But losses mount for the home furnishings e-retailer that went public in October.
Computer and software sales are already well-established on the Internet, accounting for nearly 20% of the market. Now, research shows that consumers not only browse but increasingly are buying big-ticket goods such as furniture, fridges and even VW Beetles online.
According to the National Retail Federation, Washington, D.C., and Forrester Research, Cambridge, Mass., Web shoppers spent $250 million on computers and electronics in March. “It takes about a year for people to get comfortable” with Internet shopping, says Seema Williams, senior analyst at Forrester. “They start out buying small items, and when they’re sure it’s safe, they move to bigger items.”
Seeing such an opening, Volkswagon AG recently began offering 4,000 “vapor blue” and “reflex yellow” limited-edition Beetles online. To purchase the car, buyers must choose a local dealership, select a color and transmission type, and they can haggle over the price online, as well as apply for financing and calculate their monthly payments.
Once these details are settled, the paperwork is signed in person at the dealership. “Car purchases will be flat, but as consumer confidence grows, there will be a slight increase,” says Gene Alvarez, program director of e-business strategies at the Meta Group, Stamford, Conn. “You can’t test drive a car on the Web.”
That’s why Alvarez sees the Internet as a research tool for most buyers, while a few hearty pioneers will take a chance and buy a sofa online. “Some people,” says Alvarez, “are just trying new mediums and experimenting.”
To ride the trend, e-retailers have to make some changes. Williams recommends offering a mix of low-cost and higher-cost items to satisfy both novice and seasoned shoppers.
Even more important to selling big-ticket goods online, according to Alvarez, is the financing. Dell Computer Corp., for example, has offered credit through a co-branded Visa card, and credit unions have entered the picture via CUShopper (see page 18), a site selling computers, jewelry, electronics and other high-end items. But Alvarez cautions that interest rates must be competitive: “If e-retailers get into financing, they’ll have to offer the same deals as brick-and-mortar stores.”