E-Christmas shake-out begins

E-commerce was a factor in seasonal retail figures for the first time in 1999, but as Toys 'R' Us shows, a company that is in trouble will not be rescued by an e-strategy alone

E-commerce was a factor in seasonal retail figures for the first time in 1999, but as Toys 'R' Us shows, a company that is in trouble will not be rescued by an e-strategy alone.

With another e-Christmas behind us, now comes the shake-out at those firms that performed poorly.

Some did miserably, including Toys 'R' Us which suffered at the hands of rival eToys, and was hampered by order fulfilment woes. Now, though Toys 'R' Us has a new CEO, John Eyler, who has promised to put things right.

Eyler admitted that the retailer had had "three or four years of bad news", and his priorities include installing systems and an order fulfilment infrastructure to cope with the next holiday season. The company was unable to deliver orders in time for Christmas 1999, because it was not prepared for seasonal demand.

Not prepared? How can a toy company not be ready for seasonal demand? One US retail analyst suggested that the new CEO is unlikely to have much of a honeymoon period on Wall Street. I'll say.

Stores group Kingfisher and French holiday group Club-Med both announced significant e-business efforts last week.

Kingfisher, which owns Woolworths and Comet, will spend about £50bn on Net development in the coming financial year. That is on top of £21m spent this year.

It is a similar story at Club Med, which wants to expand its sales channels with the launch of Club Med Online, a newly created subsidiary. It hopes to enable online booking and buying within three months.

Club Med said the Net is already contributing to its sales, as visitors choose destinations online then visit Club Med agencies.

Existing licensing and distribution agreements are expected to be extended to the Internet, the company said last week.

Much has already been written about the AOL-Time Warner deal: about how it legitimises e-commerce; about the coming together of a .com and a bricks-and-mortar giant; about how the "cockroach of cyberspace" - AOL - founded in 1991, merged with an amalgam of two companies, Warner Brothers and Time Magazine, both founded in 1922.

Apart from the sheer scale of the deal - $350bn (£200bn) - and the likely effect it will have on smaller media companies - a host of partnerships or mergers - the deal could spark changes in the way Web pages are developed, and how the Internet grows.

US experts believe the deal paves the way for the speedier introduction of broadband devices to access the Internet. This in turn means that Web developers may have to develop better features for higher speeds.

In particular, this applies to Web-based retailers, who have wanted to add better graphics, streaming video, 3D interactivity and other options to give online shoppers a more comprehensive view of the products for sale and "a better Web experience".

What else could the deal mean?

  • Letting Microsoft off the hook in its anti trust case. Microsoft could argue that in light of the AOL-Time Warner deal - which itself will need regulatory approval - why should the US Government consider breaking Microsoft up?
  • Better options for consumers with the match between AOL's online music offerings, including the Spinner.com radio service, and Winamp music player.
  • A bolstering of AOL's online TV effort, which plans to offer "enhanced TV services" running on set-top boxes.
  • A possible return to the browser wars. One New York-based analyst has predicted that the company may switch its browser to Netscape.

AOL owns Netscape already, so you might think that Netscape would already be its chosen browser. Not so. Apparently, problems with Netscape 4.0 have left AOL using Explorer, but that might change. The scenario is that with AOL releasing version 6.0 of its software in April or May, and Netscape releasing version 5.0 around the same time, AOL could switch to Netscape.

The upshot of that is that Web designers could find themselves having to redesign pages originally written for Explorer. It is unlikely that Microsoft will allow that to happen without a fight.

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