E-tail to Paint in Black in 2003

Discussion
May 16, 2003
George Anderson

By George Anderson


Online retail sales grew a whopping 48 percent in 2002 compared to the year prior according to The State of Retailing Online 6.0, Shop.org’s annual study conducted by Forrester Research.


Online retail operations also took a significant step towards profitability at the same time. The retailers in the study broke even as a group, compared to a six percent loss the year before.


Kate Delhagen, consumer markets research director, Forrester Research said, “In a time when the retail industry has been extremely challenged, it is encouraging to see the online channel continue to grow, and even better, start to make money. Last year was about breaking even, 2003 is about generating profits.”


The State of Retailing Online 6.0 report predicts online sales will grow to 4.5 percent of total retail sales this year.


To put the number in perspective, Elaine Rubin, chairman, Shop.org said, “It took the catalog industry 100 years to represent 4.7 percent of retail sales. It took online retailers only six years to accomplish the same feat.”


Moderator’s Comment: What are your thoughts on the
current state and future prospects of online retailing?


History will show the dot-com bust wasn’t so much a bust
as it was a stumble.


The news in the Shop.org report was good for both pure
play and multi-channel retailers. Pure plays have significantly reduced the
cost of acquiring customers and focused on the product categories that consumers
feel comfortable buying online.


Multi-channel retailing has certainly gone a long way
in easing consumer’s security concerns about buying goods online. It has also
become a practical requirement for most brick and mortar retailers looking to
remain competitive. Forty percent of online buyers were first time customers
for multi-channel operators based on Forrester’s analysis. [George
Anderson – Moderator
]

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