America’s Etailers Crawl into Black

16 May 2003

America’s online shopping sector may finally have come of age, as a new survey shows it made its first profit last year.

The annual survey of 130 etailers from (a unit of the National Retail Federation) and Forrester Research found that web sales rose by 48% in 2002 to $76 billion (€66bn; £47bn), with the profits eclipsing the losses for the first time. Sales are expected to climb to around $100bn this year.

In total, 70% of the companies in the survey generated profits from web retail, up from 56% in 2001 (though the definition of profit may not include costs from exceptional items).

According to the survey, etailers can be divided into three categories. The most profitable sector is catalog operators who also sell through the web. Next come ‘clicks-and-mortar’ sellers with stores in the real world as well as online. Finally the ‘pure-play’ internet-only retailers, still to break even as a sector.

Despite last year’s growth, online sales still account for only 3.6% of total purchases in 2002, with a share of 4.5% expected this year. This may look unspectacular, but argues that it took the catalog sector a century to carve a similar niche, compared with just six years for the web.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff