Millennium Marketing Research®

Tom Schori DBA Millennium Marketing Research®, 808 Ironwood, Normal IL 61761, 309-532-8466

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Online continues to grow. . .but. . .

By Thomas R. Schori, Ph.D., and Michael L. Garee, Principals,  Millennium Marketing Research, 808 E. Ironwood, Normal, IL 61761-5239. Tel. 309-532-8466 -

As the holiday shopping season gets underway with a gusto, there is both good news and bad news for companies attempting to market products and services on the Internet. The good news is that online shoppers are expected to fork over $2.3 billion during the 1998 shopping season, up from the $1.1 billion spent during the 1997 season. The bad news is that only 16 percent of this expenditure is expected to be gift-related.

Thus far, the majority of shopping over the Internet has involved purchases for exclusive use by the shoppers themselves rather than for others, according to Jupiter Communications, an Internet marketing analysis company. That, of course, leaves considerable "capacity" for companies hoping to increase sales of gift items during the all-important holiday shopping season, upon which some companies, large, medium and small, depend for up to one-half of their total annual sales revenue

If you’ve followed the emergence of Internet marketing, then you’re probably aware that it has been only relatively recently that major retailers have begun to make their presence known. Horror stories about how difficult, if not virtually impossible, it has (thus far) been to sell profitably on the Internet have undoubtedly made many companies hesitant to make major marketing commitments to the new medium. That appears to be changing rather rapidly, though, as stalwart companies such as L.L. Bean, Macy’s and Wal-Mart have recently jumped into the fray with both feet.

At the risk of oversimplifying the early history (actually, just a few years ago) of Internet marketing, one of the principal reasons cited by experts for lackluster sales performance of the early entrants is that many, if not most, of these companies were new and relatively unknown to consumers. As a result, potential customers were hesitant to do business with them. What if these companies went out of business? How would one return products easily? Was it safe to send money to them, or, to provide them with credit card and other financial information?

Even now that well-known, trusted companies are enthusiastically marketing on the Internet, the question of security of financial information still weighs heavily on the minds of many would-be customers. Yet, in truth, such concerns appear to be largely unfounded. Technology writer Bill Husted puts this issue into perspective.

". . .plenty of space (has been devoted) to stories about computer researchers who have found backdoors and flaws in some of the credit card encoding technology used on the Web," he said. "But you haven’t seen a single story about a crook who used those flaws to steal credit card numbers."

Conversely, Husted added, there have been plenty of instances of credit card fraud involving the more "traditional" methods of credit card transactions, e.g., mail-order, telephone, or even transactions occurring in the actual retail store itself.

If you’re a regular reader of these columns, you know that we’ve waxed eloquent a few times about what we believe to be the very exciting marketing prospects for the Internet. (See the following weekly columns: August 4, 1997; August 18, 1997; and October 27, 1997.) We firmly believe the Internet definitely has the potential to become the most exciting, most efficient and most effective marketing medium in history.

To be sure, there still are a number of "bugs" to be worked out of the Internet, and how consumers use it, before it can hope to reach its full potential. Faster access is still needed (and desired), but with the emergence of such technological advances as cable modems, this problem should be solved sooner rather than later. It’s not a matter of if the Internet will offer faster access, only when. Many sites still are not taking full advantage of the unique interactive characteristics of the medium, choosing instead merely to "transplant," in toto and only slightly modified, existing systems and ways of doing business. As competition heats up on the Internet, this problem, too, should prove to be short-lived.

Without question, as a marketing tool, a sales medium, the Internet remains very much in its infancy, when compared to other contemporary media. But, watch out! When this "infant" finally grows up, we believe it has the capacity to dramatically and irrevocably change the way all of us do business. Bet on it!