Over half of US etailors made a profit in 2001

06/13/2002

A new survey from Shop.org indicates that 56 percent of online retailers in the US reported profits during 2001, a rise of 13 percent in 2000.

The aggregate US online retail market also moved closer to profitability last year, with operation margins rising from a net loss of 15 percent in 2000 to a loss of six percent in 2001. Shop.org predicts that the market will break-even during 2002.

The online operations of catalog companies fared best during the year, posting aggregate operating profit margins of six percent.

Online penetration by product category also grew in 2001, according to the study. Out of 15 categories studied, sales in seven, including computer hardware and software, books, music and video, toys, and consumer electronics, represented more than five percent of all retail sales for those respective categories, with penetration in some categories as high as 17 percent.

Continued operation performance improvements and increased consumer spending online were cited as factors leading to improved profitability in 2001, increased marketing efficiency, tighter expense control and a rise in the number of repeat online buyers were also mentioned as significant drivers.

According to Shop.org, marketing efficiency increased significantly last year, resulting in marketing costs per order falling to USD12 in 2001 from USD20 in 2000. Customer acquisition costs also dropped to USD14 in 2001 from USD29 in 2000.

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Repeat buyers accounted for over half of sales, with 53 percent of revenue in 2001, up from 40 percent in 2000.

Source of Article: NUA Internet Surveys

Date of Article: June 13, 2002