More Consumers Turn to the Internet for Shopping
Feb. 8 (Sun-Sentinel/KRTBN)--Dave Schleier is a rotisserie baseball
junkie. He was convinced that if he got a copy of Bill James Presents:
Stats Major League Handbook 1998 before his competition, he could get a
jump on the 1998 baseball season. Last year he won $1,250 in his
rotisserie league.
"Let's just say I have no life," the Plantation man said.
So the day the book was due out, he checked Barnes & Noble and
Borders. No luck. So he got on his computer, went to
www.BarnesandNoble.com and found it. The book arrived at his home two
days later. Including shipping, it was slightly less than the price he
would have paid in the store.
"It was the simplest transaction I've ever done," he said.
Schleier is a believer in shopping over the Internet. Shopping is one
application that some say could be a payoff for the millions invested
in the Internet. But even though more people are shopping over the
Internet every day, precious few companies are making money selling
online, and that situation is not expected to change for some time.
Still, another believer is Steve Leveen, president of Levenger, the
catalog company in Delray Beach that sells pens, furniture and reading
paraphernalia over the Internet.
"I think the golden age of direct marketing is about ready to begin,"
he said. But then he adds: "I'm pretty far off the edge compared to
most people."
Other believers point to the growth of sales online -- amazon.com's
sales soared from $15.8 million to $147.8 million in 1997. Amazon is
the bookseller that exists only on the Internet, and it bills itself as
"Earth's biggest bookstore."
Total purchases on the Web may have more than doubled last year, from
around $1 billion to $2.4 billion in 1997, according to Forrester
Research.
But skeptics note that number is a tiny sliver of total retail
spending. Catalog shopping alone is more than $60 billion a year. And
surveys of the general public indicate that the Internet is far from a
mass market.
While use of the Internet is exploding, people are using it most often
for information or playing games, according to one survey.
"People keep telling us repeatedly, they want to touch, feel and hold
something before they buy it," said Britt Beemer, president of
America's Research Group, which surveys consumers every month. "That's
not likely to change much in the future. This is not a preferred way to
buy something."
Computer geeks might gravitate to the new. But most people resent
change, Beemer said. "There's still a lot of consumers that tell us
they're irate that somebody changed their area code a few years ago,"
he said.
Shopping didn't even make the top 20 list of preferred uses of the
Internet in Beemer's survey. While more than half of the public thought
the Internet was useful for doing personal research or e-mail, only 8.2
percent thought shopping was an important use. More people said they
thought the Internet was useful for looking up celebrity news than for
shopping.
Beemer's results coincide with those of other surveys of the general
public, as opposed to those that look at Internet users only. Before
the 1997 holiday season, 6 percent of shoppers told American Express
that they planned to shop online. In a followup survey, only 2 percent
said they actually did shop online. In contrast, 32 percent shopped by
catalog.
"It's the advertisers who want people to think that everybody's
shopping online, and they're not," said Geri Spieler, an analyst with
Gartner Group, a Connecticut-based computer research group.
Shopping on the Web also must become a lot more convenient, some
experts say. The average person online isn't using the fastest
phone-company connections to the Internet, so downloading pictures,
registering names and addresses at each shopping site, and jumping from
screen to screen can be tedious.
"The consumer always moves to the path of least resistance, or
greatest ease," said catalog consultant Maxwell Sroge. "When you carry
computers like you do cell phones, you'll see things change."
Some consumers are afraid of sending credit card numbers online, but
that as an issue might recede as consumers actually start to shop.
Almost 70 percent of those who hadn't shopped online said they were
uncomfortable using a credit card online, according to an Ernst & Young
survey. But 52 percent of those who had tried shopping electronically
said they were comfortable with security.
Businesses often have access to the latest technologies, and may
already be using the Internet for communication. So
business-to-business sales may be the most fertile area for growth,
perhaps because businesses don't need to touch and feel most products
they buy.
Dataquest predicts that consumer purchases over the Internet will
total $6 billion by 2000, or less than 10 percent of the size of the
U.S. catalog industry. But the research company thinks business
purchases over the Internet will be $50 billion by that year.
