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E-tail Slump Enters Third Month

E-tail Slump Enters Third Month

Is the current e-tail lull the calm before the storm?

By Nora Macaluso
10/12/00 12:00 AM PT

According to statistics firm PC Data, the pace of business at the top online retailers in September was virtually unchanged from August, marking the second consecutive month of lackluster activity.

The report comes as e-tailers gear up for the holiday selling season, which many observers view as crucial to the long-term health of e-commerce.

"This hopefully is the calm before the storm -- not the calm before the calm," said Cameron Meierhoefer, Internet analyst at PC Data Online, the division that compiled the report.

"Everyone is awaiting the fourth quarter," Meierhofer told the E-Commerce Times. "The holiday sales will be really the true indication of the state of online retailing today."

Different This Year

"You don't have the same excitement around this year as you did last year," Meierhofer said. "It's a much more sober environment, where companies really have to target how their businesses are going to work and prove that they can earn some money doing what they're doing."

Added Meierhoefer, "Online retailers have become serious about turning a profit, and many have discarded the steep discounts they used to win over consumers last year. This may be driving consumers to shop around -- both online and off -- for the best deal before buying."

Customer Service

Companies are said to be scrambling to improve customer service and delivery to avoid a repeat of last year's well-publicized snafus. Those problems notwithstanding, surveys show consumers were largely satisfied with their buying experiences online and are likely to return to the Web for holiday shopping again this year.

Analysts' forecasts for fourth-quarter e-tail sales range from $9 billion to $12.5 billion (US$), up from an estimated $5 billion to $10.5 billion last year.

eMarketer, a New York City-based research firm, said earlier this month that first-time e-shoppers will help lift holiday sales to $12.5 billion, up 71 percent from last year. Convenience factors -- such as avoiding crowds and traffic -- will drive these "newbies" online this year, the firm said.

Amazon Still On Top

Amazon.com (Nasdaq: AMZN) held on to its position as the top e-tailer, with 1.6 million buyers. Next was Ticketmaster.com (Nasdaq: TMCS), with 569,000 customers, followed by Buy.com (Nasdaq: BUYX), with 428,000.

Though Amazon retained its standing among consumers, the company has seen its stock price slump as analysts question its move to add more products to its lineup, warning the strategy could hurt its efforts to post a profit. Most recently, Amazon added photo products and services to its growing list of offerings.

eToys, Pets.com Advance

Among the top 20 e-tailers tracked by PC Data, toy seller eToys.com (Nasdaq: ETYS) moved from the 11th to the 8th ranking after jumping from the number 15 spot in August and advancing 19 positions the previous month.

Pet-product seller Pets.com also saw more business during September, advancing to number 8 from the number 10 slot.

Competition is keen in the toy and pet-product sectors, with smaller players unable to stay in business and larger, brick-and-mortar companies beefing up their Web operations.

Last year, eToys and Pets.com were among those that offered steep discounts to attract customers and introduce their names to the public. "It appears the land-grab strategy is paying off -- for those who won," PC Data's Meierhofer said. Many others, however, are now out of business.

Reston, Virginia-based PC Data Online compiles its rankings by tracking unique visitors and unique buyers from each Web site. The sample includes more than 120,000 of the total 81 million home Internet users.


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