Bridging The Loyalty Gap

E-tailers must build trust among customers to keep them. But that takes time

Around Thanksgiving, eToys sat squarely at the top of my holiday shopping list. Determined to do all my gift buying without setting foot in a store, I planned to hit eToys to take care of my kids, nieces, and cousins all in a relaxed evening of clicking. Then eToys said it would miss its revenue targets. I panicked. Suppose it went under? Suppose that happened before my order arrived? Or when someone on my list tried to exchange a gift? I bailed. My toy budget shifted to other, more established merchants.

I'm a living, breathing example of the chasm between brand awareness and brand loyalty. It's a gap that hammered e-tailers this holiday season and will continue to hobble the industry in 2001. I was plenty aware of eToys Inc. You'd have to be living under a rock not to be. The company was all over television, in magazines, in circulars stuffed inside the Sunday paper. But my brand loyalty didn't match my awareness. At the first sign of trouble, I split. In an up economy, loyalty doesn't matter: We buy from all kinds of weird outlets. But when we get worried, we revert to stores we know will be here for the long haul.

Not necessarily, mind you, stores we like. I hate the pre-Christmas melee at Toys `R' Us. But I trust that toys will be there and that the price will be right. That's brand loyalty. And it's sorely lacking online. "There is a missing link between awareness and loyalty," says Al Ries, co-author of The 11 Immutable Laws of Internet Branding. What's worse, he says, the lack of e-tail allegiance has no quick fix: "A strong brand can take time." E-tailers haven't been around long enough to build trust among customers. So when things looked shaky, consumers jumped ship.

The loyalty gap made a difficult holiday season even tougher for e-tailers. Online shopping rose about 60%, according to, a tracker of consumer activity. Forecasters, though, had expected an 80% jump. Sure, brick-and-mortar retailers missed their numbers, too, but their financial reserves are bigger. Many e-tailers already are dangling dangerously on threads of optimism and disappearing cash from hopeful backers. Missed goals may turn out to be fatal.

What's bad for some e-tailers, though, may be good for e-tailing. Holiday 2000 highlighted the steps e-tailers still need to take to build loyalty--a process that will likely take much more than one year. Watch them expand the range of products they sell to keep customers coming back for more. That's what is doing, adding gifts to its array of floral bouquets. They'll add services that make shopping easier, too. now offers same-day delivery, for instance. And watch them revamp ads so shoppers won't disappear in warmer weather. The payoff will come next holiday season. Because no matter how cute the commercials, how smooth the fulfillment, a store's bond with a customer is paramount--especially at Christmas, especially when times are tight. That bond takes multiple purchases, often over many years. But it's what makes stores into institutions and merchants into trusted shopkeepers. E-tailing leapt onto the consumer stage with remarkable speed. Building loyalty will take far more time.

Before it's here, it's on the Bloomberg Terminal.