ZDNet UK / News and Analysis / Business of IT / IT Strategy

'Tis the season to be spending... online

By James Pearce, ZDNet Australia, 6 December, 2002 16:25

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etailers, Christmas

NEWS
'Tis the season to be spending, and these days more and more people are choosing to avoid the tacky tinsel and Christmas carol muzak by hitting the Internet to buy presents for their nearest and dearest. ACNielson NetRatings' figures show online shopping grew 22 percent in the past year, with almost four million people purchasing online. According to Internet monitor Hitwise, 61 percent of online shoppers are female, and almost half of them lie in the 25-34 age bracket. Leaving its dot-com legacy behind, the e-tailing industry is showing signs of maturing and providing sustainable business models. Most companies from the dot-com boom, who bought into the "new paradigm" that you didn't have to be profitable if you sold online, have disappeared to the great hard drive in the sky, and the remainder are seeing a steady increase in traffic and customers. Adir Shiffman, founding director of Website analysts Global Reviews, has seen the online retail space change dramatically in the past year. "What we're seeing is online retail becoming far more like traditional retail," he explains. "There's no loss leader to get volume, no promising a delivery time that they simply can't do, no unrealistic cut-off dates, no offering below cost to get people in, it's more realistic," he says. "You'll see some much more realistic business models developing and being implemented here." Shiffman attributes this to the end of the dot-com boom. Large offline businesses now consider online to be just another channel, and if it doesn't generate revenue they are quick to get rid of it. This convergence of online and offline business is apparent in the attitudes of big retailers. Claudia Carr, Website manager for Dymocks says that online sales basically reflected what happens in the store, while Jill Campbell, corporate communications manager for David Jones in Australia, believes the customer experience "should be seamless between the store and the site". One thing the online world definitely has in common with its three dimensional cousin is the Christmas sale boom, which brings in a significant proportion of the years revenue. "Most of the money for every retailer comes in over Christmas," says Shiffman. "In terms of when their peak sales periods are, there's no doubt that Christmas is a peak sales period for both online and offline." E-tailers tend to agree, with every company contacted by ZDNet Australia indicating they expected sales to peak over the next few weeks, and exceed the levels of the same time last year. "It's quite dramatic this season compared to what it normally is," Zoe Pallister, company director of pure e-tailer Zodee explains. She says there is a noticeable increase over last year as well. According to Campbell, Christmas is a critical time for online business. "It echoes in a way what trade does in the department store," she says. "It has its peaks at any gift giving time, and Christmas is the biggest gift giving time." Paul Deighton, the mail order manager for Oxfam Trading, says sales from the site had doubled compared to last year, with more than 50 percent of orders coming from new customers. Oxfam offers unusual products from developing countries throughout Asia, Latin America and Africa, which are promoted through catalogues. This year's Christmas catalogue went out from the end of August through till November, and the company is currently experiencing its annual silly season rush. In a week or so Deighton expects the activity to drop off. "The number of subscribers to our newsletter has also doubled over the past few months," he says. As for the Websites of the large retailers, many are experiencing high growth, although revenue is still a small proportion of overall sales. "It's a really small part of sales, but growing at around 40 percent each year," says Campbell about David Jones' Website. Carr said that the sales from Dymocks Website were comparable to a medium-sized store. "Every Christmas we see a spike, which has already started," she says. "Online sales continue to grow so there's every reason to believe this year will exceed last year."
E-commerce is transforming business around the globe. Get the latest headlines at ZDNet UK's E-commerce News Section. Have your say instantly, and see what others have said. Go to the ZDNet news forum. Let the editors know what you think in the Mailroom.

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