The Future Is Here - marketing and electronic commerce

Brandweek, Oct 18, 1999 by Sloane Lucas

Marketers that prosper tomorrow must master the basics of e-tailing today

Forget battling department stores at Christmas, drugstores on your lunch hour and bookstores on your way to catch a plane. If you aren't buying furniture at midnight in your pajamas or pretending to run spreadsheets at work while you're really shopping for cheap plane tickets, you're nothing but a Luddite with a bad parking space at the mall.

The ease and ubiquity of online shopping and it's drop-dead trendiness ensure that the consumer e-tail space is poised for exceptional post 2000 growth.

According to Cambridge, Mass.-based Forrester Research, 1999 consumer e-commerce spending--excluding financial services and auctions--will surpass $17 billion. By 2003, that number will reach $125 billion.

But as often happens with the Internet, the enthusiasm generated by the promise of future technology overshadows today's reality. Many e-commerce players haven't yet achieved the basics of customer retention, return policies and database management--the of on- and-offline retail success. Yet they focus on that rosy time when advances in technology, including broadband, will make the dreams of consumers and e-tailers come true.

Indeed, the siren song of broadband promises always-on Internet connections, faster transactions and more elaborate Web sites. Virtual stores will be able to display their wares with much more elaborate eye-candy--from 3-D imaging to full audio--and video-enhanced shopping experiences, which will further distance online shopping from traditional catalogs. Shopping that is more engaging immediately translates into increased sales, according to industry experts.

"The informed online consumer often buys more products--and more expensive ones--on the basis of well-presented information about the product," says Bob Smith, executive director of Shop.org, a not-for-profit trade association for online retailers. "More retailers are recognizing this and are adding content and features that consumers just can't find at brick-and-mortar stores or in catalogs."

Of course, marketers dream of the day when a consumer watching a TV show sees a favorite character in the latest fashions, reaches for the remote, clicks on the outfit, puts the remote down and reaches for a pint of ice cream; meanwhile, a clothing manufacturer wraps up the package and fires it off to her home. The scenario would be complete if the consumer was so pleased with the experience that she was ready to do it all over again the next night.

QVC 2.0: Aim for instant gratification on both sides of the equation.

It's a totem of how fiercely the industry craves broadband that even those who shy away from predictions can't seem to stop themselves from forecasting, anyway.

"I think it's somewhat futile [to look ahead] more than three years because we don't know what effect broadband is going to have online," says Chuck Davis, president of e-commerce for Disney's Buena Vista Internet Group, North Hollywood, Calif. Yet he admits the TV approach that broadband brings is "going to be very powerful."

Observers caution that the industry is in danger of getting ahead of itself; that e-commerce players better learn to swim in the shallow end before diving into the deep end.

"It's easy to get caught up in a discussion of cool new technologies when talking about 'the next big thing' in online commerce," says Fiona Swerdlow, practice director for digital commerce strategies at New York-based Internet analyst firm Jupiter Communications. "However, online commerce players have to get the basics sorted out first--customer service, fulfillment, customer retention, distribution--for online commerce to really take off. It's shocking that these basics aren't something that online retailers have already nailed."

As any veteran online shopper will tell you, it's still pathetically easy to find online stores that don't deliver merchandise when they say they will, or provide a simple recourse when a buyer wants to return a purchase.

The challenges will be constant for sites, says Farhad Mohit, president and CEO of Bizrate.com, Los Angeles, which conducts customer surveys to measure e-commerce satisfaction. "Consumers will demand the best from a vendor each time they transact" he predicts. "If they don't receive this, they will switch to another vendor for the next purchase. In essence, the vendor will have to earn a customer's business on each and every transaction."

All together now: The competition is only one click away.

"When you are on the Web browsing, there's a marginal cost of going to the next store and checking them out," says Peter Neupert, president and CEO of drugstore.com, Bellevue, Wash., by way of explaining what has become an industry mantra. After all, it takes time to travel to traditional stores, so customers typically don't leave without making a purchase.

The customer satisfaction solutions for sites such as drugstore.com (whose largest investor is Amazon.com) hardly resemble the scenario of letting a consumer casually purchase Gwyneth Paltrow's Oscar gown simply by pushing a button. Drugstore.com's offerings include allowing people to order prescriptions online for same-day pickup at any Rite Aid store.