That's good news for companies like Delray Beach-based Office Depot,
which targets small businesses. The company is designing features
specifically to make it easier for businesses to shop over the Web.
A business could store its shopping list on Office Depot's site, so a
purchasing agent could track past purchases, said Keith Butler,
executive director of marketing and merchandising. It would let the
executive make new purchases just by updating the old shopping list.
Goal is online chats
Soon Office Depot hopes to be able to host online chats by product
managers, Butler said. Who could explain better how to run, say, a
Hewlett-Packard printer than a Hewlett-Packard product manager? Then
the company could store the chats for access by anybody who wants to
read them later.
"This is not the CB radio of the '90s," said Butler, who previously
worked for America Online and Preview Travel, an online travel agency.
"This is not a fad."
Still, the company has set a modest sales goal for itself -- to do as
well as the average Office Depot store, or about $8 million.That
compares to last year's total revenue of $6.7 billion. "We really are
after incremental revenue," Butler said.
Leveen, Levenger's president, is excited about the prospects for Web
retailing, though his company hasn't been able to tally sales volume. A
lot of people browse online, then order over the company's 800 number,
he said.
Leveen thinks the Web is a wonderful place to sell the company's
outlet merchandise: its overstocks, mistakes and closeouts. The Delray
Beach-based company sells products for readers and writers.
Previously, the company might run out of outlet merchandise about two
weeks after a printed list was circulated, which disappointed many
customers. Now, the product is dropped from the online catalog as soon
as its supply runs out, Leveen said.
Online, Levenger offers a site strictly for fountain pens, and another
for pen refills. It would be too costly to ship paper catalogs that
specialized, Leveen said.
He thinks Web sites won't ever replace printed catalogs. He sees the
print catalog carrying the most recent and most popular merchandise,
while the Web site would offer more selection and more depth, he said.
The company already has e-lists -- electronic mailing lists for
customers who want updated information on new products, for example, or
local company-sponsored events, he said.
Such lists are preparing Levenger for a time when most customers might
select which sales pitches they want, and which they don't, he said.
"It's in no one's interest for people to be getting catalogs that they
don't want," Leveen said.
Catalog firms lead way
Among conventional retailers, catalog companies and others that have
the ability to take orders and ship merchandise are leading the charge
online. (Office Depot is not a catalog company, but it has catalogs,
stores and warehouses for filling orders and making deliveries).
Forty-eight of the top 100 catalog companies are already on the
Internet, said Lauren Freedman of e-tailing, a Chicago consulting
company. But only 15 percent of the top 182 U.S. retailers are selling
online.
"Anybody who is a direct merchant, they already know what to do,"
Freedman said of catalog companies. "If you're Toys 'R' Us and you want
to be online, you've got to set up all the structure." That means
setting up a system for taking orders and shipping merchandise.
Sports Authority Chief Executive Jack Smith doesn't think his
company's products are well-suited to selling over the Internet.
"If you're buying a treadmill, you want to come in and see how it
works," he said. So the Lauderdale Lakes-based company plans to hold
off on selling online until the potential audience is larger.
Another local merchant who made an early jump has found the Internet a
quirky medium.
Dania-based Mr. Pottery started selling tabletop items for the home
online in late 1996. Although the company advertised on search engines,
it got very little business. Last summer, business was so slow, owner
Lanny Altshuler was thinking about canceling the Web site.
But recently, business started coming in, unsolicited. Altshuler
doesn't know how people are finding his site, (www.homegiftoutlet.com),
but they're finding it. "We're not making money, but it hasn't been a
bust," he said.
Altshuler discovered people want brand-name merchandise -- names they
trust. They also usually want to talk to someone on the phone before
they order.
Beyond that, he's not sure what goes into making a successful selling
Web site. But he figures he can't quit now.
"Once I learn what I'm doing, I could be dangerous," he said.
Schleier, the baseball fan, has done things online that aren't
dangerous -but that he's hesitant to admit to.
"I bought the Spice Girls album six months before they were popular in
the States," he said.
Schleier wasn't sure he would buy his shirts over the Internet, but
he'll be back there buying CDs.
"A CD will fit all," he said.
By David Altaner
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