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www.ecommerce-guide.com/news/trends/article.php/758161
By Beth Cox May 3, 2001 Just when you may be thinking that e-commerce is just another dot-com bomb, along comes a report that says otherwise. The online retailers who survived the battlefield that was the year 2000 are emerging stronger, smarter and more competitive. In fact, this report predicts that the North American online retail market is expected to grow 45 percent in 2001, reaching $65 billion. The report is "The State of Online Retailing 4.0," a new Shop.org study conducted by The Boston Consulting Group. Interestingly, it says that currently, 72 percent of catalogers, 43 percent of store-based retailers and 27 percent of Web-based retailers are profitable at an operating level. "Catalog retailers ... have been able to take a much more competitive position in the market as they have succeeded in attracting entirely new customers through the online channel," said Michael Silverstein, senior vice president and global leader of BCG's Consumer practice. "Roughly 40 percent of a cataloger's online customers are new to the company." Despite the dot-com shakeout, online retailers overall were able to reduce losses as a percentage of revenues. Operating losses decreased as a percentage of revenue, from 19 percent in 1999 to 13 percent, or $5.6 billion, in 2000. Customer acquisition costs for all online retailers fell from an average of $38 in 1999 to $29 in 2000, the report says. Web-based retailers, in particular, were able to bring customer acquisition costs down from a high of $82 to $55 over the same period. Indeed, the best performing Web-based retailers (the top 50 percent) reduced acquisition costs to an average of $14 per customer, rivaling the performance of catalog-based retailers. Travel, the largest online category at $13.8 billion in 2000, will continue to grow another 50 percent over the rest of the year, the report says. As the online market matures throughout 2001, however, growth in other leading categories such as books and computer hardware and software will level off at 25 percent and 15 percent respectively. Further expansion of the market will be spurred on by growth in a second wave of general merchandise categories such as toys, apparel and home and office. "While consumer demand continues to propel growth, online retailers have wrestled with operational issues and improving their performance in key areas such as customer acquisition and buyer conversion," said Elaine Rubin, chairman of Shop.org. "There is a steep learning curve in becoming an online retailer - those players that were unable to excel in all facets of this complex business just didn't make it to the end of 2000." The report is based on data from 550 retailers, 156 of which participated in a detailed survey. Shop.org is the association of e-retailers and became a division of the National Retail Federation (NRF) in January of this year. |
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