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Shopping Online
By Bruce Mushial
The whole world
surrounding the Internet has been in chaos for more than two
years now. Early on the chaos was positive, with thousands
of brand new companies going public with lofty dreams and
raising billions of dollars in capital. Over the past year
the chaos surrounding the Internet has taken a more negative
tone as some companies fold up their pipe dreams and blow
away. When all the dust settles what will be the legacy of
the Internet world. One area that has certainly had a presence
on the Internet, and will continue no matter which companies
go away, is the use of the Internet as a shopping forum. What
are people buy on the Internet? What types of companies may
be successful going forward despite the number of dead Internet
companies strewn across the online business battlefield? Did
the top five online retailers see growth or declines in traffic
over the past year?
In July consumers and businesses
spent $3.13 billion for online purchases spread across the
top 24 categories of small- and large-ticket items. The top
6 categories of online retailers selling small-ticket items
were apparel ($224 million), toys/games ($162 million), books
($152 million), health and beauty items ($121 million), music
($118 million), and software ($112 million). The top categories
were followed in order of sales by, videos, sporting goods,
jewelry, office supplies, lines/home décor, footwear,
flowers, small appliances, tools, and gardening supplies.
Even the last ranked category among the top 14 areas, gardening
supplies, was able to pull in $16.9 million in July. Spending
on large-ticket items in July totaled $2.086 billion and represented
67% of the online sales reported in the top 24 areas. The
top 8 categories for large-ticket items included, airline
tickets ($746 million), lodging ($445 million), computer hardware
($335 million), consumer electronics ($191 million), car rentals
($188 million), food/beverage ($88 million), furniture ($47
million), and appliances ($45 million).It goes without saying
why online travel companies such as Expedia (EXPD) are doing
well seeing that three of the top five large-tick items can
be booked through their online site.
With the demise of so many online companies you might think
the interest in online retailers has waned over the past year,
but nothing could be further from the truth. Traffic to the
online sites of the top 5 mass retailers has shown nice growth
over the past year. Traffic to these sites may actually have
be boosted by the death of so many small retailers on the
web (luckily most of these were not publicly traded companies)
as consumers look to do business with recognized names that
also have a brick-and-mortar presence. Wal-mart had the largest
number of online visitors in July, with just over 2 million
people visiting their site. This represents an increase of
133% over July 2000. J. C. Penny had 2.0 million visitors,
up 34%. Kmart had 1.85 million visitors, up 36%. Target had
670,000 visitors, up 142%, and the last of the top 5 was Sears
with 600,000 visitors, up 23%. The average increase in site
traffic was 73%! Keep in mind when these visitors made purchases
online, which many of them did, they didnt required
the help of a sales person (who requires a salary, benefits,
etc), they didnt fill a parking space, and didnt
clog the aisles of a store, yet they contributed to the bottom
line.
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