In an episode of the popular ABC show “Shark Tank” that aired last week, founders of the web-only fashion retailer ranked in the Second ...
“The 2002 holiday season online was incredible across the board,” Elaine Rubin, the chairman of Shop.org, told her audience at this week’s NRF Convention & Expo.
“The 2002 holiday season online was incredible across the board,” Elaine Rubin, the chairman of Shop.org, told her audience at this week’s NRF Convention & Expo as she presented her organization’s fifth annual State of Retailing Online survey. The report, conducted for Shop.org by Boston Consulting Group Inc. and Forrester Research Inc. with the use of comScore Networks Inc. data, projects that 2002 was a break-even year for e-retailers with estimated online revenues of $72 billion, up 41% from the prior year. The figure includes retail sales as well as sales of event tickets and travel services. While a sales figures for web retailing have not been fully tabulated, Rubin declared, “Based on the early numbers, we are going to be close to the projections.”
That growth, Rubin said, would mean the web would directly account for 3.2% of total retailing revenue in the U.S. last year, up from 2.4% in 2001. “It’s still a small piece of total retailing, but it is rapidly growing and should be on your radar screen,” Rubin observed, noting that it took the catalog industry 100 years to hit a 3% share, something the Internet has done in a half dozen years. “Obviously, this is a must have channel, not a nice-to-have channel.”
Other highlights of the Shop.org study include the following:
--Based on a late November NRF survey that asked nearly 7,000 shoppers where they did their Christmas shopping, fully 33% completed some of their Christmas list online this past season. Only discount department stores fared better as a source for Christmas shopping (mentioned by 49% of respondents), while department stores (with 31%), specialty stores (27%) and catalogs (16%) garnered fewer responses than the web. “What was shocking to me was that the web was the #2 choice, a complete flip-flop from what we had seen in the past,” said Rubin.
--Multi-channel retailers grew their online revenues at an estimated 44% in 2002 vs. 33% for web-only merchants. That continues a trend that began in 2000, when the pure-plays grew by 61% and the multi-channel merchants grew web sales by 71%, and accelerated in 2001, when the multi-channel retailers expanded online sales by 52% as the pure plays shrunk by 14%.
--Excluding travel, the three largest categories for direct online sales (excluding referrals) are computer products (at $7.9 billion); office, home and garden ($7.3 billion); and apparel ($5.2 billion). But the fastest growing online categories are food and beverage (up 55% in 2002) and office, home and garden (up 53%). Meanwhile, apparel sales, which grew the fastest of all lines in 2001 at 43%, were projected to slow to 18% in 2002, no doubt a reflection of a soft overall economy.
--Online sales have achieved a 5% or better penetration rate in seven major retail categories, including computers (23%), software (14%), books (10%), event tickets (9%), music/video (8%), travel (7%) and toys (7%).
While e-retailers were expected to break even as a group in 2002, catalogers are the only group generating a profit online, with earnings before interest and taxes of 6%. Store-based retailers still reported an average loss of 5% before interest and taxes and web-only merchants suffered an average loss of 13%.