Net retailers gear up for holidays

In the lazy days of summer, online retailers are already preparing feverishly for what they hope will be the biggest holiday shopping season ever on the Net.

Forrester Research, which says online sales to consumers in the last quarter of 1997 hit $1 billion, thinks the numbers might double for the last three months of 1998. Even $3 billion is not out of question, says Kate Delhagen, director of Forrester's online retail research service.

Scott Smith of Current Analysis doesn't do numbers, but he thinks doubling 1997 holiday sales is entirely reasonable.

"Particularly as folks like Macy's enter the picture, they can quickly add to [holiday revenues]," said Delhagen, who expects the Macy's online store to have more than 250,000 items for sale by the holiday season. "The booksellers will be extremely aggressive--we're talking about a very big quarter."

Part of the optimism about online holiday sales is based on consumer Christmas sales of personal computers last year, plus falling PC prices since then. Smith jokes, for example, that dirt-cheap prices have him mulling a PC under the Christmas tree for his son, now two months old.

"Last year we were in the early adopter phase," said Genni Combes, Internet retail analyst at brokerage Hambrecht & Quist. "Now it's going to hit the mainstream in terms of consumers getting comfortable on the Net."

Online merchants are already well into their holiday preparations, which include a little shopping of their own. This week, Amazon.com acquired the Junglee database-driven shopping service, a logical companion to its online music store, expected to debut by year's end. The Junglee Shopping Guide, which makes it easier for shoppers to find items on the Net, has more than 15 million items in its database.

Amazon is madly hiring customer service reps to assure good service for Christmas, Combes added.

Forrester's Delhagen sees Hollywood Entertainment's July 31 purchase of Internet video store Reel.com as another example of holiday preparation. Hollywood Entertainment runs video-rental chain Hollywood Video in the physical world.

In June, Yahoo paid $49 million for Viaweb, a Web storefront hosting service that has been rechristened Yahoo Store. In an interview then, Yahoo chief operations officer Jeff Mallett said the goal was to be ready for the fall shopping season.

eToys is hoping for a big autumn, with chief executive Toby Lenk deciding to skip the giant fall Comdex computer trade show to stay home and help the elves in his workshop. Toys 'R' Us is girding up for the holidays, too.

One reason Net retailers are focused on Christmas has nothing to do with 1998 sales: they are counting on new customers this fall to return next year and beyond.

"Amazon.com already has 3 million customers, and I wouldn't be surprised if it adds 2 million more by the end of the year," said H&Q's Combes. The online book merchant said 40 percent of sales come from repeat customers, so new book buyers for Christmas should mean jollier revenues well into 1999.

Other Net retailers hope Santa will bring them such loyal gift buyers, too.