Terrorism Not Likely To Hurt Online Sales

June 19, 2002
Print
Text Size:
A A

GRAND RAPIDS — Despite the terrorists’ attacks on New York and Washington, D.C., this year’s projection for online retail sales across North America remains at $65 billion.

Business–to-business e-commerce is also expected to continue its growth pattern for the fourth quarter, even though the country is preparing for war.

The $65 billion online retail sales projection came from a study done last spring by the Boston Consulting Group for Shop.org, an association of e-retailers and a division of the National Retail Federation. The projected e-sales figure represents a 45 percent increase over online sales a year ago.

“I actually don’t think it will a significant impact on overall sales. It’s really just shifting demand from one month to the next,” said James Vogtle, director of e-commerce research for the Boston Consulting Group, of last month’s tragedies.

“It’s not like people are going to stop buying things. It’s just a question of when they will buy them. The only thing that might have an impact is, if this does cause the economy to go further south,” he added.

Vogtle didn’t think that security fears would send consumers rushing to their PCs and keep them from going to the malls.

But he said he did feel that fewer consumers will be traveling this holiday season, which could mean that more will be gift-shopping online for out-of-town friends and relatives.

“The one up tick that we might see is that people may not be traveling as much, so you may end up with people ordering gifts online so that these can be easily delivered. Whenever anyone orders a gift for someone out-of-town, it’s so much easier to do it online,” said Vogtle.

The fourth annual study, called The State of Online Retailing 4.0, analyzed data from 550 retailers. More than 150 of those also participated further in the survey.

The report revealed that despite the dot.com shakeout, online retailers were able to decrease their operating losses, as a percentage of their revenue, last year. That percentage fell from 19 percent in 1999 to 13 percent in 2000, or $5.6 billion.

The study also showed that 72 percent of catalogers, 43 percent of store-based retailers and 27 percent of Web-based retailers were profitable at an operating level last year. Those three categories comprise the e-retailing types.

As for B2B online sales, according to IDC and Gartner Inc., the trend calls for continued growth. Just a few forecasts show that:

  • Worldwide B2B e-commerce will generate $2.6 trillion in revenue by 2004, a rise from $280 billion in 2000.

  • Sales of e-procurement software, applications that power B2B online buying, will hit $9.7 billion in 2004, up from $2.1 billion in 2000.

  • The worldwide B2B Internet commerce market should total $919 billion this year, $1.9 trillion next year and $8.5 trillion in 2005.

Vogtle said business will continue to use e-commerce, and quite likely increase that usage over the next few years, to save money on purchase orders and to create cost reductions throughout the company from efficiencies. The trend, he said, will continue — for sure.

“The business-to-business has always been larger than the consumer side of e-commerce and will definitely continue to be.

“Actually, over the last year or so, we’ve seen quite a strong push in terms of B2B commerce because of the cost efficiencies that can be achieved,” said Vogtle.

“As we hit this period of uncertainty, people are under cost pressure trying to get their cost base down as low as they possibly can, just as a precaution, if not in response to the softening demand that they’ve already seen.

“And the B2B e-commerce comes up close to the top of the list in terms of tools you can use to try to reduce your costs.”

Recent Articles by David Czurak

Editor's Picks

Comments powered by Disqus