Changes for the Better Staff

Updated · Nov 13, 2001

A recent survey by the Boston Consulting Group (BCG) found steady improvements in the online sales industry.

“Of late e-tailers have been making more efficient use of their marketing dollars by using more targeted approaches,” stated BCG e-commerce analyst Julie Green. “There's a shift away from mass marketing, and with that you see more spending on affiliate programs, e-mail campaigns, direct marketing and catalogues.”

Resultantly BCG found that e-tailers were moving away from offline forms of advertising and starting to focus more on online advertising. Survey respondents reported that they were spending an average of 23 percent of their total marketing budgets on advertising over the Net whilst print advertising made up a mere 13 percent of budgets.

According to BCG, e-tailers have experienced a consistent rise in conversion rates over the course of the past year. “This has been due to the ongoing improvement in site navigation and simplicity, as well as improving back-end operations,” noted Green. “Such improvements have enabled customers to gain confidence in a site's ability to deliver products on time,” she added.

Higher conversion rates also help to generate higher sales without requiring an increase in marketing spending, thereby having a dramatic effect on retailer profitability. Green also predicted that retailers would shift more spending towards customer retention as acquisition costs start to stabilize.

Far from flailing in the heady currents of the downturn, BCG found that the online sales industry was “performing exceptionally well in a year-over-year basis.” The firm also indicated a rise in overall conversion rates and discovered that customer acquisition rates were moving steadily down as more users migrated Net-wards.

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  • Retail
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