1999 Net Revenue May Exceed $36 Billion

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Revenue from online retailing is expected to grow 145 percent in 1999, topping $36 billion by the end of the year, according to a report released yesterday by business strategy firm Boston Consulting Group.


The agency studied actual 1998 retail revenue data from 328 cyber-retailers to determine growth in the industry last year as well. It found online revenue reached $14.9 billion last year, accounting for about 0.5 percent of all retail sales. Online orders rose 200 percent and the ranks of online Net shoppers jumped 300 percent.


Boston Consulting carried out the study for Shop.org, a trade association for online retailers. The 1999 market projection was based on a study of Shop.org members, plus data from publicly held Net companies and estimates on the size of other retailers.


The report said the majority of online retailers also operate in brick-and-mortar, catalog and other channels. However, so-called "pure-play" retailers who sell only through the Web dominate some product categories such as books, music and videos, automotive goods and the collectibles sold through auction sites.


Retailers plying their wares in both the traditional and virtual channels dominate online sales of electronics, apparel and computers; they also dominate online stock brokering. The report cited existing brand recognition as the main advantage enjoyed by multi-channel players.


The report found that Web-only retailers typically pay $42 for each customer, considerably higher than the $22 multi-channel merchants spend for each patron.
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