Internet holiday sales failures carry hefty price tag

Online holiday sales are due to hit $US6 billion this year, with some 10 million first-time cybershoppers clicking Web-based "buy" buttons, according to new research from New York-based Jupiter Communications.

Not surprisingly, online retailers are licking their chops. But there's also a catch, Jupiter warned: first-time online shoppers who are disappointed by Web site outages, order fulfillment snafus and other customer service hassles probably won't be back.

In other words, first impressions are critical.

"The impact of the shopping season will go well beyond the $6 billion, which pales in comparison to the $78 billion likely to be generated (in online sales) in 2003. That's really got to be the focus of retailers in this fourth quarter,'' said Jupiter analyst Ken Cassar. In 1998, holiday online shopping totalled $3.1 billion.

Web site failures so far haven't permanently alienated shoppers. But Jupiter believes that's because early online buyers as a group are more technologically savvy. On the horizon are the great technologically unwashed masses, who have little, if any, understanding and tolerance of bogged-down servers or Web sites that list out-of-stock products on their virtual store shelves.

Meanwhile, leading retail sites can expect their number of daily transactions to quadruple from 15,000 during the January to October period to 58,000 a day during the holiday shopping season.

That's one reason Jupiter is cautioning retailers that haven't already bolstered server capacity, fulfillment capabilities and customer service to come up with damage-control plans now. For example, they may want to consider coming up with rebates or coupons for dissatisfied customers whose calls are bound to flood retailers' call centres after the holidays.

These merchants "should think about how to fail gracefully vs failing catastrophically'', said David Schatsky, a Jupiter analyst who specialises in e-commerce infrastructure issues.

As for bolstering Web site capacities now, "it's really too late to implement any major technology changes to support rising volumes',' he said. "The bottom line is: failures will occur."

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