E-Tail Sales Up 51 Percent, Margins At 21 Percent

May 25, 2004
George Anderson

By George Anderson

A survey of online retailers, The State of Retailing Online7.0, conducted by Shop.org and Forrester Research, discovered that sales for the group jumped 51 percent last
year and the channel produced its very first profit.

“This positions online retailing as a real profit engine for retailers,” said Scott Silverman, executive director of Shop.org, the online division of the National Retail Federation

Mr. Silverman noted that profit margins for e-tailers are typically around 21 percent compared to as low as three percent for brick and mortar businesses.

The study projects e-tail sales will increase by another 27 percent this year to $144 billion. The growing number of women who are shopping online bodes especially well for categories
of high interest to the female market, says the report.

Moderator’s Comment: What is your takeaway from the top line results of The State of Online Retailing report?

As we all know, online sales still represent a tiny fraction of total retailer revenues. Still, with operating margins anywhere from two to seven times
that of stores, we wonder if investments in online marketing, for example, will now begin to approach some of the lofty predictions made before many of the original dot-coms went

George Anderson – Moderator

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