eTail Hits Puberty

• by Seana Mulcahy , June 13, 2005

On the heels of OMMA West, I had a lot of time to reflect upon the comments I heard and the discussions and panels I was a part of. Many of us have been in the space since the first online ad was sold over a decade ago. Certainly to the likes of traditional media folks, it is not a long time. However, for all of us that have remained in the space, it has been one roller coaster ride.

Socially, it's always fun for us to exchange stories about the many personalities and sites that have come and gone. Sure, we still belly laugh about the terrible rep, agency kid with the mohawk, and the sock puppet. It's amazing to think of the Darwinism we've witnessed.

I remember working round-the-clock to put together a stellar presentation with my team. In the wee hours of the night before our pitch, many of the account folks were not only nervous, but pessimistic. I remember one account director freaking out as he was skeptical that anyone would ever download a coupon online for our prestigious beverage client. I spent hours and hours defending our ideas and justifying the fact that moms with kids seeking healthy beverages have computers and go online often.

I also remember many campaigns we did for a large national bank. This client was one of the first to offer online banking. A few years ago this was not only revolutionary but scary. The interface was clunky and ugly, but it worked. It was our job to capture prospects online and have them sign up. This was no easy task back then. People were not used to the concept. Although they wanted convenient alternatives to banking, they did not want to share their personal information online. There was also a large mistrust of the Web. Consumers asked many questions: Was the site secure? Where did the information go? How can we guarantee the money would be in the account?

Nowadays I look back at that and laugh. It is rare that we have to jump over such hurdles. No matter where you look, most consumers are comfortable with providing personal information and transacting online. The new hurdle is establishing our brands or the brands we represent as a trusted marketer. I decided to take a look and see who's really leading the pack.

Internet Retailer recently conducted a study that ranked the top 400 retail sites.

In a nutshell, the good news is Internet retail sales totaled $87.5 billion in 2004, up 25 percent from $70 billion in 2003 and up 62 percent from $54 billion in 2002, according to Internet Retailer estimates. eTailing is on the up and up, overall sales, average tickets, and conversions are steadily increasing. U.S.

Top findings of the study: The top 400 eTailers represent a combined bank of $51 billion USD. This represents 58.3 percent of all U.S. Internet sales.

Consumers are confident purchasing products and services online. Conversion rates are 2.5 percent on average. However, some sites reflect anywhere between 8 and 18 percent. While these numbers seem low, they have increased steadily. There is a huge potential for sites to make it easier and more convenient for consumers to click and buy.

The average ticket across all categories increased to 16 percent last year. The Computers and Technology category continues to lead the pack representing 28 percent of overall sales or $14.3 billion in Web sales (up from $10.9 billion).

Other Web retailing categories demonstrating solid sales growth are books, CDs, DVDs, and music, which increased sales 70 percent from $999 million in 2003 to $1.7 billion in 2004 and office supplies, which rose 23 percent from category sales of $5.2 billion in 2003 to $6.4 billion in 2004.

The top eTailers represent minimum sales in at least the $1 billion dollar range. To no surprise, according to Internet Retailer, they are as follows (in order of sales): Amazon, Dell, Office Depot, Staples, and HPDirect.

So what does this mean for advertisers and marketers like us? We've come a long way but also have a lot of potential. We must establish trust of consumers and prospects online. Ease of use is always key. Consumers will keep coming back if they feel they've had a good experience. There is still room for newcomers and pure-plays, but keep in mind that multi-channel sales, customer service, and fulfillment are critical.

Do you have a success story, horror story, or tidbit of advice in the eTail space? If so, post to us on the SPINboard.