Online, in season and over here
It seems strange that more people than ever before are buying
Christmas presents online in the year of the dotcom disaster.
James Rogers dons his best Santa outfit and looks at how
e-retailers are making the most of the festive season
With Boo.com a distant memory and lastminute.com falling to
earth with a bump, you could be forgiven for thinking that the
Internet shopping bubble has well and truly burst. Not at all,
according to Ernst & Young. An online shopping study by the
business advisers estimates that UK consumers will spend 23% of
their total Christmas purchases online, up from just 14% a year
ago. “This will be a very interesting Christmas for dotcoms, UK
online shoppers report they have spent an average of £551 on the
internet over the past 12 months,” said Tim Gordon, Ernst &
Young partner and e-commerce expert. “The signs are looking good
for a bumper year for dotcoms.”
This is all a far cry from last year, when a number of online
retailers hit the headlines for the wrong reasons. There was no
Christmas cheer for the likes of the US Web site ToysRUs.com, which
ran into problems last Christmas because it under-estimated
customer demand. Both dotcoms and the Web sites of more traditional
retailers can fall prey to the same planning problems at this time
of year. Clearly, just because something works in the
bricks-and-mortar world doesn’t mean that it will be an online
success.
Ironically, ToysRUs.co.uk, the British counterpart of
ToysRUs.com, had no such problems. A spokesman
said, “We had a great service last year, and as far as this
year
is concerned, we have got our warehouse procedures, Internet
procedures and stock levels in place for Christmas.”
Christmas is a critical time of year for virtually all
retailers, but this is especially the case where toys are
concerned. No parent wants to see a tearful child on Christmas
morning, so there is massive pressure on companies to come up with
the goods. James Roper, chief executive of the industry body
Interactive Media in Retail Group (IMRG) explained, “What we are
hearing is that a number of merchants, such as EToys, Argos and
Marks & Spencer are determined that they will not get caught
out. They are taking on extra staff and notifying consumers of
their last order day before Christmas.”
Get realistic
One of the main lessons that retailers can take away from this
year’s Christmas rush is that they need to be realistic about what
they can and can’t offer.
The spokesman for ToysRUs.co.uk said, “The last date for orders
to be placed with us is 18 December. It is important to ensure our
customers receive their goods in time for Christmas. It is no good
to promise what you can’t provide.”
He added, “No doubt there will be a big rush that weekend, but
we have to make sure that we can fulfill it.”
“Consumers are becoming more discerning, there is no room for
mistakes,” said James Bidwell, marketing director of eToys Europe.
“We have doubled our online offering this year, we now have 14,000
products on the site.”
This growth has been matched by the scale of the company’s
warehouse operation, which has been increased from 25,000 sq ft
last year to its current size of 110,000 sq ft. There is a warning
here for any retailer with aspirations of online success. Don’t
even think about having an online presence if you can’t provide the
service to match it.
While eToys.co.uk describes itself as the market leader
for online toy sales in the UK, Bidwell acknowledged that
technology is only one part of the Christmas equation. He said, “It
is even more about execution this year, both from a technology and
a distribution standpoint.”
He has no fears that eToys. co.uk will be able to cope with the
surge in demand during the Christmas season, largely thanks to the
support provided by the company’s US operation.
Bidwell said, “Because we have a site that is based on our US
platform it means that when there is huge demand, there is the
back-up available.”
Retailers with online operations have learnt significant lessons
since last year according to Paul Brooks, director of home shopping
and e-commerce consultancy di’rekk. “They have now had a lot of
time to get the back-end and the fulfilment right.”
Efficiency pays
As far as Brooks is concerned, Amazon.co.uk is setting the pace
for the other retailers. He said, “If another retailer can match or
better their standard then they will be doing well.”
Amazon has certainly built up an impressive reputation over the
last few years.
One consumer told Computer Weekly how impressed he was by the
fact that he took delivery of a book that he had ordered only 48
hours earlier. He was even more pleased when he realised that the
book in question was £4 cheaper than the same copy on sale in his
local high street. This provides the perfect example of how online
retailers can win the hearts and minds of consumers. All sites have
to provide a fast and efficient service but there is also a need to
make customers feel that they are getting something special out of
buying online.
One of the reasons why Internet shopping has taken some time to
catch on in the UK is that retailers are not just competing against
each other, they are also battling against the technological
wariness of the general public. For Christmas 2000, however, the
signs are that this is beginning to change.
Admittedly, the desperate state of public transport and the
recent spate of bad weather could be playing their part, but there
is a noticeable change in people’s attitudes towards the Internet.
The simple fact is that British consumers are becoming far more
comfortable with the concept of online shopping.
Gordon said, “This Christmas, online consumers are expected to
shop in many more categories than before. In addition to books,
videos, computers and CDs, top categories for online this year now
include consumer electronic, clothes, food and drink.”
It is also worth remembering that even long-established
bricks-and-mortar companies can fall foul of the Christmas rush.
Woolworths, for example, was recently criticised because it was
struggling to deliver on time via its Christmas catalogue.
Consumers order from the catalogue via phone, fax, letter and
e-mail and the high-street giant admitted that it was initially
unable to deal with a massive surge in demand, especially in toys.
It is interesting to note that the company’s online offering was
largely unaffected by these problems. Perhaps this is proof that
online retailing really is coming to maturity.
Popular sites
The Ernst & Young study shows that the most popular UK
online sites from which consumers purchased over the last 12 months
are: