Getting e-Together Staff

Updated · Mar 30, 2001

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.

Reprinted from

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