Web gurus give strategic advice at DSN Internet conference

Discount Store News, Feb 23, 1998

NEWARK, N.J. -- Selling on the Internet could amount to anything from a $6 billion to a $60 billion business by the year 2000, but retailers shouldn't jump into the game expecting a quick return on investment.

What retailers with Web sites can count on is receiving thousands of e-mail messages weekly. Such e-mail should be regarded as a valuable tool -- rather than an inconvenience -- that will help a retailer develop personalized relationships with customers, turning them into loyal shoppers.

Those were among the key points presented during the recent Retailing on the Internet conference sponsored here by Discount Store News. Others points included:

* Web sites should be designed to ensure that buying is easy and convenient and that users have quick access to both e-mail and a tool-free 800 number.

* "Location, location, location," is vital on the Internet, as in making sure a Web site is promoted on and linked with other prominent sites such as America Online.

Retail speakers included: Marisha Geraghty, divisional vp of electronic commerce, Kmart; Judy Neuman, divisional vp of Interactive Media, Eddie Bauer; Susan Boster, director of Marketing; BarnesandNoble.com; Jill Markus, vp of store development, CyberShop.com; Dan Marovitz, Internet manager, Gateway 2000; Susan Finkelstein, Macy's West; Michael Crotty, director of business development for N2K, a music on-line retailer that recently went public; Cliff Sharples, ceo and president, Garden Escape; and Daniel Nissan, president and ceo, NetGrocer.

Speakers from the vender sector, such as Kathleen Hopkins, manager of consumer services, Little Tikes, spoke of the delicate balancing act the toy maker is engaged in: selling toys on the Internet without offending its major customers, such as Toys "R" Us, Wal-Mart, Kmart and Target.

Little Tikes' Web site offers only one-third of its line, the hard-to-find toys, and tries to steer consumers to nearby toy stores.

From American Greetings, director of electronic marketing Josef Mandelbaum defended his company's on-line sales of e-mail and hard copy greetings as driving in-store card business for retailers.

The conference also included panels and presentations from those who offer consulting services and technology to Internet retailers.

Those included: David Fry, director of Multimedia, whose firm designs Web sites, including that of Eddie Bauer; Larry Hanback, director of market development and acceptance. VISA; Mike Edelhart, president, Trird Age Media; and Paul Cimino, ceo, Snickelways.

Also, Sonny Spearman, director of channel marketing, iCat; Elaine Robin, president, e.k. rubin; Lauren Freedman, president, the e-tailing group; Marie Beninati, partner, CSC Consulting; Scott Heiferman, president, i-traffic; William Spaide, senior partner, Spaide Kuipers & Co.; and Jackie Bivins, president, Kaleidescope Communications.

Kmart plans to begin e-commerce sometime during the first half of the year, Geraghty said. While declining to describe what types of goods Kmart will begin selling on line, they won't include the popular Martha Stewart line. "She has her own Web site," Geraghty said.

Unlike Wal-Mart, which takes a broad approach to e-commerce, Kmart will begin with just a few categories and build from there, said Geraghty, who was previously head of Internet sales for JCPenney. that approach follows the model used by Sear, which began e-commerce with a narrow focus of Craftsman tools. Because Kmart has no experience with catalog sales, as do JCPenney and Sears, Geraghty said her focus has been on building back-end support systems.

Internet consultants and technology providers are constantly pitching their goods and services, Neuman said. To protect the bottom line, "I say no more than I say yes."

Eddie Bauer is one of the few Internet retailers making money, Neuman said. But to be profitable in 1997, she had to chop $300,000 out of her ad budget to protect the bottom line.

More typical is Garden Escape, a lawn and garden startup in 1996. funded with $8.2 million in venture capital, Garden Escape doesn't expect to turn a profit for at least two years, ceo Sharples said.

Seconding that notion, Finkelstein, of Macy's, said, "If you expect a quick ROI, you don't belong here."

BarnesandNoble.com expects to lose money next year on sales of $100 million, Boster said. Part of the reason: a whopping $40 million fee paid to AOL to be its exclusive book retailer for three years.

But such affiliate fees, ranging from 5% to 7% of sales, are essential to get good real estate location on other Web sites, including Wired magazine and Starbuck's Coffee, Boster said.

BarnesandNoble.com has formed 1,500 affiliate partnerships that provide promotion and quick links to its Web site, boster said.

Much of the talk centered on criticism of existing retailer Web sites. The most common complaints: Sites are too cluttered and disorganized; many sites make it difficult for users to find e-mail links or toll-free customer service numbers, and most sites are just plain boring.