RealTime IT News

The Prognostication Game

Gomez Advisors Inc., the latest research firm to enter the online holiday sales guessing/predicting game, came in with an estimate of $11.4 billion, about double what was spent last year.

Earlier predictions included something in the vicinity of $10 billion by both Forrester Research and Pricewaterhousecoopers, and a prediction of $19.5 billion worldwide by Gartner Group Inc.

Gomez said its research indicates that the anticipated growth during this holiday season will be driven by a number of key factors, such as the continuing expansion of Internet access; an increasing number of consumers turning to the Net as a valuable shopping channel; and the rise of cross-channel marketing, especially with heightened online activity among traditional brick and mortar retailers and even branded manufacturers.

"This year is clearly the year of the multi-channel retailer as many existing, branded players realize that they can leverage their physical and catalog operations with an online offering," said Jill Frankle, director of retail e-commerce for Gomez.

"Consequently, increased pressure is being put on the smaller players who have not yet built a strong company brand," she said. "Many pure dot com players, especially those with highly seasonal offerings, are facing critical periods as this quarter will account for a significant portion of their annual revenues."

Gomez said its research indicates that there has been increased investment in inventory planning, inventory management and merchandising.

A preliminary analysis of Gomez's soon-to-be-released holiday survey indicates that 81 percent of retailer respondents plan to have real-time inventory management during the upcoming holiday season. Some online retailers have taken significant steps to ensure a positive shopping experience for their customers, including service level guarantees from shippers. Others are posting the dates after which orders cannot be guaranteed to arrive in time for the holiday.

"This holiday season differs from the 1999 online holiday season in that we are recognizing a dramatically reduced level in marketing spending directed toward customer acquisition," Frankle said. "Instead, greater emphasis has been put on servicing existing customers, providing a superior online experience and safeguarding against many of the problems, such as fulfillment issues, that plagued retailers in the 1999 holiday season."