Roundup: Online Roller Coaster Continues Rocky Ride

08 January 2001

With a handful of exceptions, the woes of the world's etailers continued unabated... the USA...

Hard on the heels of last week's announcement that e-Toys' UK operations will close on January 19, the Los Angeles-headquartered company revealed on Thursday that seven hundred US jobs are also to vanish.

Warning that it could run dry of cash in March, the beleaguered etailer laid-off 380 staff last Thursday with a further 320 jobs scheduled to go by March 31. Also for the axe are one of eToys' two warehouse operations in California plus another in North Carolina, with the residual business consolidated at its Blairs, Virginia location and the surviving California site.

The news caused a further 29% fall in eToys' stock value to $0.156, a devastating plummet from last year's peak of over $80.

News source: Financial Times


The New York Times Company's internet division, New York Times Digital, is to dispense with around 17% of its current workforce in a bid for cash flow profitability in the 2002 fiscal.

Sunday's announcement will see sixty-nine jobs disappear, due mainly to the fast declining online advertising market. The move follows the news last Friday that NewsCorp is to axe 200 job at its Fox internet division [WAMN: 5-Jan-01].

NYTD chief executive Martin Nisenholtz tried to put a brave face on things, focussing on the underlying strength of the division and its 'click and brick' relationship with The New York Times, the Boston Globe and other newspapers published by its parent.

"We have access to an unparalleled content engine, a world-renowned brand, and the ability to leverage our print sales force and offline promotional assets," said Nisenholtz. "Today's move will further strengthen our ability to prosper in the future."

Three months in the online world is a long time. Just last October, NYTD claimed to have increased year-on-year revenues by 98% per cent, rising to $12.1m from $6.1m. It also bragged of a 148% hike in revenues in the first nine months of 2000, attributing these to strong ad growth. The company also shrugged-off operating losses of $46.2m during the same period, due, it said, to increased staffing, promotion and advertising.

News source: Financial Times the UK...

Tesco, the UK's largest supermarket group, claimed on Friday that its etail site was the UK's most popular during the pre-Christmas period, comparing it favourably [if irrelevantly] with that of

According to the supermarketeer, its online operation despatched over thirty million items to consumers in the run-up to the holidays, four time the volume of 1999 and almost ten times that of Amazon.

The latter, however, not unreasonably enquired: "What are all those items? We do not know if it is just eggs."

But chief executive John Browett was not going to be drawn into an exchange of verifiable statistics, contenting himself with the indisputable if non-quantifiable observation: "What we an established distribution network, an established infrastructure, through the existing Tesco stores," he said. "Start-up retailers have to shoulder all the burden of that themselves."

Browett also predicted that established 'clicks and mortar' retailers are set to pull further ahead of rivals.

News source: BBC Online Business News (UK)

...while in Germany...

Despite the global gloom about e-commerce, a survey conducted by German business daily Handelsblatt, revealed that not one of its blue-chip sample (of Dax-30 listed companies) admitted to cutbacks in e-commerce investment. Indeed, the majority claimed that they would invest more in e-commerce projects this year than last.

Germany's top companies will plough an aggregated several billion euros into the expansion of their online activities this year. Deutsche Bank alone will inject around 500 million euros into its e-commerce projects during 2001, while Commerzbank plans to invest one billion euros in similar projects over the next two years.

Exemplifying the longer term view taken by German investors and manufacturers, chemicals colossus BASF commented: "Strategic considerations must take precedence over economic fluctuations." The company, matching its words with action, plans to invest 75 million euros in its internet activities over the next two years.

Likewise, engineering group MAN aims to reduce costs and confront any downturn in its traditional business by boosting its e-commerce activities.

Other German industrial bluechips planning to up their e-investments include auto-maker DaimlerChrysler (550m euros) and Deutsche Telekom which expects its online marketplace T-Markt to account for around 50% of its annual purchasing volume of 10 billion euros.

Retailers are also poised to increase investments in business-to-consumer e-commerce, among them KarstadtQuelle which plans to invest 250 million euros over the next four years.

News source: Handelsblatt (Germany)

News source: Various media