STUART VARNEY, GUEST HOST: But if the big stores and mores are not your thing, do what millions more are doing every day: that is shop the Web.
Welcome, both of you.
First to you, Mark, I see forecasts of, what, a 20, even 30 percent gain in online shopping this holiday season, compared to last year.
What are you seeing?
MARK VADEN, CEO, BLUENILE.COM: That's right. I think people are expecting 20 to 30 percent growth, and we're seeing roughly those same numbers. Last quarter we grew 23 percent, and online is definitely becoming a factor in the marketplace.
VARNEY: All right. Patrick — Patrick, what are you seeing here?
PATRICK GATES, AOL E-COMMERCE: Well, you know, we don't sell anything. We — we have guys like Blue Nile.
VARNEY: But you know what's going on.
GATES: Yes. Well, we see — we expect the same thing. You know, industry analysts expect 20 to 25 percent increase over last year.
VARNEY: I've got to put it to both gentlemen that you know, this is still — online shopping still represents only three percent of the total retail sales. It's not even close to becoming a really major factor in the retailing picture at this point.
So, my question to you, Mark, is what's gone wrong here? Why don't we have even more rapid growth?
VADEN: I've got to totally disagree with you. I think online is changing the landscape of retail out there. Today, Blue Nile sells as many engagement rings as Tiffany sells in the United States.
VARNEY: Yes, but wait a minute. I remember back in the late 1990's, I remember back in the 1990s when online shopping was going to empty the retail malls. No more bricks and mortar, no, no, no. It was all going to be online. That was ten years ago, and you're still only up to three percent of total retail sales.
VADEN: If you look at the companies that have survived, they're making a big difference in their individual verticals out there in the marketplace. We'd be like that, if there was a number of other businesses that are doing the same thing.
It may be happening at a slower pace than people expected.
VARNEY: Am I onto something, Patrick?
GATES: I know. I think they were bold predictions 10 years ago. Yes, we all jumped on the malls are going to be empty.
But you know, consumers, it was very difficult at first to shop. They weren't sure about security. The web sites were designed by, you know, very creative engineers in California, and the sites looked that way. People didn't understand how to use them.
Now we see people with high speed connections, comparison engines and a lot easier to shop. So we think we're going to see adoption continue to grow.
VARNEY: But it does occur to me that a lot of people use online shopping not to actually purchase — to purchase, rather, but to just comparison shop, look at prices, look at styles, availability.
GATES: That's absolutely correct, especially when you have high involvement purchases where you're going to be spending a few hundred or a thousand dollars.
You want to make sure that that you're getting, you know, not only all the information on that product, but you might want to go look at it. So yes, we've seen a lot of research online and then culminating the purchase offline.
VARNEY: Mark, convince me that if I buy through you online, that I am secure. My credit card numbers are not going to be stolen. No identity theft. Convince me, Mark.
VADEN: You know, I think you look at our average engagement purchase, it's over $5,000. And a growing number of men are using the web to make that type of purchase.
And a lot of it is just what you're saying: the web is perfect for doing research. When you're going to buy an engagement ring, spend that type of money, you want to know what you're doing. You want to get a lot of information.
Guys can do that on our web site. They can feel empowered, in control of the situation. And at the end of the day, they're going to pay 20 percent to 40 percent less on Blue Nile than they'll pay in a physical store. It's — it's a pretty compelling — compelling situation.
VARNEY: That was a good commercial, Mark. That was pretty — I've got to say, that's pretty good. I've got to say it.
VADEN: That's why I'm here, Stuart.
VARNEY: Very good. How about more free shipping, Patrick?
GATES: Well, free shipping has been around and will be around. Today, I'm not trying to plug it, but AOL is doing an all-day free shipping from a lot of different web sites.
VARNEY: These commercials just keep coming fast.
GATES: No, you see less of it. It's more controlled. It's more in time periods that are sort of, you know, projected and advertised to consumers. Not on days past when everybody was doing it.
But, you know, sales getting a little tough, and you know, a couple of weeks from now, I think you're going to see a lot more of it.
VARNEY: So, you basically are saying that it's come of age, already has, online shopping. It's there.
GATES: It's there.
VARNEY: All right. Gentleman, one and all, thank you very much for joining us.
VADEN: Thank you.
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