February 28, 2002, 12:00 AM

The Cool Promise of the Internet

Thanks to the focus on the fundamentals shoppers have a new-found confidence in online shopping. But now, it is time to focus on securing the long-term future of the Internet in retailing.

Anyone attending last month’s eTail 2002 conference in San Jose had to be struck by one thing-the sessions were sound, but not awe inspiring. Nearly everyone talked about improving conversion rates, fulfillment procedures, e-mail marketing results, and other such blocking-and-tackling issues. This is in stark contrast to the industry’s mindset two years ago. Back then, remarked conference panelist Ken Seiff, CEO of Bluefly.com, Internet retailing “was all about feeding mayonnaise to tuna fish,” or in other words long on promise, short on pragmatism. Since then, Seiff noted, e-retailers have focused on customer service, fulfillment and marketing skills, “and the real cool promise of the Internet hasn’t happen.”

Hence, the very pragmatic tone of last month’s conference topics. Nothing is wrong with this picture. Because retailers and catalogers have injected a healthy note of realism to their Internet businesses, more of them are using the words “profit” and “Internet retailing” in the same sentence-phrasing that was oxymoronic only a year ago. Thanks to this focus on the fundamentals shoppers have a new-found confidence in online shopping.

Indeed, the standard of excellence in retailing is increasingly defined by online retail operations. It helps to explain why online retailing grew at double-digit rates during the last year’s recession, and why store-based retailing did not. And the e-retailing industry’s conversion to pragmatism likely explains why the University of Michigan’s American Customer Satisfaction Index, which monitors customer satisfaction with a wide variety of consumer goods, reported that in the fourth quarter of 2001 a sample of the largest retail web sites achieved a higher ACSI score (77 out of 100) than that reported for offline retailers (74.8).

All well and good, but it is not enough-not if Internet retailing is to live up to the “real cool promise” that Seiff refers to. Internet retailing has the potential to have the impact that chain stores and national brands had in the early 20th century, but the industry is not close to reaching that potential. The tremendous strides that this new industry has made in the last two years have legitimized web retailing but haven’t revolutionized retailing. For Internet retailing to become to this century what retail chains were to the last, retailers and catalogers must move beyond mastering the fundamentals of online merchandising and think again about the cool promise of the Internet.

It is the mission of this magazine to help stimulate that process by reporting on new uses of the Internet in all phases of the retail enterprise. We believe the Internet will be used to monitor individual store inventories and report that information to management and consumers in real time; that manufacturers will be included in the web-enabled retail supply chain for the purpose of automatically restocking stores; that retail web sites will be accessed by all forms of mobile, stationary and ubiquitous Internet access devices; that web-based POS terminals, kiosks and web-based price tags will become the norm in stores; that consumers will automatically receive current information on the shipping status of all web purchases in a single message; that web sites will know your shopping, payment, gift and all other relevant preferences the second you log on; that web-based marketing will become the dominant method for soliciting and rewarding loyal shoppers; and that the Internet will convert the retail enterprise from an essentially national phenomenon to a global one. In short, the Internet revolution in retailing is only at the Battle-of-Concord stage. With that battle largely won, it is time to focus on securing the long-term future of the Internet in retailing.

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