January 19, 2001, 12:00 AM

Study: Free Ride Over For Dot-Coms

Wall Street is losing patience over losses sustained by e-retail sites, according to a new report by Forrester Research. The report predicts that tighter margins, spiraling costs and Wall Street scrutiny will force consolidation by the end of the first quarter.

Despite the online shopping boom of the 1999 holiday season, Forrester says online retailers expecting 2000 to be as untroubled as 1999 are about to face a rude awakening as "economic and competitive issues will overpower growth potential." "Financial markets exasperated with nonexistent online profits will turn a deaf ear to persistent 'investment mode' rhetoric and soundly punish merchants who bleed red ink," the study says.

Forrester also predicted that recent stock price slides at
Value America, eToys and other Web merchants serve as bad omens for online stores that lack a simple or unique technology.

The study also forecasts that:

  • E-commerce media spending will shift away from big, expensive TV ads
  • Retailers will balance marketing blitzes with profitability statements
  • Brick-and-mortar e-retailers will dominate online categories

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