Study: One in three e-commerce firms in the black
Despite a general conception that there aren't any profitable e-commerce companies out there, a new study has found that some of them are making money.
Slightly more than a third of Internet retailers are making a profit, driven by continued market growth for Internet shopping, according to a survey of 412 leading Web retailers by the Boston Consulting Group. The survey, which concluded after last week's market downturn, was part of a study on the overall sector.
The study found that 38 percent of Internet-only companies, 72 percent of catalog companies and 50 percent of brick-and-mortar stores with Web sites are profitable.
The report comes at a time when major players in the market have been under fire, suffering from sinking stock prices and dwindling cash balances.
Even before technology stocks took their tumultuous ride, several Net retailing companies with over-the-top market valuations faced financial instability. Investors have been losing interest in the sector, partly because of concern about profitability and company stability and partly because of fears that interest rates may rise.
According to the study, Internet shopping will grow 85 percent this year to reach $61.1 billion. However, Net retailers face the same challenges as traditional retail stores, including how to sustain customer loyalty, improve order fulfillment and delivery capabilities, and provide a "positive shopping experience."
Boston Consulting Group jointly conducted the study with retail trade group Shop.org.