August 31, 2001, 12:00 AM

Online retailers cut widely to gain profitability, says study

At least one-third of retailers who are selling online have cut staff or promotions while 46% have renegotiated portal deals and 23% have canceled them altogether.

Operators of retail web sties who have trimmed customer acquisition costs and overall marketing costs aren`t stopping there in their drive toward profitability, according to new data from Consulting Group`s “State of Online Retailing" study. 94% of the online retailers surveyed in Q2 2001 for the ongoing study say they’ve made moves specifically to address profitability in the past six months, and they’re pursuing a broad range of measures to get there.

Half of the retailers say they’ve implemented retention programs to maximize spending by existing customers. Nearly a third of the retailers say they’ve reduced staff as a means of cutting expenses, a sharp increase from the 11% who said they’d cut staff during the second quarter a year ago. 33% said they had increased prices during Q2 versus 12% last year, and 35% said they had reduced or eliminated discounts and promotions. 35% said they had taken major steps to improve fulfillment efficiency.

Reducing the cost of portal deals has become a top priority for online retailers in the past year. Almost half say they’ve renegotiated their portal deals since last year and 23% say they’d completely canceled them.

Another 23% say they’ve deferred site upgrades this year. While it represents a short-term cost-saving tactic, warn study researchers, failure to make needed upgrades could cost retailers in the long run if it diminishes the customer experience online.

comments powered by Disqus




From IR Blogs


Anna Kuzmina / E-Commerce

An introduction to online payments in Russia

Russian shoppers use a variety of domestic e-wallets quite often when shopping online, a result ...


Rebecca Kanthor / E-Commerce

An American view of China's online shopping boom

The astronomical growth of Alibaba's Taobao online shopping mall is hard to fathom from a ...