KUHN CAPITAL Tuesday, October 17, 2017
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What Still Works

1/22/03

Slipping by almost unnoticed during an otherwise dreary Christmas retail season has been the continuing growth of retail online sales -- up about 25% this year over last. Compare that to about 1% for offline retailers.

While nowhere near the sort of hyper-growth implied by dotcom stock prices several years ago, nonetheless online retailer sales reached nearly $14 billion during last November and December according to research by Goldman Sachs, NetRatings and Harris Interactive.

PC industry trade magazine eWeek chalks up the gains to promotions and enhanced technology -- systems that track and deliver shoppers' buying preferences, as well as tools that analyze user interaction, permitting more efficient site design.

Well, this last season saw heavy promotions by both online and offline retailers. But we agree that tech advances have contributed to online sales growth.

On the other hand, we also believe that several other online characteristics are even more important, and will continue to drive rapid online growth: Internet merchants are generally cheaper than their offline counterparts, typically much more convenient -- no time-consuming Christmas crowd hassle -- and often offer products otherwise difficult to find locally.

Expect online retailers to continue to steal marketshare from bricks and mortar players as more shoppers become acquainted with these advantages.


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