E-tailers Hold Their Breaths For Santa
Sydney Morning Herald
Tuesday October 31, 2000
The online sites which promised so much last December say now they are ready to deliver.
Will the tech wreck ruin Christmas? That is the question being asked by e-tailers as they gear up for their big two months of the year a period when they can expect up to 40 per cent of their revenues.
And in many ways it is a question all dot coms will be watching with keen interest as they assess whether the carnage in the tech stock markets is spilling over to general consumer sentiment about Web usage.
Last Christmas the e-tailers were riding high. Their share prices were extraordinary, demand was booming and specialist e-tailers were launching almost every day in the run-up to Christmas.
But in the first signs that behind the homepage there was sometimes not much more than fizz, several struggled to meet their delivery times.
Enough consumers complained that their special online gift came late that the reputation of the whole sector took a bit of a beating.
In the rush to get to market, too often sites were thrown together with little focus on site navigation and usability. This led to complaints about difficulty finding goods, and transactional software which appeared flaky and lacking the industrial strength consumers wanted to allay their privacy fears.
And in the fad-driven Web world, US investor sentiment was beginning to turn away from consumer sites (B2C) towards business supply sites, the so-called B2B sector.
Some of the smaller e-tailers became early victims of the April crash, with boutique e-tailer The Spot hung out to dry by some of its backers, most notably Fairfax's Internet subsidiary, f2, and US giant Amazon.
A few others looked likely to follow in its wake, with Jumbomall burning cash so fast it had to change its name in a reposition away from a pure retail play, and the related 131shop struggling to stay in the game.
But while the local marketplace has thinned, general traffic to the e-tailing sector has risen sharply, up by more than double in the six months to September, according to Media Metrix.
As always, the Web measurement firms are not consistent, but sifting through their numbers there are now about2 million visitors who go to an Australian retail Web site once a month, or about a third of local Internet users.
As in most Web-sophisticated nations, it is the big US firms which top the local shopping list. Amazon is the Australian market leader, with about double the reach of the two local leaders, Dstore and Wishlist.
Dstore has a number of high-profile backers including the Ecorp/Microsoft joint venture ninemsn; directory group Looksmart; Rebel Sport; and Sydney businessman Mr Rodney Adler. It launched a month before Christmas last year and admits to having suffered from delivery problems, but 12 months later now claims to be ready.
Its rival Wishlist has struck a deal with BP service stations for fulfilment which it hopes will overcome consumer resistance only one in three visitors to a Web site is buying, according to IDC.
Lurking in the background, hoping to pick up their share of online custom, are the shopfront sites of the major Web players. These are really featured advertising sites sitting on big portals, offering smaller e-tailers access to much larger customer traffic than they would otherwise enjoy.
All of the portals, Ninemsn, Yahoo and Telstra.com, offer their wide user bases. The media networks such as f2 offer the strength of their key AB and geographic demographics. Third in the scale of things come the bricks and mortar retailers such as Coles Myer and the revamped site of David Jones, which are hoping their deep pockets may make up for their general tardiness in getting online.
In the US, analyst groups are predicting boom times despite the stock fallout.
Forresters is claiming a 64 per cent increase in turnover compared with last Christmas period and Jupiters is in a similar orbit, predicting a 66 per cent increase. Ratings analyst Nielsen says that the big category movers in the US this year will be toys and games, expected to grow by 270 per cent, driven by the toy industry's finally getting its act together on the Web.
Other hot movers are expected to be consumer electronics, up 109 per cent, with ``traditional" online favourites such as books and music likely to enjoy industry wide growth of around 60 per cent.
If the usual pattern prevails, then it should also be a good Christmas for the Australian online shopping sector.
For most of them it can not come soon enough.
© 2000 Sydney Morning Herald