E-Commerce Firms Grapple With Inventory Issues.

SUSAN Daniher spent last year's holiday shopping season frantically packing DVDs into boxes with all the other company executives from DVDExpress.com, just to meet the unexpectedly high demand.

This time around, company officials are hoping to be better prepared, although Daniher, the company's vice president of marketing, acknowledged that "holiday shopping online is like the wild west. You can never tell how many people are going to shop."

For experienced e-commerce sites as well as the many newcomers, the holiday guessing game is in full swing. What's going to be the top seller? How many people are needed to get merchandise Out the door? Will the company's executives be spending their Christmas Eve packing $59.95 creme brulee-making kits (complete with blowtorch) instead of wrapping presents with their families?

"If we had a Magic 8 ball, we'd be perfect," said Tracy Randall, chief operating officer of Santa Monica-based Cooking.com. "This isn't a science, it's an art."

For many Web sites, it's an art that must be refined in the coming years.

Americans are projected to spend $6 billion shopping online during the 1999 holiday season, according to Jupiter Communications, compared with $3.2 billion a year ago. By 2003, U.S. consumers could be spending more than $70 billion online during the holidays.

But in the Internet world, 2003 is a long time off, and the lessons learned by Christmases past are tentatively being put into effect this year.

To a certain extent, Randall said, Cooking.com can predict what customers will order. Most Web shoppers will buy the items that are heavily promoted, such as gift baskets and items that have been reduced. "I think during the holidays most people feel like, `Tell me what to buy,'" she said.

With that in mind, Cooking.com has upped its inventory at a warehouse in Ontario, with items like the Whirley Pop Popcorn Popper arid the aforementioned creme brulee-making kit.

"We offer them a degree of flexibility," said California Distribution President Larry Willett. "Our job is to give them rubber walls."

Willett said e-commerce companies electronically transmit the orders as they come through on their Web sites. Workers at the warehouse then "pick and pack" -- and occasionally even gift wrap -- the item and send it on its way. At that point, the warehouse sends a confirmation back to the company with a tracking number that can be passed along to customers.

For the holiday rush, California Distribution hired an additional 25 people to speed the shipping process.

eHobbies launched in October, but Chief Executive Brad Sobel said the Web site has been planning for the holiday rush since it was funded by eCompanies earlier this year.

"We've aimed our inventory at the holiday season," Sobel said. "We have depth in all the right places, because if folks come here and you're out of stock, then you're out of business."

Sobel said company officials were able to set their inventory based on traditional holiday buying patterns for hobby aficionados -- train sets, for example, are a huge holiday item but not very big the rest of the year.

Other first-year e-commerce sites can base their inventories on the experiences of their brick-and-mortar stores.

Petsmart.com, the Pasadena-based online division of the pet supplies retailer, shares warehouses in Anaheim and New York with its real-world counterpart.

"One of the benefits is that Petsmart has had experience with the holiday season for 12 years," said Chief Executive Tom McGovern. "They already know that 80 percent of the dog owners and 70 percent of the cat owners do buy Christmas presents for their pets."

This year, Petsmart has loaded up with pet treats -- and edible Christmas cards, because "dogs can't read," McGovern said.

As for DVDExpress.com, it has a new warehouse with more than five times the space it had last year. Fifty new employees were hired for the holidays and an automatic reorder system was put in place to monitor inventory and reorder when supplies run low.

But even with- the new warehouse, extra help and pumped-up inventories, Daniher still has a pretty good idea of where she will be during the holiday season: at work, in the warehouse, frantically packing DVDs.