ON-LINE SHOPPING: Today's Computer Catalogs
Selby Bateman, Features Editor
Electronic shopping malls and on-line storefronts have emerged from science fiction into reality. You can already shop for, compare, order, and purchase literally thousands of products using your home computer. Within the next several years computer-based shopping services will offer far more—and increasingly sophisticated—buying options.
"When the going gets tough, the tough, go shopping" is a tongue-in-cheek, modern American proverb which reveals a lot about our urge to browse, bargain, and buy. Of course, shopping, in one form or another, is one of the oldest and most popular customs in almost every society.
But shopping habits changed little until late in the nineteenth century, when a few astute retailers discovered that many people preferred to do at least some of their shopping the easy way—without trudging from store to store, without the disappointment of learning that their sought-after product was out of stock, and without fighting crowds of competing shoppers. At the same time, millions of people in rural America who lived far away from big cities simply were unable to shop for the things they wanted to buy. So retailers like Sears, Roebuck & Co. created a multibillion-dollar business by popularizing catalog shopping—comparing and ordering products by mail and by telephone.
We're now on the verge of another shopping revolution, this time made possible by the rise of another new communications system: personal computing and telecommunications. Using your computer as a remote terminal, you can gain access to a growing number of computer-based shopping and banking services. Some examples are CompuServe, Inc.'s Electronic Mall, Compu-U-Card of America, Inc.'s Comp-U-Store, Chemical Bank's Pronto Home Information and Banking System, and Keycom Electronic Publishing's Keyfax Interactive Information Service in Chicago.
There are also experimental videotex systems for home use which feature dedicated video terminals capable of receiving and displaying signals with superior graphics and other advantages. Knight-Ridder's Viewtron system in Miami, with its AT&T Sceptre terminal, is perhaps the furthest along in this area. But major companies, including CBS; Sears, Roebuck; IBM, and many others are researching the possibilities of online shopping services.
Although in today's urbanized America practically everyone lives near a big city, shopping center, or suburban mall, the very popularity of modern marketplaces keeps alive some of the big advantages of catalog shopping: the absence of crowds and traffic, and the convenience of buying from your own living room. Coupled with credit cards, the climate for shop-at-home services might be even better than it was in the nineteenth century. Besides that, on-line stores can potentially offer greater discounts if volume is high enough, because their overhead can be lower. And all shoppers have one thing in common—everyone likes a good buy.
"I believe it's going to be a steady, geometric growth as the services become available and as the industry discovers which services people want," says Merrill Millman, president of American Home Networks. Based in Illinois, American Home Networks is scheduled in December to go on-line with its American People/Link telecommunications system throughout the continental United States. The system will be accessible by virtually all home computers and will initially feature electronic mail service, a party-line communications service, an electronic bulletin board, and games.
"I think there will be success in areas connected with user interaction, electronic mail, information retrieval, games. And merchandise ordering—I think that's great," says Millman. "Right now on CompuServe, for instance, you can order from Sears, Roebuck & Co., and I think that's fantastic."
In fact, CompuServe, with a subscription base of more than 130,000 computer users, offers access to more than 80 merchants through its Electronic Mall service. Firms like WaldenBooks, American Express, Commodore, McGraw-Hill, Microsoft, and American Airlines are part of the system.
The Electronic Mall is open 24 hours a day, seven days a week. The on-line catalog contains not only descriptions of each product, but also a "mailbox" which allows you to query merchants for more details. Shipping information and order forms are also part of the Mall system.
Sometimes, though, as this infant industry continues to mature, the terminology can become more confusing than the actual services themselves. For instance, terms such as teletext, videotext, videotex, and viewdata are being used in a multitude of ways, some inappropriately, to describe how your computer can communicate with other computers.
Teletext generally refers to the transmission of information to your computer screen or TV set via a standard broadcast signal, giving you access to that information without letting you fully interact with what you see. For example, some data base services might let you receive encyclopedia information. You can control what you see and the speed at which you view it, but you can't ask questions and get responses. What you see is what you get—basically a oneway link.
