2002

Online Retailing Hits Its Stride

Sep. 2002

After the dot-com fallout last year, it seems online retailers have figured out their niche.

According to recent reports, more e-tail sites are proving profitable--especially those attracting the affluent demographic.

In 2001, 56 percent of retailers reported profits--the first time that number tipped into the majority. In 2000, it hovered around 43 percent. According to a study by Shop.org, shoppers spent $51.3 billion online in 2001--up 21 percent from 2000. That figure is expected to increase another 41 percent this year, bringing total sales to $72.1 billion.

The most profitable, according to Shop.org, are multi-channel retailers whose brands form relationships with consumers both online and in traditional stores.

Another study, meanwhile, by Jupiter Research, showed that, while moderate-income consumers are flocking in larger numbers to the web, it is the more affluent consumer base that is spending the most online.

About 58 percent of more affluent customers buy online, compared to about 38 percent of middle income consumers.

The demographic of families earning more than $75,000 a year account for one quarter of the Internet population and are most likely to visit commerce-related websites. Over the next four years, that group will increase their spending from the current $574 per year to $926 per year in 2006, according to Jupiter.

In good news for the diamond and jewelry industry, meanwhile, the number of online households making jewelry purchases online is not dependent upon income. Fifteen percent of middle-income households had purchased jewelry online, compared to a similar 14 percent for the more affluent group. According to these numbers, sales should increase in coming years as the number of middle income households with Internet access jumps to 10.6 million in 2006 from 6.8 million this year.