Getting the lowdown on downloads - Statistical Data Included

Discount Store News, Dec 13, 1999 by Robert Scally

Software is a natural product for Web retailing the Web since a computer is required in order to be on line in the first place. The NPD Group said software will be one of the most popular on-line purchases during the 1999 holiday selling season. Of consumers surveyed by The NPD Group, 41% said that software would be on their holiday on-line shopping list. In addition, Forrester Research estimates that 50% of all consumer software could be sold through the Internet by 2004.

Ann Stephens, president PC Data, predicts 25% of software will be sold on the Web by 2004. However, she doubts that the downloading of software will become a major factor until Internet connection speeds increase.

"Bandwidth will have to be a lot higher than it is now for ESD (Electronic Software Delivery) to become a factor," Stephens said.

Among the pure e-commerce retailers, Beyond.com tops the list for software sales, followed closely by former bricks-and-mortar retailer turned cyberretailer Egghead.com.

Few of the conventional bricks-and-mortar chains that count software as major category are doing a particularly good job selling on the Web. One exception is the 595-unit Electronic Boutique's site EBWorld.com.

During the third fiscal quarter ended Oct. 30, Electronic Boutique launched a $12 million marketing campaign for its Internet subsidiary, EBWorld.com, which included print and media advertising. Initial response to the campaign was very strong and during October 1999, the first month of the marketing campaign, visits to the site increased by more than 40% compared with September 1999.

"This is a tremendous increase in traffic in just one month's time," said Joseph Firestone, president and ceo of Electronics Boutique, during a conference call with analysts that took place in November.

During the third quarter the EBWorld site attracted 5.1 million visits and generated sales of $2.7 million.

                           TOP FIVE MUSIC SITES
WEB SITE (START-UP DATE)       DIVISION OF/OWNED BY
Amazon.com (July 1995)         Publicly held
Barnesandnoble.com (Jan. 1997) Publicly held; major stakes owned by
                               Barnes & Noble and Bertlesman AG
Borders.com (May 1998)         Subsidiary of Borders Group
CDNow.com (Feb. 1994)          Publicly held
Towerrecords.com (June 1995)   Privately held
WEB SITE (START-UP DATE)       TOP EXEC
Amazon.com (July 1995)         Jeff Bezos
                               chairman, president, ceo
Barnesandnoble.com (Jan. 1997) Jonathan Bulkeley
                               ceo
Borders.com (May 1998)         Greg Josefowicz
                               president, ceo
CDNow.com (Feb. 1994)          Jason Olim
                               chairman, pres., ceo
Towerrecords.com (June 1995)   Mark Bressler
                               managing director
WEB SITE (START-UP DATE)       STRATEGY
Amazon.com (July 1995)         Expand into growth categories
                               beyond core book business
Barnesandnoble.com (Jan. 1997) Expand into growth categories
                               beyond core book business
Borders.com (May 1998)         Expand into growth categories
                               beyond core book business
CDNow.com (Feb. 1994)          Become leading music e-tailer
Towerrecords.com (June 1995)   Become leading music e-tailer
Source: DSN research, Gomez Advisors, Media Metrix, Xceed Intelligence.
                          TOP FIVE SOFTWARE SITES
WEB SITE/START-UP DATE         DIVISION OF/OWNED BY
Barnesandnoble.com (Jan. 1997) Publicly held; major stakes owned by
                               Barnes & Noble and Bertlesman AG
Beyond.com(Nov. 1994)          Publicly held
Egghead.com (Nov. 1996)        Publicly held
EBWorld.com (April 1998)       Electronics Boutique subsidiary
Outpost.com (May 1995)         Publicly held
WEB SITE/START-UP DATE         TOP EXEC
Barnesandnoble.com (Jan. 1997) Jonathan Bulkeley
                               ceo
Beyond.com(Nov. 1994)          Mark Breier
                               president, ceo
Egghead.com (Nov. 1996)        Jerry Kaplan
                               ceo
EBWorld.com (April 1998)       Seth Levy
                               president
Outpost.com (May 1995)         Robert Bowman
                               president, ceo
WEB SITE/START-UP DATE         STRATEGY
Barnesandnoble.com (Jan. 1997) Expand into growth categories
                               beyond core book business
Beyond.com(Nov. 1994)          Become a leader in on-line
                               software sales
Egghead.com (Nov. 1996)        Become a leader in on-line
                               software and hardware sales
EBWorld.com (April 1998)       Become a leader in on-line video
                               game/computer software sales
Outpost.com (May 1995)         Become a leader in on-line software,
                               computers, CE and gift sales
Sources: DSN research, Media Metrix.