A Dynamic Moment for E-tailing

When they write the definitive history book about the evolution of electronic commerce, 2001 may emerge as a pivotal year in the industry’s growth.

That may sound surprising, particularly since the year so far has seen a bunch of dot-coms dying on the vine, not to mention general skepticism among consumers, investors and industry observers as to where and when growth will begin again.

Yet despite the naysayers, this year has seen a series of dynamics that could spell success in the long term.

Even this week, in the midst of the nation’s tragedy, the dynamics continue. It started with Yahoo! (Nasdaq: YHOO) announcing September 17th that it was repurchasing almost 5 million shares of its common shares from Softbank.

Buying In

Yahoo! stepped in as soon as the U.S. Securities and Exchange Commission (SEC) loosened its restrictions on such purchases. Although the buy represents only a miniscule percentage of the company’s outstanding stock, the move was symbolic on a number of levels.

First, the company showed strength and confidence in itself. Further, Yahoo! was among the first to lead the way in buying American, a move many say will bolster the economy.

A number of other tech and e-commerce companies made similar buybacks, including E-Trade (NYSE: ET)and Priceline (Nasdaq: PCLN).

Dealing Around

On another front, e-commerce giant Amazon.com (Nasdaq: AMZN) and retail leader Target revealed their intention to form a partnership. Although both companies remain mum about the details and financial terms, chances are Wall Street will respond favorably.

For Amazon, the deal portends a greater move into mainstream America, because Target is firmly entrenched in middle America. This year Amazon also struck deals with household-name retailers Circuit City and Borders, among others.

For Target, the move signals its recognition that the online channel is worth a corporate investment of money and time.

Picking Up

To the tune of about US$14 million, Global Sports (Nasdaq: GSPT) has continued its expansion with the acquisition of luxury Web merchant Ashford.com.

Ashford, struggling to secure its footing for some time now, was on the verge of being delisted by the Nasdaq, but now finds itself bailed out. Consumers, meanwhile, will have more time to develop their taste for online luxury goods, if Global Sports maintains the e-tailer’s current business model.

Even more promising than the purchase was Global Sports’ announcement that it would tap the best of Ashford’s staff to boost other Web sites that sell luxury items.

The decisions made by Global Sports are a major vote of confidence for the online luxury sector. Global Sports apparently believes that luxury has a place among Web merchandisers, and simply needs more time to grow.

Laying Low?

Now, as the calendar winds down for 2001, the big question mark for e-commerce concerns the near future of consumer behavior.

A number of observers believe shopping malls may see lighter traffic in the coming holiday season and online buying may experience a resurgence. The terrorist attacks have caused noticeable attitude shifts over the past several days, and some expect consumers to spend more time in their homes for the foreseeable future.

Might that lead to a stronger showing for online retailers during the holiday shopping season?

Capitalizing On

If it does, no one should mistake the upswing for the online sales community capitalizing on tragedy.

If anything, a strong showing among e-tailers could be one more necessary boost to an extremely tenuous economy. This is a time when the online community can truly make a contribution to the American culture, and by all indications it is rising to the occasion.

At a time when the national battle cry has become “Buy American,” American Web merchants could well lead the way.

What do you think? Let’s talk about it.


Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


2 Comments

  • My best guess is that given recent events, the decrease in consumer confidence (which will certainly go even lower), and the recession that is inevitable, there will be a significant decrease in spending online. Say 10%.

    The biggest pure-play retailers are Amazon, Travelocity and Expedia. Amazon will certainly see decreases in sales given their products compete with the large discount retailers, who now have much improved online pressences. Not much chance to meet the EBITDA promise made by Jeff, unfortunately. Travelocity and Expedia will do very poorly due to the massive decrease in travel spending.

    Most of the rest of the public pure-play crowd – Bluefly, Alloy, GlobalSports, FTD, etc… – are just too small to really matter at this time. The private pure-plays – well, unless they are profitable, this could be it for many of them.

    That leaves the rest of the e-tailers being brick-and-clicks. Their businesses are fine – they are just getting their feet wet online, so a decrease in online sales (which they will experience as well) will not be a big deal to them.

    What is the take away? This holiday is going to be much worse than e-tailers predicted, and this is going to further injure the pure-plays and hasten the ascent of the brick-and-clicks.

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