Online sales for third quarter 1999 rose 160 percent over the same period last year, The Boston Consulting Group reported yesterday.
BCG, which conducted the study in conjunction with trade group Shop.org, projected online retail revenue will reach $9 billion for the period between Nov. 1 and Dec. 31– on track to meet the group’s July projection that sales for 1999 will be $36 billion.
Also, BCG reported, many online retailers expect sales to increase three to four times this holiday season over last year, and plan to spend 40 percent of their total advertising and marketing budgets over the holidays-mainly on print, radio and television focusing on customer acquisition.
The cost to acquire each of those customers increased from $33 in 1998 to $35 in the third quarter of 1999.
With those costs– and last year’s fulfillment-failure stories– in mind, BCG said this year’s survey revealed that many companies have instituted contingency plans for customer service and fulfillment in case their networks become overloaded.
“Online retailers are investing aggressively to ensure they can meet customer demand,” David Pecaut, senior vice-president of BCG. “Our survey indicates that some retailers increased server and fulfillment capacity by five times so they would not be caught unprepared this holiday season.”
Retailers surveyed included those in computer hardware/software, travel, collectibles, books, apparel and sporting goods, department stores, flowers, cards and gifts, music and videos, event tickets, consumer electronics, food and wine, home and garden and toys.