Online Shopping Turns 10

Ten years since the first e-commerce sites went online, more and more Americans are using the Internet to buy a wider variety of products, from cars to shower curtains to tomato plants. Leslie Walker was online to discuss her recent story on the constantly changing "etailing" sector.

A transcript follows.

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Leslie Walker: Hello out there. Welcome to our chat about online shopping. It's hard to believe Web shopping is only 10 years old. I don't know about you, but I can hardly remember what life was like before eBay and Amazon.com made it dangerously easy to buy just about anything you might want in 15 minutes or less.

Please join our chat today. Tell us the wackiest thing you have bought online. We printed a list of things our colleagues and friends have bought online in the newspaper yesterday. My contributions were, among other items, a Marilyn Monroe wig (for a Halloween party.) I know you can buy everything online, but I still laughed to see that someone else had bought a whole leg of American wild boar online, not to mention wild-shot game birds from Scotland. Makes my Alaska license plate for a Honda motor scooter look tame!

So come on, sends us your thoughts, tips and questions about the weird world of Web shopping. We are here to listen and to yack.

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Washington DC: Where is the best place to get bargains online?

Leslie Walker: There are so many, that's tough. EBay is the bargain center of the universe, of course. I buy my ink-jet printer cartridges there, and I also buy used books from a sister site that eBay owns called Half.com. Books and CDs are so cheap there that it probably would cost more to drive to the library.

Leading Web sites for liquidating surplus and end-of-season stuff are Overstock.com and SmartBargains.com. Bluefly.com is a big designer clothing discount site. Cairo.com tells you what's on sale OFFLINE if you enter your zip code. And one of my favorite wacky bargain sites is Woot.com, which sells only one item daily, but at a dirt cheap price. Mostly electronics, and it sells out FAST, so you have to check in super early.

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washingtonpost.com: List of online shopping purchases: Leg of Boar, Screen Door And the Kitchen Sink, Too

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Silver Spring, MD: What's the deal with state sales taxes and online shopping? Are online stores required to collect sales tax across the board, only in a few states?

Leslie Walker: Right now, most Internet merchants are exempt from state sales taxes, unless they have a physical presence in the state where the customer they are shipping to lives. But the states are lobbying furiously to change the law so Internet merchants would be required to pay the same sales taxes offline merchants do. Many analysts feel it is inevitable we will all be paying state sales tax soon on most Internet purchases. Many big online retailers, especially those with offline stores, already collect sales tax from all their online customers.

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Maryland : I bought a loud mouth Billy bass on Ebay to scare away deer.

Leslie Walker: A loud mouth Billy bass, huh? Bet you got a better deal on eBay than you would at Wal-Mart!

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Washington DC: How bad is credit card fraud on the Web?

Leslie Walker: Terrible. The rate of credit card fraud for Web transactions runs two to three times as high as it does for offline transactions, by most industry estimates.

Overall, the financial industry insists the credit-card fraud rate has been steadily declining over the past decade, and is something like 5 cents per $100 of sales now. But the arrival of the Internet has created new opportunities for credit card thieves, making it easier for them to use stolen credit card numbers.

And they have been having a field day, often spending their fraudulent dough at smaller retailers, because many of them lack the sophisticated systems to detect fraud that the big guys like Amazon have.

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Indianapolis, IN: I imagine the two most wackiest things I've purchased online were a case of Dublin Dr Pepper and a brand new pine bookcase. Not too exciting but truthful. I could have purchased the famous "ghost" painting that has turned into an eBay myth. However, if anyone still remembers it was an actual item listed on eBay.

Leslie Walker: The pine bookcase is interesting, did you have it shipped or pick it up locally?

My research shows furniture is a johnny-come-lately to the web, but furniture sales online are now finally picking up.

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Laurel: Fortunately, I'm not an impulse buyer, so I don't throw $25 away causally to get free shipping from Amazon.

Wackiest purchase -- a share of Enron (stock certificate) for a Xmas gift exchange.

But I wonder among all the figure you've found -- the amount of researching without buying that goes on. I commonly read a review on Amazon before buying at Barnes & Noble (- Columbia, not -.com); or browse a book at B&N before buying at Amazon.

I also shopped for my last car that way. Getting three quotes within $100 provides good confidence you've made at least a decent deal.

Leslie Walker: Excellent points, Laurel. Retailers have discovered that for every $1 spent online, several more are spent offline that were RESEARCHED first online.

