But flexibility is the key. Even with the increase in broadband access, toy retailer FAO Schwarz, whose online sales represent about 8% of its total, doesn't want to lose those customers using dial-up. When load volume gets heavy in the days before Christmas, the company may drop its moving toy soldier from the site, designed in Macromedia Flash. "Even if it takes an extra 15 seconds for a customer to load a page, we'd rather not chance losing them," says director of new media Torva Danielson.

As for the heavy traffic associated with the holiday season, E-retailers are confident that their Web-site infrastructures can handle the load. Instead, they're focusing on personalization and cross-selling to maximize holiday sales.

Tower Records in a few weeks will introduce features to its Web site that make significant use of E-mail. Customers will be able to create wish lists and have the site E-mail them to friends, as well as send electronic gift cards.

Martha Stewart Living Omnimedia Inc. also is trying to target its customers better. Late last month, the company launched its new site, built using Java, XML, Art Technology Group Inc.'s Consumer Commerce Suite, and E.piphany Inc. analytics, says Raffaele Pisacane, VP of Internet development. If a consumer clicks on a feature about how to make holiday decorations, the site may suggest related merchandise. Information about customers is collected from various sources, such as magazine subscriptions or purchases of Martha Stewart products at Kmart stores, letting the company categorize each customer by segment. "Before we start to do one-on-one marketing promotions, we want to make sure we get this right. There's a learning curve to making sure our segmentation is really accurate," he says.

J. Crew's Web site is designed for the majority of its customers, those with 56-Kbps modems, VP Towers says.

J. Crew wants to market the right products to each customer by making recommendations based on the customer's buying history. "You can have the best Web site in the world, but if you're not giving customers the right options for products, you'll lose sales," Towers says. It's a lesson J. Crew learned the hard way. The company has struggled to get the right mix of merchandise in its stores in the past few years and blamed that problem, along with the bad economy, for a 15% drop in same-store sales last year.

E-commerce, however, keeps growing. J. Crew's Internet sales now make up about 15% of its business. Through Oct. 5, online sales were at $78.1 million, compared with $67.1 million for the same period last year. J. Crew's Web site plays an important part in its effort to improve merchandising, and the company has spent months using personalization software to learn customer preferences. The strategy will be heavily tested this holiday season across all of its sales channels, including stores, catalogs, and Web site.

Also new this year are online tools to help shoppers with purchasing decisions, such as J. Crew's Gift Guide and its Chino Finder, which let shoppers search by product, style, and price. Strategies for cross-selling and up-selling will let a shopper see what a skirt looks like on a model, for example, and then tinker with matching accessories on the model such as a sweater and boots, as well as different colors.

For customers with high-speed access, playing online dress-up has never been easier.

Photo by Mark Asnin