E-Commerce On a Steady Rise

Tuesday Aug 26th 2003 by Susan Kuchinskas
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Online pure plays like Amazon and eBay are faring well, while the brick-and-mortar set still struggle to drive online consumers to their offline stores and then back to the Web. For smaller businesses, it pays to latch onto the success of others.

New estimates released from the Census Bureau of the U.S. Department of Commerce show U.S. retail e-commerce sales for the second quarter increased significantly over last year and from the previous quarter.

The chart of retail e-commerce sales shows a series of waves and troughs, with a steady ascent to last quarters' $12.477 billion in online sales.

That number represents an increase of 27.8 percent from the same quarter last year and a 4.6 percent increase in sales from the first quarter of 2003. Second-quarter 2003 online sales — between April and June — accounted for 1.5 percent of total retail sales, slightly above the 1.2 percent of total sales they represented in the second quarter of 2002.

That 27.8 percent year-over-year increase means the major e-commerce players, Amazon.com and eBay, are doing a great job, according to Robert Leathern, commerce analytics group director and senior analyst for market research firm Nielsen//NetRatings.

"Online retail is growing at a pace substantially and significantly higher than all retail," Leathern told internetnews.com. "That's a pretty significant difference."

But Leathern says there's a more important story that these numbers don't tell.

"There's a significant influence component of online information to offline sales," Leathern said. "That's a much harder number to pin down."

He noted that brick-and-mortar stores like Wal-Mart, Target, Home Depot and Barnes & Noble are still struggling to drive online consumers to their offline stores and then back to the Web.

"If you compare the number of people who go to a Target or Wal-Mart on a monthly basis with those who go to these companies' Web sites, there's a really great difference in those percentages."

That means, according to Leathern, that there's further e-commerce growth potential for normal channel retailers.

But they'll have to learn how to work this channel or suffer the consequences.

"If more and more people are buying online," Leathern said, "if these companies don't have a Web presence and aren't interacting with customers online, they're going to lose out."

Leathern said the success of Amazon.com and eBay translates to better online opportunity for small and mid-sized merchants. While the idea of a standalone store doesn't make sense any more, he said, smaller companies can take advantage of the super powers' clout and mass reach.

Adpated from internetnews.com.

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