Online CE Sales Still Kicking Despite E-tail Contraction

By Alan Wolf On Jun 11 2001 - 6:00am




LOS ANGELES — To borrow from Mark Twain, reports of the death of e-commerce have been greatly exaggerated.

According to a recent report by BizRate.com, the online comparison shopping and e-tail rating service, cyber sales continued to grow at a robust clip during the first three months of the year, despite the listless economy and in stark contrast to the revenue woes of brick & mortar retailers. And computers and CE products were no exception.

Citing statistics culled from the National Retail Federation and U.S. Census data, BizRate noted that online sales during the traditionally lackluster first quarter grew 32 percent over the year-ago period, compared to 2.5 percent for traditional retailers.

BizRate's own point-of-sale surveys and internal data show that online sales of CE and computers in particular paced total e-commerce volume by increasing 30 percent during the quarter. Those products also constituted the largest category in cyberspace, generating $5.3 billion in revenue during the period, or roughly half of all e-tail sales.

The volume of online orders recorded during the period also grew at a healthy double-digit clip for the CE industry. Some 21.1 million electronics and computer orders were placed during the quarter, representing a 39 percent gain over the comparable period last year, when the Internet frenzy had reportedly peaked.

The category's lone setback, however, was in average ticket size. While still leading the cyber pack with an average purchase of $254 — compared to the overall norm of $126 — the figure fell 6 percent from the average $271 order placed last year for CE or computers.

Not surprisingly, given the pace of e-tail consolidation over the past year, click & mortar retailers are winning out over pure plays in the e-commerce competition, although no one except mail order companies is making any money online just yet. Click & mortars grew their businesses 46 percent in orders and 38 percent in sales last quarter, compared to 15 percent and 32 percent, respectively, for all other online merchants. And according to statistics from Shop.org, the bricks & clicks contingent suffered an average operating loss of 36 percent from its e-tailing efforts compared to a 94 percent loss for pure plays. Catalog companies, by contrast, enjoyed a 12 percent average operating profit.

The lesson to be learned from this, says BizRate, is that companies that have mastered the back-end and focus on the buyer — as traditional direct marketers apparently have — are winning the cyber wars.

Looking ahead, e-commerce continues to look rosy from a consumer perspective. According to a BizRate online research panel conducted last month, consumer confidence in online business conditions six months hence shot up 7 percent (6 percent for CE and computers), compared to a 7 percent decline recorded six months prior.

BizRate's best advice?

  • Target women, who powered online growth during the holiday season.

  • Take a multichannel tack, as online shopping drives offline purchases.

  • Commit to buyer satisfaction, which translates to higher order growth.

  • Utilize third-party product searches, as search functionality is the most important feature for 43 percent of cyber shoppers.

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