E-tailers dream of a green Christmas

'Tis the season to be jolly, and it seems the online retailers that have emerged from the ashes of the dot-com crash are looking forward to a bumper festive period this Christmas.

For the majority, the focus for 2002 has been on extending their product ranges and improving their service offerings and delivery times, although several retailers have also come up with innovative schemes for promoting their sites.

One issue where online retailers are unanimous in their opinions is that they have all had to learn from the mistakes of the past, and they have had to learn quickly.

"Our company originally started out as a project run by first-year students, back in February 2000, and it was thanks to the lecturers` encouragement that we have since taken it further as a business," says Benje Du Toit, marketing manager for NoGapGifts.com.

"As a young company in what was essentially a new field, there was always going to be an element of naivety, but we certainly learnt our lessons swiftly, which is why we are still around, when so many others have fallen by the wayside."

Wine retailer Cybercellar will have been in operation for four years in December, which is considered "a lifetime in the online environment" by the company`s business-to-consumer manager, Louis Ferreira.

"Perhaps the best lesson we`ve learnt is that - although we are purely an online shop, without any bricks-and-mortar capacity - a lot of our regular customers prefer to place their orders offline. That is, they e-mail us their order, as it is generally less hassle for them than logging on to the Web site."

Hein Pretorius, CEO of Kalahari.net, says the most important lesson for an e-tailer to learn is that you must keep your promises, or if you cannot for some reason, you must communicate with the client as soon as possible.

"It is up to you to be honest with the client and to take responsibility for your actions - if you have promised delivery by a certain date, you need to take responsibility for that delivery getting there on time."

Woolworths` online operation - InTheBag.co.za - was started in February 2000, although Woolworths only started to run the site in June 2001 after it acquired the e-tailer.

"One of the first things we had to do was change our processes. Our offering was working off a centralised distribution system, but we decided that in-store picking would be a better way of doing things," states Anthony Dean, brand manager for InTheBag.

"Last year, our Christmas shopping facilities were limited, in that there was no way to personalise gifts, and the recipient was presented upon delivery, so this was not ideal at all.

We learnt our lessons swiftly, which is why we are still around, when so many others have fallen by the wayside.

Benje Du Toit, marketing manager, NoGapGifts.com

"This season we have designed a new 'Gifting Service` that allows the user to flag an item as a gift and place a personalised message with it. Also, the recipient only sees the delivery note, not the receipt, so they remain blissfully unaware of what it cost."

Roan Hammond, MD of Streetcar.com, says his company was aiming at a niche target market when it began, namely South African expatriates who wished to send gifts to loved ones back home.

"While this has proved to be a good market to target, it didn`t take us long to learn that it is not a big enough market for us to survive on that alone.

"We have since started a corporate incentive scheme, whereby organisations can use our products or gift vouchers as incentives for staff, as well as purchasing their annual corporate gifts at this time of year."

Streetcar.com presently does around 40% of its business on the expat side, with the remaining 60% taken up by the corporate incentives, says Hammond.

A spokesman for wholesale giant, Makro, says the company`s online division is anticipating an increase of around 45% over last year`s figures. "This, of course is a very conservative estimate," he says.

"While nearly 80% of our sales occur in the major metropolitan areas, sales in the more outlying areas are definitely catching on, and with an average basket sale of over R2 000 per customer, this can only be good news."

He says Makro`s Web site was well designed from the outset, and - although it has been tweaked here and there - "it has been proven to work, so we`d be foolish to change it".

"The biggest improvement we have made over last year is that we have grown our online product range. We have also improved our delivery times, which now take on average just three to four working days to reach the customer."

Cybercellar`s Ferreira says the e-tailer has also grown its product range - introducing a range of wine accessories, such as corkscrews and ice buckets - and has also introduced a gift voucher option for clients.

"We have had to revise the cut off dates for pre-Christmas deliveries, as we discovered last year that there could be problems with getting a delivery through on time with a cut-off date of 20 December, so this year the cut-off date is 10 December.

"Although our delivery periods are generally between three and five working days locally and three to seven days internationally, with the revised cut-off date, customers can be assured that their delivery will reach them before Christmas Day."

Fiona Phillips, Cybercellar`s CEO, says the company is already 250% up on last year`s turnover, although this figure is slightly artificial, owing to the massive drop in sales following the 11 September tragedy.

"At this point, we are anticipating growth in the region of 200% for the festive season. This is due, in part, to the huge increase in our exports - we are working on an export ratio of 80:20 at present, compared to a 60:40 ratio for the same period last year."

Kalahari.net has introduced a personalisation function, whereby customers can create and customise their own shop, choosing their four favourite products. The site has also brought in a statistics function, so users can look up the best-selling products in any given category.

Based on the numbers already visiting our site, it looks like it`s going to be a really merry Christmas this year.

Hein Pretorius, CEO, Kalahari.net

"We are predicting a 100% growth from last year, and based on the numbers already visiting our site, we are bound to achieve this. It`s looking like it`s going to be a really merry Christmas this year," reckons Pretorius.

To dispel many of the common fears and myths surrounding online shopping, NoGapGifts.com is planning a celebrity shopping-spree, designed to show the public they have nothing to fear when it comes to this new method of transacting.

"However, for those people who are still nervous about transacting online, we have introduced a fax facility and a direct deposit facility, so they don`t have to worry about using their credit cards over the Internet," says Du Toit.

"In terms of growth, we are already sitting on the same quantity of orders as we processed in 2001 - and we haven`t even entered what is considered to be the traditional consumer festive season yet."

