A Merry E-Christmas?

  |  November 21, 2000   |  Comments

What's ahead for the coming e-Christmas? Conventional wisdom holds that the online arm of real-world stores will shove the dot-coms aside. But are they really in any better position to succeed than the specialists were?

Back when my wife and I were newly married, we often celebrated the holidays with her parents. They were physically closer than my parents, a huge horde of family surrounded them, and we didn't have any kids yet.

Jenni's mom sent us for last-minute presents to a place I remember as the Wonderland Mall. It sat by two freeways in what we'd now call a "transitional" neighborhood. The middle class was fleeing, and the poor were moving in.

Many of the stores were shuttered, while others had a very meager stock. Even name-brand merchandisers were being careful not to put their best stuff on display, yet shoppers seized on these goods with a wide-eyed hunger that bespoke desperation and poor planning.

This memory flashed in my mind recently while looking over the web's Christmas offerings. Garden.com is gone. BeautyJungle.com and Pets.com are gone. Bike.com has ceased operations, MotherNature.com is liquidating, and Furniture.com has shut its doors. These are just a few of the closings announced in the last several weeks, just before the "crucial" Christmas selling season.

Last year's boom has become this year's bust, despite the fact that more people than ever are looking to buy stuff online. Conventional wisdom holds that the online arm of real-world stores will shove the dot-coms aside, with sites such as Walmart.com and Kmart's BlueLight.com grabbing all the business. Certainly they have an opportunity. But are they in any better position to succeed than the specialists were?

The fact is that a big, scaled e-shopping site is a very complex business. Once someone clicks, you have to do more than run a credit card from a shopping cart. You have to find the goods, pick them, box them, ship them, and then hang tight for the dreaded returns. You have to know how much each of these functions costs you and put that into your pricing.

There's also a lot to be done before the click. You have to bring customers in the door, convince them to trust you, and merchandise properly. You can't just take the money and then learn these things; you have to be ready to perform as soon as they walk in the virtual doors.

Many merchants have learned precisely how to make this happen but only within fairly narrow niches. Direct-mail merchants such as L.L.Bean, Lands' End, and REI can simply bolt a web front end onto existing operations and actually save money off the cost of taking orders by mail or phone. But, again, these are specialists. Warehousing and merchandising are different for each type of product. These are disciplines that take time to learn.

So maybe this e-Christmas will be like a trip to the Wonderland Mall, and maybe your "meat space" rivals are going to get the big opportunities this year. But my guess is many of them will suffer the same indigestion and heartburn you went through last year. When this season is over, there will still be plenty of room for small boutiques, specialty shops, businesses ready to scale, and all the good things you might want to imagine.

I heard from my in-laws that the Wonderland Mall eventually got a new mix of shops and found new prosperity. The web can, too.

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Dana Blankenhorn

Dana Blankenhorn has been a business reporter for more than 20 years. He has written parts of five books and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine, and other publications. His own newsletter, A-Clue.Com, is published weekly.

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