Nov 25

A Blue E-Christmas
Sun Review November 25, 2000

Last year's online Christmas shopping frenzy has yet to repeat itself. A recent study of the top e-commerce sites in 10 categories shows that online traffic has yet to show even mild growth, according to Nielsen/NetRatings (www.nielsen-netratings.com ), a joint effort by media research firm Nielsen Media Research Inc. and Web measurement service NetRatings Inc.

Some might call it dot-carnage. Indeed, today's market has become less friendly to dot-com companies that gobble up funds but fail to turn a profit. The e-marketplace has taken a turn for the worse as e-tailer after e-tailer has shut its virtual doors. Webmergers (www.webmergers.com), a San Francisco company which tracks mergers, acquisitions, and now shutdowns in the Internet space, said that of the 130 dot-coms that have shut down since January, 21 closed their doors in the first half of November alone. That compares with 22 that closed during all of October.

If you follow the markets regularly, you've seen many analysts downgrading stock values, and online retailers warning that their fourth-quarter sales forecasts may not meet predictions.

Just in the past week, three online retailers, who last year were considered the cat's meow, shut down operations. Pets.com Inc. a seller of pet supplies, MotherNature.com Inc., which sold vitamins and health products, and closely held Furniture.com Inc. all went belly up, leaving what few customers they had hanging out in the cold.

"Last year was the first consumer holiday shopping season on the Web where many e-commerce sites skyrocketed in traffic as they established themselves online for the first time," said Sean Kaldor, vice president of eCommerce at NetRatings. "As we've seen, many were weeded out," he said. "This year proves to be a tougher environment with an Internet matured."

Adding to the dot-com shakeout, the overall retail environment has softened somewhat in the past few months. Consumers, though enjoying high employment, are struggling with high debt levels, rising energy prices and sinking stock portfolios. Shoppers are likely to be more selective as to what they buy and where they spend their money.

But despite the shoddy customer service performance and unreliable shipping methods that some e-tailers employed last year, 97 percent of the shoppers plan to be back this year, according to a study for AT&T, and they will be joined by many new customers - 14 million, for a total of 55 million, if Nielsen//NetRatings is right. So the season should still be a big success for the industry, in revenue as well as operational terms, forecasters say, although the revenue gains won't be anything like last year's 200 percent or 300 percent. "One thing e-tailers have to accept is, once the industry reaches a certain size, it can't keep tripling every year," says Sean Kaldor.

If you plan on shopping online, keep in mind the following tips:

1. Always use your credit card to pay online - do not send checks or money orders.

2. Use the latest version of your browser, armoured with 128 bit encryption

3. Look for the locked lock or unbroken key symbol on your browser to ensure your credit card information is transmitted securely.

4. Check the company's privacy statement, return policies, guarantees and shipping rates.