In Wartime, Web Stores Resilient But Not Invincible

Internet commerce decelerated sharply as war erupted in Iraq lastmonth but appears to be rebounding already, according to companiesthat track online spending.

Web search engines and shopping sites report heightened interestamong online shoppers in American flags, gas masks and otheremergency gear.

At Amazon.com, global-positioning-system gear has become a hotseller, along with the Grundig Satellite 800 Millennium Short WaveReceiver, a $480 item. REI.com, the outdoor store, lists GPS gear asits top seller on its home page.

At America Online, member searches for "yellow ribbons" tripledlast week from the week before. More people on AOL also weresearching for "care packages" and "Operation Shoebox," saidspokeswoman Lisa Gibby, suggesting they were looking to buy things toship to troops in the Persian Gulf. AOL said the number of membersresponding to its "deal of the day" offers reverted to prewar levelsquickly after they resumed March 24. AOL had scuttled the specials inthe first few days of war.

Overall, though, Internet commerce clearly lost some momentum lastmonth because of worries over the war and the economy.

The total dough Americans spent on the Net declined by 8 percentor more on the eve of war, according to several companies that tracke-commerce. Internet spending seems to have recovered somewhat and isgrowing again, though still not at the heady rates of early thisyear, according to BizRate.com, which surveys people as they shoponline.

Still, Internet commerce looks healthier than offline retail,which was hurting even before the war. On the first day of war, salesin traditional stores fell 14 percent nationwide, according to theconsultancy ShopperTrak. Sales gradually picked up and were down only1.9 percent after the first 11 days of war, ShopperTrak found, whichindicated that people were steadily venturing back into stores.

Business online appeared to come back even faster.

On March 17 and 18, online sales dropped 14 and 8 percent from thesame days a year ago, BizRate found. Sales picked up quickly anddelivered a 19 percent year-over-year increase during the first fullweek of war, BizRate said. Overall, e-commerce sales (excludingtravel) rose 26 percent during the first quarter of 2003, the companyreported.

"I would say e-tailing is much more resilient," said BizRate chiefexecutive Chuck Davis. "In fact, a lot of people feel safer buyingonline in the privacy of their homes during uncertain times."

Analysts expected e-commerce might actually get a bump from thewar because of the "cocooning effect" of people staying home, thoughthat apparently didn't happen to the extent some had hoped.

"Last week was a tough week overall for most Internet retailers Ihave spoken to," said Elaine Rubin, chairman of Shop.org, the onlinearm of the National Retail Federation. "This week seems to be better.The folks I have spoken to seem to be in an uptick again."

ComScore Networks, another firm that tracks Internet spending,said it has seen online sales growth stabilizing in the past week."The weekly trends have been a bit like a roller coaster," saidDaniel E. Hess, vice president of ComScore. "As events unfold or getmore tense, it is not unusual to see a sharp decline in growth rates.It is very similar to the response you see in the financial markets."

BizRate didn't release data on individual Web sites, but Nielsen/NetRatings compared at-work traffic at top retailing sites during theweek war broke out with that for the previous week. It found a 27percent traffic decline at the Web site of Dell Computer, a 3 percentdrop for Amazon.com, a 21 percent fall at Walmart.com and a 9 percentreduction for eBay.

Although most Internet retailers responded in some fashion to theSept. 11, 2001, terrorism attacks, altering their home pages toexpress sympathy or make other statements, there has been little ofthat during the Iraq war. Retailer 1-800-flowers.com posted a symbolshowing support for the troops on its home page -- a yellow ribbontied around an Earth icon -- and Walmart.com published a photo of asolder with a hyperlinked headline: "Send a message to our troopsthrough Operation Dear Abby."

But for the most part, Internet retail sites remained full ofcheery spring promotions, with nary a hint of the conflict raging inIraq. One place where war-related products were much in evidence waseBay, the Internet auction site.

A search on "Iraq" or "Saddam Hussein" revealed all kinds ofmerchandise relating to the war-torn country being offered on eBay,including Iraqi dinars, Saddam T-shirts and political leafletsdropped in the Persian Gulf during the 1991 war. On Tuesday, 1,205items were offered with "Saddam Hussein" in the description, and6,839 mentioned Iraq.

EBay reports details of its sales and listings only every threemonths, but some who track activity on the site say listings havedropped noticeably over the past two weeks.

"The war has definitely had an effect. Sales on eBay aresluggish," said David Steiner, president of AuctionBytes.com, anelectronic auction guide. "EBay dealers are tuned in to trends. Theywon't put up as many listings if there are fewer people looking atthem."

Not all eBay sales are waning, though. Stephanie Inge, a part-time dealer and working mom in Dallas, said that while a friend whopeddles costume jewelry on eBay has watched her sales hit "rockbottom," Inge's have gone straight up. That was in part because Ingefound some "Wanted: Dead or Alive" Saddam Hussein posters at anestate sale the week before the war.

"I've sold over 100," Inge said.

Not one person, however, bid on the domain name Iraq.com when itwas offered on eBay last week for $10,000.

Leslie Walker's e-mail address is walkerl@washpost.com.