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...

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 hitthe 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 hearingisthat a number of merchants, suchas 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:

  • Amazon.co.uk

  • Jungle.com

  • Audiostreet.com

  • Tesco.co.uk

  • Blackstar.co.uk

  • QXL.com

  • CDnow.com

  • Easyjet.co.uk

  • Ticketmaster.com

  • Buy.com

  • This was last published in December 2000

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