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Getting e-Together

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Posted March 30, 2001 By Staff     Feedback

A Boston Consulting Group report indicates that consumers are more likely to patronize an offline store with an online component.

Traditional brick-and-mortar retailers are poised to surpass pure-plays in the e-tailing game asserts a new industry report.

Based on a quantitative survey of 2,876 Net purchasers conducted during the fourth quarter of 2000, the Boston Consulting Group recently speculated that a golden opportunity to grow customer share online awaits offline retailers. Online retailing is entering a new phase in its evolution, stated Michael Silverstein, a senior vice president and head of BCG's Consumer practice. What was once an industry characterized by entrepreneurial dot-coms, targeting the discretionary spending of the Internet-savvy consumer, is fast becoming the domain of traditional retailers, selling both necessities and discretionary items to the broader population.

Leveraging an existing clientele base and strong offline brands these erstwhile offliners stand to benefit from a new growth phase in consumer-based e-commerce, postulates BCG. According to their report online sales are poised to grow from $34 billion in 2000 to $168 billion by 2005. Consumers are now migrating to the big brands with an online capability, stated Silverstein.

Expecting a major online revenue boost from online ticket sales, South African Airways recently joined the e-business fray with the launch of their website. Backing for their move can be found in the BCG report which forecasts tremendous growth in online travel-related sales over the next few years. Other categories that are set to experience unprecedented online growth include groceries and clothing, predicts BCG.

While consumers want the convenience of 'always available' shopping, they are also demanding higher levels of performance from retailers in all aspects of the online shopping experience, counselled Silverstein, implying that the transition online wont be an easy one. The next chapter in online retailing will be about the revenge of the sophisticated incumbent, he noted.

Those are the best positioned to succeed in the online game are catalogue marketers, stated Peter Stanger, vice president and head of BCG's US B2C topic area. Catalogue marketers enjoy the advantages of established brands, existing infrastructure, and extensive experience in selling to customers at a distance, he remarked. They know they will succeed if they focus on the best customers, rather than allocate huge sums to attract customers whose purchases won't justifytheir acquisition costs.

As for pure-plays only the strong will survive, warned the report. BCG maintains that only those that have built competitive advantages in key areas such as brand strength, procurement, fulfilment, customer acquisition, and service will survive to see the new age of e-business.

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