Macy's and Yahoo unveiled ambitious online retailing initiatives last week, just in time to cash in on the newest wave of credit card-wielding Net surfers.
Yahoo, Santa Clara, CA, launched a comparative shopping service at http://shopping.yahoo.com that the search engine said has more than 2 million products from more than 2,700 online stores. Meanwhile, Macy's, New York, debuted a major overhaul of its Web site at www.macys.com with 250,000 products.
Although this year's fourth quarter won't be a make-or-break holiday season for online retailers, many say it will further drive a wedge between the winners and losers.
“I think it's going to be a separation Christmas,” said Jeff Mallett, chief operating officer at Yahoo. “It might not be enough to put some no-names out of business, but it'll be enough to separate the usses from the thems.”
Macys.com is the latest component in the company's strategy to bring its merchandise to consumers through alternative formats — it launched the Macy's By Mail catalog in August.
“This is not an online catalog. It's designed to be an online store that replicates the department store experience,” said Kent Anderson, president of Macys.com.
The site will be featured in a national advertising campaign that kicks off during the Macy's Thanksgiving Day Parade and will include TV, print and direct mail inserts. Macys.com also will be featured in IBM's new e-business campaign that uses examples of companies that maintain a successful e-commerce operation.
Online advertising, which is being handled by Leftfield, San Francisco, will consist of an anchor placement on America Online's shopping channel, creating a Macy's keyword at various search engines and displaying 140 million banner ads by the end of the year.
In the meantime, the pundits have all weighed in with their online holiday shopping forecasts that differ by some $1 billion.
Forrester Research, Cambridge, MA, came in the highest, forecasting a $3.5 billion fourth quarter for 1998 online retail sales. Jupiter Communications, New York, predicted $2.3 billion and the Yankee Group, Boston, predicted $2.55 billion. Everybody agrees, though, that this year's online holiday sales will double last year's performance and that it will still be a pittance compared to the $174 billion the National Retail Federation says consumers will spend this holiday season overall.
Still, online shopping is steadily working its way into the mainstream, said Melissa Bane, senior analyst with the Yankee Group.
“We're seeing many more retailers and major brand names advertising the idea of shopping online for the holidays,” she said. “[Also], with both major credit card companies online actively promoting this as a shopping channel, it makes an enormous difference in consumer perception of security.”
MasterCard, for instance, has partnered with sweepstakes promoter Yoyodyne and online trade association Shop.org to promote National Online Shopping Week from Nov. 27 to Dec. 4 by offering 10 percent discounts, free gift wrapping and other incentives.
Elsewhere, sales at iQVC, the Internet arm of television shopping channel QVC, West Chester, PA, for the first two weeks of November exceeded sales for the whole month of November in 1997. During the week of Nov. 9 to Nov. 15, iQVC took $1.8 million in orders.
“We are getting a lot of new names during the fourth quarter as well as a lot of increased sales from existing customers,” said iQVC spokeswoman Leslie Gross. “What we'll find is that customers who are shopping with us for the first time in the fourth quarter will probably continue to shop with us in the first quarter.”
“Should we continue along this trend, iQVC's 1998 sales will nearly triple 1997's,” said Stuart Speigel, vice president and general manager.
The company also reported that its average order size is $71 and that toys are its fastest-growing category.
As more evidence that post-holiday Internet sales aren't likely to drop, Forrester predicts that online retailers will begin using e-mail reminder services and continuity clubs to get this year's crop of online shoppers to continue buying.
“Coffee and wine merchants see that customers don't want just a week's worth of their favorite beverage, they want a monthly delivery,” said a recent Forrester holiday shopping report. “Retailers like Dean & Deluca, Starbucks and Virtual Vineyards will cash in year-round.”
By upgrading its e-commerce capabilities now, Macy's is attempting to get a jump on the rest of the department store industry.
“If you use bookselling as an example, branding is pretty important on the Web,” said Karl Salnoske, general manager of e-commerce at IBM. “This kind of commitment by Macy's to lead the way is an important strategic move.”
Macys.com is designed for easy navigation and offers special functions to make first-time Web shoppers feel confident about making purchases. The gift wizard acts like a search engine to present 36 targeted gift suggestions based on a shopper's specifications. The “For You” function groups related merchandise to streamline the creation of wardrobe. The site will also host Macy's expanded online Bridal Registry.
The E-Club gives consumers a way to store the dates of special events, mailing addresses, and other pertinent shopping information. They also can opt in to receive e-mail messages.
Macys.com will process orders through two fulfillment centers and its stores. It plans to ship merchandise via UPS within 72 hours of the order.