It's Now Or Never

Gloss.com competitor Eve.com, which has been open for business since June, couldn't agree more.

Gloss.com competitor Eve.com, which has been open for business since June, couldn't agree more. While co-founders Mariam Naficy and Varsha Rao also have worked to build their Eve.com brand through traditional advertising, they said the holiday season will be about showing that the company offers more than just a pretty place.

The company, backed by Charter Venture Capital, idealab! and Menlo Ventures, is focusing on putting the operational expertise and customer service capabilities in place to meet the demands of nervous new online shoppers.

"We are measuring our milestones not just in sales, but on whether we're able to fulfill orders, on whether we can keep our site up and running," Naficy said.

That alone can be a tall order. Research firm Jupiter estimated that the average commerce site handles four times as many transactions per day during November and December compared with the rest of the year. But at a time when online storefronts are their busiest, they also must be at their best. A full 49 percent of online buyers surveyed by Jupiter said their usage of a retail site is affected by the performance of that site.

"The real impact of the shopping season is how it affects future shopping," Jupiter analyst Ken Cassar said. "Transactions that are successful - the ones where the site doesn't crash and the order is filled - help to create long-term relationships."

And building those customer relationships is critical to building the value of an online retail company. Simply put, retailers treating a customer right the first time have a shot at creating a lifelong customer. Three-fourths of all consumers who buy online say they are likely to make another purchase from a given merchant, according to shopper surveys conducted by BizRate.com. A full 22 percent say they are inclined to develop an exclusive buying relationship with a retailer.

Wall Street is likely to be fickle in the way it grades Web merchants. Those with established reputations, such as Amazon.com, may be under less pressure to post massive fourth-quarter sales results than are emerging retailers seeking to build their brand name in the marketplace, said Ulric Weil, a senior technology analyst at the Friedman, Billings, Ramsey investment banking firm.

Two classes of companies are likely to feel the most pressure: recent initial public offerings and second- and third-tier e-tailers. Of lesser players hoping to vault themselves into the limelight, Weil said: "If they don't get a big reception, then that will alert people to the fact that you want to invest in the big-name Internet stocks."

And the flow of investor money - along with the resulting performance of a company's stock - could go a long way in determining future financing options available to online retailers. Internet companies, for instance, are becoming bolder about floating secondary offerings on the heels of their initial stock offerings in order to establish a cash hoard to see them through dry times. That source of financing would become much more expensive for Internet retailers if their stocks were to tank.

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