Videotex—sometimes referred to as videotext or viewdata—is interactive. What you see is just a starting point for what you can get by using your computer to talk to the remote computer, usually a mainframe system. Thousands of people can communicate with the mainframe at the same time. Examples of these interactive, or two-way, videotex systems include home banking, services which let you buy stocks and bonds and make other financial transactions, on-line computer games, and electronic shopping.
Telecommunications experts are convinced that teletext will be a widespread, though limited, mass-market technology since it can be made inexpensive. There is disagreement, however, about how widespread the penetration of videotex will be. Will it become a mass-market service?
"That depends on how you define mass," says Gary H. Arlen, head of Arlen Communications, Inc., a Washington, D.C., research firm specializing in electronic communications. The publisher of Videotex/Teletext News, Arlen predicts that videotex will come into its own in the late 1980s.
"It's going to be widespread and cut across a number of lines," he says.
But that doesn't mean, he cautions, that the great majority of American people who now have televisions will have access to videotex in the same way. There are limiting factors—chiefly cost and functionality—which to some extent will control the spread of videotex systems.
"The biggest problem in that whole general industry is that they've been mostly selling the glitter of this new technology—which really isn't a new technology—without bothering to explain to people in any real way why they would want to subscribe," says Steven Weissman, a videotex expert and the director of information services analysis for the market research firm of International Resource Development, Inc.
"The whole utility of it has been largely ignored until recently," says Weissman. "They love what the concept embodies—as do I. But as a consumer, just because I love it isn't enough to make me go and spend money on it. And a lot of consumers feel the same way."
The AT&T Sceptre terminal required by the Viewtron service costs subscribers $600 each. Though quite sophisticated, the terminal can be used only with the Viewtron system itself. The Sceptre is essentially a videotex graphics decoder which lets the transmitter send high-resolution graphic images rather than the all-text or blocky computer graphics available on conventional computer-based shopping services.
While services such as CompuServe tap into a base of subscribers who already own computers, the hardware requirements for Viewtron and a few other videotex systems mean hefty expenditures of money to get started. The tradeoff, of course, is that with Viewtron an advertiser can present you with high-quality images not yet possible through a system like the Electronic Mall, which depends primarily on text to sell its products.
"The Sceptre terminal being sold in Miami now will never see the light of day outside of Florida," says Gary Arlen. "AT&T admits that. The Model One, as they call it, is very limited—expensive, dumb, it doesn't do very much. At the same time, a lot of software for Commodore computers—as low as sixty bucks for a Commodore and typically two hundred to two hundred and fifty bucks for an IBM PC—does the same kind of thing. The only problem is that the software doesn't fully implement the NATLTS protocol—the presentation-level protocol that the system operators are using.
"The problem with that," explains Arlen, "is that the software may only have a color palette of eight or sixteen colors, depending on the board that you have to put in your PC. If someone wants to advertise something and they want to display their logo, which is in Kodak Yellow, and the software or the board can't display that particular shade of yellow, the advertiser loses interest in offering his material on that system. So, obviously, the Sceptre terminal is dedicated to overcoming that problem."
What results is a classic Catch-22 situation: Advertisers won't advertise unless they can display their products in a sophisticated fashion; system operators can't produce that signal yet without charging subscribers for expensive terminals; and consumers aren't willing to pay that much.
What will solve this problem in the next few years and allow a greater proportion of the population to take part in advanced on-line shopping is the development of cheaper, more flexible hardware and software.
"The most exciting things are those things coming from the electronic imaging world," says Arlen. "There are a lot of folks at IBM, Wang, and DEC [Digital Equipment Corporation], almost everywhere, working on new imaging systems to present photographic quality images rather than the computer graphic images.
