Who's Afraid of E-Commerce Now?

Even as online shoppers multiply and increasingly mirror mainstream consumer profiles, considerable pockets of e-commerce abstainers remain. These neophytes, hampered by security or fulfillment concerns or inadequate Internet connections, still rely on the Web only for product research.

To reach this untapped revenue source, e-tailers must work to simplify their storefronts and establish brick-and-mortar partnerships, analysts agreed.

"[Many e-tailers] need to redesign their sites to make the shopping experience more intuitive," Meta Group senior program manager Gene Alvarez told the E-Commerce Times. "This includes improved search capabilities, visualization tools and the integration of multiple [sales] channels.

"The Web has proven itself as a great investigation tool, so at a minimum, e-tailers need to offer investigation capabilities," Alvarez added.

Indeed, multichannel retailers have begun to leverage the Internet's researching strengths to drive in-store purchases among late adopters of technology.

Stores Satisfy

Online commerce currently accounts for just 1 percent of overall U.S. retail spending, according to the U.S. Department of Commerce, and analysts do not expect this figure to rise above 5 percent in the foreseeable future.

"The fundamental issue is that shopping in stores is satisfying in a number of ways that online shopping is not," Giga Information Group analyst Andrew Bartels told the E-Commerce Times.

In-store consumers can browse and process information that is 360 degrees around them, interact with other people, touch and test tactile goods like apparel and furniture, and immediately acquire products, Bartels noted.

"Online commerce lacks these features and will probably never have them," he added.

Real World

Still, some online retailers have tried to replicate the physical shopping experience in an effort to lure brick-and-mortar loyalists.

For example, clothing retailer Lands' End has earned analysts' acclaim for its virtual models, which simulate a fitting room environment. Similarly, real estate firms like Homestore.com and Century21 have streamlined sales processes with online virtual home tours.

"These types of innovations are helpful for clothing and other categories where the look of the product is as important as its specifications," Bartels said.

Other sophisticated sellers like Dell Computer (Nasdaq: DELL), Travelocity (Nasdaq: TVLY) and Expedia (Nasdaq: EXPE) target discerning customers with numerous customization options and "what-if" scenarios, he added.

Timid Travelers

Expedia's strategy for pleasing e-commerce neophytes is to convince them rapidly that online travel booking can save them money and time.

"We will return more than 500 potential flight combinations for most airfare searches," Expedia marketing manager Mitch Robinson told the E-Commerce Times. "But we allow you to order the search results by what is most important to you -- price, arrival time or duration of flight."

To alleviate newcomers' security and credibility concerns, Expedia prominently displays three privacy seals -- TRUSTe, BBBOnLine and PricewaterhouseCoopers.

In addition, the company provides around-the-clock customer service via telephone for shoppers who are used to dealing with a physical travel agent.

"The customer service line allows us to help late adopters [become] confident and comfortable with the process," Robinson said.

Research Project

For its part, multichannel electronics retailer Best Buy (NYSE: BBY) caters to recent e-commerce entrants with extensive online product information.

In fact, for some complex products, like appliances, cell phones and XM radios, Best Buy allows shoppers to conduct research online but requires in-store purchases.

"Our online product information plays well to late adopters," Best Buy spokesperson Donna Beadle told the E-Commerce Times. "And our in-store pickup option puts fulfillment fears to rest for leery Internet newcomers."

Cross-Training Strategy

Most multichannel retailers like BestBuy use online content and information to lure hesitant buyers into physical stores, Bartels noted.

But some outfits, like Kmart (NYSE: KM) and Gap (NYSE: GPS), have crossed sales channels in the other direction, enticing in-store browsers with Internet connectivity promotions and Web kiosks, respectively.

In both cases, analysts agreed, brick-and-click retailers are better equipped to attract e-commerce-phobes than are pure e-tailers.

"In most product categories, the e-tailers that have performed the strongest have stores tied to them," Alvarez said.