E-TAILERS WARNED TO GET THEIR ACTS TOGETHER

Byline: Valerie Seckler

CHICAGO — E-tailers need to watch — and improve — their websites’ backend, if they expect to meet cybershoppers expectations for Christmas.
“Forty-nine percent of online purchasers bought something from at least one new Internet merchant last Christmas, therefore a big opportunity exists for e-merchants this holiday,” noted Heather Dougherty, associate analyst at Internet consultant Jupiter Communications.
“But if websites fail in fulfillment, or other back-end operations, like inventory management,” she added, “they won’t get repeat business from their new holiday customers, if any business at all.”
Repeat customers at a website are more profitable than new ones because they tend to spend more money at that online destination.
Dougherty made her projections in a presentation entitled, Next Generation Commerce: Scanning the Horizon, at Jupiter’s Online Shopping Forum 2000, which concluded here Friday.
In surveying consumers who shopped online during holiday 1999, Jupiter found repeat shoppers were significantly less satisfied with their cyber experience than were “newbies,” or those who have made purchases on the web for less than two years.
Dougherty said 70 percent of the newbies were happy with their online experience last holiday season, compared with only 52 percent of repeat shoppers who said they were satisfied. “We think the gap exists because the expectations of newbies were lower,” Dougherty said. “While the satisfaction rate among new Internet shoppers appears rather high, we think that has to do with their pattern of making fewer purchases and spending less money online than repeat customers.”
Among all shoppers surveyed, 82 percent made fewer than half of their holiday 1999 purchases online, and 55 percent spent less than $200 in cyberspace.
The sweet spot on the Web this year’s holiday season, in Dougherty’s view, will be sites that are gift-oriented and cater to customers who also buy merchandise for themselves online. Players such as J.Crew.com, eve.com, Ashford.com, Urbanfetch.com, and RedEnvelope.com, she said, are examples of sites in that sweet spot.
“It takes much more than driving the front-end of a site — spending a lot on marketing and acquiring customers — to operate a successful e-commerce site,” Dougherty emphasized. “One of the biggest problems of holiday ’99, was the absence of inventory necessary to meet the heightened demand online.
“Websites shouldn’t be spending so much on their frontend, at the expense of their back-end,” Dougherty concluded.