And some more. Good night.
>>
SAN FRANCISCO, Jan 8 (Reuters) - Look for everyone from your neighborhood drugstore chain to the dog biscuit purveyor to be online this year hawking their wares after e-commerce stores reported big success in the holiday season.
Indeed, one of the first to launch a new venture was Rite Aid Corp., which plans to dispense prescriptions on the Web, along with herbal remedies and vitamins from its venture partner, GNC Nutrition.
"If we get to the end of the year and mainstream companies don't have legitimate Internet strategies in place -- they run the risk of becoming irrelevant," said Andrea Williams, Internet analyst for Volpe Brown Whelan in San Francisco.
As e-commerce enters the mainstream of corporate America, and more familiar names set up ambitious e-shops, look for things to get a lot more serious. Consumers will expect sites to work, and investors will get more anxious for a return on their money with every success that is reported.
But even the most optimistic forecaster expects a slowdown in the growth rate next year from the torrid pace of 1998. So for the hundreds of companies just putting ".com" after their names, it will be that much harder to break in, especially with consumers losing patience over faulty sites.
"A lot of the early success has been based on the novelty of it all -- and the novelty is wearing off fast," said Shelley Taylor, whose research firm, Shelley Taylor Associates, tracks Web sites. "Customer satisfaction is what makes people come back."
Popular sites like auctioneer eBay Inc., were hit by computer failures, and many others had trouble handling the deluge of orders. The San Francisco Chronicle Thursday gave a lengthy account of problems faced by electronic shoppers over the holidays -- ranging from items shipped to the wrong address to unfilled orders to ever-present "Out of Stock" messages.
In part, the breakdowns came from the surprising flood of orders. Sites were scoring triple-digit percentage gains over the prior year, and the biggest ones are now toting up Internet sales in billions, not millions: Amazon.com Inc.'s annual "run rate" is $1 billion a year -- based on the $250 million level it hit in the last three months of 1998. America Online Inc. said its Christmas season sales hit $1.2 billion. And Dell Computer Corp. has put its Web sales at $10 million each day -- close to $4 billion a year.
Total online purchases are expected to soar to $12 billion next year, from $7 billion last year, according to Jupiter Communications, which tracks Internet shopping and other technology issues. A year earlier, it was less than $3 billion.
The year ahead will be a critical time for those who want to win a piece of that huge, emerging market. "Mainstream companies are taking this more seriously than ever before," Volpe's Williams said. "It's happening so quickly that it's catching some people unprepared, and a lot of them are getting worried."
The fear of not being there is spurring more big names into the ring. AT&T Corp.'s $48 billion deal to acquire Tele-Communications Inc. was a way for it to jump start its Internet efforts. TCI is the main shareholder of At Home Corp., the fast-growing Internet cable modem service. Walt Disney Co., meanwhile, acquired an option to take over Infoseek Corp. Lycos Inc. and Excite Inc. are viewed as possible takeover targets for a major telecom company.
Some companies moving too quickly to get online have made big mistakes. Auctioneer eBay was one. On the way to establishing its huge online franchise, even America Online had its share of celebrated blowouts -- as its service outages became national page one news. But as more competitors come online, the margin for those kinds of errors narrows.
"People are getting a lot pickier," consultant Taylor said. "It's not enough to be first anymore." To avoid mistakes, companies need to bring the Web strategy up to the corporate level "so it doesn't get handled in a techie fiefdom instead of the boardroom."
For those that do not get it right, there will be others ready to step into the void. Barnes & Noble Inc., a hugely successful retailer that was slow to go online, is still struggling to catch Amazon. While Rite Aid launched its site with much fanfare Thursday, it conceded that it would not go live until October. Never mind, for those who want to order medicine online. Soma.com, borrowing its name from Aldous Huxley's dystopian novel "Brave New World" said Thursday its Internet pharmacy opens for business in mid-January.
For consumers, it's all good news. Better and more service as companies put more, cheaper services online. Retailers are offering special low-price offers, and travel services often award free bonus miles for online orders. Companies will be leaping over each other to offer the best service they can because the stakes are so high.
Forrester Research Inc. projects revenues from Internet shopping at $108 billion by the year 2003, which it said would account for 6 percent of domestic consumer spending.
The heavy ordering over the Christmas season made those totals seem attainable. As fast as the Internet's growth had been thus far, Web site tracker Media Metrix said the e-commerce results were even more dramatic, growing "four to five times" as fast as the Internet as a whole. Equally encouraging for Web backers, e-commerce brought in older consumers and more women, helping wrest control of the medium from the young males who dominated in the past, said Zona Research.
"The bottom line is that this holiday season was the watershed event for online shopping and the Internet," said Bob Ivins of Web site tracker Media Metrix. Good news, for those who get it right.
13:56 01-08-99
<<
Did we all get it right? |
