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50% of B2C e-commerce websites are profitable
[March 13th 2001]
Many factors impact profitability online, and B-to-C Web companies know the secrets. Today, 50% are currently profitable. E-marketers that identify key profitability drivers are in a position to maneuver out of the red and into the black. Of all Websites participating in ActivMedia Research's online success survey, just over one-third are profitable, but overall, 60% will be within 12 months. Nevertheless, profits are elusive for many online companies today.
One reason for so small a portion of online firms making a profit is the relative newness of Internet commerce. In a series of reports detailing "Online Success" ActivMedia Research identifies parameters by industry (B2B, B2C, 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 lead to success by industry:
- One in three B-to-B e-tailers are profitable, and another one third expect to be profitable shortly. However, a substantial proportion don't intend to be profitable since their Websites are marketing 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 ISP/ASPs are profitable, but they have hopes. Burdened by heavy competition online, they are particularly affected by other media that offer Internet access along with other services.
ActivMedia's VP of Market Research, Harry Wolhandler rejects the claims of many of today's analysts. "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. As long as high-flying Dot-Coms are experiencing stratospheric growth, it will strain their ability to succeed. The challenge for them will be to remain standing when online markets mature five or ten years from now."
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