1999 May Be The Last Year For Online Shopping Gravy Train

December 2, 1999

GAINESVILLE — Thinking of doing some holiday shopping on the Internet this year? Better act fast: This time next year, the number of online retailers may be down and the savings edge may be all but gone, says a University of Florida electronic commerce expert.

E-consumers have been reaping the rewards of small online newcomers’ eagerness, gilded with free shipping and handling and bargain-basement pricing. But as the pressure builds to show a profit, online shoppers may soon feel the pinch.

“This could be the last Christmas of the free lunch. We’re in a little Twilight Zone’ episode right now, but The Twilight Zone’ only lasted 30 minutes and we’re in about the 18th minute of the show,” said Erik Gordon, director of the Center for Retailing Education and Research at UF’s Warrington College of Business Administration.

While many have said this holiday season will show clearly whether e-retailing can work, Gordon said that’s not really true because Internet businesses have been operating at such an advantage by not having to make money. He compared the situation to a basketball game in which one team — traditional retailers — have to stick to the play book, while the other team — e-retailers — are allowed to go out of bounds and do whatever they want to make points.

“You won’t really get a true picture this year of how e-retailers will do over the long term because they haven’t had to play by the rules,” Gordon said.

The rapid and unprecedented explosion of e-retailing has given rise to a horde of tiny “dot-coms” that so far have been able to skate without showing a profit; the venture capitalists who provide the start-up cash have been banking instead on their potential. But the investors likely will expect some return soon and will yank the plug if they don’t get it, Gordon said.

“This year is critical for [the small e-retailers] because on Dec. 26, they have to go back for another suitcase of money,” he said. “If they didn’t make the sales, they’ll be gone.”

Meanwhile, as natural selection weeds out the small-timers, some of the retail world’s big guns are expected to have their own upgraded blockbuster online shopping sites well-entrenched for the 2000 holiday season.

“Those names people know and trust will be getting in on the game, and that’s where people will go,” he said.

Wal-Mart, for instance, already has an online shopping site but currently is testing an expanded, redesigned version scheduled for launch Jan. 1, said company spokeswoman Melissa Berryhill. The new site will offer more than 600,000 items, as well as travel services not available in Wal-Mart stores.

It also will offer something the dot-coms lack, Berryhill said.

“Customers have a lot of confidence in the Wal-Mart name,” she said. “We instill confidence, and our customers know we’re going to take care of them.”

Despite the changes he predicts in the industry, Gordon said e-commerce will continue gaining ground, but there’s one area where brick-and-mortar businesses almost certainly will hold their own for the long haul: last-minute shopping. The absent-minded husband who waits till Christmas Eve to start looking for his wife’s gift isn’t likely to take to the mouse pad.

Said Gordon: “There’s no such thing as three-hour shipping.”