Patrick Gates, Senior Vice President of E-Commerce, AOL

This is a partial transcript from Your World with Neil Cavuto, November 23, 2001.

NEIL CAVUTO, HOST: Think all retailers are nervous about this holiday shopping season? Think again. E-tailers are expecting this to be their best year yet.

So which e-tailers are going to come out on top? Let's ask Patrick Gates. He is the senior VP of commerce over at AOL.

Mr. Gates, good to have you.

PATRICK GATES, SENIOR VICE PRESIDENT OF E-COMMERCE, AOL: Hey, Neil. How are you?

CAVUTO: Good.

Who looks good right now?

GATES: Well, I think that the bargain sites are looking really good. Somebody like SmartBargains.com, they have branded products at 40-80 percent off every day. I think people like RedEnvelope, who do great gift selection — they do it by recipient. They do it by lifestyle. They give you great advice on how to find very difficult-to-find gifts.

I think people like Amazon, once again, are doing a great job. They've got Target as part of their store offering. They have Toys 'R Us. So I think they're well-rounded, good customer service. And they will do well again.

CAVUTO: You always worry about whether these guys can deliver their goods on time, sometimes through no faults of their own — but now that we're scrutinizing packages more diligently and a lot of people are afraid of packages period, that this boomerangs. What do you think?

GATES: Well, I think some of the early comments that came up were good about notifying people that a package is coming.

The other thing I am seeing retailers doing now, they are putting very big logos, their store logos on there, very clear return addresses, making consumers feel comfortable. I think that will help allay consumers' fears.

Now, as far as getting goods on time, I think you should, if you're expecting to have goods delivered regular mail, you shouldn't deliver much after the 13th of December. And if you're going to use expedited, one or two day, you shouldn't leave it longer than between the 17th and the 20th of December.

CAVUTO: So people like me who do it on the 24th are probably doomed.

GATES: Well, you have to buy a gift certificate, an online gift certificate.

CAVUTO: Yes, move fast. Move fast.

Let me ask you a little about this issue we raised earlier. And that is some of the expensive establishments, the Tiffanys, the Nordstroms, maybe the places that don't necessarily gravitate with a lot of business on the Web, anyway, are the ones that will feel the pinch, this year. Do you buy that?

GATES: Well, I think they will be challenged just like all retailers are. I think...

CAVUTO: But maybe more so?

GATES: A little more so, I would agree. I think that they have to go the extra mile. I think if you look at companies like Neiman Marcus, they have basically taken their Christmas catalog and put it online. They are trying to find things that are harder to get.

For instance, on AOL, they auctioned off one Lexus convertible, a car that is extremely difficult to find. So I think they are trying to go and do things that they haven't typically done — offer shipping incentives, offer interest-free purchases — to try stimulate people buying.

CAVUTO: Now, a lot of them have gone the route of just trying to find ways to make sure that what you get on the Net is cheaper than what you get on the store. Is that self-defeating?

GATES: I haven't seen a lot of that behavior. What I'm seeing instead is trying to converge the distribution channels, where the customer knows you a have a catalog, an online selection, and a store, so that you can buy something online, return it to a store.

I think the other thing I'm seeing is, local is king. If you can find something that's in your local area and go and buy it from a physical store, that's a win for a customer, because most customers — in fact, about seven out of 10 are actually researching online and then buying if offline.

CAVUTO: They're buying physically, yes.

GATES: Right.

CAVUTO: Who does most of the online stuff: men or women?

GATES: Well, interesting, yes.

We just got a stat back last week that 65 percent of all the transactions on AOL last week were by women. And if I look at this time last year, we were basically at the 52-55 percent mark. So what I am seeing is that it is becoming a much more natural, accepted behavior for people to shop online, because 70-80 percent of all the offline purchases are made by women. And online is getting closer to that number.

CAVUTO: But the knee-jerk reaction — this is going to sound like a chauvinist comment on my part — that men, a lot of them don't like to shop. So isn't that the more natural method for them to take than women?

GATES: Well, I don't know. Some men do like to shop. I think that is probably a generalized comment. And, initially, the Web was fun, because they could compare stuff. They could do all this cool gee-whiz stuff to shop. But I think, overall, it has got back to much simpler: Let me find it. Let me buy it. And let me get out of here.

CAVUTO: Can you deal with the crowds yourself when you go out shopping?

GATES: Well, I was at a mall today and it was pretty wild out there.

CAVUTO: And you're alive to tell about it.

GATES: Yes. One thing I noticed, service is much better.

CAVUTO: We'll see how long that lasts, by the way. I have certain doubts about that.

Patrick Gates, vice president for e-commerce over at AOL.

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