First impressions count. For my wedding in May, the gifts I received from the on-line arm of department store Marshall Field’s, Fields.com, came wrapped in stylish white paper with matching bows and elegant greeting cards. And when a coffee mug arrived chipped, Field’s dispatched another in a snap. Other e-tailers botched delivery, sending gifts late, without a card, or unwrapped. As my bride said, ever so delicately, "They sucked"—which made Fields.com look that much better. I had never bought from the site before, but now I’m hooked.

That’s why the on-line gift business should matter to e-tailers. If done right, it can attract not one but two sources of future sales. A satisfied buyer is likely to return. And if the recipient is pleased, she may try out the site as well. Another reason it should matter: Gift giving is big business. Nearly 60% of cyber-shoppers will buy presents on-line this year, spending some $13 billion, according to Forrester Research. And gift buyers are better customers: Last year, they laid out an average of $1,141 on-line, compared with $833 that typical Web shoppers spent. Says Dawn Monfries, a busy mother of two, "Buying presents on-line is a huge convenience."

Convenient or not, customers will buy only if the total experience is good. That’s why Fields scored so big with me. Everything about receiving presents from the site felt special. "It’s important for people to feel like they’re getting a gift and not a UPS box wrapped in brown paper," says a Forrester analyst. "Otherwise, they might as well be getting pet food."

Savvy sites know gifts aren’t just puppy chow, so they woo recipients with a taste of their products. Luxury goods e-tailer Ashford.com inserts a brochure showcasing products at the site along with a 20%-off coupon. Targeting gift recipients helped push sales from $30 million in 1999 to $65 million last year, says Kim Richard, Ashford’s vice-president for marketing. "More often than not," she says, "recipients check us out and buy."

Here’s the caveat: Some recipients feel that pamphlets and coupons taint the gift. You can market, just don’t let the promo overwhelm the present. On Secretaries Day, 1-800-Flowers.com slipped an unobtrusive note in bouquets sent to secretaries reminding them that Boss’s Day was coming up. Nearly 10%—far higher than the 1% or 2% typical of direct mail—bought a gift. "We believe recipients are fertile ground," says Joe Pittito, a 1-800 vice-president. "But it has to be handled with care."

The key is to make sure people find nothing but pleasure in their gift boxes. Hallmark.com, for example, has dropped sugar cookies into its gifts. With its flowers, it sometimes includes a classical CD. "You can’t be blatant," says John Sullivan, senior vice-president of e-commerce for Hallmark Cards. "You want to romance them." Hallmark’s romancing helped boost Mother’s Day orders this year by 165% over last year.

The bow on the package for e-tailers is that targeting gift recipients can cut costs. On-line merchants spend anywhere from $25 to $100 to land a new customer, says analyst Kenneth Cassar of Net researcher Jupiter Media Metrix. By marketing to gift recipients, merchants avoid the biggest expense: acquiring customer names and mailing the promotion. They simply drop the promo in a box that’s already headed out the door. They only pay for the coupon or cookie—usually less than $1 per customer. "It’s critical that merchants think like this," Cassar says. Remember, all it took for Fields.com to nab me was some pretty white paper, a few ribbons, and a little punctuality.

By Roger O Crockett in BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc