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Surprise: Dotcom companies make money
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Date: 04/23/2000 Author: LOS ANGELES: Contrary to a general conception that there are no profitable e-commerce companies, a new study has found that some of them are making money. Slightly more than a third of Internet retailers in the United States are making a profit, according to study results released on Tuesday by Shop.org, a trade association for US on-line retailers. A total of 412 leading Web retailers were surveyed. The study found that 38 per cent of Internet-only companies, 72 per cent of catalog companies and 50 per cent of brick-and-mortar stores with websites were profitable. Even before last week's NASDAQ stock declines, several major US net retailing companies had already suffered from sinking stock prices and dwindling cash balances. Investors have been losing interest in the sector, partly because of concern about profitability and company stability. But according to the study, total 1999 American on-line business-to-consumer revenues across all categories grew 120 per cent to US$33.1 billion, representing 1.4 per cent of all retail sales in the country. An additional US$13.1 billion was spent by businesses at retail websites in such categories as travel, office supplies and computer software. Internet shopping is expected to grow 85 per cent this year to reach US$61.1 billion. The continued growth is a result of a boom in the on-line population, an increasing number of off-line retailers establishing a strong presence on line, and the emergence of new nontraditional retail business models. But, Net retailers face the same challenges as traditional retail stores, including how to sustain customer loyalty, improve order fulfilment and delivery capabilities and provide a "positive shopping experience," according to the study.
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