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Thursday
- May 25, 2000
Growth of European Online
Retail Market Threatens to Reverse Lead
The early success of Internet-only, or dot-com, retailers
is threatened as Western Europe's online market grows dramatically
by 415 percent over the 1999 to 2001 period, to top EUR 14.7
billion by 2001, according to Jupiter Communications, Inc.
Currently, dot-com players maintain a narrow majority of
51 percent market share of online retail spending. However,
they are under threat from traditional retailers that are
poised to steal online market share by leveraging their real-world
supplier and customer relationships.
Research indicates that online
commerce revenues are set to increase eightfold, rising
from EUR 8 billion in 2000 to EUR 64 billion by 2005. Meanwhile,
the number of online buyers will more than quadruple, reaching
85 million by 2005, up from 20 million in 2000, with the
most aggressive growth expected during the next 24 months.
Driving this growth is an increase in the volume and diversity
of consumers' purchases. Jupiter's research further indicates
that online shoppers are now buying a growing number of
higher-consideration products; products and services that
are higher in price and require some thought prior to purchase,
such as packaged holidays and high-end apparel.
According to Evan Neufeld, vice
president of international research for Jupiter, dot-com
retailers have done a much better job than traditional
players of exploiting the Internet retail channel in Europe.
But with the vast majority of online revenues and shoppers
still to come, this early lead does not ensure future success. "Dot-coms
are leaving the door open for traditional retailers to
reverse the tide," said Neufeld. "Selling low-ticket
items with simple transactional sites and discounting won't
develop the loyal customers or the good supplier relationships
that retailers need to become profitable in the long run."
Focusing on securing these relationships
is the key for all players who want to succeed in the European
online market, whether they are traditional retailers or
dot-com retailers. As the novelty of shopping on the Internet
wears off, online buyers will turn away from simple incentives
and will only return to these sites that offer them the
best products and service.
"The real-world skill of
building good supplier relationships is even more crucial
as volumes rise and an increasing number of premium and
branded products are sold online," said Nick Jones,
analyst with Jupiter's European research team. "Suppliers
are taking more interest in, and control over the way these
goods are distributed and promoted online."
"As online shopping becomes
mainstream, brick-and-mortar players have the opportunity
to build on their off-line experience," added Jones. "Switched-on
retailers can make the most of their existing relationship
with suppliers to put attractive product propositions in
front of online shoppers. Couple that with the immediacy
that in-store purchasing offers, and traditional retailers
can secure more of a consumer's wallet share." Jones
concluded, "These assets are neutralised unless traditional
retailers act now."
Monitoring Your Online Reputation
According to Fortune:
"In early March a posting
popped up on Silicon Investor, one of the Web's most influential
stock-message boards: Gadzoox was releasing its earnings
in a few days and investors should be ready. If Gadzoox,
a data-storage company in San Jose, missed the date, day
traders were sure to pounce. The problem: The dates in
the post were wrong. Within minutes Chris Munson, Gadzoox's
CFO, received an e-mail in her box from a company called
NetCurrents alerting her to the post and announcing that
it had already posted a correction. "They are my eyes
and ears where I can't be," gushes Munson.
Monitoring your company's reputation
used to be easy: Hire a PR firm to talk to the world; hire
a clipping service to find out what the world's saying.
But in the Internet era, the game has changed. Suddenly
disseminating information is simple, and corralling it,
almost impossible..."
Click
here for the full story (about a product called NetCurrents)
[Link no longer active]
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