'Tis the season to be spending, and these days more and more people are choosing to avoid the tacky tinsel and Christmas carol muzak by hitting the Internet to buy presents for their nearest and dearest.

ACNielson NetRatings' figures show online shopping grew 22 percent in the past year, with almost four million people purchasing online. According to Internet monitor Hitwise, 61 percent of online shoppers are female, and almost half of them lie in the 25-34 age bracket.

Leaving its dot-com legacy behind, the e-tailing industry is showing signs of maturing and providing sustainable business models. Most companies from the dot-com boom, who bought into the "new paradigm" that you didn't have to be profitable if you sold online, have disappeared to the great hard drive in the sky, and the remainder are seeing a steady increase in traffic and customers.

Adir Shiffman, founding director of Web site analysts Global Reviews, has seen the online retail space change dramatically in the past year. "What we're seeing is online retail becoming far more like traditional retail," he explains. "There's no loss leader to get volume, no promising a delivery time that they simply can't do, no unrealistic cut-off dates, no offering below cost to get people in, it's more realistic," he says. "You'll see some much more realistic business models developing and being implemented here."

Shiffman attributes this to the end of the dot-com boom. Large offline businesses now consider online to be just another channel, and if it doesn't generate revenue they are quick to get rid of it.

This convergence of online and offline business is apparent in the attitudes of big retailers. Claudia Carr, Web site manager for Dymocks says that online sales basically reflected what happens in the store, while Jill Campbell, corporate communications manager for David Jones, believes the customer experience "should be seamless between the store and the site."

One thing the online world definitely has in common with its three dimensional cousin is the Christmas sale boom, which brings in a significant proportion of the years revenue.

"Most of the money for every retailer comes in over Christmas," says Shiffman. "In terms of when their peak sales periods are, there's no doubt that Christmas is a peak sales period for both online and offline." E-tailers tend to agree, with every company contacted by ZDNet Australia   indicating they expected sales to peak over the next few weeks, and exceed the levels of the same time last year.

"It's quite dramatic this season compared to what it normally is," Zoe Pallister, company director of pure e-tailer Zodee explains. She says there is a noticeable increase over last year as well.

According to Campbell, Christmas is a critical time for online business. "It echoes in a way what trade does in the department store," she says. "It has its peaks at any gift giving time, and Christmas is the biggest gift giving time."

Paul Deighton, the mail order manager for Oxfam Trading, says sales from the site had doubled compared to last year, with more than 50 percent of orders coming from new customers. Oxfam offers unusual products from developing countries throughout Asia, Latin America and Africa, which are promoted through catalogues.

This year's Christmas catalogue went out from the end of August through till November, and the company is currently experiencing its annual silly season rush. In a week or so Deighton expects the activity to drop off. "The number of subscribers to our newsletter has also doubled over the past few months," he says.

As for the Web sites of the large retailers, many are experiencing high growth, although revenue is still a small proportion of overall sales. "It's a really small part of sales, but growing at around 40 percent each year," says Campbell about David Jones' Web site.

Carr said that the sales from Dymocks Web site were comparable to a medium-sized store. "Every Christmas we see a spike, which has already started," she says. "Online sales continue to grow so there's every reason to believe this year will exceed last year."

Customer service and the perils of gift giving

The final nail in the coffin of the dot-com business model was a failure to recognise the importance of customer service. In an attempt to offer ever lower prices e-tailers overlooked the importance of punctual delivery, billing and customer support services. However, those who have survived have learnt their lesson.

"The focus is on customer service, getting as many orders as we can out by the Christmas deadline," says Dymocks' Carr adding that security is still an important issue.

The focus on customer service has resulted in sites that are easier to use than those in the past, according to Shiffman.

"I think a lot of really large online retailers are actually improving at a slower rate than some of the smaller retailers who seem to have a really big commitment to make the customer experience as pleasant and as enjoyable and as conducive to shopping as possible," said Shiffman.

"That's because they need to do more, they can't rely on a well known offline brand to drive sales, they have to rely on a better experience with more information and a better chance of actually closing the sale," he said.

