E-Tail Sales Burst Through The Rooftops

From the U.S. bellwether Amazon.com to the German catalog retailer Neckermann.de to HK.Yahoo.com in Hong Kong, online shops around the world are hoping for a holiday season of double-digit sales growth – a small beacon of light amid stock downturns, flagging tech spending and stagnant corporate sales.

Leading the charge is Europe, where some forecasts even call for triple-digit increases over last year.

“We have seen a growth rate this year in excess of 100 percent,” said Jon Prideaux, executive vice president of Virtual Visa Europe. “A given retailer might not see precisely that, but we’ve seen monthly sales increases of 18.5 percent, so a double or more increase over last year is very likely.”

European e-tailers are gaining over the pioneering Americans because more consumers who are relatively new to the Internet are in Europe, said Japp Favier, research director at Forrester Research Inc.’s European operations. The United States has fewer newcomers, so growth is somewhat flatter this year.

The German e-tailer KarstadtQuelle, the online arm of the Karstadt department store and Quelle appliances, says 30 percent of its online sales this year – which should come in at E1.2 billion ($1.2 billion), a 70 percent increase – are coming from first-time customers.

“The average time between first plugging in the computer and buying something is 18 months, and the first purchase is usually a CD or book,” Favier said.

Overall, Forrester expects that European online retail sales this holiday season will rise to E7.6 billion from about E4 billion, bringing the total for the year to E30 billion, up from E15.5 billion.

In Asia, the situation is more fragmented. Cultural nuances and logistical barriers do not always turn new Internet recruits into online shoppers.

For example, in Hong Kong and Singapore, Internet and broadband penetration levels are among the world’s highest, but online sales lag significantly behind Europe’s and North America’s. In China, consumers want to actually touch the merchandise to make sure it works before they buy, analysts say. But e-commerce is still gaining in markets like South Korea, Japan and Taiwan. While there is little religious significance to Christmas in much of Asia, the idea of a “holiday season” may be catching on.

“The fourth quarter is increasingly becoming a shopping season in Asia-Pacific,” Lane Leskela, a research director for Gartner Inc., said in a recent report. “Christmas has penetrated the local culture of many non-Christian societies as a gift-giving celebration.”

Hong Kong’s top shopping destinations are the Yahoo shopping and auction sites. Quinnie Ng at Yahoo Hong Kong said the sites had seen a 160 percent rise in total customers this year. But in actual numbers, she said, the base is small.

Peter Steyn, Nielsen/NetRatings director in Hong Kong, said: “People in Hong Kong and Singapore go online to browse, compare prices and functions. Then they hop across the street and buy in a shop.”

In Europe, retailers have matured somewhat on the Internet over the past several years, and consumers have gotten used to them.

“People are finding it more convenient to buy online,” said Brian Morris, who heads e-business for MasterCard Europe. “And with the move to the euro, it’s become easier to do comparison shopping with Web sites in different countries.”

Even in markets where credit cards are often spurned as a payment method – such as Germany, Italy, Japan and China – e-tailers are getting creative and consumers are responding. Amazon will send bills by mail in Germany and accept cash on delivery in Japan. Many Japanese customers buy online and have the goods sent to a 7-Eleven outlet, where they pay with cash.

“Some people actually bring cash to the office,” said Fritz Demopoulos, founder and former chief executive of Shawei.com and now senior consultant to NetEase.com in Beijing.

“We have seven different ways you can make payment, like bank wire transfers, debit cards, prepaid cards.”

Internet buying is still a small fraction of overall retail sales. And online sales are seldom net gains – they are sales that have moved from the store cash register to the personal computer. But purchases made online generally cost the retailer less to process than face-to-face sales. Even in struggling retail sectors, such as consumer PCs, this shift has been notable.

“Overall, sales have stagnated,” said Massimiliano Bancora, Web and marketing director for CHL, one of Italy’s largest computer retailers, “but sales initiated online have increased by 20 percent this year.”

Regis Brinster, Geneva-based interactive marketing manager for Iomega International, a computer-storage maker, said: “We launched online sales two years ago, and they have grown to about 1 percent of our total European sales. To achieve this level of sales so quickly on a supplementary channel, without investing in a call center, makes this really outstanding.”

To more effectively balance loads and keep peak drain on their systems to a minimum, European retailers have encouraged early shopping. Amazon’s sites, Iomega International, British retailers like Argos, and many others offer incentives such as free shipping for orders placed before early December.

“If you’re going to compete with the high street experience, you need higher levels of customer service,” said Ian Loughran, managing director of Blackstar.co.uk, a Belfast-based video retailer.

Blackstar meets with Royal Mail representatives to plan for peak delivery periods such as holidays or during the release of hot movies.

That everything works is especially important to first-time buyers. If things do not go as planned, the next sale will be much slower in coming.

On the other hand, too much customer service can be a hindrance, and Internet stores can answer that need, too.

“I don’t need sales help to buy a movie,” said Lee Evans, a Berlin-based travel consultant.

“On Amazon, I type in the movie name and buy it. I don’t have to fight the throngs. Then I can go downtown, stand in the Christmas markets, drink the mulled wine and look at the lights with my family.”