50% Of B-TO-C E-Commerce Websites Are Profitable
(EMAILWIRE.COM, March 14, 2001 ) Peterborough, NH - ActivMedia Research (www.ActivMediaResearch.com) - Many factors have an impact on profitability online, and web companies that sell to consumers (B-to-C) are leading the way with 50% currently profitable. E-marketers that can identify key profitability drivers are in a position to maneuver their companies out of the red and into the black. Of all the websites participating in ActivMedia Research online success survey, just over one-third are currently profitable, but overall, 60% will be within 12 months. While 17% do not intend to make a profit, the rest do. Nevertheless, attainment of a profit goal is elusive for the majority of firms online today.
One reason for so small a portion of online firms making a profit is the relative newness of the Internet as a commercial medium. Online firms have not had much time to make the necessary investments to be profitable. Many have conducted business offline and know how to run a profitable business, however few have equivalent experience selling online. They are fast realizing that selling online is not quite the same.
In a compilation series of reports detailing "Online Success" ($495 each or $1,500 for all four in the series), ActivMedia Research identifies parameters by industry (B-to-B, B-to-C, Online Content, ISP), that lead to profitability. Across all four industries there is a commitment to the Internet as a selling and marketing channel. But for true success, the key is to understand possible factors that leads to success by industry.
PROFITABILITY BY INDUSTRY
One in three B-to-B e-tailers are currently profitable, and another one in three expect to be profitable in the next few years. However, a substantial proportion don't intend to be profitable since their websites are marketing communication vehicles.
Half of today's B-to-C e-tailers are profitable because they are the most active websites in terms of directly selling products and services to customers online.
One in four Online Content firms are profitable, but most expect to show profits over the next couple of years as the market matures.
Only one in four Internet Services & Support firms (ISPs and ASPs) are profitable, but they have hopes for the future. Burdened by heavy competition online, they are particularly affected by other media that offer Internet access along with other services.
ActivMedia Research's VP of Market Research, Harry Wolhandler rejects the claims of many of today's analysts. Wolhander says, "Many analysts report that the greatest E-Commerce success is among the most known Dot-Coms. I disagree. Online successes are instead found most broadly in the mid-sized business arena where companies with in-place businesses increasingly capitalize on their extended communication capabilities. High-flying dot-coms are forced to expend resources on building a business backstage to accommodate the high level of sales that they generate. As long as they are experiencing stratospheric growth it will strain their ability to grow. They will not begin to effectively accumulate cash until growth slows to more modest, steady levels. The challenge for them will be to remain standing when online markets mature five or ten years from now."
MORE INFORMATION:
http://www.activmediaresearch.com/online_success_strategies_seri.html
ActivMedia's series on "Online Success Strategies" highlights important findings from several waves of research conducted in 2000. Analyses in this research are intended to separate fact from fiction in the topsy-turvy, rapidly evolving world of eBusiness. This series of research reports is designed to present that data in a rigorous exploration of what it takes to succeed online. Information in this report has been gleaned from thousands of interviews of business executives responsible for online commerce decisions of their companies, and from their customers, the businesses and consumers who are increasingly turning to online resources for commerce of all kinds. Research reports can be purchased individually for $495 or as a complete set for $1,500 (site-licenses available).
ABOUT ACTIVMEDIA RESEARCH, LLC
ActivMedia Research LLC is widely recognized as a leader in studying eBusiness. Ever watchful of innovative business strategies, ActivMedia was first to publicly demonstrate that online business was both viable and profitable (Business Week, 9/23/96). An ongoing series of eBusiness research studies from 1994 to 2001 continue to alert eBusiness managers to new business opportunities and changing online strategies.
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