Pallister said that "providing a fantastic service and help when [customers] need it" was the main focus of Zodee. She said when people buy the products they like to be able to get assistance when needed, so Zodee provides help by phone or e-mail. They also inform the customer when the product will be dispatched, whether there are any delays, and finally that the product has been dispatched.

This is to ease the concerns of people who are still nervous about shopping on the Internet, according to Pallister. "A lot more people are willing to shop online," she says, but "people often call to confirm an order."

"We get people phoning up to pay over the phone by credit card, because they're not sure who we are and how long we'll be around," she added.

The strategy of most sites to ease the burden of Xmas shopping for their customers (not to mention increase sales) is to provide suggestions of gifts for each type of person.

"Every Christmas [David Jones] includes an additional category, the Christmas store. It's designed to help you have a look at your options in terms of what you want to buy," said Campbell. "People are really looking for suggestions, and options for gifts."

Despite this, a survey of 1013 people by online auction site eBay found that four out of five people would receive one or more unwanted gifts this year. At an average of AU$40 per present, eBay calculates that Australians will waste $471 million on unwanted gifts.

If you don't trust your nearest and dearest to figure out what you want for Christmas, Yahoo Australia New Zealand is promoting a Hint Dropper on their site, to avoid receiving "hideous gifts". After choosing whichever style suits you, ranging from bookworm to corporate to glamorous, you can choose which gift you want from those available and vary the hint from 'subtle' to 'sledgehammer'.

If this worked it would be bad news for eBay, who have grown used to brisk post-Christmas trade. "The biggest surge throughout the whole [2001] festive period came on the 27th when the number of items listed on eBay doubled, as did the number of bids which indicates that those who were listing their unwanted gifts were then bidding on the items they really wanted," Simon Smith, managing director of eBay Australia and New Zealand told ZDNet Australia.

However, eBay claims many people looking for bargains turn to the auction site to pick up good presents at low prices, and back this up by revealing that the first half of December 2001 saw an increase of up to 429 percent in the number of bids being made by members.

Tips on shopping safely

With almost a million Australians shopping online for the first time this year, many people are expected to finally let the temptation of queue-free gift-wrapped presents sent straight to the door of their intended recipient overcome inherent concerns of credit card security and suspicions of late deliveries.

Global Review's Shiffman has some tips on what to look for when sizing up an e-tailer whose shores you wash up on while surfing the Internet.

"Some good things are a phone number, a physical address, for people that are particularly nervous they can actually contact the retailer and see what sort of a response they get," said Shiffman. "Obviously making sure that the ordering part of the site is actually secure-those are the types of things that are giveaways. Making sure there's a returns-and-refunds policy on the site, a security policy and a privacy policy on the site, and if that business has an offline store or stores as well, then that would give me more confidence."

However, he does not advise people to avoid small e-tailers.

"I still think that in the vast majority of cases small online retailers are more committed to the online shopping experience than large retailers," says Shiffman.

"There are some exceptions, obviously the division of David Jones that is David Jones Online is completely committed to selling online, but I think in the main you've got a lot more small retailers, who may only be on the Internet or they may be using the Internet to supplement an offline business, but they're more excited and committed to the online experience."

A persistent lack of consumer confidence in etailers is a problem Shiffman addresses through Global Reviews, by providing a comprehensive analysis of all the online retailers and benchmarking their performance.

Finally, Shiffman cautions e-shoppers to leave enough time for the store to deliver the product. While flower shops routinely offer next day delivery, some of the larger retailers, especially big music retailers, give two weeks as their standard delivery time, according to Shiffman.

"Ideally these sites should actually be telling you on their site what sort of delivery time you should actually expect, and the best operations provide you with the options of paying extra for a courier service if you really need the item in a hurry," he said.

And are these delivery estimates usually accurate?

"Uh, no," he says. "If people are going to order for Christmas they should allow at least two weeks as the lead time for ordering," said Shiffman.

So if the space under your tree is still looking bare you better get cracking, there's only 18 more reboots until Christmas.

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