A year ago this Black Friday weekend, Bridget Collins and Chris Moss
got great deals on gifts for their children at BestBuy.com. The products
never showed up.
Best Buy said it was a software problem, but
critics said it was also a major communication mishap and yet another
black eye for the beleaguered electronics retailer.
The next few
days can be make or break for all the online retailers. More than 500
major retail website clients tracked by IBM SmarterCommerce saw a more
than 17% surge in online sales Thanksgiving Day as of 6 p.m. ET.
will likely see an even bigger day Monday, known as Cyber Monday for
the online promotions. To make sure things go smoothly, they have been
busy for months trying to prevent possible site slowdowns and crashes,
which can cost millions in sales.
making sure they don't take orders they can't fill by Christmas - Best
Buy's mistake last Black Friday weekend - is a huge priority.
Disappointing kids - and their parents - at Christmas is a public
With more customers choosing to shop online, the need for a seamless experience has become imperative.
and tablets mean people are in "shopping mode whether in-store or at
home or anywhere in between," says Vikram Sharma, CEO of ShopLocal, a
marketing services company that digitizes the newspaper circulars for
more than 100 top retailers, including Target and Macy's. "This has
really changed the dynamics of shopping and eliminated the difference
between online and offline."
This year retailers are preparing for
better deals and more shoppers seeking them. ShopLocal found the amount
of shopping research - "pre-shopping" - on retailer sites was up 43%
for the weekend before Black Friday vs. the same weekend last year.
are responding to this increasingly early interest: The number of deals
for stores and websites on Thanksgiving Day were up 28% over last year,
But if things go wrong when shoppers are done
researching and ready to buy, it can mean both lost sales and lost
customers during a time when both are highly coveted.
expect perfection on every step of the way," says Doug Rassner,
director of product management for Micros-Retail, a retail technology
company that helps run e-commerce and mobile sites. "Retailers are
forced to keep up with this or lose their market share."
Best Buy says last year's order-fulfillment issues affected less than 1%
of its customer base, some, including Collins and Moss, say they are
done with the retailer after not receiving the gifts they ordered.
have still yet to shop at Best Buy," says Moss of Paducah, Ky., who is
shopping on other retail websites. "I won't even go in the store."
year later, Collins of Naperville, Ill., says she never received the
gift card Best Buy promised to those affected, in the amount of their
original purchase (in addition to receiving a full refund, which she did
"I don't even look at their ads in the Sunday paper
anymore," says Collins, who has 16-year-old quintuplets. "I am still
ordering online, just not doing any shopping at Best Buy."
you lose a customer, it's hard to win them back, Rassner says.
"Retailers are all scrambling to acquire customers," he says. "And a
poor online experience, whether it's holiday or another time, is going
to lose you customers. It's a lot more spent to make that customer back
So retailers put a lot of work in ahead of time making sure things will go smoothly when it's crunch time.
typically start planning for their online holiday season in the summer,
says Vicki Cantrell, the National Retail Federation senior vice
president who heads the organization's online division, Shop.org.
has to work together," she says, ranging from promotions to product
availability to the infrastructure that supports the uptick in Web
Overstock.com is ready for an estimated 10 million to 15
million unique visitors between Thanksgiving and Cyber Monday, says CEO
Patrick Byrne. True to its name, the e-tailer traditionally gets its
inventory from warehouses that are shutting down and stores that are
liquidating and trying to get rid of surplus products. That ensures that
there is only a certain amount of any particular item. The business
model means the site is much better equipped than traditional retailers
to avoid inventory problems, Byrne says.
"We know that we are
getting 214 tablets," he says, as an example. "So our system has to be
set up from the beginning that you cannot oversell. When we sell through
the last one ... we can't go back to the guy who supplied us."
holiday season Overstock decided to offer doorbusters on hot items,
instructing buyers to seek out specific products in advance rather than
relying only on liquidation. But Byrne still doesn't think inventory
will be a problem.
"We've bought very, very deep in these
products," he says, adding that they've been able to better plan for the
holiday season because of it.
And while retailers may have an
occasional "high-profile snafu," says Jay Henderson, director of
strategy for IBM SmarterCommerce, "the industry as a whole has made
great strides (in avoiding website and communication breakdowns)."
retailers simulate online scenarios like Cyber Monday months ahead of
time to make sure their sites can withstand the expected traffic.
try to make sure we're in a position to far exceed any of their
expectations of the amount of traffic and volume and revenue they'll see
throughout the holidays," says Rassner, whose company helps retailers
with these kinds of tests.
That's what Best Buy says it has done -
expanded server capacity and done "extensive testing" of its site at
more than double the traffic numbers it saw last year to make sure it
can handle high-traffic days, says Scott Durchslag, the chain's head of
Best Buy's problem last year wasn't only that it
couldn't fill orders, but in some cases it took weeks to alert customers
that their item was out of stock. This year, communication will be much
faster within Best Buy's supply chain, Durchslag says.
"That's something we monitor on an hourly basis now," he says.
retailer is also stocking "a lot more inventory" than last year for hot
items, has hired additional staff to make the online ordering process
go faster and has larger and more distribution centers dedicated to
online orders, Durchslag says.
sites ideally will update consumers as early as possible when a product
is out of stock and when it might become available, Henderson says. And
retailers have to stop marketing products that are out of stock so they
don't disappoint consumers.
But "there are big challenges in doing that from a technical perspective and organizationally," he says.
not just the traditional online experience that retailers need to pay
attention to. With mobile and tablet shopping on the rise, websites need
to be compatible on those devices, too.
organizations were often separate from the store side in the 1990s. And
while they are typically all one entity now, Henderson says, some
retailers have put mobile commerce in its own "silo," which could lead
to communication problems related to available inventory.
the top 30 online retailers, including SonyStyle.com, Victoria's Secret
and Bath & Body Works, haven't optimized their websites for
smartphones or tablets, according to Compuware, which measures the
technical performance of Web and mobile sites. Optimizing means the
functionality and design of the site are built specifically for ease of
use with the device, factoring in things such as the smaller screen and
navigating with fingers instead of a mouse.
Just eight of the top 30 retailers' sites (as ranked by trade publication Internet Retailer)
are optimized for tablet use, according to Compuware. Last holiday
season, however, none of the top 30 sites were optimized for mobile or
Underscoring the importance of high-performing mobile
websites: Thanksgiving Day sales from mobile devices on the retail sites
tracked by IBM Smarter Commerce were up 15% as of 6 pm EST.
is still only about 10% of retail sales, and smartphone and tablet
sales are only 3% of that, or an estimated $10 billion this year,
according to Forrester Research. But because consumers use phones and
tablets for so much of their shopping research, Sharma of ShopLocal says
it's "very surprising how slow a lot of retailers have been to get to
mobile-enabled and tablet-enabled. That's just a huge disadvantage."
When it comes to the holidays, though, there's only so much prep retailers can do. And it still may not be enough.
got issues of one kind or another," Durchslag says. "That's not unique.
What's unique is how you respond when they do come up."