Fewer dot-coms will throw around much smaller amounts of other people's money on silly TV, radio or print ads. There will be much less ad spending and much more counting of boring things like cost-per-lead and cost-per-conversion. Savvy players will try to integrate on- and offline messaging to get more pulling power for fewer dollars spent.
Ironically, you'll see more proven, predictable promotions as a myriad of new e-tail sites launch. And, even before the first penny is spent, you can count on three times the traffic of last year.
If you are handicapping Holiday 2000, keep your eye on these inflection points.
WHO'LL BE ONLINE NEXT?
Everyone in the pool. Well known, important and luxury brands will flood the Web in time for Christmas. They will bring with them strong brand names, an array of new site functionalities but modest marketing budgets. Most will seek to mine their existing customer bases first. Many will seek to interact directly with customers for the first time or own customer relationships for the first time. They will meet with mixed results.
A quick scan of "Coming Soon" pages suggests Saks Fifth Avenue, Sisley, DKNY, Ann Taylor, Liz Claiborne, Barneys, Prada, Giorgio Armani, Royal Elastic and Tods will debut between Labor Day and Halloween, the last acceptable moment to launch and still cash in on this holiday season.
Brand experience rules. How you feel when shopping on a site will dictate how often you return and how many people you tell about it. Easy, intuitive navigation; simple checkout procedures; clear, clean graphics and photos will yield best results. No amount of points, discounts or prestige can overcome slow downloads, cumbersome or repetitive forms or hard to access merchandise.
Research indicates buying is a quick action game. Sixty percent of conversions from clicks to sales happen in 30 minutes or less. If you don't engage surfers quickly, they do not become customers.
Everyone fantasizes about selling gifts. Nimble functionality will win.
Gift-wrapping and cards require considerable fulfillment expertise. The capability to place one order and ship to multiple addresses is not built into most e-commerce engines, nor is the capability to buy multiple items and charge them to multiple credit cards. The capability to respond to the full range of retail needs and idiosyncrasies is very costly, but will separate the winners from the also-rans.
Similarly, return processing will be critical. Reputations will be made or lost on how this mundane task is handled.
WATCH THOSE MARGINS
Discounts will be limited. Margin pressure on merchants will be great.
Retailers have taken significant hits to stock prices for excessive markdowns and close-outs at mid-year so the appetite for great deals online will be slim. Add the fact that free shipping and handling (a variable cost that increases with success) is expected and demanded by huge numbers of online customers. Look for tests of many "non-offer offers" giving customers early or exclusive access to select merchandise or promising discounts linked to increasing sales volume.
* Delivery guarantees will come under competitive and regulatory scrutiny.
In the wake of Federal Trade Commission fines against companies such as Toysrus.com, the ability to deliver in time for Christmas will be highly touted -- and highly suspect. Look for prudent merchants to sidestep Christmas delivery promises after Dec. 15. The fact that Christmas falls on Monday this year will give retailers the weekend as a hedge.
Contact strategies will kick in. Direct mail in tandem with e-mail will be the dominant media.
Banners, interstitials and rich media ads will be tried but will not pay out. Everyone will slap URLs on print ads, TV spots, bills, coupons, store signage and all kinds of collateral to leverage already committed dollars and reduce incremental spending. Co-op offers, such as American Express Co.'s free shipping with Gold Card use, will add sales for the cost of processing.
Ad spending will drop by at least 25% over last year, probably closer to 40%. TV and radio stations that sold out in August last year will take the hit.
Successful merchants will devise contact strategies to mitigate the flurry of HTML e-mails that the Gap, Red Envelope, Nordstrom and Brooks Brothers have unleashed on their house lists. Look for "quick shopping" tactics to link catalogs, e-mails and print ads for easy purchasing.
List strategy will separate winners from losers. Finding most-likely-to-convert customers without cannibalizing the existing business is the Holy Grail.
HOLIDAY VS. POLITICS
This holiday selling season will be much more exciting than the Gore vs. Bush campaign. We have ringside seats to witness a variety of classic retailers morph into direct merchants with varying degrees of success.
With new luxury merchants online, we will get a read on the kind and value of merchandise most likely to be sold on the Web. And we will be treated to a battle of the brands, minus gobs of VC money, where merchandise strategy, customer service and attention to detail are the critical variables.
Mr. Flamberg is senior VP-managing director at Digitas, New York (email@example.com). His opinions are his own.