BRANDS WILL LEAVE THEIR MARK ON WEB SALES
Byline: Melanie Kletter
NEW YORK — E-commerce sites with established brand names and easy-to-use features will rack up the most online sales this season and into 2000, according to Wall Street analysts and Internet consultants.
While pure Net players, like Amazon.com, are expected to dominate holiday e-commerce, observers noted the emergence of more brick-and-mortar retailers on the Web in 1999 has significantly altered the e-tailing landscape.
Among the apparel click-and-mortar players believed to be best positioned for success online are Jcrew.com, Gap.com, Landsend.com and Bananarepublic.com.
“The differentiator this year is the synergy between traditional and Web channels,” said Carol Ferrara, senior retail analyst at the Gartner Group, an information technology consulting and research firm. “Retailers that are able to span channels have the ability to leverage their infrastructure in areas such as their call and distribution centers.”
Ferrara said last year many e-commerce watchers believed some brick-and-mortar stores would be forced to close in the face of expanding Net sales, but that sentiment has turned out to be dead wrong, as many chains have since leveraged their stores with Web sites.
“Companies like the Gap have an advantage because customers can order online and can return items to the stores,” noted Mark Rowen, senior retail analyst at Prudential Securities. “About 30 percent of mail-order apparel gets returned, and many people don’t like the idea of having to pack it up and carry it to the post office after they order something they don’t like.”
Ken Cassar, a digital commerce analyst at Jupiter Communications, pointed out that brick-and-mortar retailers are well positioned online because new cyber-shoppers are gravitating more to brands they know and trust, such as Gap, Barnes & Noble and Toys ‘R’ Us, rather than to pure dot-coms. Cassar cited a recent study by Media Metrix, which found Toys ‘R’ Us is now the third most trafficked e-commerce site, after EBay and Amazon.com.
“E-commerce traffic is up significantly,” he said, “and three of the 10 most heavily trafficked sites also have a presence in stores: Barnes & Noble, Vitamin Shoppe and Toys ‘R’ Us.
“Online shopping veterans — those on the Web for two years — will buy from [pure] online merchants, while newbies — those on the Web for less than one year — have a propensity to look toward traditional retailers’ sites,” Cassar added. “We’ve been saying we expect the e-commerce battle to be won by traditional merchants, but we didn’t expect to see the trend to start emerging until next year.”
Also crucial to successful e-tailing, Ferrara emphasized, is fulfillment.
“Fulfillment reliability is the most important factor in maintaining good customer relationships,” she said. “In addition to real-time inventory checking, retailers must be able to provide customers with timely shipments and frequent updates on a product’s position in the delivery pipeline. The Web site must also provide frequent updates to the customer concerning items that are not readily available, and this should include estimated time of arrival [on the site].”
Jeff Edelman, retail analyst at PaineWebber, agreed. “Successful e-commerce companies have strong store franchises, easily navigable sites and the capability to deliver the product on time.”
Advertising, both online and off-line, is helping to separate some e-commerce winners from losers, although it is far from the most important factor for successful e-tailing.
In fact, Cassar called e-commerce advertising a “necessary evil.”
“Advertising doesn’t necessarily guarantee success, and it is extremely expensive,” Cassar said. “Also, we are starting to reach the saturation point.”
Many traditional apparel retailers have yet to start selling online or are just starting online sales, although some early adopters have garnered a strong reception from consumers.
Gap was cited by many Net watchers as one of the best-positioned online sellers this holiday, in large part because of its well-known name and emphasis on fashion basics.
While apparel sales online are gaining ground and likely to easily exceed year-ago levels, most consumers are still reluctant to purchase fashion items. “In terms of apparel, it makes more sense to sell basics,” said Prudential’s Rowen. “That is why the Gap and Lands’ End have done well.”
Lands’ End was cited as a clear-cut e-tailing winner mostly because the site is easy to use. Landsend.com includes detailed product descriptions as well as ready customer service representatives who are familiar with both the catalog and Internet operations.
Ferrara noted that the Lands’ End site includes more than 1,000 items and ships to 185 countries. It also features innovative technologies, including “Specialty Shopper,” which provides customers with personal e-mail advice on sizes and fabric care, among other areas, and “Over the Counter,” a rotating price-reduction feature that introduces overstock products each Tuesday and Saturday.
J. Crew and Banana Republic also were cited as successful e-commerce players by, among others, Lauren Cook Levitan, president of the e-tailing group of analysts at Robertson Stephens, who said, “Banana Republic is an established name that can drive traffic.”
In contrast, many broad-lines retailers are just beginning to make a substantial commitment to selling on the Web, and thus are not likely be big winners this season.
One relatively early adopter was Federated Department Stores, the giant department store operator, which is selling apparel at macys.com and bloomingdales.com, and acquired Fingerhut, which is aiding those Web sites as well as operating a number of its own.
However, Federated’s online sales will still be small this year, according to analysts’ estimates.
Other broad-lines chains selling some of their stores’ assortment on the Web are Internet pioneer J.C. Penney, Sears, Kmart and Wal-Mart, which has announced plans to relaunch its e-commerce site early next year.