September 3, 2002, 12:00 AM

A new burst of online shopping

(Page 3 of 3)

With such growth comes the opportunity for retailers to grab a share of the online market while shopping loyalties are still unformed. That means doing more of the same of what has brought online retailing to this point-marketing and merchandising-and then providing a good experience. “If retailers don’t do it now, they’ll miss the boat,” says Kal Raman, president and CEO of Drugstore.com. “The cost of acquiring customers now and providing a great experience is much lower than it will be a few years from now when you’ll have to play catch-up.”

Keep ‘em coming back

Drugstore.com already demonstrates the value of repeat customers. Returning customers account for 71% of sales vs. the industry average of 50%, and they spend $154 a year, three times what they spent in 1999. “The most important thing we do is take care of the customers at the site,” Raman says. “We want to give a great shopping experience. And that’s the most important thing any retailer can do.”

As any market matures, growth slows and, a resurgence of growth this year notwithstanding, online retailing will be no different. The only question is how long the new boom will last. Early measures of third quarter growth show a dip in the growth rate-sales were up 20% in July from July last year.

Growth will also depend to a certain extent on the economy, of course. But even if the economy slips this year, observers expect online sales growth to outstrip overall retail sales. By how much is the great unknown. “But there aren’t a lot of places you can find double-digit growth,” says Daniel E. Hess, vice president of comScore, “whether the economy is slowing or not.”

kurt@verticalwebmedia.com

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