From...

December 23, 1999
Web posted at: 3:58 p.m. EST (2058 GMT)

by Peter Young, Computerworld Australia

SYDNEY (IDG) -- Santa's giving Internet shops a black eye right about...now.

BizRate.com's latest customer satisfaction ratings show a 20 percent to 25 percent slump compared to this time last year, says Al Lill, a Gartner Group research director who tracks e-business trends. That is a significant fall, given that BizRate collects transaction and performance statistics from nearly 3000 online stores.

"Many, many sites are hitting the wall already with more to come," says Lill.

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Web sites have concentrated money and attention on advertising and front office systems, he says. Scaled up Christmas demand is exposing the weakness of their back office infrastructure including logistics, inventory, customer management and order fulfillment systems.

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The stress will peak between December 22 and December 24 with another peak between December 26 and December 31 as customers queue up to exchange or return gifts. In Australia, the week before Xmas has produced a "meteoric" rise in transaction counts on the servers of payment gateway company Camtech, which claims to handle 60 percent of the online credit card market.

"I don't have the actual numbers yet but the ramp-up has been significant," said Camtech CEO Bruce Linn. But the figures are small potatoes compared with the US online rush, he said. "The truth is Australian consumers are not geared for an online Christmas this year....maybe next year."

Estimates of Australian online purchases for the full calendar year are running around $A1.1 billion ($US708 million) with the two months leading up to Christmas accounting for perhaps $A200 million of that. The bad news for the Australian economy is that an estimated 50 percent of the online spend, or $A500 million, went offshore, mainly to sites in the US.

Meanwhile, online advertising in Australia hit a record $A5 million in November but preliminary figures indicate it will dip to around $A4.5 million in December, according to 'Net research company www.consult. That reflects a traditional advertising dip as business slows down over the December and January holiday period.

While the November figure is impressive, it is inconsequential compared to the print, television and radio annual advertising spend of A$5 billion. Online advertising still lies in the category of investment and experimental expenditure for most large advertisers, according to Australian Association of National Advertisers general manager Sara Morton-Stone.