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Retailers Struggle To Revolutionize Online Shopping - 2001-12-05


New statistics show 22 percent of U.S. consumers plan to purchase holiday gifts over the Internet this year. Online shopping has evolved as retailers struggle to use this new sales medium effectively.

Ordering gifts without leaving your home. Using your computer to find the cheapest prices for anything you want. These are some of the ways the invention of the Internet was going to alter forever the way Americans shopped.

Disdaining the plight of old fashioned "brick and mortar" stores, thousands of new online retailers declared themselves open for business.

But Rob Leathern, marketing analyst with Jupiter Media Metrix, says many of the first online merchants were laboring under a misconception. They thought they were acquiring customers when in fact they were just acquiring transactions. "In most cases, consumers have a very specific item in mind before they go online. They are just looking for the cheapest place to buy it. And if you, as a merchant, are offering a very great deal, that could backfire on you if the customer buys an item from you very cheaply and never returns," he says.

"Open for business" signs rapidly turned into "out of business" signs as the first wave of online merchants discovered bargain prices did not necessarily yield faithful customers.

Next, Rob Leathern says, those online firms that succeeded in developing a faithful customer base realized selling was easier than delivering. "They also had to build distribution infrastructure. They had to build relationships with suppliers. Doing both of those things is pretty hard," he explains. That led to more bankruptcies, and a new wisdom: Perhaps traditional stores that knew how to sell and distribute would do best online.

But this year big retail stores like Bloomingdales and Macys are declaring losses and scaling back websites. Rob Leathern says the new wisdom is that success will come from figuring out how to merge the strengths of the Internet with the strengths of the traditional retail store.

Sears Vice President Dennis Hogan says his store this year is offering customers the chance to shop and buy products online and then pick up their merchandise at a nearby Sears store. "Our store associates go out, pull the merchandise for them, and we send our customers an E-mail, saying, 'This product is now waiting for you in the store that you selected.' So when you come into the store, it is a very quick process, almost as easy as getting takeout food."

Mr. Hogan says Sears has spent a lot of time and effort trying to figure out what its customers want. This could be the perfect formula for online success. Or, it could be yet another stage in the evolution of Internet sales.

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