June 26, 2008, 12:00 AM

Good reasons to invest in online retailing

Retailers need to invest to meet the growing demands of consumers who continue to shift their buying preference online

Large retail chains got a major new impetus last month to increase their investments in online operations: Moody’s Investors Service announced it will give greater weight than in the past to retailers’ online sales when rating retailers’ debt. “A strong online presence is considered a ratings positive more frequently than in the past because it represents such an important channel of distribution and can mitigate declining comparable-store sales trends,” Moody’s says.

Moody’s decision is certain to have a significant impact on the industry. Many large chains had already begun to recognize the shift in consumer buying from offline to online and were increasing their emphasis on the online channel accordingly. But now, with a major credit rating agency-Moody’s has a 40% share of the credit ratings market worldwide-paying closer attention to their online sales, their interest will become even more acute. As a result, their investments in online retailing will go up.

When that happens, the rest of the industry will be under enormous pressure to keep up. Suddenly, the web-only retailers who until now have had an edge because they understand better than chains how to sell direct to consumers, fulfill orders quickly and handle customer service are in danger of losing their advantage as large chains bring their enormous resources to the online channel.

But it’s not just the Moody’s action that raises the stakes; it’s consumer preferences as well. Online sales in the first quarter were up 13.6% from a year earlier vs. total retail sales growth of 2.8%. While the 13.6% was lower than in the past, it comes off a bigger base than ever and it maintains the wide spread between offline growth and online growth. Retailers who do not invest to meet the growing demands of consumers who continue to shift their buying preference to online will end up losing market share.

So as you muscle up your web site investments, there’s no better place to shop for vendors to this industry than in the publication you hold in your hands-the Internet Retailer Annual Buyers Guide. Containing 565 vendors of services, products and technology-19% more than last year’s Guide-it’s the place to look when you need help in anything from affiliate marketing programs to web site usability expertise.

The Buyers Guide also serves as a gauge of a vendor’s commitment to this industry. If a vendor has invested to make its listing stand out-or to call even greater attention to its offerings with display advertising-you can be sure that vendor is seriously interested in serving this industry and has developed the expertise and experience to meet your needs.

The Annual Buyers Guide is a huge undertaking and represents months of research by Cindy Wilkins, who-in addition to her usual duties selling the monthly Marketplace section and Products & Services Guides in Internet Retailer-researches companies to include in the Buyers Guide. She has put together the most comprehensive list of vendors anywhere in this industry. Our thanks go to her for a great job and to the advertisers who make this publication possible.

And so we present to you Internet Retailer’s 2009 Buyers Guide. Our hope is that it will help you become a better competitor in what will only become a more competitive industry in the next year.


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