Internet shopping holds much promise, even of finding a plumber at midnight

The Outlook

June 16, 1996|By Abbe Gluck

RETAILING ON the Web is the latest craze. More than 150 major companies have online-sales sites and they already are making six figures a month from their businesses on the Web, according to EarthWeb, a New York company that builds online services.

Analysts estimate that Internet retailing will be a multibillion-dollar industry. Some companies are even opening up "cybermalls," Internet sites that bring different retailers together with one click. MCI's MCI Marketplace, Microsoft's eShop, and IBM's forthcoming World Avenue are a few such malls.

Are predictions of explosive growth on target? Which industries will profit most from Internet sales? Will individual retailers prosper, or is the future of Internet sales destined to be a long strip of cybermalls?

Karen Epper

Analyst in the Money and Technologies Group, Forrester Research, Cambridge, Mass.

Right now the [Internet] merchant business is at about $518 million in 1996. We see it tracking up to $6.6 billion by 2000. When you take that in the context of the multibillion-dollar retail market, it's still a fairly small slice of the pie.

We see online purchasing to remain fairly concentrated in the areas it is now, like computer products and airline travel.

We see apparel at $46 million of the $518 million today and wrapping up to $322 million by 2000. It's still somewhere below where we see computer products.

In most of the merchant malls, there is some cost of entry. IBM is charging a 5 percent take on their merchant mall. I question what is going to drive the consumers to that mall.

The big companies are going to be Microsoft and Netscape.

Eighty percent of the browser market is Netscape, and virtually all of the virtual retailing server is Netscape.

Online, there's [Microsoft's] eShop, and they have about half a dozen merchants. But more importantly, [eShop] gives Microsoft the technology to offer to merchants themselves to set up their own sites.

David Levine

President, HuskyLabs, Shepherdstown, W.Va.

The big catalog houses are very happy with the results of their Web sites, and it's not just as a result of additional sales, but of finding new people to send their catalogs to. Victoria's Secret is selling really well. L.L. Bean, too. People are buying clothes that way.

Their profits aren't only in sales, but in direct marketing. They have customer databases now for people who like country music and they can market them for a Ford truck.

In the long term, I would say corporate information sales will probably be the hugest online transaction.

Peter Krasilovsky

Senior media analyst, Arlen Communications, Bethesda

Using the interactive capabilities of the Internet, you can really compare prices and products easily. Actually performing the transactions are more difficult.

While credit-card security on the Internet may be better than giving your credit card to a waiter in a restaurant, consumers need to be reassured that there's no problem.

[Individual businesses] are making hundreds of thousands of dollars right now. You're not seeing any multimillion-dollar business yet. But I see it as being a multibillion-dollar business. It's still a minimum two to three years down the road.

The people who are shoping on the Internet tend to be the elite, people who have traditionally bought catalogs. The Internet is not going to cut into the television-shopping networks so much as it will complement or take away from the mail-order catalog business. Lands' End and others will be the ones really affected.

If you're a retailer, you have to wonder whether you want to give up your own identity to be part of someone else's [cybermall] site. The Internet is ideal for developing your own image. I think cybermalls are really a business for smaller retailers who want to have a new place to sell things.

Alex Wolfson,

Associate director, Columbia Institute for Tele-Information, New York

I think items that will be quick to pick up on the Internet are those that are commodities. It doesn't matter whether you buy a CD at Tower or the Wiz. On the Internet, you can easily search through a number of online stores and come up with the best price. It's not like an article of clothing which you need to see, and try on. With a CD you know the artist and the title.

One of the benefits in the future will come in the service-type areas. It's midnight: How do I find a plumber who can come overnight in my area? Traditional Yellow Pages won't have the type of flexibility that the intelligence of the Internet will provide. When you know what you want, that's when the Internet will become a successful selling media.

Right now, we also don't have an accepted standard for encrypting credit-card information over the Web. Is it really unsafe? It's probably safer sending your credit card over the Internet than handing it to a 16-year-old behind a cash register.

Pub Date: 6/16/96

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