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'Virtual Reps' Let Users Customize Products on the Web

   By Erika Morphy

The sales configuration application market is expected to develop into a hot sector within CRM in the next few years, according to a forecast released Wednesday by IDC.

"This is definitely an emerging trend in the CRM industry," Julie Rahal, analyst for IDC's customer relationship management applications program, told CRMDaily.com. "More and more, we will see CRM suites integrating configurators into their product lines."

Sales configuration software, which is a subset of sales force automation, allows consumers to build customized products on a Web site. The applications have become fixtures on such sites as Dell (Nasdaq: DELL) and Compaq (NYSE: CPQ).

"This software acts as a virtual sales rep -- it takes you through the selection, configuration, pricing and ordering process. It can recommend certain items and ask what other components you might need. And if you make a choice that doesn't fit with a product, it can alert you to that as well," Rahal said.

Traditional vendors of these applications include i2 Technologies (Nasdaq: ITWO), Firepond and Trilogy. Newer companies include Comergent and Siebel (Nasdaq: SEBL). Oracle (Nasdaq: ORCL) offers configurators on its site, along with most of the major enterprise resource planning (ERP) vendors.


New Breed

Lately, a new breed of sales configuration applications has emerged, Rahal said. The large best-of-breed vendors are rolling out upgraded or entirely new applications that are better, faster and easier to use.

Many vendors are expanding their product coverage beyond configuration by forming partnerships and alliances with CRM and ERM (enterprise resource management) vendors. Smaller best-of-breed companies are being snapped up by large CRM and ERM suite vendors.

The result of this industry upheaval is a new generation of applications that is far more user-friendly and sophisticated, Rahal said. In short, they have been designed for a non-technical client base.

"The first versions were very tool-oriented, Rahal explained. "That had much to do with the modeling behind them. Programmers would write the procedural codes for everything."

The newer versions are based around data-driven models, role-based maintenance environments and the integration of declarative language and specification, she said. "What that means is that you don't have to modify the code in order to update the Web site. The responsibility for that has shifted away from the programmer to a product manager."

The shift is important to businesses that need to react to and anticipate new market trends, she said.

Pricing Next

Rahal said these new applications are already having an impact. "A lot of industries are getting into this now, not just computer manufacturers. Service providers, such as insurance or financial companies, are also deploying sales configurators on their Web sites."

However, this particular CRM subsector is still in the embryonic stage, with much growth and product development ahead.

Next up in this space will be price configurators, Rahal predicted. "This would allow businesses to configure prices based on a client's history. Companies could also factor cross-sell and up-sell opportunities into the price." Some vendors are planning to offer this feature in the near future, she said.

It also is not inconceivable to envision a greater integration with analytical capabilities. "I can definitely see that happening down the road," Rahal said.


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Yahoo! and Amazon Report Huge Increases in Online Sales

   By L.J. Martinez

Yahoo! (Nasdaq: YHOO) and Amazon.com (Nasdaq: AMZN) both reported that online sales over the Thanksgiving weekend showed a marked increase over last year.

After much speculation over how the economy and the terrorist attacks might affect e-commerce, hopes were raised for a robust online holiday when Web shoppers started buying in volume from the dominant Web sites.

Over the three-day weekend following Thanksgiving, Yahoo! Shopping posted a 75 percent increase in sales compared to the same period last year.

"Video games have risen to the top of our most searched-for and purchased items. That's the Xbox, the GameCube and PlayStation 2, in that order," Yahoo! Shopping spokesperson Stephanie Iwamasa told the E-Commerce Times.

Harry Potter and Barbie are also on top of the sales charts, she said.

According to Iwamasa, Yahoo! Shopping is "extremely optimistic" moving into the rest of the holiday season and expects double-digit growth for the holiday season over Christmas 2000.


All About Harry

Of the 25 top-selling items at Amazon.com, five are Harry Potter-related products, including the boxed set of the four Harry Potter books.

Amazon also said that DVD players and DVDs, including "Shrek" and "Star Wars: Episode 1 - The Phantom Menace," are top sellers.

In the toy category, the Air Snares Drum from Mattel (NYSE: MAT) was the top seller at Amazon, beating out a Harry Potter board game.

Old and Newbies

According to Yahoo!, the online shopping surge over the weekend included a healthy combination of existing customers and new Web shoppers.

