Web tech spending static—but high—for the busiest e-commerce sites
In an era of declining technology costs, e-retailers’ technology spending has remained relatively constant for the past three years, according to a report from JupiterResearch LLC. But high-traffic sites, those with 5 million or more unique visitors per month, spend more than $10 million annually.
The report, “Web Site Spending 2007,” shows that web site technology spending includes software, hardware, hosting, development, integration, maintenance, salaries and content development. However, the share of budget allocated to those items has not wavered in the past three years, the report says, “belying the notion that relatively cheaper technology has shifted economics for the largest businesses.”
Still, the survey indicates that overall web site operations spending will increase in 2007, with one-third of site operators hiking spending by at least 11%, compared with spending in 2006.
For smaller e-retailers, the high cost of web site operations drags down margins. But economies of scale quickly become apparent, the report notes. Companies with online sales of $1 million to less than $10 million spent an average of 39% of their online revenue on site operations, according to a December 2006 JupiterResearch survey of web site executives.
High traffic yields greater opportunities for applying technology. For example, the reward for investing in web site analytics was substantial for retailers with the volume to justify the investment, according to the report. “However, low-volume merchants can have relatively more difficulty obtaining good return on such investments,” the report says.
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