Web Traffic Is Strong for Traditional Retail Giants
Since Thanksgiving, traffic on e-tail sites has jumped 25% to 31% a week compared with a year ago. But much of that increased traffic appears to be going to sites operated by brick-and-mortar giants, not pure e-tailers.
Though final sales results won’t be in until January, preliminary figures show that Internet sites with familiar brand names such as Eddie Bauer, Radio Shack, Wal-Mart, Toys R Us, K-Mart, Barnes & Noble and Nordstrom reported strong gains in Web traffic, according to figures to be released today by New York research firm Media Metrix.
Walmart.com saw its Web traffic surge ninefold for the week ended Dec. 17 compared with a year ago; Sears.com’s traffic more than doubled for the same period, and JCPenney.com jumped 43%.
Meanwhile, many online merchants who do most of their business on the Web are limping along, hoping the last few shopping days will provide them with much-needed dollars to justify their continued existence.
In the latest week, EToy Inc.’s Web traffic fell 11%, and CDnow.com’s traffic grew less than 3%.
“The bloom is certainly off the e-tailers’ rose,” said Matt Stamski, retail and technology analyst with Gomez Advisors Inc. in Waltham, Mass. “This holiday season is a make-or-break period, and, unfortunately, it seems to be breaking a lot of them. It’s clear now that the days of the pioneering, pure-play e-tailers are numbered.”
Yet consumers are spending record amounts online, according to data released today by the National Retail Federation in Washington, and Forrester Research in Cambridge, Mass.
In spite of a slowing economy, the increase in the number of first-time Internet shoppers continues to boost online retail sales, the study shows.
Based on Internet spending so far, NRF economists say they are confident online sales will exceed their projections of $10 billion during the holiday season, or double the amount spent last year.
In November consumers spent more money online than they did for the combined period of November and December 1999, or about $6.4 billion, according to the study--with much of that going to traditional retailers’ online sites.
That’s because buyers fueling online spending growth are more likely to purchase from businesses they know--and companies they can also call or visit if anything goes wrong with either the process or the product.
Peter Schaeffer, a retail strategist with Ernst & Young, however, cautions that growing sales do not necessarily mean a better performance for brick-and-mortar companies that have migrated online.
Many retailers with tens of millions in online sales, he noted, still are not required to report their online results because the dollar amounts are not considered a material part of their annual performance as defined by Securities and Exchange Commission rules.
“Most of the growth is coming from the traditional retailers, but it’s still a tiny, tiny portion of the retail business,” Schaeffer said. E-tailing still accounts for less than 3% of total retail sales.
Still, traditional retailers appear to be siphoning off critical sales from so-called pure-play online retailers that have little or no presence outside of the Internet.
Last week, Santa Monica-based EToys announced that sales during the holiday quarter would be only about half of what the company anticipated, prompting the company to hire an investment banker to explore a possible merger or asset sale.
Rather than the $240 million in revenue EToys had expected for the quarter, sales were likely to be between $120 million and $130 million, the company said, only slightly better than last year’s holiday net sales of $106.8 million. EToys had expected to raise more funds, but now concedes its cash could dry up by the end of March.
Meanwhile, a newly combined Toysrus.com-Amazon.com site continued to be the top toy site in terms of unique visitors.
Amazon.com’s Web traffic jumped 47% in the week ended Dec. 17, compared with the same period a year ago.
But even Amazon.com, the largest of the online retailers, is showing signs of strain.
The Seattle-based e-tailer yesterday announced it will join EToys and other Web merchants in offering an outlet store on its site in January to move surplus products at deep discounts.
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Web Traffic
More shoppers are turning to the Internet this year, but the wealth is not being shared by all. Many consumers, particularly those new to the Web, are turning to online sites run by traditional retailers such as Target, Wal-Mart and Barnes & Noble.
Unique U.S. Visitors to Online Retail Sites
Dec. 17, 2000: 33,781,000
Dec. 19, 1999: 27,122,000
Top Retail Sites (for week ending Dec. 17)
Average for week ending
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Site Dec. 19, 1999 Dec. 17, 2000 1. Amazon.com 1,156 1,703 2. MyPoint.com 1,082 1,516 3. Webstakes.com 466 633 4. BizRate.com 333 565 5. Buy.com 393 438 6. Walmart.com 49 419 7. Americangreetings.com 224 407 8. Half.com N/A 381
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Source: Media Metrix
