Nervous shoppers lean toward big online names

It isn't just investors who are feeling the dot-com jitters: Some shoppers are now cautiously opening their wallets to smaller e-commerce sites that could be here today--but gone tomorrow.

Customers and industry watchers say the recent litany of dot-com failures has some shoppers shifting their buying habits to go with big-name e-tailers that they trust are on solid ground.

"I would probably buy from the Gap (rather) than some unknown," said Matthew Zeumann, who has bought shoes and clothes on the Internet. "I know they aren't going anywhere; they have hundreds of stores."

That kind of shift in consumer confidence can fuel a downward cycle for struggling, smaller companies--and benefit the titans of the online world, analysts say.

"The big will get bigger," said Alan Alper, an analyst at Gomez. "A lot of the separation in the pack has to do with a store's good reputation and the good experience people have had with them in the past."

In the past few months, several online stores have gone under. Video retailer Reel.com shut its doors last week, for example; other casualties include high-profile British fashion store Boo.com, shopping site Foofoo.com, Disney-owned Toysmart.com and Viacom-owned Red Rocket.

To help boost consumer confidence in some smaller e-tailers, a Web site called Ebates.com has said it will effectively insure members who buy goods at Web sites that subsequently go out of business.

The company said it will reimburse its members for any charges incurred through its shopping site if a product doesn't ship as a result of a participating retailer shutting its doors.

Dot-closures

Most analysts view the move as largely unnecessary, because most sites promise to fulfill all existing orders. The major credit cards have also engendered confidence in consumers by guaranteeing to help reverse charges after the first $50.

"I feel better using a credit card online," said Lauren DiMarco, a consumer who has shopped at clothing retailer J. Crew's online site and the bigger Net-only players like Amazon.com. "I definitely would not send a check or use a debit card."

Analysts noted that the typical fulfillment time, from taking an order to delivery, takes about three to seven days--plenty of time for merchants to make good on their orders.

"It's not like the doors slam shut precipitously and consumers are left holding the bag," said David Schatsky, an analyst at research firm Jupiter Communications.

Major portals such as America Online and Yahoo don't guarantee refunds if one of their merchants falls by the wayside. However, these industry leaders said they extensively screen merchants before they put their stamp of approval on them.

"We also do everything we can to support our merchant partner," said Julie Mason, an AOL spokeswoman. "When it comes to it, if someone were to go under, we have done all we can do. And there's only so much you can do."