Thursday, December 21, 2000

Online Spending Exceeds $6 Billion In November

The National Retail Federation (NRF) and Forrester Research, Inc., in conjunction with Greenfield Online, Inc., today announced the results of the latest NRF/Forrester Online Retail Index. According to the 11th survey in this monthly series, total spending on online sales increased from $4.4 billion in October to nearly $6.4 billion in November. More than 22 million households shopped online in November, spending an average of $285 per person.

Categories that experienced a significant increase included toys, sporting goods, and apparel. Online sales of toys and videogames soared from $203 million in October to $673 million in November. Online sales of sporting goods shot from $68 million in October to $152 million in November. Similarly, apparel leapt from $253 million in October to $525 million in November.

"Last month, online sales alone exceeded combined sales in November and December 1999 by more than 25% -- or $1.4 billion," said Scott Silverman, vice president, Internet retailing at NRF. "Even if December 2000 is equal or even slightly lower than November, we can still expect online spending in 2000 to more than double last year's performance."

Sales of food and beverages, books, and music also grew significantly in November. Food and beverages increased from $158 million in October to $305 million in November. Books increased to $383 million in November from $205 million in October. Music grew from $146 million in October to $257 million in November.

"Obviously, the holiday has been a strong driver of November's booming online sales," said James L. McQuivey, research director at Forrester. "Since the Index is nearly a year old, we are almost at the point of being able to compare year-to-year sales -- analysis that will provide insight into how other holidays and various external influences affect consumer online shopping habits."

Internet Integrator Industry Returns to Normalcy
Rewind back one year ago, and Internet integrators were the "toast of the town." Aptly put, in today's market, many are "burnt toast." In a Report published today, the Yankee Group predicts that although a majority of firms' revenues are currently down, future demand for specific e-business services such as wireless integration will remain at healthy levels.

The newly published Report, "Internet Integrators: Down But Not Out," explores several reasons behind the industry's downturn, identifying such factors as shifting demand and the emergence of an alternative user base. It details various other issues facing integrators such as differentiation, lengthened sales cycles, increased project complexity, and a shift from "enterprise-wide" to "worldwide" initiatives. Further, the Report recommends how integrators should re-tool and differentiate themselves to rebound and once again remain competitive.

"The most significant trend affecting the industry is that demand has shifted, while leveling off to a more realistic pace," stated Richard Young, an analyst in the Yankee Group's E-Sourcing Strategies Planning Service. "The industry has transitioned from its 'hyper growth stage' and 'returned to normalcy.'" According to Young, the services in high demand include:

- Transaction processing
- Supply chain infrastructure integration
- Wireless integration
- BtoB
- Application monitoring/management

"A majority of integrators find themselves categorized under a single 'bumper sticker,' despite their unique strengths and offerings. This confusion will increasingly be a detriment to those firms trying to sell to an alternative user base – the Global 2000," said Young.

Several organizational steps Internet integrators must address to adapt in today's new environment, include:

- Re-tool service offerings and focus business units
- Partner with ASPs and MSPs
- Bolster business development
- Expand international presence.

News Tidbits (appears every day on front page)
- Internet troubles aren't just happening to U.S. companies. Suhu.com, one of the largest China portals, recently laid off 126 employees with more layoffs to come. In just the past six months more than 1,500 online jobs have been lost in Hong Kong alone.

- The liberal online publication Salon has fired a fifth of its staff. The online magazine has experienced poor revenue and has seen its stock plummet to $1 a share. This is the second time in six months that Salon has laid off employees.