Mid-size e-commerce websites profiting most

[April 10th 2001]

A clear indication of success for mid-sized online businesses lies among the three in five profitable ventures whose revenues are between $100,000 and $999,000 during 2000. Nearly half of the remaining sites in this group expect to be profitable within the next 12 months, raising the expectations to nearly four in five profitable businesses within a year.

Naturally, these businesses did not begin at this level - they have risen and earned their way to this point. However, it is also interesting to note that online businesses with $10,000 and $99,000 in revenues are close behind in profitability. Even a third of the very smallest businesses online are profitable now, and another third expect to be shortly.

The largest online businesses, those with 2000 revenues of $1 million or more are still performing well - two in five are already profitable, and another one in four anticipate profitability during 2001. One in five expect profitability eventually, while a final one in six may never be profitable, in part because they were not established to generate profits.

                       Web Business Revenue 2000

                 Under $10K  $10-99K  $100-999K  $1M+

Profitable now      30%        57%       61%      39%
Profitable 12 mths  31%        23%       17%      25%
Profitable 1-5 yrs  25%        11%       15%      21%
May never profit     9%         3%        4%       4%
Not intended to be   5%         7%        3%      11%

Further underscoring mid-sized online profitability, companies with 100 to 499 Internet-generated transactions per month are more profitable than either low-volume or high-volume online companies.

Companies whose transactions occur totally online are substantially more profitable at both mid- and upper-level transaction volumes than those that market online, but handle offline transactions by staff. Companies with smaller transaction volumes see less benefit to profitability from automated online transactions, but they can better ramp up volume through improved marketing and Website promotion than offline marketers.

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