Most companies have more or less prepared for the expected influx of holiday shoppers. This should translate to a smooth shopping season this year, without a lot of upfront upgrading-or upfront cash. "Fortunately, most e-tailers ramped up operations last year for fear of a repeat of the 1999 season, which was plagued with service issues," says Dougherty.
FragranceNet.com, for instance, an online discount seller of fragrances in Hauppauge, New York, doesn't have to spend nearly as much money this year as it did last year, when it moved into a warehouse about five times the size of its original space.
But even with the economy so uncertain, "We're anticipating the Christmas season to be bigger this year, especially since we have a bigger customer base," says Jason Apfel, 29-year-old founder of FragranceNet.com, which averages yearly sales of $8 million. Every year, the company's fourth quarter represents about 35 percent of yearly sales.
Many companies are also enhancing their shipping and customer service operations this holiday season-just as many did last year. Toyopia Inc., for example, a San Diego, California, online toy retailer that posted sales of more than $1 million last year, beefs up its customer service and fulfillment staff every year by at least 50 percent during the holiday months.
In October, Toyopia began bringing in a seasonal fulfillment staff to work its warehouse and customer service department. "We know that during the holiday season, customers are most interested in finding what they want easily, purchasing it without a lot of hassle or time online, and having it either delivered on time or when they need it," says Bob Reed, 34-year-old senior vice president of Toyopia and one of its founders. Each year, about 45 percent of Toyopia's sales are made during the Christmas season. The company also adds new merchandising and seasonal design features to its Web site every year. For instance, the company's holiday theme features online chat, holiday music and holiday graphics.
However, most companies are probably focusing on cosmetic site design improvements this season rather than expensive features. "Adding robust merchandising features, such as personalization technology, could drive up the cost of site maintenance considerably and even require the use of additional servers," says Dougherty. "As a result, companies this year are sticking with the basics."