This was the year cyberspace retailers came down to earth — either falling hard, or landing deals with their brick-and-mortar counterparts. As dot-coms bombed, savvy survivors adjusted to a new reality: The Internet is just one of three important sales channels, the other two being stores and catalogs.
But for retailing giants with scores of stores and well-established back-office operations, Internet sales offered a rainbow of hope with double- digit growth. And for e-tailers, the thinning ranks of their pure-play peers offered a chance to enlarge their piece of the market pie and their profits, even though profits still prove elusive for most.
For many of the most successful sites, the goal is to convert more browsers into buyers. While the idea of attracting passes from the masses might still work for a few sites, the increasing success of catalogers points to a more targeted approach. Lands End, for example, recently converted 8.8 percent of its online visitors into buyers, with a $96 average purchase, according to marketing research firm comScore Networks.
"We feel this provides an enormous opportunity to convert new customers and improve our overall profitability via the online channel," says Michael Sherman, president of Fingerhut.
At Amazon.com, a new approach featured increased brochure mailings and partnerships with Circuit City Stores and Target. Amazon expects to be profitable by years end, according to founder Jeff Bezos. The terrorist strikes obviously make that promise harder to keep, but some theorists believe that the fear of air travel could translate to more online purchases.
At gift site RedEnvelope, however, CEO Martin McClanan is sticking to his prediction of profitability, even after the terrorist strike. "Were seeing traffic numbers on the Web site going down, but the conversion rate is higher," McClanan says. "People are shopping with more purpose." Like other successful sites, RedEnvelope markets through a catalog that is closely tied to its Web site.
At Office Depot — the most successful converter among office suppliers, with a 9.5 percent rate in August — the lines dividing catalog, in-store and online sales have virtually been erased, says Monica Luechtefeld, Office Depots executive vice president of e-commerce.
"Weve found that if you take a catalog shopper and make them a Web shopper, their purchases go up 30 percent," Luechtefeld says. "We quit saying the customer moves from one channel to another. We absolutely believe that every customer is a multichannel shopper."