Christmas Postponed

By Chris Taylor

For want of a light saber, a toy drum, a doll, a jigsaw puzzle and a Slinky, Elizabeth Bernard almost stopped believing in the e-commerce Santa Claus. The Louisiana mother of three and veteran online shopper chose her presents at Sears' wishbook.com way back on Dec. 6--well within the holiday-delivery comfort zone. But by Dec. 14, her $250 box of goodies was still stuck in cyber limbo. She dialed customer service, and a cheery representative told Bernard that her order didn't exist. More than 10 anguished calls later, she clicked on FAO Schwarz fao.com) which rushed the full wish list to her in time to avoid tears under the tree. But Bernard felt burned. "It never occurred to me that it wouldn't be safe to place Christmas in the hands of Sears," she says.

If it's any comfort, Bernard is not alone, and neither is Sears. The final days of the Internet's first really big Christmas were punctuated by a mountain of undelivered packages and a blizzard of complaints: computers that crashed, orders that vanished, items suddenly out of stock or stuck in the warehouse. In a telling field test, the results of which were released with only five shopping days left, staff members at Andersen Consulting tried ordering 480 gifts at 100 of the most popular online stores and managed to get through only 3 times out of 4.

The problems were centered high in the retail pipeline. The worst offenders, according to the Andersen study, were giant chains trying to jump on the online bandwagon (but perhaps leaving their hearts in the mall). Even when the big bricks-and-mortar stores managed to get the online orders right, there was a 75% chance that the goods wouldn't arrive on time. Toys "R" Us, realizing three days before Christmas that it could not make good on its delivery promises, issued free $100 gift certificates to customers left in the lurch.

Amazon.com and other retailers born on the Web did much better, hitting their delivery dates nearly 9 times out of 10. The best performers--seemingly against all odds--were the delivery guys. UPS hired 90,000 extra employees for the dotcom season and managed to keep more than 95% of its promises.

But when a single gift can make or break a Christmas, even 95% may not be good enough. In a survey conducted by PeopleSupport.com only 26% of online holiday shoppers had no complaints. About a third of them could name at least one Web store they will never use again.

This is not to say that first-time Web shoppers hated the experience more than they hate trudging through the mall. The e-stores must have been doing something right; early indicators point to a $12 billion cyber Christmas, way beyond the most optimistic preseason estimates. And since nobody had a clue as to how many folks would actually buy online this year, it's not surprising that a quarter of the orders got trampled in the ensuing stampede.

Some sites, of course, were better prepared than others. By bringing on enough servers to handle peak-load traffic, the best avoided "site busy" messages and snail-like downloads. They also kept puzzled shoppers from fleeing by providing an 800 number or offering real-time Instant Messaging chats with customer reps. And they avoided apoplectic rages by "integrating" their inventory systems so that what appears to be in stock on the website corresponds with what's actually on the shelves.

Too many stores this year rushed onto the Web, lavishing plenty of cash on advertising but not enough on infrastructure. "They get up a nice website. They get people interested in their products. But they haven't thought about how they're going to get the products to their customers," complains Professor Curtis Grimm of the University of Maryland's business school. By contrast, he says, "the Amazon.coms of the world have put a lot of attention into logistics and transportation." In some cases this required getting into bed with partners as pedestrian as the U.S. Postal Service.

Of course, Web retailers, because they don't have storefronts, depend for their very existence on establishing good relations with their online customers. For traditional stores, e-commerce is still a tiny fraction of their business; they can afford to make clumsy beginners' mistakes. And they can always press their presence in the mall as an advantage over e-tailers when the Web fails to deliver all those Slinkys and light sabers. Sears, for one, now acknowledges that Elizabeth Bernard "didn't get the customer care she deserved." A few days before Christmas, the retailer finally discovered and dispatched the order that didn't exist--at no charge to her. That's what we call friction-free Web shopping.

--With reporting by Melissa August/Washington and David Nordan/Atlanta