Optimism Online

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With the holiday shopping season in high gear, online retailers are hoping they've succeeded in overcoming their greatest perceived weakness: inferior customer service.

Internet merchants are determined to avoid the late deliveries, Web site crashes and slow customer service that marred the 1999 holiday season.

"A lot of changes we made over the course of 2000 came from market research and customer feedback," said Carl Rosendorf, executive vice president of Barnes & Noble.com, partly owned by the brick-and-mortar bookstore chain. "The message is very clear: Make the purchasing process fun. Make it simple."

Online retailers have plenty of motivation: U.S. consumers are expected to spend $12.5 billion online in the last three months of this year, up from $7 billion in 1999, according to Geoffrey Ramsey, co-founder of the Internet research firm eMarketer.

The outlook for brick-and-mortar retailers is far less rosy this holiday shopping season. Merchants had been expecting a difficult season,because of stock market volatility and a slowing economy that has made some consumers skittish about spending.

Sales at specialty stores in the nation's malls have declined 6.2 percent since the Thanksgiving holiday weekend in late November, according to the International Council of Shopping Centers, which is expected to release more recent data this week.

Facing similar pressures from the slowing economy, Internet retailers devoted many months and millions of dollars to improving customer service before the holidays. They built new distribution centers, revamped order-processing systems and made Web sites easier to navigate.

Two-thirds of online retailers have increased staff at call centers so customers can get questions answered before they place orders via the Internet, according to a survey by Jupiter Media Metrix. About half have switched to new, high-tech systems for filling orders and tracking inventory and hired more workers to collect and package orders.

"There's been a tremendous amount of investment this year," said Jupiter analyst Michele Rosenshein.

Many sites offer new features, such as a virtual "personal assistant" to help customers find the right gift.

What remains to be seen is how well online retailers will handle the crush of orders from last-minute shoppers.

Many customers were frustrated last year when gifts they purchased at the 11th hour failed to show up in time for the holidays.

Much of the frustration was directed at Toysrus.com, a subsidiary of the Toys 'R' Us retail chain. The company was unable to fill many last-minute orders, and its Web site crashed frequently when customer volume overwhelmed its servers.

"We were not going to repeat" that, said Toysrus.com spokeswoman Jeanne Meyer.

The company has teamed with Amazon.com, the world's largest Internet retailer, which fills all Toysrus.com orders from its regional distribution centers. Toysrus.com is also ocusing on forecasting demand for specific toys and keeping Amazon's distribution centers properly stocked.

Meanwhile, Amazon.com has reorganized its seven warehouses to reduce the time it takes to ship orders.

The second-largest Internet retailer, buy.com, expanded its customer service staff, made easier to return products and improved its Web site with a new buyers' guide and technical support links.

"From a customer support standpoint, we are light years ahead of where we were last year," said Travis Fagan, vice president for customer support.



By Linda A. Johnson © 2000, The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed
  • CBSNews.com staff CBSNews.com staff

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