E-Commerce On An Upswing For Those Still Standing

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To the victor belong the spoils. And in the shrinking world of online CE retailing, there's apparently plenty of swag to go around.

In the aftermath of the dot.com meltdown, only a handful of pure play e-tailers — and even fewer CE specialists — are left to vie with the click-and-mortar chains for a share of online electronics sales. But as the consolidation narrows the playing field, cyber shopping, particularly for consumer electronics products, is soaring.

According to BizRate.com, an e-commerce research firm and leading comparison-shopping site, online sales grew by 51 percent to $11.9 billion in the second quarter of 2002, representing a $4 billion increase over the prior year period.

More recently, total cyber sales for the week ending July 13, 2002, grew by 58 percent over the same period last year, while sales of consumer electronics specifically shot up 77 percent to $108.8 million. CE was the third fastest growing category that week, behind only hardware and gifts and flowers.

Trailing the weekly growth average was computer software, up 23 percent to $50.7 million.

That consumers are becoming increasingly comfortable with shopping online has only fueled e-tailers' competitive fires. Earlier this summer, in a reprise of the free shipping wars of Christmas 2000 that crushed lesser cyber stores, top CE sites Amazon.com, buy.com and BestBuy.com rekindled the flame, in an attempt to remove a key barrier to order completion.

Amazon fired the first volley in June when, as part of a price-cutting initiative that included CDs, DVDs and electronics, it had halved the qualifying order size for its free shipping option from $99 to $49 in a three- to six-month test.

In an open letter to customers, CEO/founder Jeff Bezos said that free shipping on orders over $99, which began in January, had proven "economically sustainable" due to the large numbers of shoppers that had adopted it. The latest test, which he described as "maybe the most important experiment we've done to date," will determine if Amazon can generate enough incremental business from new and existing customers to offset the huge expense.

Within two days of the announcement, Amazon arch rival buy.com began offering free shipping on all orders, regardless of size, and one week later undercut Amazon's book prices by 10 percent across the board.

By July 2, BestBuy.com had entered the fray by offering free shipping on all purchases for a limited time. "BestBuy.com has offered free shipping on various product categories in the past, which was popular with our customers," said John Thompson, the site's senior VP. "Expanding free shipping to all products is part of Best Buy's continuing commitment to offer value to our customers. By offering it, we are eliminating a barrier to using the online channel, giving the customer the freedom to choose how to shop."

Similarly, CircuitCity.com is presently offering free shipping on all PDAs and notebook computers as well as on purchases of two or more movie or music titles.

If Amazon was trumped on the free shipping front, it scored a major coup in its march toward full vendor acceptance this month when Zenith authorized the e-tailer to sell its full line of digital products, including HDTV sets, LCD displays, DVD players and digital audio devices.

Amazon has already begun selling most of Zenith's digital SKUs, which now comprise more than 80 percent of the vendor's line, and will add its complete plasma display offering, in sizes from 40 inches to 60 inches, later this year.

The move represents a departure from Zenith's previous Internet policy of dealing exclusively with click-and-mortar accounts that operate physical storefronts in addition to e-commerce-enabled Web sites. In making the announcement, Zenith called Amazon its primary nationwide authorized online retailer and described the deal as "the cornerstone" of its online sales strategy.

The authorization was the second major CE coup for Amazon in as many months. In June, longtime holdout Sony finally sanctioned the e-tailer to carry a limited assortment.

Meanwhile, RadioShack, which was one of the first national retail chains to set up shop online, has added a digital photography and video service to its site that will compliment its expanded selection of digital cameras and accessories in stores.

The service, dubbed Fotoshack, allows consumers to store and share their digital photos online, as well as order digital prints or DVDs of home videos.

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