"The holidays are a time of year when the light Internet users often make their first online purchases," Iwamasa said.

The portal's shopping unit enjoyed an increase in the number of big-ticket items being purchased and a higher dollar amount per transaction, she said.

Bits and Pieces

Although e-commerce is a small part of the overall retail picture, it is one of the fasting growing sectors.

"In addition to the holiday shopping season, the overall growth in e-commerce can be attributed to the fact that more people are becoming comfortable with shopping online, and the fact that more people are going online, even though there is a softening economic picture," Iwamasa said.

More To Come?

The Thanksgiving weekend, although a good indicator of things to come, is not the biggest holiday shopping period for e-commerce sites.

"Typically, about two weeks before Christmas is when online shopping sees the biggest spike in sales," Iwamasa said.

Shares of both Amazon and Yahoo! were up Monday as investors started to believe that there would be a solid online holiday season. Amazon was trading at US$11.05 late Monday, up $1.97. Yahoo! shares were trading at $17.23, up $1.50.


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Wireless Technology: Must All Roads Converge?

   By Brian McDonough

If there's anything fundamental to American society, it's the concept that more is better. More of what doesn't matter. Supersize it. Package it with bonus offers. More features, man, give it more features! At some point, the vendor goes from enhancing value to losing the core product under a mountain of superfluity.

We're not there yet in the mobile arena, but if Comdex is any indication, we're close.

National Semiconductor was having fun at Comdex, where it unveiled the prototype of a new toy it calls "Origami." British news site Ananova featured a photo of the device in its wacky-gizmo section. The doodad is part of a trend toward convergence devices -- gadgets that do everything but remove mustard stains from your necktie.

The Origami is a phone and PDA that also takes still photos, records video, plays MP3s, displays photos, handles e-mail and enables videoconferencing. That's eight admittedly overlapping functions in one device that twists like a pretzel to be transfigured into whichever of its schizoid personalities you need. Oh, you can also surf the Internet, whatever that'll turn out to mean on portable devices.

It's fairly speculative -- the manufacturer admits it has no release date, suggested price or even a vague plan to produce the silly thing. Whoa -- Bluetooth flashback. I'm okay now.

The Origami is part of that wonder-of-tomorrow thing they do at Comdex -- just the researchers down at National Semi havin' fun and thinkin' ideas. There's probably another version on an R&D workbench that also has a cheese grater. But they're not the only ones thinking this, and other companies work on similar products. Without the cheese grater, probably.

And it all points to the big question: Why not a cheese grater? Or, better still: How much functionality does anybody need?

Use It or Lose It

That the PDA and the phone must become one for the sake of a number of users, especially the biz types, seems to be a given. It's a perfect match. And there'll be your more fun-lovin' types, your kids and such, wanting to play with digital photos. In Japan, that's already selling like rotten tomatoes at a Keanu Reeves one-man Shakespeare review. But eight freakin' functions? Who needs all this junk?

It's a fairly consistent fact of technology that most users only scratch the surface of overall functionality. The barest fraction of people with data-enabled phones or data-providing carriers avail themselves of these services. How many of the half-a-billion channels piped into the average cable subscriber's home does that user ever watch? Got an automatic transmission? Ever use the second low gear?

When's the last time you used the record-a-memo function on your answering machine? My 35mm camera has nine settings, of which I only ever use two: full auto and full manual. The microwave has seven, nine, maybe twelve different options to accommodate the temperature and density of my fine food products. I use "high."

I have the Windows operating system on my computer, though every day puts me closer to the promised land of Linux. Windows has more programs, functions, system tools and evil desktop icons than AOL sends out junk-mail sign-up disks in a month. Of those packaged features sucking up hard drive space, nobody uses more than five, maybe six. And that's counting the people who haven't wised up and adopted the slick, free Opera browser and Eudora.

At some point, the convergence trend becomes the same dumb trick Windows uses with each upgrade: Clog the product with more useless features that only 2 percent of users ever will touch, thus impeding the smooth functionality of the rest of the product, and trumpet the versatility of the "improved" version.

Convergences Past

Okay, take it as a given that no one's going to use videoconferencing. We've got enough proof of that to teach it in grade school. That still leaves seven tools in this digital Swiss Army knife. Combine video and phoning, phones and the Internet, video and data. Surely people will want that, right?

