Felony charges filed in fatal Tesla Autopilot crash Microsoft to buy Activision Blizzard for $68.7 billion Free COVID-19 test kits US to give out 400 million N95 masks Lord of the Rings: The Rings of Power prequel series Wordle explained

Study: retailers remain unready for online sales

Many traditional retailers and consumer product manufacturers aren't yet online and many more have not designated anyone to lead their e-commerce efforts, a consulting firm says.

Despite the growth of e-commerce, many offline companies remain unprepared to compete on the Internet, according to a new study.

The report, to be released tomorrow by consulting firm Deloitte & Touche, finds that more than four years after Amazon.com popularized selling books online, many traditional retailers and consumer product manufacturers still lack a Web presence and many more have not designated anyone to lead their e-commerce efforts.

The results could be catastrophic for "brick and mortar" companies, said Steve Riordan, national director of e-business for emerging strategic clients at Deloitte & Touche. Consumers have begun to expect to shop at their favorite stores online, and because of their experience with companies such as Amazon.com and eToys, to expect to be able to track their order status.

"We believe the entire retail industry is at risk," Riordan said.

The study comes on the heels of a record online holiday shopping season, punctuated by miscues. Although many "pure-play" e-tailers turned in banner sales results, retail giants such as Wal-Mart, Best Buy and Home Depot were largely shut out because of delays in launching their Web sites. Meanwhile, other traditional companies such as Toys "R" Us struggled to fulfill online orders and keep their Web sites up and running.

Those firms aren't alone in struggling with their Internet strategies, according to Deloitte & Touche, which markets consulting services to such companies. The study, which surveyed 400 traditional retailers and consumer goods manufacturers, indicates that even among those companies which are online, many haven't clarified their strategy or how they expect to compete with Web-based businesses.

Among the study's findings:

  • Only two-thirds of survey respondents have Web sites. Only about one-fourth of respondents are selling online.

  • Of the companies that have Web sites, 31 percent said their sites have no "strategic purpose." Another 4 percent said they couldn't articulate their strategic purpose.

  • More than 50 percent have not organized their online efforts. Only 14 percent have spun off their e-commerce business into a separate company, division or department.

  • Of those companies surveyed that are selling online, 46 percent are fulfilling orders from the same distribution centers they use for their brick-and-mortar stores and 30 percent are fulfilling orders directly from their store shelves.
Moreover, while traditional companies have struggled to figure out how to sell online, pure-play e-tailers have pressed forward, inventing and reinventing business models, Riordan said.

"The good news is that if you are a traditional retailer, you aren't that far behind your traditionally defined competitors," he said. "The bad news is there's no easy fix. It's going to take a lot of heavy lifting: investing in technology, evolving your business model, developing multichannel sales."

Interestingly, Riordan said only a handful of the pure-play companies will succeed in the long run.

In the meantime, however, they are already having a huge effect on offline retailers and manufacturers. For example, the shift in consumer spending to online retailers could hurt offline companies that are weighed down with long-term fixed costs such as store leases, Riordan said.

In the end, the companies that will succeed will have both online and offline strategies. "The strongest players will be the established companies that effectively transform themselves," Riordan said.

The study's results hold for the general population of traditional retailers and consumer good manufacturers, Riordan said. The study has an error margin of 4.63 percent.