May 5, 2004, 12:00 AM

The Q1 story: No let-up in online sales growth

In 2004’s first quarter, the online retailing rocket ship showed little sign of falling to earth. Online retail sales exceeded $1 billion every week through the first quarter, bringing total online sales to $13.72 billion through the end of March.

In 2004’s first quarter, the online retailing rocket ship showed little sign of falling to earth. Online retail sales exceeded $1 billion every week, bringing total online sales to $13.72 billion through the end of March, up 26.4% from a year ago, according to numbers fromcomScore Networks Inc.

Total retail sales were hardly a slacker in Q1, too, with GAFS sales (general merchandise, clothing and clothing accessories, furniture and home furnishings, electronics and appliances, and sporting goods, hobby, book and music) up “an astonishing,” in the words of National Retail Federation economists, 9.8%.

A number of retailers who break out their web-based numbers reported equal or better growth in recent months.

Web sales at computer equipment seller CDW Corp. were up 56% in the first quarter to $361 million, 27% of total revenue. Total sales were up 31% to $1.33 billion. CDW sells primarily to businesses, government and educational institutions. Only 2-3% of sales are to consumers.

Netflix Inc., the online DVD movie rental service, posted record revenue of $100.4 million for the quarter, up 24% from $81.2 million a year ago. It ended the first quarter with more than 1.9 million subscribers. Q1 subscriber acquisition cost went up 11% to $35.12 per new-trial subscriber, but average monthly subscriber churn was down to 4.7% from 5.8% in Q1 of last year.

Direct marketer of apparel and home furnishings Hanover Direct Inc. released year-end numbers last month and reported that Internet sales grew 24.2% to $108.6 million from $87.4 million in the prior year. Web-based sales accounted for 27.9% of total revenue last year vs. 19% the year before. Total revenue for the year, which ended Dec. 27, 2003, decreased 9.4% from the prior year to $414.8 million from $457.6 million.

Some retailers who reported March numbers also were pleased with the direction of their web sales. Web-based sales at Sharper Image Corp. grew 79% in March compared to last March, to $10 million from $5.6 million, while total company revenue increased 38% to $54.8 million. Web sales accounted for 18.2% of all revenue in March vs. 14% in March 2003. For the first two months of Sharper Image’s fiscal year, Internet sales were up 71% vs. a year ago, to $18 million.

Quixtar.com, a subsidiary of Alticor Inc., which also owns Amway, reported a record day with sales of $11 million on March 31. Sales that day pushed March online sales over $100 million, the first month since Quixtar.com launched in 1999 that sales reached that level, the company says.

Bluefly Inc.’s Bluefly.com, an online retailer of designer brand apparel and accessories at discount prices, posted March sales of nearly $3.7 million, up 51% from $2.4 million in March 2003.

Web-based sales at J.C. Penney Co. Inc. in March increased more than 50% over March 2003, while companywide sales were up 10%. J.C. Penney does not report dollar figures for its web sales.

And even though the latest quarter’s web sales at J. Crew Group Inc. were down 38% to $29.6 million from $47.9 million, the multi-channel apparel retailer is planning to spruce up its web business and expects to see a turnaround in the second half of this year. “We’ll be supporting the site with targeted e-mail promotions in a more balanced and long-term strategy, and increasing product assortments, including adding back two women’s lines that were removed last year,” a spokesman says. l

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