Broadband, Broad Acceptance Boosts e-Tail Into Retail Mainstream

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TWICE: Last quarter was something of a watershed for e-tail, with tremendous growth and record sales volume over the holidays. Did share in the glad tidings? If so, how much is attributable to the site’s recent re-design?

Doug Moore,Circuit City: I think everybody who operated a Web site the way they wanted to this past holiday season would be happier than they were the year before. I can’t imagine that they received less business. Clearly it gives people all kinds of options they didn’t have before. We’re very excited about our re-launched Web site and we believe it’s an integral part of how we go to market as the dynamics of the marketplace change.

We’re not in a position to share metrics, but I would say the Web is an important part of our strategy. It clearly is where people like to go to start, and often finish, their shopping. A large percentage of our customers go there first. As broadband household penetration rises, it has certainly become one of the great options. And the activity has moved around: you can do it at work while getting paid to be online.

It’s Consumer Reports in the moment, and also technology in the moment. Being able to bounce from vendor site to retail site to a Web-only site makes it a dynamic time for customers, although it somewhat challenges the traditional selling environment of a brick-and-mortar retailer. But talk about wireless being an enabling technology; the Web is an enabling technology for having customers come to us better informed and wanting to be in control of the entire transaction. And there’s more to come, I think.

TWICE: Do you have separate merchandising teams for stores and the Web?

Moore: Not to open up our work chart, but there are things the Web team has to do themselves that have to do with running the site, and the merchants still buy the merchandise. With the sometimes arm’s-length fulfillment options that you have through virtual inventory ownership and other things, it gets a little blurry. But it’s a healthy tension. The old tension was always the merchants versus the operator versus the marketing department. I think we’ve added a fourth leg to that stool.

We wouldn’t be doing this if it didn’t matter. It clearly does, and we’re clearly making an investment there. It’s where the customer wants to be more often than before. I wouldn’t venture to guess where that starts and ends in the future.

TWICE: had a milestone of its own over Black Friday weekend.

Frank Sadowski, We did. The three-day weekend following Thanksgiving was the first time in the history of that books were not our biggest category of product. In fact, consumer electronics, in terms of order revenue for those three days, was the number one category for our business.

When we launched consumer electronics in 1999, Jeff Bezos, our chairman and founder, said publicly at the time that he thought consumer electronics had the potential to one day be our largest category. It certainly isn’t our largest category on a running basis, but for the weekend following Thanksgiving it was.

Not only was the Web business up, both for pure Internet retailers like us and hybrid click-and-mortar retailers like Circuit City and others, but customer satisfaction with the experience last season was also at an all-time high. Not only are more customers doing it, but more customers feel better about the experience.

One of the trends that we’re seeing is an openness to buy more different types of product on the Web that consumers maybe wouldn’t have considered for purchase on the Internet before. It’s pretty intuitive that customers are going to buy MP3 players, PDAs and digital cameras; they come in small boxes that are roughly the size of a book.

But the confidence level in buying larger, heavier, non-traditional Internet products has just exploded in the last two Christmas seasons. We’re selling projection TVs, large computer monitors, and even gas grills — we’re a large retailer of Weber high-end gas grills. That trend is very healthy for online retailing has led to a whole new level of consumer confidence and growth on the Web. We’ve always said that this whole e-commerce thing is still in its infancy and Amazon has only just celebrated its 10-year anniversary.


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