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San Francisco CA: How many Internet retailers are making money?

Leslie Walker: I don't know how many are profitable. Most are still privately held companies, and few disclose revenues. Most offline and mail-order retailers don't disclose what portion of their revenue comes from the Web, either.

But Shop.org recently reported that the average operating profit margin among Internet retailers last year was 28 percent, up from 21 percent in 2003. Mail-order cataloguers were the most profitable, with profit margins of 32 percent last year.

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Indianapolis, IN: In answer to your question: I had the bookcase shipped. Overall it was a bit over $100. I still have the bookcase too.

Leslie Walker: Thanks. It always surprises me how much heavy stuff people buy online and get shipped.

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Washington, DC: What do you think has been the driving force behind internet "sales" as opposed to brick & mortar establishment sales?

Leslie Walker: I think convenience is the biggest driver. It's often a hassle to go to the store, much easier to walk over to you computer, especially if you have broadband access at home and the machine is already on.

In the early days, unfamiliarity was a barrier to Internet shopping. Now that it is no longer new-- so we are familiar with how to place an online order and have favorite WEb sites bookmarked--it's pretty darn quick to order many things online.

I bought one of my editors a gift online recently. Not only was ordering it easy (a handheld GPS system from NewEgg.com), but researching it online was quick. I went to a few comparison shopping sites and looked at what the most popular items were in electronics.

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Bowie: Do the "Phishers" who sent me fake e-mail links to update my PayPal account really know I have a PayPal account, and if so, how?

Or do they just send them to any address they can find, assuming a good percentage of them probably do use PayPal?

Leslie Walker: Most phishers have no clue where you have an account. They are mass-emailing to a gazillion email addresses they scooped up off the Web and are hoping you have an account at, say, PayPal or BankofAmerica.com.

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Washington, DC: To the person looking for deals on the internet, I think that the best deals are simply when items go on sale at regular websites. My favorite helping hand in finding the online sales is Shop It To Me (shopittome.com). I receive an e-mail every morning that tells me what has been marked down, in my size, at my favorite clothing stores. It is all customized so I only get the stores or brands that I want and don't have waste half of my morning searching the sites!

Happy Shopping!

Leslie Walker: Thanks for the info. I hadn't heard of that site. You are right about deals at regular Web sites. Almost all the sites I frequent email me when they have special sales, and I often buy then.

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Annandale, VA: Your article caught my eye because it mentioned one of my fave sources for shoes online, zappos.com. We're a foreign service family, just back in the US a year after 6 years out, so I feel like I shop online much more than friends stateside.

I stick with an online retailer whose site is user-friendly and who offers good service, like zappos.com's free expedited shipping and easy returns.

Ebay and other online selling sites are amazing. I have a friend who bought a car online through ebay, otherwise I wouldn't have believed that people do it.

washingtonpost.com: Car Hunting on EBay, This Deal Just Clicked

Leslie Walker: Thanks, Annandale. That's interesting about Americans overseas doing a lot of online shopping.

As an aside, I suspect rural America is finding online shopping even more convenient and powerful than urban America, since our big cities have such a glut of malls that the countryside often lacks. But I've never done research to quantify this.

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McLean, VA: Can you suggest some comparison shopping sites? I am never sure about some of the pop-up ones.

Thank you.

Leslie Walker: Sure, PriceGrabber.com is one of my favorites. NexTag.com also is reputable. Shopping.com is the most heavily trafficked, though I am not a fan. Shopzilla.com also is popular. If you haven't tried Google, that is also worth considering. Its shopping site is called Froogle.

http://froogle.google.com/

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Washington, D.C.: What can you tell us about the market share of the big Internet retailers? Do a handful of sites account for the lion's share of sales?

Leslie Walker: Internet Retailer magazine say the big guys control most sales online, as they do offline, but their market share isn't quite as big on the Net. The magazine estimated that the top 100 Internet retailers control 53 percent of all Web retail sales The top 100 brick-and-mortar retailers, by contrast, control 63 percent of offline sales.

Another interesting factoid the magazine reported is that brick-and-mortar retail chains have claimed 39 percent of all Web retail sales, versus 27 percent for Web-only retailers, 19 percent for manufacturers, and 15 percent for mail-order cataloguers. That struck me as surprisingly high for Internet-only players and surprisingly low for catalog companies.

