September 3, 2002, 12:00 AM

Technology Fuels e-Retailing’s Growth

In the last two years, e-retailing has been greatly enhanced by the application of marvelous new technologies that deliver content faster, personalize the shopping experience, display the merchandise more clearly, intuitively search for the right product, allow for real-time inventory checks and speed order fulfillment.

By Jack Love

When the dot.com bubble burst more than a year ago, many believed the revolution in online merchandising had been a mirage created by hype, not by substance. Too many shoppers, they argued, had been turned off by the pioneering web merchants who could not fulfill orders in a timely fashion, by retail web sites that were hard to navigate and slow to load, by the inability to efficiently search sites for desired items, and by the inability to check whether those items were in stock. So they concluded that the web was destined to play a minor part in merchandising and would never fulfill the promise of the visionaries who pictured a revolutionary role for the Internet in all aspects of retailing.

What those analysts failed to consider is the historical penchant of American consumers to embrace new technologies that offer convenience, speed, information and comfort. That embrace is tight enough to overcome the flaws inherent in the early application process. Thrilled by the new technology when it does work, they tolerate the many times it fails to work properly. It’s the reactionaries who shouted “get a horse” to the drivers of the early automobiles that could not traverse the muddy roads. They laughed at early TVs with their grainy, 12” picture tubes that often lost their horizontal control. And it was IBM’s belief that PCs would play a subsidiary role to the mainframe that made Microsoft America’s most profitable company. What they all failed to understand was that new technologies do not stand still; they are rapidly perfected as they are increasingly deployed.

This month’s cover story reveals how this process is unfolding in e-retailing. Since its beginning in the mid-1990s, the growth of online shopping has regularly outpaced the increase in store sales. And even though Internet retailing is working from a much larger base today than last year, its growth rate is surging at an accelerated pace even as store sales are mired in recession.

Why? For one thing, the technology is now in the hands of merchants, not technologists. But most of today’s growth in e-retailing is simply the result of retail web sites that work better. In the last two years, e-retailing has been greatly enhanced by the application of marvelous new technologies that deliver content faster, personalize the shopping experience, display the merchandise more clearly, intuitively search for the right product, allow for real-time inventory checks and speed order fulfillment. Even the skeptics concede these improvements create a greater role for web merchandising and that someday online shopping might snare 10% to 20% of the retail market.

I believe its share will far exceed that and will someday make e-retailing every bit as important as store-based retailing, which itself is being revolutionized by the web. That belief is founded on the proven premise that web retailing technology is still in its infancy and that unpredictable enhancements lie in store. Those who reject this conclusion ignore the advances that gave us automobiles with the creature comforts of home, cable television sets with 500 stations and live satellite images from Afghanistan, and $750 PCs that pack more computing power than most mainframes did when the PC made its debut. The same metamorphosis is underway in web-based retailing. Exactly what types of e-retailing technologies lie over the horizon is anyone’s guess. What seems certain is that they will break through the barriers that keep web shopping on the border of mainstream merchandising.

Jack@verticalwebmedia.com

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