• by Ken Liebeskind , August 2, 2002

A survey of online retailers shows enormous gains in 2001 revenue and prospects for 2002 look even brighter.

The survey, for online retailing association Shop.org, performed by the Boston Consulting Group, was based on data from 109 online retailers in a variety of categories. Fifty-six percent reported profitable operations last year, up from 43% in 2000. The leading category was travel, with $20 billion in revenue last year, up 18% from $14.1 billion in 2000. Auto was next at $9 billion, up 89.5% from $5.4 billion. Computers followed at $7.5 billion, up 5% from $5.9 billion.

The survey proclaims 2002 to be a milestone year for online retail with revenue expected to jump 41% to $72.1 billion from $51.3 billion last year. The EBIT (Earnings Before Interest and Taxes) margin will approach zero, meaning online retailing will reach the break-even point.

In the past, retailers suffered losses due to high costs per order and customer acquisition, but the survey shows them dropping, with cost per order down to $12 last year from $20 in 2000 and cost per acquisition at $14 last year, down from $29 in 2000.

The survey shows that online retailers spent 63% of their marketing dollars online last year compared with only 38% in 1999. They spent 17% on portals, 17% on sponsorships, 8% on email, 7% on search, 7% on affiliates and 3% on banners. The leading offline spend was 18% on catalogs.

The survey also shows that multi-channel retailers are showing the most growth. They commanded 67% of the market share last year, compared with 54% in 2000. Multi-channel customers spend 72% more per year than single channel shoppers.

The study also finds the customer base maturing, with 53% of the revenue from repeat shoppers, compared with 40% in 2000. The conversion rate of visits into orders increased to 3.1% last year from 2.2% in 2000.

The only downside of the study is that the cost of fulfilling orders and customer service has grown slightly. Fourteen percent of revenue went to fulfillment last year compared with 12% in 2000. The cost of customer service remained stagnant at 2.5% of revenue for the past two years. Online retailers need to improve these numbers to achieve even greater success this year.