Ray Van Eng (07/16/97)                          

For retailers, the Internet is certainly a great place to do sales and marketing and maintain relationships with their clients, but an increasing number of web merchants are feeling the need to go one step further to set up online catalogs for cyber shoppers to purchase merchandize right over this virtual channel.

According to a study by Computer Sciences Corp. and the Retail Info Systems News, 59% of online retailers plan to have shopping systems in place by 1999, up from a mere 20% this year.

With the roll-out of secure electronic commerce schemes such as the Visa and Mastercard co-authored secure electronic transactions (SET) protocol for handling credit card sales online, consumers' concerns for security and privacy are finally put to rest. In fact, IBM are beginning to run TV ads touting the virtues of online shopping.

Ironically, Big Blue has just closed its own Internet mall -- the World Avenue. The reasons for its demise are: one, IBM should have promoted the various vendors' brand names instead of disguising them as an IBM venture (some consumers complained that they have to go through a number of screens before they can even locate the merchants' web pages) and two, the technology giant did a poor job in marketing the service to consumers.

To its credit, IBM did admit that it has made a mistake and has learned from the experience. Now, officials say that they have wised up and will stay in the background (where they belong) while putting retailers front and center.

For those merchants who are successful in moving their brands to the cyber media, the rewards can be enormous and that has been one big reason why retailers flock to the Internet to sell their wares in the first place.

A study by ActivMedia indicated that web based commerce could amount to $24 billion this year with sales and fees accounting for 85% of that figure and ad banners accounting for the rest. While ActivMedia says that only 14% of the sales are actually carried out online, other studies have some very encouraging news for the Internet retailers and that has to do with who is buying online.

It may be true that Net shopping is still in the early adopter stage, but these cyber shoppers represent some of the most desirable demographics.

A recent study from AT&T and Mercer Management Consulting suggests that this group of online consumers are well-off premium buyers who offer greater profit potentials for retailers fortunate enough to have their businesses.

And there is more. These customers are not only very happy with their purchases, a vast majority of them said that they will continue their patronage online.

Let's dig into some hard figures.

The AT&T/Mercer telephone survey of 300 heads of households indicated that 59% of those who buy online are highly satisfied with their transactions. Because of that, 62% said they would do more shopping online with only 4% said they would buy less.

Across the board, 88% said they consider themselves as brand loyal and tend to shop from premium sellers as opposed to value based providers. Some two thirds of their children are also online, which means that companies with innovative ideas would find great opportunities with this market segment.

To add to this rosy picture, 27% of those who are currently not buying online said they intend to do so in the future. This is a excellent sign that online retailing would soon move past the early adopter stage and into the mainstream and that would bring tremendous opportunities for the web merchants.