Two words: Web TV. Remember how that amazing appliance was going to make the Internet convenient for the whole family? Surf right on your TV screen. Uh huh. Not exactly as common a household product as Cuisinart, is it? More like the digital equivalent of a pasta maker. Few buy 'em, fewer use 'em.

And then there's the videophone. Or the videoconference. The marketplace is littered with the decomposing bodies of convergence ideas that failed faster than Mariah Carey's acting career.

The last great product convergence? Peanut butter and chocolate in the same candy. Those Reese's guys, they know their stuff. "Chocolate and peanut butter. This could work," they probably said. Notice they did not say "Chocolate and peanut butter. And nougat, cookies, fudge, marshmallows and a juicy liquid filling."

Then again, any day now we might see the flailing Palm release a Web-browsing PDA/phone with a pre-installed caramel center.


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Web Shoppers Confident About Holiday Season

   By Clare Saliba


Online retailers are having to direct their Web marketing efforts to both confident consumers and worried consumers, researchers say.

Shaking off fears of continued economic malaise, roughly 37 percent of online consumers are expressing confidence that the holiday shopping season will be a strong one and plan to spend more as a result, according to a study released Monday by the Boston Consulting Group (BCG) and Harris Interactive.

"We believe confidence is contagious," said BCG vice president and business-to-consumer (B2C) analyst Peter Stanger. "Consumers look to their neighbors to set their mood. Consumer confidence is on the rise."

The number of confident e-shoppers is more than double the number of online buyers who reported being distressed by the current financial outlook.

In many cases, the study said, consumers who fell into the worried category had experienced a layoff or seen family members lose their jobs, and had not yet rebounded from the blow to their household income. Conversely, only 11 percent of the confident consumers had been pink-slipped or experienced a decline in their personal income.

Middle of the Road

Falling in the middle of this continuum are consumers who are in the process of recovering from the unsteady economic forecast, the research groups said.

With approximately 48 percent of respondents falling into this segment, the study predicted that these Internet shoppers will soon return to normal spending levels.

Pleasing Everyone

In order for retailers to make significant inroads with online consumers, BCG and Harris Interactive -- which surveyed more than 4,500 U.S. adults -- said sellers must recognize the polarization of the spending market and target their holiday offerings accordingly.

For example, the report said, this may require retailers to create a range of pre-packaged, moderately priced basics for the distressed segment, while balancing the merchandise selection with more exotic gifts geared toward the confident segment.

"Educated, higher-income, employed consumers are planning to spend more, they're traveling again, and they're facing the world with confidence," said BCG senior vice president Michael Silverstein. "The less-educated, more economically vulnerable population is still scared."

Added Silverstein: "While there's no question this is a challenging environment for retailers, the smart ones will merchandise their stores to serve both segments. It creates the chance to approach these two segments of consumers with product assortments built to meet their specific needs and budgets, and in so doing increase sales."

Jumping Online

According to the study's estimates, more than 109 million people are expected to purchase goods or services via the Web this year. More than 56 percent of those surveyed plan to spend the same as or more than they did last year.

Moreover, the 68 percent of consumers who said they will purchase gifts online intend to spend a higher proportion of their holiday budget online -- 27 percent compared to last year's 22 percent.

Back and Forth

The research groups concluded that multichannel retailers will have a "competitive advantage" over other marketers in terms of capitalizing on this upswing.

"The more of a retailer's channels consumers visit, the more likely they are to purchase from that retailer," said the study. For instance, among those in the recovering segment, roughly 80 percent of prospective clothing purchasers who visited both a Sears (NYSE: S) store and Sears.com said they plan to make a purchase at the retail giant.

In contrast, 61 percent of shoppers who visited only a brick-and-mortar Sears store and 63 percent who only logged onto the Web site plan to buy from the company.

By Web Alone?

In light of these findings, BCG and Harris Interactive concluded that "this year more than ever before, simply having a Web site isn't sufficient." Consumers tend to gravitate toward retailers that provide a consistent and convenient cross-channel shopping experience.

In fact, the study said, consumers who search for a gift at one company's Web site end up purchasing the product from another company's store or Web site 35 percent of the time.


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