From...

January 13, 1999
Web posted at: 2:45 p.m. EDT (1445 GMT)

by Matthew Nelson

(IDG) -- Now that the holiday decorations have been put away and discarded Christmas trees line the sidewalks, many Internet stores are breathing a sigh of relief and trying to learn what they can from the 1998 holiday season.

The most important lesson of this year's onslaught is that sellers should bring Internet commerce into their core operations, and prepare for success all the way from the order-entry system to the shipping department.

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"For a lot of people, e-commerce is still an appendage to their core business," says Christopher Lochhead, chief marketing officer at Scient, a systems integrator in San Francisco. "Despite whatever happened this year, the good, the bad, and the indifferent will be dramatically amplified next year."

The two overriding issues that most sites deal with today are the failure to integrate their e-commerce systems with their overall supply chains, and miscalculating the demand these applications put on systems.

"The biggest lesson to look at is scalability. [For] managing sudden high volumes of traffic in 1999, folks should be really considering the value of outsourcing," says David Baltaxe, an analyst at Current Analysis in Sterling, Virginia.

"Scalability is critical. There is no substitute for it," agrees Bill McKieran, president and chief executive officer of CyberSource, a back-office transaction processor for Internet merchants, in San Jose, California. "If your systems don't scale to support traffic, you've just wasted money."

E-commerce overload

As predicted, 1998 appears to have been a watershed year for online holiday shopping. Online shoppers spent $1.96 billion from November 26, 1998 to January 3, 1999, according to BizRate.com, a Los Angeles-based independent point-of-sale market research company.

But the mad buying rush brought several difficulties--and some customers are not shy in voicing their displeasure.

"The buying part was fun, doing the hunt for the best price," says John McGing, of Colombia, Maryland, who spent approximately $2000 buying Christmas gifts online for the first time this holiday season. "I had fun until it came to [the gifts] being delivered--that's when the fun stopped," McGing says. He had problems receiving the goods he ordered.

Some companies had server problems at the height of holiday shopping. But most problems occurred with the fulfillment and shipping of orders, which could leave first-time customers with a lasting bad impression, according to Suzette Henry, a product manager at BizRate.com.

"In preparation for 1999, you have to have access to an inventory, tell people if you are out of stock, and alert them to delivery times," Henry said.

"What the holiday season proved is everyone can sell online. The real question is, how do we drive the system further into the organization to make it work more efficiently?" Baltaxe said.

But, overall, 1998 did indeed open the world of e-commerce up to a growing pool of buyers. It only remains for online merchants to keep their customers happy.