"You start doing this with the AT&T concept—that is, with a box, hopefully cheaper, that can be used in connection with a standard TV set. Or more likely—and this is really the key—the digital TV sets that will be coming into the market next year," Arlen adds. "By the time the price comes down a little, and people start buying them—that's three or four years away—the equipment will then be out there to display the kinds of things that electronic marketers want to display."
Despite the so-called high-resolution graphics available on today's personal computers, notes Arlen, when you try to display a picture of the latest Paris fashion, it still looks too much like a dress made out of a child's Lego blocks. Even the Sears, Roebuck catalogs of 80 years ago could plug their products with better pictures.
In the long run, then, today's text-based shopping services will give way to newer technologies.
"I'm impressed with what CompuServe and CompuCard have done, but that isn't for everybody," says Arlen. "It's worse than looking things up in a catalog. It's not as easy as flipping through pages and comparing prices.
"If you know you want to buy a digital watch, say, Seiko model LX2271, or whatever, and you know the model number, you're presented with an array of model numbers. But if you have to start reading and comparing which has the larger readout, which has the light on it, which has a videogame on it, you lose the value [of the system]."
In spite of the limiting factors which Arlen, Weissman, and others mention, they nonetheless have great expectations for the future of videotex. As with most types of computer technology, rapid advances seem to go hand-in-hand with dwindling prices.
And response to the new on-line systems has so far been quite good, says Robert McBride, a senior vice president with Chemical Bank's Pronto Home Information and Banking System, based in New York.
"We just hit the 10,000-subscriber mark toward the end of July, and the rate of new signup has continued at a very good pace," he says. "We are actively pursuing now the small-business customer and applying the same home banking applications to business accounts. And the reception there has been quite strong."
Although Pronto does not yet offer home shopping services, Chemical Bank is aware of the potential.
"What we envision is that the number of services that can be provided over a network such as Pronto is really mind-boggling and limitless. At this point in time, the on-line securities and investment service seems to be something that is directly applicable to the financial role we play. But certainly telemarketing, shopping, purchasing airline or theater tickets, dictionary services, encyclopedia services—there's just a whole gamut of possibilities."
Pronto users can bank at home, pay bills, transfer funds, determine balances, see electronic statements, track budgets, and balance checkbooks.
Chemical Bank also has licensing agreements with eight other banks, ranging from San Francisco's Crocker National Bank to Bankers Trust of South Carolina.
In the Chicago area, the popularity of the Keyfax Interactive Information Service is being closely watched by videotex observers because of the system's relatively low cost (a $10 to $15 monthly base rate with a one-time $40 software package), and because it is accessible by home computers. In addition to its data base services, financial options, home banking, and educational packages, home shopping will be offered as well.
One indication of things to come is the introduction of a new videotex decoder by Telelogic, Inc., of Cambridge, Massachusetts, shown first at the Videotex 84 trade show last spring. The unit, called Tex, is being sold for $100 to providers of information services, such as banks, who can then offer the units to their own customers.
Using a Touch-Tone phone, you dial the service you wish to contact and place the phone handset on the Tex decoder. Menus displaying available services appear on your television screen, from which you make selections by using the telephone keypad. The one-piece unit includes a decoder that translates the information transmitted from the host computer plus a modulator which connects to a TV's antenna terminals. The computer service sends the text and graphics over the phone lines to be received and decoded by Tex.
The decoder uses the Prestel graphics protocol, which was developed for Great Britain's commercial videotex services.
The system is as easy to use as a bank's automatic teller machine, says Telelogic President William J. Harris. "This combination of low price and ease of use will help bring videotex technology to a large number of people."
Tex units are being tested already by the National Bank of Detroit for its Video Information Provider (VIP), a telebanking pilot project.
While videotex may still be in its infancy, don't expect it to stay that way for long. The text-based shopping services you can access now will soon be joined by low-cost national videotex systems in just a few years. And telecommunications specialists agree that the market for those services will be the same people who today have been among the first to use personal computers, VCRs, and similar technological advances.
"No one's doing a satisfactory job yet," says Arlen. "But everyone is trying very, very hard."