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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 didn’t required the help of a sales person (who requires a salary, benefits, etc), they didn’t fill a parking space, and didn’t clog the aisles of a store, yet they contributed to the bottom line.

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