By Megan Swaine - Fall 2004
The holiday season is the most anticipated part of the year for retailers.
Last year, on a single day during the holiday season, Amazon.com sold 1.2 million items, or, rather, one sale every 24 seconds. Yet suprisingly, Amazon.com reportedly never made a net profit until 2002.
E-marketer predicts that Americans will spend approximately 27.6 % more money this year online during the holiday season than last year.
What is the draw to online spending? Convenience, obviously, but the primary mistake of the dot-com bubble was the mentality that shopping is entirely about convenience. What of fitting rooms? What of days at the mall or Walmart with the family? What of SANTA?
Looking back to Christmas of 2000, we find that many of the dot-coms suffered a harsh disillusionment, and just a few of them were eToys, Pets.com, Garden.com, Living.com and Furniture.com. People in the industry hadn’t yet figured out what sort of conventions would remain unbreakable for the consumer. They came to terms with the fact that clothing, video/dvd, electronics, toys/video games and books are popular online purchases.
Analysts found that although the internet represents convenience, people still appreciate the social aspect to shopping. Jim Dion of Dionco Inc. said: “Technology may move very quickly, but people don’t. People are still very social animals. It’s not in their nature to lock themselves up in a semi-dark room to order on the Internet rather than go out for a beer and go shopping to try things on.”
So e-retailers have to present a catch, something unique. Bricks and Mortar stores or, "Bricks with Clicks" this year have various online, holiday-related offers. Most of them have free shipping, beyond a specific purchase amount, to encourage consumers to buy online. Walmart , for instance, is offering 97 cent shipping on certain toys and Canadian Tire has a 'win your wishlist' event. They all have a 'wishlist' feature that usually requires registration (a useful information gathering tool).
According to a study by Dieringer Research group, the growth of internet-influenced offline sales in the US has increased twice the amount of online sales. The internet has become an invaluable tool for research. The Online Publishers Association found in a survey that 76% of American consumers prefer finding product information online rather than offline. Established stores are benefiting from having an online presence- such as Indigo, Futureshop, The Bay, Canadian Tire, etc.
Most of these sites now have a 'gift guide' listing their products according to categories that the consumer can relate to while christmas shopping- price range, age group (for toys especially) and type. These create an online catalogue that the consumer can browse through, and purchase from both offline and online.
But you also can't detach the physical element of e-business. It's not just about the webpages- behind the scenes, there needs to be a back-end infrastructure. Software to handle orders and transactions. A warehouse and staff to fill those orders and ship them out in due time.
According to J. Timothy Hunt “Clicks without bricks are like little pigs in straw houses- a huff and a puff and they're gone.” Established major retail chains that already have some sort of shipping structure, like Sears, have made the jump to online more easily than others.
In fact, eMarketer cited that the increase in online spending in the US may in fact be due to fewer web site crashes, inventory problems, late deliveries, and better customer service.
The Hudson Bay company, whose online retail is booming, has organized a five story tall picking-rack in their one-million square-foot warehouse.
In Canada, e-commerce grew by 20% in the fourth quarter of 2003, but is still behind the US. Internet access has reportedly 'plateaued' at 52%, and online shopping saw a slight drop last year at $972 million, compared to $990 million the year before. Researchers cited many reasons, including decreased spending on average, and the higher Canadian dollar.
But there has also been a switch to Canadian products. In the fourth quarter of 2003, 63% of the dollars spent online by Canadians were spent on Canadian sites. Why? Users cite that the shipping costs, duty and availability sometimes make it inconvenient to purchase online from US sites. Comscore.com observed a trend- “As spending in less developed ecommerce markets moves toward critical mass, online buying migrates from international sites to domestically-based merchants.”
Online retail has become a natural part of the way people shop, a natural extension of a pre-existing conventions. Online shopping will continue to grow, but also has a symbiotic companion to Bricks and Mortar retail.