• by Jack Loechner , Staff Writer, June 12, 2006

The recent Internet Retailer survey, reported in a lead article by Mark Brohan, shows that 40% of the retailers taking part in the survey anticipate growth of 30% over 2005, but 39.5% of chain retailers, catalogers, virtual merchants and consumer brand manufacturers are ready to reduce expenses, including their marketing, fulfillment and general overhead, to sustain profitability.

Conducted by WebSurveyor Corp., participating company profiles indicate that:

• 87.5%, are privately held and have been in business for at least two years.
• 79% established their web retailing operations 4 to 9 years ago
• 7% have been in business for a decade or longer and only
• 4.5% are just starting out

The survey also reveals that:

• Among participating companies, 79%, are profitable
• Among all companies, 50.5% of virtual merchants have been profitable for 3 to 6 years
• 44.3% of chain retailers' web operations have been profitable for 3 to 6 years
• 28.1% of catalogers' web operations have been profitable for 3 to 6 years
• 20% of consumer brand manufacturers have been profitable for 3 to 6 years

57.4% of catalog companies have been operating web sites profitably for more than 6 years, followed by consumer brand manufacturers at 25%, virtual merchants at 17.9% and chain retailers at 6.7%.

Brohan says, "... web merchants are connecting with customers by employing the right mix of merchandising, pricing and site experience while keeping their expenses in check. And... the retailing organizations taking part in Internet Retailer's latest survey expect to finish the year with solid gains in both sales and net income. A total of 40% expect annual sales to grow by more than 30% versus 47.5% at between 10% and 30% and just 12.5% that anticipate a yearly gain of below 10%. Consumer brand manufacturers... are the most bullish, with 45.5% expecting sales to grow in excess of 30% in 2006, followed by web-only merchants at 42.6%, chain retailers at 40% and catalogers at 17.6%."

With regard to spending on marketing and advertising as a percent of sales, the survey shows:

• 4.1% of all companies earmark more than 25%
• 7.7% spend less than 1%
• 18% spend between 2% and 3%
• 19.9% between 4% and 5%
• 28.1% from 6% to 10%
• 21.9% from 11% to 25%
• 46% of catalogers allocated 6% to 10% of sales to marketing and advertising,
• 31.8% of manufacturers
• 27.8% of virtual merchants
• 20% of chain retailers

To read the complete article, please go here.