October 1, 2010, 2:52 PM
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A great time for cautious optimism about online retail

Thad Rueter

Senior Editor

Few phrases beyond “pitchers and catchers report” make me as giddy as “cautiously optimistic.” As a reporter, I try to maintain an allergy to hype and excessive positive thinking. Expectations often fall flat, and so many game-changers end up changing nothing except the size of investors’ bank accounts.

That’s why the past few weeks have been positively joyful.

First came a series of reports about what the upcoming holiday shopping season might mean for online retailers. The E-tailing Group surveyed more than 250 e-retailers and found that while only 31% expected growth of 10% or more in holiday shopping, most did anticipate selling more products this year than last. “Respondents confirm that e-tailers have a cautious yet positive mindset and are prepared to meet the challenges ahead,” said Lauren Freedman, president of the market research firm.

Other reports reinforced those expectations. Yesterday, Kantar Retail, a research and consulting firm, estimated that online holiday sales will increase 6% this year. Bold Software, which sells live chat services, released results of a survey of 171 e-commerce clients that found 65% expect gains in holiday sales, with 33% anticipating the same results as last year, and only 2% predicting a worse shopping season.

The brightest ray of sunshine piercing through the partly cloudy sky was the projection from stock analyst Colin Sebastian of Lazard Capital Markets. He foresees a 10% to 15% jump in e-retail sales this holiday season. I am rooting for him to be right. A strong holiday shopping season helps everyone.

Another dose of cautious optimism was offered this week just outside Dallas, at the annual conference held by Shop.org, the online retailing division of the National Retail Federation. I have attended dozens of conferences for various publications, and in so many of them it was far too easy to run into various executives and consultants doing their song and dance about The Next Big Thing.

But on two moderately cool autumn days, I listened to online retailers and online retailing experts discuss in a reasonable manner what is happening to this industry. Absent for the most part were bold, somewhat utopian predictions of how emerging technologies would perfect the shopping experience while funding a Jay Gatsby lifestyle for entrepreneurs.

For example, many of the speakers devoted time to social media and the prospects for social commerce—you know, turning Facebook, Twitter and their various competitors into a fountain of retail revenue. Few doubt that social media is changing, and will continue to change, how consumers shop. Facebook, after all, has half a billion users—half of whom check the site no less than once a day, according to one estimate—and retailers cannot ignore such a large collection of consumers.

Things often move slowly, however. Amid a retailer-dominated audience of more than 200, only one woman—who works for a Canada-based apparel firm—raised her hand when a moderator asked who had made money off of Facebook.

In that same session, Josh Himwich, who oversees e-commerce efforts for Diapers.com and Soap.com, set what I thought was a wonderful tone of realism when he advised retailers to forget about social commerce’s return on investment, at least for the time being, and focus simply on how to make friends with consumers through a site such as Facebook.  “It’s about building up relationships,” he said. “Without those, no social commerce will happen.”

Himwich also offered a reminder about why people flock to Facebook when he said that consumers go there to socialize, not spend 20 minutes shopping. That’s why Himwich wants to offer consumers on Facebook the ability to do what he called microtasks­—in this case, making it possible, within two minutes, for customers on Facebook to buy products they regularly reorder, and then letting those shoppers get on with the work of catching up with friends, mothers-in-law and high-school sweethearts.

Sure, the microtask concept may be more difficult for retailers selling products not used every day for health and hygiene. But Himwich’s comments represent the kind of cautious, anti-utopian thinking that could lead online retailers to a better place.

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