This Christmas, the virtual tills of Europe's online stores are expected to be ringing louder and faster than ever before. In a year when e-tailers have seen their businesses continue to grow rapidly, this holiday season will still make up 30% of the year's online sales, according to figures released this week by Forrester Research. In the UK, that adds up to £400m in the holiday season alone.
Yet already this year's online Christmas is much more muted than last year's hugely hyped event. The cash might be rolling in, but many e-tailers are concentrating on actually delivering the goods rather than blowing millions on advertising campaigns, after a difficult year in which the bubble of investor and consumer confidence in dot.coms has been punctured.
From the dot.com disasters of Boo.com and ClickMango through the abrupt calling-off of the stock markets' love affair with all things internet, consumers sense the e-tail industry is in trouble. Combine that with Christmas presents ordered last year arriving in January of this year, scare stories about credit card scams and online fraudsters, and it is easy to see why e-tailers have a job on their hands to persuade consumers that using their sites is safe.
"This Christmas will be a test of customer service and site performance," says Abigail Leland, consultant analyst at Forrester Research. "For the larger projects, good retailers will have planned far in advance. They will have really learned from last year where merchants were not able to get products out on time and had to refund customers."
Even at Amazon.co.uk, which has a customer service record most online retailers envy, preparations for the seasonal rush began long ago.
"This is our third Christmas, and one always wants to say that we're going to do a better job than we ever did before, but in fact we did a really good job last year," boasts Steve Frazier, managing director of Amazon.co.uk. "The challenge for us is that we've gone on every quarter since then and done more business each quarter. What Christmas really means is that you are stepping up to the next plateau - it's like 2001 is happening in December.
"You have all this preparation and then it's showtime - you've got to do a really, really good job in November and December to persuade people that you're in business and doing a good job."
Over the past year, the e-tailing giant's staff has been working on adding new product ranges and making its website run more efficiently in preparation for the end of year rush. The site's help section has been renovated ("we've discovered customers like to help themselves") and its "Christmas messaging" - on-screen details like ordering deadlines for the Christmas post and the various gift options - have been tweaked to make them more easily seen and understood.
But most of all, Amazon has been trying to get across one message: we can deliver. At Christmas more than any other time of the year, says Frazier, "that whole question of how you are taking care of that basic thing - getting packages to customers - becomes tremendously important".
To that end, Amazon's advertising campaign is being co-sponsored by the Royal Mail, which delivers its parcels. The message is clear: you can depend on Amazon not just because it's Amazon, but because the Royal Mail is delivering. "We think that this point - that Amazon can be relied upon to make Christmas happen - is something that people in this market need reminding of," says Frazier. "There has been enough doubt and confusion sown in e-commerce that we thought it was important to tell people: you really will get this stuff."
That has also led to Amazon's slogan for the year - "a real company in a virtual world". "I'm pretty sure it's not a slogan for the ages," laughs Frazier, "but I'm sure it's a slogan for the year 2000. We saw how many companies failed to do a good job last Christmas, and our feeling was that this would be a year of doubts and confusion about e-commerce."
At the other end of the scale are companies such as Father Christmas Ltd - a tiny web operation based in Cambridgeshire which emerges for only a few months at the end of each year. It relies on potential customers "domain dipping" and typing in its prime web addresses such as www.santa-claus.com and www.Christmas.co.uk by chance, rather than advertising. But despite the differences in scale its managing director, Stephen Bottomley, seems to be grappling with the same issues as his giant competitor.
"This may sound strange coming from the MD of an e-tail site, but the perception of e-tailing is not good at the moment," says Bottomley. "That needs to change, and there's no way that is going to change in time for this Christmas. The only thing that you can do as an e-tailer is offer guarantees - like money back, no quibble guarantees should the worst happen - advise on when people should place their order so that it arrives at the right time, that kind of thing."
But Bottomley also says that for him, unlike many e-commerce MDs, this is not the vital e-christmas for his company. "I don't think this will be the one," he says. "I think next Christmas will be more important, simply because of all the hurdles online retailers have to clear this time around. There's the confidence in fulfilment, security online and more, and I don't believe that this is the make or break Christmas."
