"Some of them are very comfortable buying on the Internet, but when you're buying a diamond it's not like getting a CD or a sweatshirt," said Stephanie Kellis, a former Disney Store sales manager who now counsels potential BlueNile.com shoppers by telephone. "Most men I talk to are buying something they know very little about."
Jason Smith, business development manager for EToys.com in Santa Monica, knew what he wanted when he went online to buy a diamond engagement ring and a wedding band. Like most of BlueNile's customers, he researched his purchase online and visited several stores to compare prices.
The customer service agents came into play when Smith couldn't find the exact rings he wanted. After a few brief conversations, he closed the deal online. "The price was $2,000 to $3,000 below what I'd found it for at jewelry stores in L.A. and Santa Monica."
Telephone service agents and catalogs boost the cost of each sale. Levin expects Lucy.com's sales to be evenly split between catalogs and its Web site in 2001. Though it's more costly to service catalog customers, Levin views the expense as prudent. "We want women to be able to shop with us through whatever channel is most convenient for them," said the former Nike Corp. executive.
Catalogs also are playing an integral role at start-ups that no longer enjoy access to capital that fueled last year's massive wave of largely ineffective dot-com advertising. "We're generating $3 in sales for every $1 spent on catalogs," Keith said.
Carefully designed catalogs can be more effective than Web sites when it comes to shedding light on a new brand--particularly among the vast majority of consumers who rely on slow-speed modems.
"In five seconds, as you flip through the catalog, you get a real sense of who we are, of what we believe in," Levin said. "Web sites can't do everything they're being asked to do. This small space has to tell you all about the brand, give your personality, your point of view, as well as tell consumers what we've got to sell."
That's not news to Sharper Image, Lands' End and Chef's Catalog, all of which moved online in the mid-1990s. At the time, many companies feared that online sales would cannibalize other venues. But savvy catalog operators realized that online sales generally reduced printing, postage and telecommunications costs.
Similarly, dot-com operators are confident that e-mail will evolve into a powerful direct-marketing tool. But rather than waiting for e-mail to mature, many dot-coms are harnessing the proven power of direct mail. "When it comes to discovering prospective customers, it's harder to get highly qualified [candidates] from e-mail," McCartney said. "There are legal issues as well for e-mail, but with direct mail, people have been managing lists for years."
San Diego-based Gateway Inc., which took its first phone order in 1985 and moved onto the Internet in 1996, raised eyebrows a year later when it began opening bricks-and-mortar stores. The chain now has 349 stores, each staffed with 15 employees, and plans to open 100 more stores in 2001. Gateway also has announced plans to put employees in 1,000 OfficeMax retail stores to promote its products.
"The beauty of the Internet is that it cuts down on transaction costs," said John Spelich, Gateway's director of corporate communications. "But we know that there's still a significant portion of our clientele that would never buy a PC sight unseen."
Gateway's multichannel system "encourages cross-shopping," Spelich said. "Our statistics show that people who buy at Gateway look at two or more channels. They may come into the store, do research online and call on the telephone. That's the way it's supposed to work. We aren't trying to force people to go one way or the other."
Bricks-and-mortar chains also are warming to the idea of online sales. "The idea is that we make it as difficult as possible for our customers to take their business to someone else," said Gap spokesman Jack Dougherty. "If we can take care of them in their living room, ordering online, terrific. If they come in, hopefully their item is in stock. If they get there and it's not, we want to order it and make sure it gets to them. If they're not pleased with it, they can return it to the store."
The allure of a store is real. "Bricks-and-mortar stores bring the visual presence," said analyst Cooperstein. "You don't spend money every time someone sees your store's sign, but you do spend money online every time you put a banner ad in front of someone."
