August 15, 2000
Retail Web Sites that Profit
Despite grim tales of e-tailers losing money, plenty of retailers on the Web are profitable
"The Future of E-Commerce," "Will E-Commerce Survive?" and "The Fall of E-Commerce" are just a few of the headlines that have graced news sites in recent months. With Amazon's stock rating slipping and Ashford's continued loss-making, writers and analysts are telling tales of potential failure for this new way of shopping. They are ignoring the success of established retailers and focusing on the failure of so many Internet-only companies.
It's time to wake up and realize pre-Internet retailers are making profits on the Web, and those retailers already accustomed to taking orders and shipping to customers are having little difficulty with e-commerce. QVC, the leading television shopping channel, turned a profit on its Web site a mere three months after it launched in 1996. iQVC, the online component of the shopping channel, made $97 million in Internet sales last year and expects to exceed $170 million this year. Imagine that, an e-commerce site that profits, and QVC isn't the only retailer profiting on the Web. Other television shopping channels, catalog retailer Land's End and J.C. Penney are finding customers online as well. Land's End made $138 million online last year, and its site has been profitable for years. J.C. Penney is bringing in the bucks too, with $79 million in sales from January to June and an expected $300 million by the end of the year.
What are these companies doing right that the Amazons and Ashfords of the Net aren't? Well, most importantly, they already had customer-service call centers, distribution centers and shipping partners before they moved to the Web. They didn't have to start from scratch to build the infrastructure. Also, they didn't have to spend money on an extensive advertising campaign. Land's End and J.C. Penney could promote their sites to existing customers through their catalogs. QVC advertises on its cable station and takes viewers through live demonstrations of iQVC. J.C. Penney is also experimenting with site demonstrations and has installed interactive kiosks in some stores so customers can browse through the Web site.
Smaller retailers that don't sell merchandise through catalogs or on television can still learn from these retailers. Simple things like putting a computer with Internet access in your store so customers can familiarize themselves with your Web site can help you move ahead in the e-commerce world. Adding your Web address to regular advertising and marketing material can save you the cost of marketing the site separately. Posting signs in your store so customers remember they can check out the merchandise they liked again later at your Web site will drive even more sales.
Retailers with a bricks-and-mortar presence already have an advantage over Internet-only retailers: they have an existing market of customers, existing advertising campaigns and trusted store names. If bricks-and-mortar retailers capitalize on these advantages and learn from retailers who already profit on the Web, success will follow.
- by Julia M. Duncan