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Blockbuster Story From The Chicago Tribune: “Internet Poised To Become Bigger Force In Retail”

January 7, 2010

Internet poised to become bigger force in retail
Frugal shoppers turning to Internet in droves, retailers investing in technology

Through much of last year, in our DubLi presentation we shared this WSJ story about the tough economy’s impact on malls (traditional stores) and the rise of ecommerce.  The article’s quote two-thirds of the way down summed it up:

“Why go to a mall anymore? I can get whatever I want cheaper on the Internet and it comes to my door.”

Now a new story has arrived, with the same message but updated info.  As we share the DubLi story with people, use this to drive home the point that ecommerce is getting bigger and bigger.  There are still some people who say, “I don’t do much online shopping,” just as there were people five years ago who said, “I don’t use email very much.”

The killer quotes:

  • “At the end of the day, everyone is afraid of Amazon because they are so aggressive from a technical standpoint … They own all this information on the (shoppers), so they have the ability to market based on buying patterns.” – DubLi is positioning the same way.
  • “… the economic downturn has left the Internet poised to enter 2010 as a larger force in retail.”
  • “… online shopping, historically only 5 percent of U.S. retail sales, is about to get a lot bigger.”
  • “Online sales, excluding travel, had been growing at a roughly 20 percent to 25 percent annual clip for much of the decade.”  [Obviously the growth slowed as the economy crashed, but the key is to note that while the economy was in negative territory (shrinking), online sales were positive (still growing).]
  • “Amazon, Wal-Mart and Best Buy saw their Web site traffic soar more than 20 percent on Black Friday from the year-ago period.”
  • “Traditional chain stores are starting to recognize what Amazon long has known: The benefit of an online store reaches far beyond the dollars generated by selling merchandise.”

The article ends with the critical point that only companies with very deep pockets will survive the price-war battles, making it nice to know about the financial backing and long-term vision DubLi has.

Thanks to Stephanie Price for forwarding us this gem!  What’s so perfect about her sending the story is that she says she’s “not a computer person!” – more proof that you don’t have to be a “techie” or “geek” to see the vision of DubLi or to position in front of the trend to make a fortune!

Red highlights are mine.
JC

http://www.chicagotribune.com/business/chi-tc-biz-outlook-retail-0105-jan06,0,6844636.story

Internet poised to become bigger force in retail

Frugal shoppers turning to Internet in droves, retailers investing in technology

By Sandra M. Jones
Tribune Newspapers

January 6, 2010

The battle for the shrinking American budget is moving online this year with a vengeance.

While the recession took a toll on shopping centers and strip malls across the country, the economic downturn has left the Internet poised to enter 2010 as a larger force in retail.

Frugal shoppers are turning to the Internet in droves to compare prices, hunt for bargains, download coupons and seek advice from fellow shoppers. Retailers, weary from years of building sprees, are diverting capital away from storefronts and to Web sites, investing in the technology to make online shopping easier, faster and cheaper.

Look no further than Wal-Mart Stores Inc. for a sign that online shopping, historically only 5 percent of U.S. retail sales, is about to get a lot bigger. The world’s largest retailer announced late last year plans to unleash its economic might on its decade-old but often neglected Web site, walmart.com, intent on toppling Amazon.com Inc. from its perch as the world’s largest online merchant.

There’s no question the Internet has gone from being a curious sidebar to a main event,” said Mark Cohen, marketing professor at Columbia Business School in New York and former chairman and CEO of Sears Canada Inc.Customers are becoming completely comfortable with doing business on the Net. … This year is going to be a very good year for online shopping, tempered only by the negative effect of the economy.”

Credit Suisse Securities LLC, the New York investment firm, issued a report Tuesday predicting that e-commerce sales will rise nearly 10 percent in 2010 to $144 billion after ending 2009 with an estimated 1.1 percent gain, the worst year on record.

Online sales, excluding travel, had been growing at a roughly 20 percent to 25 percent annual clip for much of the decade, before slowing to a 6 percent gain in 2008, according to ComScore Inc.

When ComScore releases its year-end data this week, the market research firm expects 2009 online sales to remain about even with 2008 at $130 billion. That would make it the first year online sales have failed to expand, said Andrew Lipsman, ComScore’s director of industry analysis.

After tumbling in the second and third quarters of 2009, online sales rebounded to post a 5 percent gain from Nov. 1 through Christmas Eve, ComScore said. The strong finish bodes well for 2010. Lipsman expects online sales to return to “reasonably healthy growth rates” this year.

Some experts say Internet sales reached a turning point over the holidays. Black Friday, or the day after Thanksgiving, typically has been a day for physical stores to shine with early-bird specials that entice shoppers to stand in line for hours until stores open their doors at dawn.

But last year the big national chains — including Wal-Mart, J.C. Penney and Best Buy — grabbed a piece of the doorbuster promotions by offering “screenbuster” sales online for shoppers who wanted to stay home. The cyber activity spurred a record $595 million in online spending that day, an 11 percent gain over Black Friday 2008, ComScore said. Amazon, Wal-Mart and Best Buy saw their Web site traffic soar more than 20 percent on Black Friday from the year-ago period, the firm said.

There was a time when big brick-and-mortar retailers looked askance at their online divisions, figuring stores should receive most of the company’s resources and attention because they generate the bulk of the sales. No longer. Traditional chain stores are starting to recognize what Amazon long has known: The benefit of an online store reaches far beyond the dollars generated by selling merchandise.

Websites are a treasure trove of information about shopping behaviors and purchasing preferences. Retailers can track what each customer buys and use that information to target discounts and suggest products, said Lauren Freedman, president of E-tailing Group Inc. in Chicago. “At the end of the day, everyone is afraid of Amazon because they are so aggressive from a technical standpoint,” she said. “They own all this information on the (shoppers), so they have the ability to market based on buying patterns.”

Online data firm Forrester Research said the Web influenced $937 billion in U.S. store sales in 2009, a figure projected to reach $1.3 trillion by 2013, or about one-third of total retail sales.

“I know this is an overused phrase, but it really is a perfect storm,” said Sucharita Mulpuru, retail analyst at Forrester. “People want to find the cheapest products. Most households have broadband, and there are a lot more devices with access to the Web.”

As the price war between Wal-Mart and Amazon escalates from books to a wide range of goods, the smaller e-merchants are in for a challenging year, said Howard Jackson, president of HSA Consulting.

“It reminds me of the cola wars where Coke and Pepsi won and everyone else lost,” Jackson said during a Credit Suisse-led conference call Tuesday on the state of the e-commerce industry. “That may be ultimately where the game goes. The question then is, how long does it take to get there and what happens in between? Which I think is the magic of 2010.”

smjones@tribune.com

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