KUHN CAPITAL Thursday, October 19, 2017
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Online Retailers Rule

May 16

Consistent with our earlier optimism about the online retail sector, new data indicate that it continues to prosper through the global economic downturn.

According to Shop.org, the online arm of the National Retail Federation, and Forrester Research, the industry as a group broke even last year, with 48% sales growth to $76 billion. The researchers expect online sales to reach “nearly $100 billion” in 2003.

The data supports our theory on the attractiveness of online retailing: its economies are persuasive, maybe inevitable, especially in models that have the retailer drop shipping inventory direct from the manufacturer to the consumer.

The NRF/Forrester study was based on data provided by 130 companies, including offline retailers with online operations. The majority of online retailers are now profitable with catalog retailers operating websites being the most profitable of all online merchant groups. On the other hand, "pure play" online sellers continue to lose money as a group.

One wonders why this is so: perhaps the catalog players are driving higher levels of website traffic via their print media, and they're realizing greater internal economies through shared ordering and inventory systems.


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