Skip to main content
The Web    CNN.com      Powered by
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SERVICES
 
 
 
 
 
 
 
SEARCH
Web CNN.com
powered by Yahoo!
Technology

Record numbers go online shopping

Traditional companies turning e-tailers

From CNN's Maggie Lake

story.amazon.jpg
Amazon has invested millions in new facilities to keep up with customer orders.
RELATED
Bargain hunting easy in cyber boutiques
QUICKVOTE
Have you ever purchased an item of clothing from a Web site?
Yes
No
VIEW RESULTS
SPARK
Find out how tech is changing our lives  Click here
YOUR SAY
Send your thoughts on this story to spark@cnn.com or read what other viewers have to say
VOTE
What has been the most significant invention or discovery of the past 50 years?  VOTE NOW
YOUR E-MAIL ALERTS
Electronic Commerce
Spark

FERNLEY, Nevada (CNN) -- Whether their roots are in brick and mortar or cyberspace, online retailers share a common challenge: attracting an Internet-savvy consumer with an insatiable appetite for discounts.

These days, the pressure is on e-tailers to stay one step ahead of technology, to keep prices low and to attract the thousands of new customers who are migrating from the mall to the Web every day.

As one of the pioneers of e-tailing, Amazon.com's business is built around making customers' online shopping experiences simple and affordable.

But in order to stay on top, the company made, what some described as unusual, a decision to invest millions of dollars in facilities, contradicting the common belief that online businesses operate with little physical infrastructure.

Amazon's enormous base in Fernley, Nevada is the size of four aircraft carriers, has nine miles (14.5km) of conveyor belts and moves hundreds of thousands of items out the door everyday.

As orders are placed by customers over the Internet, a computer at Amazon's facilities assigns it to a scanner, and a staff member collects it and scans the item.

Amazon's head of worldwide operations, Jeff Wilke, told CNN the company's new buildings were more productive, enabling shipment of goods to customers to happen as quickly as possible.

"We've been able to enhance the customer experience, get things to people faster with few defects -- and all of that lowers the cost," he said.

The operating efficiencies helped Amazon triple its earnings in the third quarter of the current year, while still being able to offer consumers incentives, including free shipping.

As competition increased in the online retailing market, building customer loyalty became critical, Wilkes said.

Americans are on pace to spend $144 billion dollars online during 2004. Ebay and Amazon are the sites most frequently visited, but traditional retailers are nipping at their heels. Walmart now runs a close third.

It is a similar story in the United Kingdom, the second biggest Internet market after the U.S., with sales last year reaching £9 billion.

Four of the five top e-tailers in the UK are traditional retailers.

Among them is Littlewoods, which specializes in homeware and clothes. It is one of Britain's fastest growing online retail businesses.

At its main distribution center in the north west of England, massive cranes filled with boxes give an indication of just how big the online business is.

The company believes that it is benefiting from the facilities it has had in place for years.

Littlewoods managing director Alan Evans told CNN that setting up an online offshoot of its business enabled the company to give customers value for their money.

"It's very easy to set up an Internet site and take a few orders," he said.

"But as more of the traditional retailers, and particularly ourselves who've got a heritage in home shopping, have started to trade on the Internet we're able to bring this scale of infrastructure into play to give customers great value and the service they demand."


Story Tools
Subscribe to Time for $1.99 cover
Top Stories
Burgers, lattes and CD burners
Top Stories
CNN/Money: Security alert issued for 40 million credit cards
Search JobsMORE OPTIONS


 

International Edition
CNN TV CNN International Headline News Transcripts Advertise With Us About Us
SEARCH
   The Web    CNN.com     
Powered by
© 2005 Cable News Network LP, LLLP.
A Time Warner Company. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines. Contact us.
external link
All external sites will open in a new browser.
CNN.com does not endorse external sites.
 Premium content icon Denotes premium content.
Add RSS headlines.