Tuesday April 6, 5:54 pm Eastern Time
Retailers disgrunted with big Internet sites
By Michael Connor
MIAMI, April 6 (Reuters) - Online retailers are growing disgruntled with tie-ups with popular Internet sites such as Yahoo! (Nasdaq:YHOO - news) now seen
as the main way of pulling in cybershoppers, according to a study released on Tuesday.
The Jupiter Communications research group said fewer than one in 20 online retailers plan to renew unchanged existing deals with the big sites, saying the
so-called portals deliver too many one-off customers.
''Although 92 percent of commerce players surveyed believe that portal tenancy deals help them to drive sales or transactions, over two-thirds attribute 30
percent or less of their online sales directly to portal deals,'' Jupiter said.
Yahoo!, Excite (Nasdaq:XCIT - news), Microsoft (Nasdaq:MSFT - news) and other portal sites offering Internet-search, chat, news and other services
accounted for about $1.4 billion of U.S. consumer online sales of $7.9 billion last year, according to Jupiter analyst Marc Johnson.
And while portal-driven sales of recordings, books, clothing, tools, vitamins and other products will continue to rise, other means of attracting and keeping online
customers for repeat business will grow ever more important, according to Jupiter.
''Commerce players simply have not demanded enough from their portal partners,'' Johnson said. ''While they offer an effective means to drive traffic, primary
portals do not help commerce players retain customers.''
Johnson said online retailers were not going to abandon portal alliances in great waves, but he expects new deals to be based on commissions on transactions
and other criteria likely to yield repeat business. Most current deals typically turn on the number of visitors a portal directs to an online retailer, he said.
Ken Seiff, chief executive of Bluefly.com, said portals were important marketing tools for his online clothing retailer site but changes in terms were likely.
''You see differences among customers from different sites,'' Seiff said at an Internet conference in Miami sponsored by Jupiter. ''You may see that you'll see
different prices from different portals.''
Jupiter forecasted that overall consumer Internet sales will rise to nearly $43 billion in 2002, up from a forecast $13 billion this year. But portal-delivered
business will rise only to $8.7 billion or less, from $2.4 billion this year, Jupiter said.
The research firm predicted that portals' share of electronic commerce would rise modestly through 2002, going from an estimated 18 percent last year to 20
percent in three years.
Online retailers need to add other means of recruiting customers, such as traditional advertising on radio and in newspapers, and promotions, Johnson said.
Online retailers should also use specialty sites, such as those dedicated to sports, to build customer traffic, according to Jupiter.
Several online-retail executives at the conference said building customer traffic was vital in start-ups and saw portal deals as important but that frequent-buyer
premiums, good service and reliability aimed at building repeat business were keys to profitability.
Johnson said tests done as part of the study found that only 43 percent of 125 retail sites queried by e-mail last month responded within two days, down from
63 percent in December.
The Jupiter study was based on consumer-transaction data, company projections and a survey of 36 online retailers, Johnson said. |
