Online shoe sales take bigger stride

CHICAGO — Kiran Advani shops for most of her clothing online. In fact, she can't remember the last time she bought a piece of apparel from a store.

But shoes? That's a different story.

Advani, 29, 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 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 ½. 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 jumped into the arena with its online shoe store called Piperlime.com. And in January, Amazon.com followed suit by unveiling 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 of Cambridge, Mass. Last year, footwear 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 with an 18 percent projected gain for online apparel sales, according to the e-commerce research firm. By 2011, sales are forecast to double to $5.8 billion.

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/InterActive, run by 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 Seattle-based dot-com pioneer, remains private.

At the same time, plenty of brick-and-mortar retailers, including Nordstrom, Nine West and Brown Shoe'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, an 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 — 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.

"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.