The values of online retailing keep on clicking - Editorial - Brief Article

DSN Retailing Today, March 25, 2002 by Tony Lisanti

While the publicity and coverage of the dot-com world of retailing has diminished significantly, the importance of online retailing hasn't.

What was once a market dominated by high-flying, big-talking entrepreneurs all trying to cash in on the dot-com explosion and become the next Amazon is now a world of electronic retailing that's a niche business clearly controlled by the nation's largest bricks-and-mortar retailers.

Furthermore, things seem to be heating up again and battle lines are being drawn as retailers in several channels are trying to outdo one another and capture market share.

* Supermarket. Albertsons.com expanded its shopping service to 180 zip codes in the five San Francisco Bay area counties, making it the largest geographic reach among online grocers. It now serves more than 700 zip codes in California, Washington and Oregon. At the same time, Safeway.com announced the launch of its online grocery shopping service--in partnership with Tesco.com--into San Francisco and San Jose.

* Drug. CVS.com launched a new baby department on its Web site, featuring formula, nursery products, shower gifts, developmental toys and health information. Drugstore.com relaunched its baby department with an expanded selection of gift merchandise.

* Mass. Wal-Mart, Target and Kmart continue to fine-tune their Web sites with new products, promotions and tie-ins with traditional stores. In fact, one study reported Kmart's Bluelight.com posted sales growth of 20% in 2001, despite the challenges that faced the traditional stores.

* Electronics. Circuit City recently acquired the rights to 800.com as the consumer electronics retailer continues to battle with rival Best Buy. According to Best Buy, 40% of its customers making an in-store purchase claim they have visited the Web site prior to visiting the store.

* Office Supplies. The office supply chains, which have the most sophisticated sites, have continued to expand their e-commerce businesses and have achieved greater success than retailers in other channels. Office Depot, which operates 15 Web sites internationally, expects Internet sales to reach $2 billion in 2002, up from $1.6 in 2001. Staples recently was named a top site for entrepreneurs by Forbes.

Consider also the growth of retail at America Online, a company often overlooked in the retail industry. The company reported a 67% increase in online spending in 2001 to more than $33 billion.

And then there's Amazon. With several partnerships, including Toys "R" Us, Target and Borders, the dot-com that started it all continues to drive revenue and traffic, but has yet to achieve profitability. It also continues to be the benchmark for online retailers and shoppers. It recently added a wedding registry, keeping pace with a category that has been an online success for several other retailers.

The bricks-and-mortar retailers are using the Web to offer their customers convenience, education and value. And it's obviously working. There's no doubt that electronic retailing is alive and clicking!