The last few holiday seasons have been rocky for them: sluggish and crashing Web sites, inventory problems, delivery mishaps, and complaints about everything from privacy to return policies. But this season has, so far, been relatively problem free.
"There hasn't been any of the same kind of train wrecks we've seen in the past," said Forrester Research analyst Kate Delhagen, a former vice president at women's apparel site Lucy.com. "The training wheels are off."
The reason is mostly because the companies that are still alive have learned from past mistakes and have put resources into the back-end technology and operation systems. And with sites running more smoothly, Delhagen said, merchants can focus on what's really important: selling goods.
In the past, the post-Thanksgiving crush gave retailers as much holiday fear as cheer. Unprepared for swarms of customers, scores of Web stores stalled or crashed. The virtual shopping carts provided for customers broke down. E-commerce executives hired too few customer service representatives to answer customers calls for help.
In one of the biggest blunders, seven stores, including Toysrus.com, Macys.com, CDNow and KBkids.com, missed delivery deadlines, with some items arriving at the doorsteps of incensed shoppers after Christmas. That gaffe was bad enough to draw the wrath of the Federal Trade Commission, which fined the Web stores.
Customers said those kind of setbacks made them wary of shopping online and undermined the credibility of e-commerce.
But this season, researchers are finding some good news.
According to San Mateo, Calif.-based research firm Keynote Systems, improvement has been made in several customer fulfillment areas this year. Through Dec. 9, all of the 18 online stores Keynote monitored were delivering goods within the promised time frame; half of the 50 stores monitored for how fast their sites loaded came in under three seconds; and the amount of time it took to complete an online transaction has been cut from an average last year of 15.5 seconds to under 9 seconds on average this year.
Veteran online shoppers have noticed the difference, too.
Geoffrey Kleinman has been shopping online since 1995 when he bought a book from Amazon.com the day the site launched. He's perused the virtual aisles of Book Closeouts, Staples.com, Shutterfly, Allposters.com and dozens more. He remembers when buying online during the holidays meant long shipping delays.
"They've been really pretty good this year," Kleinman said. "I've bought some toys for my children and video games for myself on Amazon, and they've arrived on time."
One aspect of e-commerce that may have hurt holiday sales is security. Numerous surveys have shown that shoppers generally worry most about online security of their credit card information and that online fraud is far more rampant than fraud off the Web. High-profile attacks by worms and viruses, to more surgical intrusions by hackers have contributed to the general uneasiness.
Just last month an intruder electronically burglarized Playboy.com's Web store and pilfered an unknown number of credit card numbers.
Yet there is anecdotal evidence to suggest that there are fewer break-ins that involve huge numbers of credit cards being stolen, as e-tailers learn to safeguard themselves with improved systems software. Eric Chan, a self-described online bargain hunter, said that is one of the reasons he feels "more comfortable" with the security of his information online.
Forrester analyst Delhagen credits many of the gains in e-tailing to simple evolution. Four years ago, e-commerce executives marched into untested and uncharted areas. The business of selling goods over PCs was new. Finding and implementing successful practices took time.
The strong survive
Today, online merchants that have survived the radical downsizing of the e-commerce sector have steadier sites and have taken steps to improve payment, navigation and security tools. This has become easier to do as that market has evolved.
Sharing information on best practices has also helped. Delhagen said e-tailers had been notoriously tight lipped about systems or techniques they had created. Now, when it comes to handling traffic spikes, many want to help their peers, since a slew of downed sites hurts the reputation of the entire industry.
She recalls that while she was at Lucy.com, which closed earlier this year, the company geared up for legions of Oprah fans to hit the site after the TV talk show icon mentioned Lucy.com on her show. Delhagen said Lucy.com's chief technology officer got on the phone with counterparts at companies who had weathered similar traffic crunches.
Along the way, many sites have also replaced Web wunderkinds with older and more retail-experienced managers who steered sites toward basic retailing principles and away from developing space-age technologies that had questionable benefits for a company's bottom line. Consider the now-defunct Webvan, which spent lavishly on hundreds of high-paid software programmers when the company's problems were more basic, such as getting orders filled correctly and delivered on time.
Despite the beefed-up sites and increased consumer confidence, several surveys this holiday season have shown that while online sales are up overall from last year at this time, the rate of growth is leveling off. Online holiday retail and travel sales will reach $11.9 billion this season, up 11 percent from last year, the report said. But in 2000 it was up 54 percent from the year before, and up 125 percent in 1999.
But analysts note that with fewer e-commerce sites operating this year, many individual retailers should show solid returns for the season. Gartner researchers had predicted $11.86 billion in sales in North America this holiday season and more than $25 billion worldwide. Last year, e-commerce holiday sales hit $9.1 billion, according to several researchers.
"It's worth it to shop online even with some of its quirks," Kleinman said. "This time of year, shopping online is still easier than finding a parking spot at the malls."