Take2.co.za is a newcomer to the field, having only been in operation for three months, but it has identified a niche market and aims to exploit the gap in the market.

"Our products are predominantly computer games and DVDs, so we are focusing on building relationships with other sites - particularly those sites that offer online gaming - and we are running competitions on these sites to improve our brand awareness with the market," says Neil Smith, marketing consultant for take2.

"We have also signed up a number of affiliate partners - MSN South Africa and World Online, to name just two - and we are also receiving a lot of exposure on their sites."

World Wide Worx, an Internet research house headed by Arthur Goldstuck, expects online retailers to show an overall growth in sales of between 50% and 75% on last year.

"The festive season is always key to a retailer`s overall performance - whether it`s a traditional business or an online shop - as about 25% of annual sales typically occur in the period between mid-November and Christmas Day," says Goldstuck.

He says that even though certain retailers are experiencing spectacular growth, the failure rate in this arena is also very high.

In a survey done last year by World Wide Worx, it was shown that some 40% of online retailers had gone out of business, although those that remained showed dramatic growth.

Goldstuck says one of the surprise success stories in the online market was that of lingerie retailers. Purely on number of sites, this was the single fastest growing category in the online environment.

Despite the sector`s growth rate, online shopping still represents less than 0.1% of the country`s R188 billion retail market.

Arthur Goldstuck, MD, World Wide Worx

"Cumulative sales volume for this year may well exceed R270 million - up considerably from last year`s R162 million."

"However, despite the sector`s growth rate, it still represents less than 0.1% of the country`s R188 billion retail market."

The top five online retailers for 2001 were Pick 'n Pay Online, Kalahari.net, DigitalMall, Netflorist and Megashopper.

Just as shopping centres offer customers a wide variety of stores under one roof in the bricks-and-mortar world, so online retailers have found that associating themselves with a capable technology partner can really benefit both parties.

"We provide a complete solution for online retailers - from the development of the online business and business system integration to fulfilment and relationship marketing - and they partner with us in a model based on shared risk and success," says Yaron Assabi, founder and CEO of DigitalMall.com.

"Our market share has most definitely grown. We have taken several new clients on board, including the Relyant group, which recently launched the Appliance City, Sleep City and Furniture City stores."

Assabi says DigitalMall has been operating for four years, and during that time, it has been a constant learning process.

"An example of this is that we have discovered - depending on the retailer and products involved - that Christmas orders need to close earlier than usual, in order to ensure that we can fulfil our delivery promises."

He says a retailer teaming up with a technology partner benefits from a lower barrier to entry as they do not make the investment in technology, people or processes and can benefit from features such as live help via the call centre, multiple payment gateways, gift voucher and direct deposit options.

"When one thinks that much of the general public is still wary about purchasing over the Net, these varied options as well as the ability to place orders over the phone increase browse to buy ratios.

"Judging by the way the year has gone so far, I reckon that we will see growth of at least 100%, possibly more - although it`s difficult to tell, since South Africans tend to do their festive shopping quite late, unlike Australia, for example, where the majority have already completed their Christmas shopping."

The ability to integrate with all the various banks and payment mechanisms is crucial if a technology partner wishes to attract the top online retailers.

Anton Gaylard, GM, M-Web ASP Division

The ability to integrate with all the various banks and payment mechanisms is crucial if a technology partner wishes to attract the top online retailers, says Anton Gaylard, GM for M-Web`s ASP Division.

"The beauty of M-Web Shopping is that we maintain the relationship with the banks, so our clients not only save on IT and maintenance costs, but they are then also free to concentrate on building better relationships with their customers."

He says M-Web has been in the field since 1999. "We now have nearly 200 merchants, including some of the largest online retailers around, such as Pick 'n Pay Online, NetFlorist, Makro and Look & Listen, and thanks to some of these players coming on board, we have seen over 300% growth recently," states Gaylard.

"I think the single biggest factor in helping to grow online retail has been the advent of Internet banking. People are inclined to trust their banks, so when the banks are associated with a particular portal, the public are more likely to use it."

While it seems that the majority of online retailers who survived the dot-com crash have become more efficient at what they do, a spokesman for one of them says this is purely because they have now been doing it for quite a long time.

"It`s a fun and exciting industry to be in, although I think in the early days, there were a lot of people who were in it just because they thought it would be easy money," says Du Toit.

"However, since the dot-com crash, those people have been weeded out and the ones that remain are passionate and pioneering types, who have learnt a great deal in a short space of time."

InTheBag`s Dean believes the next step is to add value to existing services, so that clients want to come back to the site.

Many people are looking for ways to avoid the Christmas shopping crush - now the answer is only a click of a mouse away.

Neil Smith, marketing consultant, Take2.co.za.

"InTheBag provides added-value seasonal information on its Web site, so that users can not only shop, but also get tips on keeping the kids entertained during the holidays, or pick up some festive recipes. It makes the site more valuable to our customers."

Hammond agrees, saying that streetcar.com is using incentives to attract customers from its target market of South African expats. "We are running a competition in conjunction with SAA, whereby our clients will have a chance to win air tickets back to SA, so that they can visit their friends and family."

"In today`s tough economic times, cash-strapped consumers are searching for the best value for their hard-earned rands," says take2`s Smith.

"Possibly even more important than that, the average consumer is looking for a way to avoid the typical seasonal madness that engulfs the bricks-and-mortar shopping malls during frenzied last-minute Christmas shopping. The solution is now just the click of a mouse away."