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Ballston, VA: There's no way I could have planned my wedding last year on the opposite coast if it wasn't for online shopping. I bought my wedding gown, veil, bridal jewelry, wedding bands, invitations, favors, supplies to make the programs, etc....the list goes on and on. Not to mention I saved about $500 alone on the gown by buying it via the Internet; I actually found it in a bridal shop and after pricing it out through them, discovered that I could save much more by ordering online. It was well worth it.

Leslie Walker: Wow, Ballston, $500 in savings on the wedding gown! Did your wedding have its own Web site, too?

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Olney, MD: How many people end up being shopaholics at sites like QVC? Has the Internet made it easier to go overboard?

Leslie Walker: Yes, online shopping addiction is starting to attract attention as a potential social problem, especially when people do it at work while they should be doing other things.

I think evidence of this is still mostly anecdotal and squishy, but I agree the Internet makes it easier to go overboard on lots of things, not just shopping. (Gambling and sexy chat come to mind!)

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Maryland: Many airlines offer deals and specials on their web sites now plus you can print boarding passes in advance. That's an improvement over the good ole days.

Leslie Walker: Agreed.

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D.C.: How popular is that feature that allows you to browse through a book online? Have publishers worked out the logistics of using that feature without giving away the book?

Leslie Walker: This feature was controversial when first introduced at Amazon.com. Some publishers worried that, as you said, it would be like giving away the book. But I think it has turned out to be more of a promotional tool, a tease that helps sell books.

You can't access the entire book, only small portions, and while you can get around those restrictions if you are clever, it's a royal pain to do so. Much more efficient to buy anything you actually intend to read.

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Alexandria, Va: Hi, I've been an online shopper since I was 16, and today, five years later, I still use it for items that I don't need immediately, but need soon. I've heard that many stores will start using PayPal. What benefits will this switch bring?

Leslie Walker: I am not sure what "switch" you are referring to. Do you mean offline stores using paypal? Paypal is expanding more to be offered as a payment option at Web sites other than eBay, but not much offline.

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Silver Spring, MD: Is there a general consensus that Internet sales should not be taxed? Who's pro and con taxes?

Leslie Walker: Pro and con arguments for Internet taxes boil down to states arguing it's only fair that Internet retailers be required to collect the same sales taxes as offline retailers. Internet commerce advocates retort that that online retail, still a young industry, would be adversely affected if it had to cope with the confusing patchwork sales tax requirements in effect in the 50 states.

For the past three years, more than 20 states have been working to set common sales tax rules and ways of collecting taxes across states. The effort is called "Streamlined Sales Tax Project " and is part of a drive to encourage federal legislation that would let states mandate tax collections from retailers even when they don't have a physical operaion in those states.

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Arlington, Va.: Re: Sales taxes.

In Virginia, anyway, you are supposed to report (on your state income tax form) purchases of goods on which you paid no sales taxes, so that a "use tax" can be assessed. Basically, the use tax is the same as the sales tax, just paid by the consumer rather than the retailer. I've never heard of the state coming after someone for not paying the required use taxes on Internet purchases, but the tax does exist.

Leslie Walker: You are correct, Arlington. That is the letter of the law in many states. However, it is widely ignored.

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Silver Spring, MD: Biggest thing bought on-line: Amadeus iron bed. Saw one I liked at Sears for almost $600. Spent an afternoon searching and got it for less than $400, shipping included.

Leslie Walker: Hope you are getting a good night's sleep on it!

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Los Angeles, CA: OK. Here's my absurd e-purchase for your list; a Christmas tree. And I don't mean an artificial one. The tree itself was a reasonable price for our area (about $100) but the shipping doubled the total. It was an extremely fresh tree but more than a painful lesson.

Leslie Walker: So what was the painful lesson? The high cost of shipping? Tree damaged in transit?

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Washington, D.C.: If a big online merchandiser knows that I work for a company that can impact its public image, will I be offered better deals than someone else? How can I make sure the online marketing software thinks I'm someone to whom it should offer the best deals?

Leslie Walker: Good questions, to which I do not have all the answers.

Retailers have been experimenting with customizing their price offers online in ways they can't really do offline. They are not very forthcoming about what they are doing.

Much of it, though, has been around rewarding repeat purchases. It's somewhat like offline loyalty cards that yield discounts. Other efforts involve testing various price points.

