e-Deaths Show Signs of Leveling-off
Updated · Jan 17, 2002
Analysts believe that the dot-com crash will slow-down during 2002 and that consumer confidence in the Net will steadily increase.
For the last two years the Net has been in the grips of a veritable Ice Age that killed-off a lot of green growth from the early boom years. At last, however, it seems as if the permafrost is showing signs of a potential thawing and analysts expect that 2001 will be a less stressful year for e-players.
In the second quarter of 2000, dot-commers suddenly started falling on hard times and running afoul of investors and analysts. Hundreds of Internet companies folded during that fateful year – but the worst was yet to come. During 2001 the number of e-fatalities doubled and survivors were beset by wave after searing wave of lay-offs and budget cuts.
According to Webmergers.com news, entertainment and other content sites made up 25 percent of the casualties whilst e-commerce companies accounted for 45 percent.
The research firm reckons, however, that the worst might be over for the dot-com industry. Their reasoning is based on observations that the rate of e-failures decelerated during the last two months of 2001. As such, 42 Net companies folding during November and December of 2001 – this, compared to 99 e-companies that bit the dust during the same period of 2000.
Similarly, they noted that e-fatalities shrunk on a quarterly basis with 78 sites blinking out in the fourth quarter of 2001 compared to nearly twice that number that folded during the same quarter a year earlier.
Lately it’s also become quite apparent that the dot-com downturn was merely symptomatic of an overall global economic depression, which is only really taking effect in the offline world now. Resultantly, brick-and-mortar economies are now starting to crumble whilst online economies, by contrast, are steadily recovering.
The events of September 11 have further conspired against offline sales as consumers further tighten their belts. Online sales, by comparison, are expected to remain stable – if not increase – and it’s hoped that the Net will serve as the perfect shopping destination for bargain hunters and penny-pinching consumers.
Additionally, it’s expected that the Net, in coming months, will become the perfect tool for the purchase of cyclical goods like PC upgrades and consumer electronics whilst driving offline sales of other more expensive cyclical goods like cars and white goods.
By 2003, it is expected that the e-economy will have recovered altogether. “Our model shows that consumers will purchase 57% more online in 2003 than they did in 2002,” noted Forrester Research Director Jaap Favier. “Surviving dot-coms will then reap the fruits of their customer relationship investments and their successful adaptive response to darkening economic times.”
Reprinted from sa.internet.com