One Year Ago: Report: Pure-Plays Still E-Commerce Champs


Originally published on November 2, 2000 and brought to you today as a time capsule.


Traditional retailers Wal-Mart Corp. (NYSE: WMT) and Target (NYSE: TGT), which have beefed up their Web sites ahead of the holiday shopping season, are still not likely to pose a “significant threat” to pure-play e-tailers this year, according to a report issued Thursday by Goldman Sachs analyst Anthony Noto.

Wal-Mart, Target and Kmart Corp.’s BlueLight.com have all improved their sites during October overhauls, Noto wrote in the report. Noto based the study on online store checks and pricing analyses of leading e-tailers.

Despite these efforts, Noto says that the online merchandising techniques of traditional stores are generally not as sophisticated as Internet pure plays — product assortment tends to be lighter, and, contrary to common belief, they do not seem to have a greater offering of hot products.

While e-tailers may not have much to fear this year, the dynamics may change in the future, Noto said, noting that “the competitive impact will heighten” over time.

Fall Frenzy

E-tailers began their own promotional pushes this fall in an attempt to garner business ahead of the holiday rush and avoid a repeat of last year’s glitches, which included late or delayed deliveries and customer-service problems.

Those issues notwithstanding, analysts expect a robust season for online commerce. International Data Corp. predicts shoppers will spend US$12 billion online this year. Meanwhile, industry watchers at Gartner have estimated that Net sales will reach as high as $19.5 billion, an 85 percent increase over last year.

Amazon Stretch

In the study, Amazon.com (Nasdaq: AMZN) promoted its newer categories, placing “heavy emphasis” on toys and consumer electronics. The e-tail giant used a combination of placement, free shipping and price discounts to lure customers, Noto said.

During October, Amazon added a camera and photo store, a university books category, and a corporate gifts section to its already extensive selection of products. Many new items listed on the company’s site in October were available for shipping within two weeks, according to Noto.

, promoted itself by a free co-branded Internet service with Yahoo!, Inc. (Nasdaq: YHOO) and a closer alliance with brick-and-mortar affiliate Barnes & Noble Corp. (NYSE: BKS) that includes allowing customers to return merchandise purchased online to the chain’s retail stores.

Yet Noto finds Barnesandnoble.com to be “less promotional” than other sites, with discounts generally smaller than those found at Amazon.com or Buy.com (Nasdaq: BUYX). The customer return program, for example, provides only exchanges or merchandise credit.

eToys, eBay Gear Up

Even those e-tailers that are less dependent on seasonal sales are ramping up for the holidays. Online toy seller eToys, Inc. (Nasdaq: ETYS) launched a number of new features last month, including a hobby shop, a party store and a holiday boutique.

Online auctioneer eBay, Inc. (Nasdaq: EBAY) is also making changes. “We noticed more banner ads and information about fixed-price testing that is to begin in November,” said Noto. Some auctions, he noted, touted a “buy-it-now” feature, which is “more conducive to gifting” than eBay’s traditional auction.

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