Monday, April 16, 2001

Mid-Size eCommerce Websites Profiting Most

A clear indication of success for mid-sized online businesses lies among the three in five profitable ventures whose revenues were between $100,000 and $999,000 during 2000, according to ActivMedia Research LLC. Nearly half of the remaining sites in this group expect to be profitable within the next 12 months, raising the expectations to nearly four in five profitable businesses within a year.

Naturally, these businesses did not begin at this level--they have risen and earned their way to this point. However, it is also interesting to note that the group just behind them in sales, with revenues between $10,000 and $99,000, are close behind in profitability. Even a third of the very smallest businesses online are profitable now, and another third expect to be shortly.

The largest online businesses, those with 2000 revenues of $1 million or more are still generally performing well--two in five are already profitable, and another one in four anticipate profitability during 2001. One in five expect profitability eventually, while a final one in six may never be profitable, in part because they were not established to generate profits even though they have substantial sales revenues.

Further underscoring the profitability of the mid-sized online venture, companies with between 100 and 499 Internet-generated transactions per month are more profitable than either low-volume or high-volume online companies.

Companies whose transactions occur totally online are substantially more profitable at both mid- and upper-level transaction volumes than those that market online, but handle offline transactions by staff. Companies with smaller transaction volumes see less benefit to profitability from automated online transactions, but they are in a better position to ramp up volume through improved marketing and website promotion than the offline marketers.

It is important to note that many online businesses may be offering products that can’t be effectively sold with the click of a “buy now” button e.g., services of an ongoing nature like advertising or accounting.

108 Million Internet Users in Europe by 2002
A new eEurope Report from eMarketer forecasts 108 million Europeans will be "active internet users" by year-end 2001, a 54% increase from the 70 million online recorded in 2000. The report projects 255 million Europeans will actively be online by 2004.

"The European online community reflects a moderate slowdown in the global economy from the past few high-growth years," said Nevin Cohen, eMarketer senior analyst. "However, if the US faces a more serious-than-expected recession this year, internet penetration in Europe is likely to proceed much more slowly, particularly in large portions of the region with nascent market economies."

The eEurope Report reveals that European e-commerce will generate $69 billion by 2001, an increase of 103% from the $34 billion recorded last year. That figure is expected to rise to $980 billion by 2004.

"This rapid expansion of e-commerce activity depends on increased investment in information technology, steadily increasing internet access, and public policies to make e-business more secure and appealing," said Cohen.

Key findings from the eEurope Report:

- The expansion of internet penetration in Europe will fuel the growth of e-advertising in this region in the next few years. Total e-advertising expenditures will reach $6.4 billion by the end of 2005

- 7.2 million persons were managing their current and savings accounts through online banking services in Western Europe last year, accounting for nearly 14% of all internet users. By 2004, nearly 18% of internet users will bank online -- at least partially -- totaling 15.2 million

- Given the growing ubiquity of wireless phones in Europe, eMarketer estimates that by 2003, Europe will account for the highest number of worldwide wireless web users

Editor's Note: eMarketer's definition of an active internet user is restricted to people over the age of 14 who are online at least once a week for no less than an hour.

The eEurope Report offers the most comprehensive and accurate picture available of the internet and e-commerce development in this ever-expanding region of the globe.