Experience Helps: E-Shopping Rises 270%

Problems caused by a reported 270% surge in online purchases during this past holiday shopping season came mostly at electronic retailers whose Web sites -- but not warehouses -- were ready.

There were some fulfillment problems. "A lot of retailers did invest in infrastructure and Web processing," said Donna Iucolano, chairwoman of the Committee on Internet Shopping at Shop.org, a trade association of online retailers. The problems were largely on the order-fulfillment side, Iucolano said.

Toys R Us Inc., for example, was unable to fulfill some orders, but it offered $100 in store gift certificates to make up for problems.

Most of the delays were at companies that focused only on site development and didn't look at inventory issues or hire enough people in their warehouses and weren't the fault of package delivery companies, according to Susan Rosenberg, a spokeswoman for United Parcel Service of America Inc. She said the company experienced no major problems, even though its online tracking requests reached an all-time high of 3 million on Tuesday, Dec. 21.

UPS was prepared for the volume because it spent much of the summer running forecasting models with catalog and electronic retailers, Rosenberg said.

Mark Saunders, a spokesman for the U.S. Postal Service in Washington, said the Postal Service saw use of its Priority Mail service increase about 8% compared with the same time last year. He attributed a lot of the growth to the Internet, but the Postal Service doesn't have numbers to prove that.

To prepare for the increase in mail, the Postal Service hired 40,000 seasonal workers, expanded office hours, rented an extra 1 million square feet of facility space, contracted for thousands of extra trucks and, in many cities, delivered packages on Sundays.

"Those (retailers) who had been in the market a year or better were better prepared than last year," said Iucolano.

Shop.org and The Boston Consulting Group polled 30 retailers during November and December. The study projected that total e-commerce sales for 1999 would be between $38 billion and $40 billion, compared with 1998 sales of $14.9 billion. The study projected that online revenue not related to financial services during the holiday season would total between $10 billion and $11 billion, compared with approximately $3 billion to $3.5 billion the previous holiday season.

The size of the average online order was up 8% over the same period a year earlier. The researchers reported success across all product categories, with apparel sales particularly brisk, but they had no specific breakouts.

Copyright © 2000 IDG Communications, Inc.

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