I am not aware of any special discounts offered to customers of particular companies (like the media? reporters who write about them?)

As for how you can trick the best offer out of the online marketing software, there are too many variables at work for me to hazard a guess. And I could be wrong, but I don't think most online merchants are varying their price offers all that much yet.

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Silver Spring, MD: RE: Amadeus bed. Love the bed. Also get all my razors, electric toothbrush heads, etc from Ebay at about 1/3 of store price (as long as you watch shipping).

Leslie Walker: Thanks, Silver Spring. Personally, though, I don't know if I would buy toothbrush heads on eBay. I don't care what goes in my printer but.......

;-)

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Olney, MD again: Er, I should be working but these chats are more interesting.

Leslie Walker: I know what you mean, that computer on the desktop can be quite a distraction in the era of Internet shopping and chatting!

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Taxes: How effectively can online sites be policed anyway if small retailers decide not to charge sales tax?

Leslie Walker: Very little policing is going on.

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Wheaton, MD: Has the adult film industry gotten a boost from online sales?

Leslie Walker: That would be an understatement!

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San Francisco CA: What is the next wave you see for online shopping?

Leslie Walker: More cross-border trade. Right now, Internet merchants still ship the vast majority of goods to customers in the same country where the merchant is based. I can see a day coming when a lot more online purchases will cross national boundaries.

Right now, for example, eBay says only about 15 percent of its merchants is shipped from one nation to another. It expects a much higher percentage within a few years.

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Maryland: IF someone makes a high bid on a gag item like a piece of toast with the Virgin Mary's likeness, is that sale enforced? How easy is it for people to get out of such bids?

Leslie Walker: People can and do "get out of" their bids on eBay all the time. They just don't pay! The penalty sometimes is nothing more than getting negative "feedback" left in the user's online rating area of eBay. But eBay is tightening up a bit and will start kicking out non-paying bidders who make a habit of such bad shopping behavior.

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Silver Spring, MD: What about Internet sales of wine and liquor, can that be sold legally in all 50 states?

Leslie Walker: The Supreme Court recently handed down a ruling that should allow more interstate wine shipments. But some states--including Maryland--still won't let companies ship wine to their residents.

The court issued a ruling in May that effectively overrules some state statutes barring interstate wine shipments and will allow wineries to ship to to some of those states via the Internet. The full impact of the ruling remains unclear.

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Los Angeles, CA: The high cost of shipping was the painful lesson. Had I spent a little more time offline shopping, I could have found a comparable tree and spent the shipping dollars on a present.

Leslie Walker: Ah, I see. Shipping can be a deal-killer online, for sure.

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Arlington, Va.: My absurd online purchase was kangaroo meat!; My brother was on the Atkins diet and getting tired of ordianry meat, so I ordered him some exotic kangaroo chops for a change.

Leslie Walker: Kangaroo meat? Where did you find that online, Arlington?

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Vienna, VA: Please speak to the importance of customer satisfaction in the online shopping experience.

How to measure

How often to measure

What should be done with the finding?

Leslie Walker: It's highly important, Vienna. And often the sites earning the highest approval marks from customers are not the leading brick-and-mortar retailers but Internet-only players like Amazon.

A company called Foresee Results surveyed customers at 40 leading Web retailers and found those with the highest customer-satisfaciton ratings were Netflix.com, Amazon, QVC.com, Newegg.com and LLBean.com.

Those faring much worse were Kmart.com, Costco.com , CompUSA.com and Buy.com .

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Silver Spring, MD: RE: Toothbrush heads from Ebay. They are always wrapped in original packaging. Never had a problem.

Leslie Walker: Well, I learn something new about eBay every week. Thanks!

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Washington, D.C.: what's the best way to protect one self from indenty theft while shopping online? Also, is it best to just use an online credit card for e- shopping?

Yakob

Leslie Walker: I personally ALWAYS use my credit card when shopping online, even if I am paying through PayPal. Paypal has a credit-card payment option and I use it. Twice I have had to do chargebacks when the eBay merchant did not deliver my goods.

In general, I am leery of buying from Web sites about which I know nothing. I always check the URL in the window when they ask for my credit card info to to make sure it says "Https" and not just "http", indicating a secure session has been initiated.

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Leslie Walker: That is all we have time for today. Thanks for sending in your quirky Internet shopping stories. It's been fun. Talk to you later!

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