Ecommerce/29″/LK1st/mark2nd By SARA FISHER Staff Reporter Gridlocked parking lots. Harried sales clerks. Out-of-stock-merchandise. The holidays often are called the most wonderful time of the year, but for shoppers plunging into the annual purchasing melee, the season can be anything but. Online retailers wouldn’t have it any other way. Hoping to woo holiday shoppers away from traditional retail chaos and into their Web sites, many of L.A.’s e-commerce firms are working more aggressively than ever. And it’s no surprise why: A successful season can do more than boost the bottom line it can prove a company’s merit to the watchful eyes of analysts, investors and future IPO underwriters eager to cash in on the next big Internet trend. “This season is the time for online retailers to make a strong showing,” said Maria LaTour Kadison, an analyst for Forrester Research Inc. “It’s a case of success breeding success. If a company proves itself savvy enough to capture the sales now, it can attract more future sales, more venture capital and more general interest.” A record number of shoppers is expected to flock to the Internet to buy gifts this year. A survey sponsored by Visa USA found that 46 percent of computer users intend to shop for presents online this season. Jupiter Communications estimates that online merchants would see $2.3 billion in revenue during November and December. Forrester was even more bullish, projecting online sales of $3.5 billion during the last three months of the year roughly the same amount consumers spent on e-commerce during all of 1997. “This quarter is going to be either good for us or it’s going to be great,” said David Hodess, chief executive of Pasadena-based Cooking.com, a 2-month old Idealab start-up that sells gourmet food products and kitchenware. “This first holiday season is especially important for us since it will be a brand-building exercise. We want to attract people to our site for the first time, get them to know us, and have them come back.” Cooking.com sells more than 1,000 cooking-related products online. It currently is touting Thanksgiving accoutrements and recipes, holiday gift baskets, and gift certificates to attract the culinary crowd. Hodess estimates that 40 percent of the start-up’s annual revenues will come this quarter alone, similar to a traditional retailer’s bell curve. Even more important for the company, which eventually hopes to go public, is establishing brand-name recognition. As e-commerce giant Amazon.com has proven, a well-known name that stands out above the Internet’s clutter garners both first-time buyers and repeat clients and possibly a sky-high market capitalization. “Online buyers have shown themselves to be surprisingly loyal,” LaTour Kadison said. “If they already have your name in mind when logging onto the Internet, they’ll likely buy from you.” Santa Monica-based eToys knows this lesson well. On the verge of its second holiday season, the company already is the largest toy store on the Web. Over the last year, it has run ads in parent-oriented magazines and on the radio. Most recently, it is featured in a Visa television ad for the holidays. Phil Polishook, eToys’ vice president of marketing, says the site is attracting 20 to 30 times the number of visitors it saw last year, and the fourth quarter is expected to bring in about 55 percent of the company’s annual revenue. To keep customers coming, the company plans to regularly update its site, promoting various items and offering some discounts. Analysts already consider eToys an Internet success story and predict that it will go public in 1999. But they are closely watching its holiday performance. Company executives refused to comment on plans to go public. “This quarter’s performance is absolutely critical for eToys, since it will lay bare how well-equipped the company really is to become a big, public company,” said Nicole Vanderbilt, director of digital commerce research at Jupiter Communications. “In general, this year’s fourth quarter will be particularly important for any company selling online and interested in going public. It’s time to prove what they can really do.” Hollywood-based DVD Express, which sells movies in DVD format, is ready to take that challenge. The 17-month-old private company has posted $16 million in revenues and has been ranked by some industry groups as the highest-grossing online DVD retailer. Susan Daniher, the firm’s vice president of marketing, said plans to go public already are in progress, though no date has been set. With this in mind, the company is gearing up for a record-breaking quarter. It has boosted its online advertising efforts, taken out print ads and launched a special holiday site, featuring its 2,000-title catalogue plus an ongoing story line about Santa Claus. “We know this is going to be our biggest quarter ever,” Daniher said. “We do 40,000 sales per month, and have budgeted that we are going to see at least 20,000 additional sales per holiday month.” Companies that already are publicly traded have announced elaborate plans in part to further increase their stock value. North Hollywood-based Buena Vista Internet Group, Walt Disney Co.’s online division, has aggressive holiday strategies for both its Disney and ESPN shopping sites. The Disney site, which has been redesigned during the holiday season to handle twice its normal number of visitors, is pushing over 2,000 items, ranging from Disney videos to theme-park passes. It also offers a new section of the store where consumers can customize their gifts. The newly opened ESPN.com site, which sells ESPN-branded items, sports collectibles, and licensed sports teams’ merchandise, gets 1.2 million hits a day and is clearly looking to turn those into holiday sales, though Chuck Davis, Buena Vista senior vice president, declined to disclose any revenue forecasts. “The holiday season is critical for us,” he said. “But it is important to emphasize that we don’t hang up our Mickey hat for the rest of the year. We are building a strong, long-term business here.” Santa Monica-based iMall, which runs a virtual mall with 1,600 online merchants, will be running holiday specials starting this week and is spending $500,000 in online and radio advertising over the next two months. A strong holiday performance for the company which recently inked a $14 million deal with First Data Corp. in exchange for a 30 percent equity stake is expected to further drive the company’s slowly climbing share value. “We see 200 to 300 percent increase in traffic to our mall during the holiday season, and our merchants see up to a 100 percent increase in sales during the next two months,” said Chairman and Chief Executive Richard Rosenblatt. “This is a huge spike for us.” The holiday season may be especially critical for small online retailers. Like the neighborhood merchant, these private companies rely heavily on the next couple months’ sales, helping them ease through the year’s leaner times. “My company is strictly online, so I have to hope that this holiday season goes well,” said Richard Bendik, who owns and runs Canoga Park-based BC Specialties, a 3-year-old operation that sells cigar accessories such as humidors and cigar cutters on the Internet. “I’m budgeting to see at least a 20 percent increase over normal for sales in the next (two months).” Bendik is advertising on all the major Internet search engines in order to catch more shoppers’ attention. Beverly Hills-based Fine Pens Online expects to see a similar spike in holiday sales but without the advertising push. The company sells fountain pens ranging from $12 to $11,000, catering primarily to the professional crowd. “We normally take 25 orders a day, but it can easily double or more during the holiday season,” said Carolyn Ann, a manager at Fine Pens Online. “It’s already starting to get hectic and we haven’t even hit Thanksgiving weekend yet.”
