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Online sales take bigger stride

CHICAGO – Kiran Advani shops for most of her clothing online. In fact, the 29-year-old can’t remember the last time she bought a piece of apparel from a store.

But shoes? That’s a different story.

Advani never considered buying shoes online until last summer. Frustrated by her inability to find a pair of simple yet stylish pumps for her wedding, she stumbled upon BlueTuxShoes.com, a Chicago-based Web site that specializes in wedding shoes. She found the sought-after pumps and has been shoe shopping online since.

“Now I’m hooked,” Advani said. “I was always hesitant about buying shoes online because of the fit and comfort. Sometimes I’m a 7. Sometimes I’m a 7 1/2. The last few years I’ve been doing a lot of apparel shopping online and now shoes have just become a part of it.”

When it comes to online retail, footwear has been a step behind the categories driving e-commerce – items such as computers, books, music, toys and clothing. Now shoes are moving into the mainstream.

In November, Gap Inc. jumped into the arena with its online shoe store called Piperlime.com. And in January Amazon.com Inc. followed suit by unveiling its shoe site, Endless.com.

“Apparel was the big behemoth,” said Catherine Beaudoin, senior vice president and general manager of Piperlime. “It’s falling like dominoes. Shoes are probably one of the last bastions because the feeling has been you have to try on shoes to feel comfortable.”

In 2002 online footwear sales, at $954 million, was about one-fifth the size of the $4.4 billion online apparel business, according to Forrester Research Inc. of Cambridge, Mass. Last year, footwear had surged to $2.9 billion, or about one-third the size of the $9.6 billion sold in apparel.

And there is more growth ahead. Online shoe sales are projected to increase 22 percent in 2007 to $3.5 billion, compared to an 18 percent projected gain for apparel sales online, according to the e-commerce research firm. By 2011, online shoe sales are forecast to double to $5.8 billion.

It is no wonder that more companies are looking for a foothold.

Online shoe shopping began during the dot-com boom in the late 1990s and attracted shoppers looking for shoes in hard-to-find sizes or technical shoes for sports and outdoor adventures.

In a sign of how popular online shoe shopping has become, two of the largest online shoe stores – Zappos.com and Shoebuy.com, both pioneers from the late 1990s – are attracting investor interest.

New York Internet conglomerate IAC/InterActiveCorp., run by Hollywood mogul Barry Diller, acquired Boston-based Shoebuy.com last year for an undisclosed sum.

Venture capitalist Sequoia Capital took a stake in Zappos in 2004, and the online retailer achieved its first annual profit in 2006. Onlineshoes.com, another dot-com pioneer based in Seattle, remains private.

At the same time, plenty of brick-and-mortar shoe retailers, including Nordstrom Inc., Nine West and Brown Shoe Co.’s Shoes.com, are crowding the field.

Just how much of a threat heavyweights Gap and Amazon are to the shoe market is unclear. Gap is struggling to find its way after a string of bad fashion calls and steep sales declines; Amazon is under pressure to boost profits.

“I have no idea how to explain their mad dash into the shoe space,” said Sucharita Mulpuru, analyst at Forrester. “It’s a tough model to get right.”

Since fit is so key to shoe sales, online shoe stores have traditionally offered free shipping and free returns, in some cases up to a year after purchase – an expensive but necessary cost of doing business.

And since Amazon entered the fray, price wars have begun. The giant online store upped the ante in January when it debuted Endless and offered free overnight shipping. Zappos matched the free shipping.

Gap, for its part, is taking a different tack. While most of the shoe sites tout a vast array of shoes (Zappos carries 3 million pairs of shoes in its warehouse and offers more than 100,000 styles from vegetarian shoes to $2,000 designer boots), Gap is taking an edited approach. It carries about 100 brands and has guest fashion editors talking about their favorite shoes.

“It made sense for us to enter only if we could bring something new to the market,” said Piperlime’s Beaudoin. “Our philosophy has been to carry a tightly edited group of brands and bring a strong merchandising filter to it.”

Gap is also trying to entice customers with eye-catching lime-green packaging, then individually wrapping each shoebox in brown tissue paper.

Amazon, which dabbles in everything from groceries to diamond jewelry, has been selling apparel and shoes through such third-party retailers as Macys.com on its Web site for years. But Endless marks the first time the online bookseller has created a separate Web address for one of its stores.

“It took a very short time for us to realize the shoe and handbag segment is the most successful within that business,” said Garth Mader, manager of Endless.

Indeed, like many women, Katherine Deane, a Chicago-based recruiter, owns more than 100 pair of shoes. She began shopping for shoes online last year as a way to save time, buying four or five pairs of shoes in one sitting.

“I was working long hours and didn’t have time to go to stores,” Deane said. “It’s very convenient, especially in the winter when you don’t want to go out in the cold. You just click a button and it shows up on your doorstep.”

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