E-Tailers Finesse Sites As Apparel Profits Hold Promise - online shopping increasing - Statistical Data Included

DSN Retailing Today, Dec 11, 2000 by Emily Scardino

It's no secret that whatever the season, Wall Street's favorite color is black, and not the color (rhymes with "dead") that it's seen in many dot.com ledgers the past year. Investors who threw capital around in the flush of first love with e-commerce have also had second thoughts; it's virtual-reality time. Now, profits are expected, and everyone from retailers to business-to-business portals has been busy custom-tailoring their sites for profitability.

Despite the much-publicized Internet failures, online apparel spending has in fact risen, from $0.4 billion to $1.4 billion between 1998 and 2000, and will reach $2.4 billion by the end of 2001, according to Jupiter Research, a Jupiter Media Metrix company.

Sales still pale compared with the more than $180 billion the apparel business raked in this year, but the growth of e-commerce as a distribution channel is alluring. Salomon Smith Barney projects channel distribution to shift toward the Internet during this decade, from one percent to 13 percent of sales, while stores and catalogs basically remain flat. Last year, Wal-Mart, Kmart and Target did less than 0.5 percent of their total U.S. store sales on line, estimates Barrett LaMothe Ladd, senior retail analyst at Gomez, an Internet analysis firm. For 2000, she predicts this number will rise to about one percent.

According to data gathered for the International Mass Retail Association (IMRA) by MarketFacts, 16 percent of Americans will purchase gifts on line this holiday. Last year only 12 percent said that they would. Of those surveyed this year, 18 percent are planning to buy apparel. Clothing remains the dominant gift choice in the overall realm of retail. According to the study, some 56 percent plan to buy apparel on or off line this season.

Meanwhile, retailers continue to finesse their on-line sites not only for the eventual profits, but, in the case of clicks-and-mortar operations, for brand extension. Kmart, for instance, is featuring value coupons for holiday shopping on BlueLight.com in its print circulars.

As might be expected, selling apparel digitally relies in large part on fashion. One of the hottest apparel items this holiday both on and off line is leather. Many companies are positioning leather gifts, including jackets, pants and skirts, prominently on their sites where they've ported electronic "shops" to help simulate real-world shopping online. The Gap and other e-tailers have concept shops within their sites, letting customers zero in on a category, like leather, to streamline gift shopping. Wal-Mart's on-line shops, with themes like "gifts for guys," categorize merchandise simply--an important feature on the revamped site that features 500,000 skus.

Good prices and great merchandise mean nothing, though, if a customer isn't satisfied. To this end, e-tailers across the board have made major changes to their sites, hoping to avoid the ghost of holiday past--fulfillment woes. They want to make sure consumer expectations are met, and if they can't be met, they're letting customers know up front.

"Our protocol includes guaranteed delivery dates' for out-of-stock items, explains Dave Karraker, director of corporate communications at BlueLight.com, Kmart's online site. This way, consumers can decide if a gift will be delivered when they need it. "If adults have to wait an extra week for a shirt, it sometimes isn't a big deal, but if 6-year-old Jimmy's toy doesn't arrive come holiday, it's very bad."

Satisfying customers with timely delivery has, as most Internet players know, been quite a task for traditional bricks-and-mortar retailers. Some that are now on line are partnering with outside fulfillment companies to accomplish the task. Kmart's BlueLight.com, for example, delivers via SubmitOrder.com's automated warehouse. SubmitOrder.com exists specifically to help retailers establish Web-based sales channels. It has more than one million square feet of facilities equipped with hi-tech conveyor systems the company says can sort and ship same day more than 99 percent of orders they receive. Partnering with specialists like SubmitOrder.com spares retailers the massive expense of building new facilities from scratch.

Other companies are taking a different path. They are avoiding the problem of distributing inventory altogether, by letting someone else do it. Fashionmali.com follows this model; it's a virtual mall, with links to on-line storefronts for The Gap and other outlets. Ames' site also works as a portal, with links to vendors' sites, including Silhouettes for plus-size clothing. This model generates dollars from transactions, letting partners take care of inventory and delivery. AmesPlace.com started out with this construct, but now also features its own inventory, a gift selection that doesn't overlap with in-store skus, and is using a fulfillment company, shipeconimerce.com, notes Norm Veit, chief information officer, AmesPlace.com. However, he adds that "it's ideal for vendors to warehouse and ship merchandise from their own facilities where it's available."