For some in the industry, the hurdles being put in e-tailers' way by nervous investors and consumers is a frustration. James Roper of the Interactive Media in Retail Group (IMRG) admits that he gets annoyed by e-tailers making the same mistakes but says he thinks the lack of faith has "got a bit silly."
"I think this is a fundamental change in the way we communicate and do business and it will take many years - if not decades - to fully bed in," he says. "Everything is having to be realigned from banking services to shipping, from media to how we spend our time and everything else. We set up the IMRG group because we realised that it was just far more complicated than people thought. We're getting just so fed up with people making the same mistakes over and over again."
He says consumers are at much less risk than the media claims, thanks to protection from credit card companies against online fraud and a raft of new European legislation which means online shoppers have more legal protection than those in the high streets.
"There has been such noise about consumers' exposure, yet frankly there has been little - if any - consumer exposure. Anybody who uses a credit card is comprehensively protected, and now the law means you are more protected buying online thanfrom a shop," he says.
"It's very unhelpful to generalise because a lot of consumers, who only know what they see in the press, are very anxious. But those people who have actually shopped on the net find it works and continue. We find that people, in their first year online, have small ad hoc trials, but in their second year they get serious about it, booking holidays and flights and choosing what car to buy."
This pattern of tentative first steps in e-commerce, followed by much more extensive - and expensive - e-shopping, is reported by many e-tailers. Forrester's Leland says that much of the growth in e-commerce is fuelled by more experienced net users overcoming their fears and using online stores more often. "Consumers who have been online for three years are two and a half times more likely to shop online than when they were in their first year," she says.
"There is a sort of cumulative effect of both new people coming online and [existing users] buying more online, so it's natural to see continual growth. The holiday season is just all the new users being combined with the added incentive they have to spend at this time of year."
Yet all this festive good cheer could still be tempered by e-commerce's continuing challenges. No matter how efficient the dot.com is at its end, fulfilment can still be a problem, as anyone who has attempted to have bulky items delivered to their home will testify. Even the much simpler, but equally vital, signposting on e-tail sites is still a problem, with many dot.coms not including the simplest details such as contact telephone numbers and addresses to reassure nervous customers.
And many consumers - especially the large number of first-time shoppers this Christmas - are still wary of handing over credit card details. "There is a big discrepancy between the number of shopping carts which are started versus those which are checked out," says Leland. "Usually about two-thirds of shopping cards are abandoned; that's down to a lot of things including finding out that the items are not available, that the merchandise cannot be shipped to wherever they are, but a lot of it has to do with security."
Many expect to see a few big name e-tailers go to the wall after Christmas, although it will be the cumulative effect of a number of factors, including the City's harsh attitude towards dot.coms, that will trip them up, rather than a bad festive season.
For those with more secure finances, all they can do is be good boys and girls this Christmas, helping themselves as much as they can through improved sites, better organisation and customer service, and hope that Santa brings them calmer consumers, and markets, next year.
Is ordering online safe?
Online shopping is safe - if you follow these tips.
1 Before you buy, check out the site. Does it give an address (not a PO box) and a telephone number to call if things go wrong?
2 Check its policy on returning goods. It should be properly explained and straightforward.
3 Does the site tell you when the goods will arrive? You should have an estimated time of delivery, so you can chase up your order.
4 Is the site based in the UK or European Union? If it is, you are covered by a raft of new consumer laws.
5 Pay by credit card - that way, you're covered further against fraud. Charge cards and cheques do not carry the same levels of protection.
6 Enter credit card details only when using a secure server. Your browser should tell you when you are entering a secure area and the little padlock in its bottom left hand corner should close. The address will begin https:// (rather than http://).
7 Look out for schemes such as the Which? Webtrader, which give reassurance that the vendor is complying with a basic set of standards.
8 Keep records. Print out or save the confirmation screen after you have placed your order. It often includes details like telephone numbers and your order number.
9 Ask around. Friends may tell you that big high-street names have terrible online service, while online-only stores are much more eager to please.
10 Don't buy from unsolicited emails or newsgroup postings.
