E-tailers' various woes may sour some shoppers

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It's virtually the night before Christmas for online retailers, and some analysts are beginning to think the millions spent on marketing e-commerce are going up the chimney in smoke.

"Internet sites are pouring dollars into offline advertising to drive customers to sites -- it's working for some sectors and it's folly for others," said John Garrison, analyst with Xceed Intelligence, a New York marketing researcher.


With numerous e-commerce sites loading slowly, shutting down at crucial times and -- perhaps most importantly -- offering customers limited selection and spotty customer service, e-commerce may have a difficult time luring consumers back in the future, experts indicated.

"All online marketers felt enormous pressure to make their voices heard," said Evie Black Dykema, analyst in consumer e-commerce at Forrester Research. "They bet the business on the holidays and put their investment in the front end and put hardly any on the back end."

Particularly disappointing was the performance of traditional retailers expected to turn 1999 into a click-and-brick holiday by synergizing the best of the cyber and real worlds.

"Bricks-and-mortar retailers have not done a very credible job this holiday season," said Kurt Barnard, president, Barnard's Retail Trend Report.

Even though the final figures aren't yet tallied and last-minute sales aren't yet accounted for, pure-play e-commerce companies such as Amazon.com and eToys appear headed toward proving themselves the best Santas of the cyber-world, experts concluded.

Elaine Chen, senior analyst at Xceed, said Toys "R" Us' online site (toysrus.com) sent out a catalog and pushed discounts and free shipping, then was unable to handle traffic.

"Are people going to try [a site] a second time if they are disappointed the first time?" asked Ms. Chen.


Wal-Mart Stores also added a flat note to the holiday season by putting off the launch of its revamped Web site until Jan. 1. It also won't help that Wal-Mart gave up early on trying to play Santa; it notified Web customers Dec. 9 it couldn't guarantee on-time delivery, encouraging customers to shop at its stores.

Even The Gap, once online retailing's poster child because of its site and backed with an outdoor and transit ad campaign driving gift seekers online, saw average daily visitors drop 20% from the week ended Dec. 5 to the one ended Dec. 12, according to Media Metrix.

Overall, however, holiday cyber-traffic was expected to be up 27% this season, according to Net-Ratings. And others anticipate cyber-holiday sales will range from $4 billion to $12 billion of the $195 billion consumers are expected to spend on holiday gifts this season.

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