E-tailers Buoyant About High Holiday Sales, Low Returns

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To "e-" or not to "e-" was the question for many gift-shoppers during the recent holiday selling season.

According to eight e-commerce experts gathered for a TWICE roundtable discussion held during CES, consumers answered with a resounding click of the mouse, bringing record sales to numerous e-tailers.

Amazon.com, for example, had revenues of $650 million in 1999's fourth quarter, more than its sales in all of 1998, according to Chris Payne, general manager of the company's consumer electronics store operation. Six of the e-tailer's 10 top-selling products were CE items, he said, with the 3Com Palm V organizer Amazon's best seller overall.

Another success for Amazon.com was software, which the company rolled into its consumer electronics operation November 10. "It was a huge success, one of the fastest-growing businesses ever for us," Payne said, noting the category will be expanded this year.

Frank Sadowski, senior merchandising VP for 800.com, said his firm's "most remarkable" accomplishment of the holiday season was achieving its revenue targets without eroding margins, "due to an unexpectedly high mix of product sold." And like other e-commerce execs in the group, Sadowski said return levels so far have been "quite a bit lower than traditional brick & mortar retailers' levels because of the considered nature of the purchase."

Mike Jeans, president of Roxy.com, said December revenues were more than 10 times higher than December '98, which he attributed in part to the company's first national advertising campaign, kicked off in November. "And for the week ending December 19, our revenue was twice that of the entire first quarter," Jeans said.

To enhance the communication the e-shopper demands, Roxy.com will expand its customer-service call-in centers from 20 hours of operation daily to 24/7, Jeans noted.

Dan Hodgson, senior VP/merchandising for longtime catalog retailer Crutchfield, said his company's online business in December soared 170% over the same month in 1998. "We're seeing a big shift in our business to transactions online," Hodgson said.

In its first e-Christmas experience, RadioShack.com hit its projected sales and gross margin numbers, according to Henry Chiarelli, executive VP/general manager of the retail chain's e-commerce operation. "We did no e-commerce advertising, just silent tags on our TV commercials and a note in our print ads, but it worked fine," Chiarelli said.

Robert Heiblim, etown.com CEO, reported "gigantic sales growth" in the last four to five months of 1999. Heiblim said that by researching prospective purchases on the Internet, "consumers are saying, 'I can be a smart shopper now,' and that's changing how they go about the buying process."

Richard Gilbert, VP of strategic planning for electronics.net, said he was faced with a challenge when consumer electronics marketing partner Tops Appliance City announced in October it was pulling out of the CE field. Nevertheless, "We met our expectations in the fourth quarter with a new distribution model," he reported.

Gilbert said his company is marketing to prospective customers purely online, "which is what we want to focus on to maximize our distribution channel. We're trying a number of different things to drive traffic to our Web site."

The Associated Volume Buyers buying group launched its BrandSource.com umbrella site into e-commerce eight months ago, selling appliances and furniture, as well as consumer electronics products online.

Said executive director Bob Lawrence, "Our business on the Internet has continued to grow, and we've found that the average ticket has gone up as people buy high-end products."


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