Is the E-tail Thrill Gone?

It’s natural to shrug off the two straight months of slow e-tail growth as the lull before the holiday rush. It’s natural as well to believe that once snow starts to fall and Christmas carols fill the air, everything will be all right.

Basically, it’s natural to delude ourselves.

The slowdown in growth points to deeper problems for online retailers, problems that even a booming holiday season won’t solve. E-commerce, accustomed to the enormous expectations placed on it by its early explosive growth, is now in danger of becoming a one-trick pony that only turns out impressive stats once a year. If that.

Troubling Times

To be sure, e-tailers are staring down the barrel of their own success. Early growth was so strong — it started from zero not long ago, after all — that sustaining it over a long period of time is exceedingly difficult.

Still, what’s frustrating is that there apparently is so much more growth to be had. Even if the holiday season is a blockbuster, online purchases will reportedly still account for less than 1 percent of all U.S. retail sales.

So what’s holding e-commerce back?

Certainly, it’s logical to say that companies are changing tacks as they try to become profitable, curbing their penchant for deep, unsustainable discounts and pulling back a bit on advertising and marketing.

Looking for a Second Wind

But also missing is the buzz that surrounded e-commerce 12 months ago. E-commerce was the Thing to do, whether for the holiday season or for back-to-school or any other time of year. It was new and consumers experimented with it, using their disposable income to check out this phenomenon. The Pets.com sock puppet was fresh enough to be funny and Amazon’s now-endless parade of new products seemed hopeful at the time.

Many drawn by the online shopping buzz liked it and have stuck around. But despite predictions that newcomers will help drive sales this holiday season, the urgency seems to have drained away from online shopping.

The fact is, with the novelty and buzz worn off, there is very little to drive consumers online. Convenience is a big selling point, but it’s been there all along — it’s just as convenient to buy back-to-school items online as holiday gifts. The stores are just as crowded and inconvenient in late August. Plus, what better way to make sure the last vestiges of summer aren’t wasted, than to stay away from the mall by pointing and clicking?

Diverging Fortunes?

Bear in mind that the slow months of August and September came as some real-world retailers, such as The Gap, posted better than expected sales for the third quarter. That tells me the other gap — the one between online and offline spending — is getting bigger.

In fact, there are knowledgeable analysts out there who think shoppers will continue to favor brick-and-mortar stores around the holidays because going to the mall and hearing the music and seeing Santa and the decorations puts them in a shopping mood. In other words, the vaunted holiday season may turn out to be fool’s paradise for e-commerce.

In the Line of Fire?

There’s more. The parade of earnings warnings has some economists guessing that the U.S. economy may be slowing. Where do you think that hit will be felt the hardest? Are the bulk of online purchases, made at places like Amazon.com and music outlets, the type of necessities that will continue to be bought during tougher times? Hardly.

Added up, the evidence suggests to me that e-tailers have to work hard to get the buzz going again, to make shopping online the thing to do again this holiday season.

That’s much easier said than done, of course. Ideally, it starts with great customer service, which can help spread the good news that undoubtedly is out there.

Hands Tied

But e-tailers are limited in what they can do to turn observers into online buyers. The new focus on profits means less of an advertising blitz than in the past. That in turn might give real-world retailers, whose storefronts and shopping carts are forever before the eyes of consumers, yet another advantage.

The bottom line is that growth will come — and even go — in increments for e-commerce, as for the rest of the business world, and that those increments may be smaller than anyone imagined. Businesses should build that level of reality into their forecasts and plans and the rest of us should build it into our expectations. The thrill is gone, but life — and business — go on.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

How confident are you in the reliability of AI-powered search results?
Loading ... Loading ...

E-Commerce Times Channels