How We Doing, Santa?

With Hanukah past its mid-point, the Christmas buying season heads into the home stretch. And it’s been a grand season so far. The malls are jammed, fulfillment houses are working harder than Santa’s elves, and online sales may be tripling.

Before we get going, you may want to save this story, in which Ziff collected the major analysis firms’ pre-season guesstimates for how we’d do this year. Hold this one for January, when we’ll see which analysts were naughty and which were nice.

In terms of actual returns (as they say on the political beat), the earliest numbers come from PCData, and show that the Thanksgiving weekend was worth $500 million to e-tailers. The biggest crowds to the online mall also came on Saturday, apparently following up on those Friday mall visits.

In fact, PCData’s “Buying Meter”, shows that the Christmas e-tailing season really began around November 16, nine days before America sacrificed turkeys on the altar of football. On that day, the company’s data shows the percentage of users who were buying online rose to 1.62 percent, breaking through the normal pattern of 1.3-1.4 percent of users buying.

Since that date, most shopping days have seen over 400,000 buyers online, with December 2 actually representing the peak of 594,000. The highest percentage of online buyers was actually November 27 (the Thanksgiving Saturday) when 2.38 percent of users bought something.

Not all the publicity has been good, of course. Many reporters seem to be delighting in throwing humbug on the whole idea of an online Christmas. Investors were yawning over the early returns, toy shelves were reportedly empty, and Jupiter Communications threw a wet blanket over the whole thing.

Even worse has been the publicity regarding poor online customer service. I personally suffered a hiccup at the eToys cash register that moved me to re-enter my order, resulting in “double prizes” for some kids on my list. The desk hutch I most wanted (and bought online) was also returned, but the fault there lay in an inaccurate flyer obtained at a store.

What we’re finding is fulfilling the promise of click is harder than it looks. You have to win the procurement game, you have to accurately measure the size of your warehouse and fulfillment operation, and you have be clever in customer service to make an e-tailing Christmas merry.

While physical retailers can wait for returns to come to them, e-tailers may need to be more proactive. Had a computer program at eToys examined incoming orders for duplicates, and had someone from the company called me, they would have made a profit on my order, not a loss. More information on how parts fit together might have gotten that hutch built – maybe some program on the web site could have asked some hard questions before I made my mistake.

The point is we all have a lot to learn about e-tailing, mistakes that can only be made through experience. The learning curve is steep, and the price for failure can be high. (See the fate of Brainplay.com, which failed to scale last Christmas and wound up being swallowed-up by KBToys.)

But those who master the channel will win, not just on the top line but on the bottom line, and if not this year then soon. That should be the lesson of this online Christmas.

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