In its second-largest acquisition, Amazon buys the company for $970 million.
The three industry giants are attracting more online buyers, a report says.
Amazon.com Inc., Wal-Mart Stores Inc. and Best Buy Co. Inc. are all attracting more online buyers, a report from the Goldman Sachs Group Inc. finds.
When Goldman asked shoppers recently to list sites where they had made purchases, 58% said Amazon, up one percentage point from 2009, 23% said Walmart.com, up two percentage points, and 14% said BestBuy.com, also up two percentage points from a year earlier.
Other players doing particularly well online, according to Goldman data, are J. Crew Group Inc., where online accounts for 23% of sales, up from 15% five years ago, and Urban Outfitters Inc., with online accounts for 15% of total sales, compared with 11% five years ago. The two retailers’ online sales have grown more than 200% over the past five years—nearly double the pace of their total sales. Online success benefits the retailers greatly, Goldman points out, because having a relationship with customers across channels builds greater loyalty and because multichannel shoppers often spend more than twice as much as the average shopper.
The Goldman report also outlined emerging trends for the future, including private sales sites such as Gilt Groupe and GSI Commerce Inc.’s Rue La La. Gilt Group, No. 140 in the Internet Retailer Top 500 Guide, had an Internet Retailer-estimated $97 million in online sales in 2009. Rue La La, No. 103, had an Internet Retailer-estimated $157 million in revenue in 2009.
Goldman predicts Rue La La and Gilt will each grow 70% to 100% in 2010 as the retailers expand their product lines.
Members-only, flash-sale sites benefit from their ability to get items to market quickly while saving on marketing and customer acquisition costs thanks to their membership-based referral systems, Goldman says.
Another trend to watch is branded manufacturers migrating toward direct-to-consumer sales, Goldman adds.
Goldman points to consumer goods manufacturer Procter & Gamble, which recently announced plans to sell its products online through PGeStore.com, a site operated on license by PFSweb Inc. CEO Bob McDonald has said that he sees an opportunity to increase online sales—which today account for about $500 million, or 0.6% of the company’s fiscal 2009 sales of $79 billion—substantially over the next few years. Although P&G says it doesn’t want to act directly as the retailer, it expects to gain extensive and valuable information about its customers’ shopping interests as well as generate additional sales.
Other movements in retail include improving working capital through lowering inventory commitments. For example, Kohl’s Corp. plans to roll out online kiosks across its more than 1,000 stores. By tapping into its online presence, each store can deliver the right product and size to a customer without having to commit to the physical inventory in each store, Goldman says.
Online shoppers aren’t going anywhere; instead, they are increasing in number, Goldman adds. 44% of consumers say shopping online is more convenient, 37% report they find better prices on the web and 14% say the web has a broader selection than bricks-and-mortar stores. Customers are showing their support for the web by pulling out their pocketbooks, the report concludes, and smart retailers will do the same to invest in e-commerce.