November 29, 2000

US Online Stores Face Survival Battle This Christmas Season

Lou Hoffman, president of The Hoffman Agency, a U.S. Silicon Valley-based PR firm, said that this Christmas-shopping season will be critical to most online stores in the United States.

Hoffman noted that online shopping became popular in the United States in 1998. In the beginning, online stores had many operational problems. Online shoppers tolerated these problems, attributing them to the immaturity of the industry. By 1999, many Web sites made significant improvements in operations and systems; though problems remained, such as the fulfillment difficulties Toys ‘R’ Us had. This year, the public expects online stores to have resolved all these problems. Therefore, if an online store cannot deliver goods on time or has other glitches, it will suffer irreparable damage to its reputation and might lose its customers forever.

Christmas Battle Crowns the Winners and Weeds Out the Losers

Hoffman also pointed out that due to the burst of the bubble in Internet stocks, it is difficult to find investors interested in dot-coms. Therefore, if online stores fail to deliver this Christmas, they might have to close shop. Only the best will stay in business. He predicts that another wave of dot-com shutdowns will occur after Christmas.

There have been a number of American online stores that have gone out of business recently; why didn’t they make one final thrust, and finish up with the Christmas season? Hoffman explained that, because these stores lost a lot of money in the past, it would be best for them to shut down and minimize their mounting losses. He believes that only well-known brands such as Amazon and clicks-and-mortar stores will survive.

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