Lessons at the E-Commerce Breaking Point

Pundits, powerhouses and assorted talking heads were already predicting the demise of retail e-commerce before the current economic downturn. Now, with the conventional wisdom suggesting more doom and gloom, the word on the street -- yes, that Street -- is that e-commerce was great fun, but it was just one of those passing fads.

Not so fast. It's incongruous to suggest that the American economy taking a nosedive is an automatic precursor of an entire field of business disappearing from the commercial map. If anything, when the U.S. economy hits the doldrums, the tough generally get going.

That may be precisely the chapter the current online shakeup will write in the history of e-commerce's formative years. Poorly structured, mismanaged e-tailers naturally had to be given the boot so the true players in the industry could emerge and thrive.

By the end of last year, e-commerce was already shaping up as rough terrain for entrepreneurs. This year's sudden slide simply pushed the dangling e-tailers over the edge.

Turn The Page

Sorry Boo.com, Pets.com, Mothernature.com, et al., but your premature demise was never about timing, luck or online presentation. Your disappearance has more to do with the inevitable growing pains of a fledgling channel that simply cannot yet accommodate an endless stream of competitors.

After all, how many online pet supply stores did we really need? In a sales channel that was barely off the ground, it did not take long to saturate the sparse market. Additionally, some retail products simply did not translate to an online shopping experience.

Impulse items and hands-on products, such as those sold by the softness of their touch or fragrance of their makeup -- not to mention items that need to be seen to be appreciated -- have had a hard time finding an e-shopping audience.

Maybe it's time for us to stop collectively scratching our head trying to figure out what happened and why. It happened. Let's move on.

Moving On

The essential lessons of the dot-com shakeout are getting lost in the endless barrage of opinions about the viability of electronic commerce. Everyone is entitled to an opinion, but what have we learned?

According to Jupiter Media Metrix, we've learned that clicks indeed affect bricks. In other words, what a company does with its e-business presence has a definite affect on it real-world business.

Jupiter reports that customers are increasingly expecting their favorite brick-and-mortar stores to be as tuned into e-commerce as they are. In fact, 67 percent of online buyers expect employees at brick-and-mortar stores to be able to access their individual online buying records. Unfortunately, only 18 percent of retailers have the technology to access a customer's online and offline purchasing data, the report said.

The reaction from consumers is sobering. Jupiter found that 70 percent will spend less at the real-world store if they have a bad experience with the store's Web site. Once again, consumers are speaking up about the importance of customer service, but this time the message has to do with multichannel relations.

All Together Now

Pretty soon the dust from the dotcom shakeout will have settled. Those who are still standing will most likely be companies that have either affiliated with a brick- and-mortar firm (think Amazon/Toys 'R' Us) or traditional businesses who have developed a successful Internet arm (think Kmart/BlueLight.com).

What is the big mystery here? Customers enjoyed the novelty of some of the early e-tail companies, but have now expressed a preference for tradition with a twist.

Now is the time for smart brick-and-mortar companies to make a push for integration of their online and offline inventory management, supply chain and customer relationship management.

Additionally, companies that have successful offline business models must somehow duplicate that model online, and carry it further. The best way to do that would be to offer value-added incentives for online purchases.

Look for Kmart stores to feature "Online Only Specials" in their national newspaper advertising. Not only would such promotions help integrate bricks and clicks, but it would encourage more consumers to take a trip to Kmart's BlueLight.com site.

Online Security Blankets

Meanwhile, it is important to remember we're still in the stage of coddling our consumers.

Many are still not comfortable with the online buying experience, and if they stick one toe in the virtual waters, we must make sure the pool is clear and inviting. One way to accomplish that is through fail-safe fulfillment methods and guarantees.

E-tailers must stand behind everything they sell, from pencils to bedroom sets. That means clearly stating warranty and return policies in a prominent place on the home page, and then facilitating fast, efficient service if there is a problem with the merchandise.

How long will e-commerce have to continue to pamper its customers? As long as it takes. Instead of asking how long, the better question is "What is the best way to indulge the buyer?"

What do you think? Let's talk about it.