Brick-And-Mortars Deliver E-Profitability
To see the new face of online retailing, look at Office Depot, which launched its Web site in 1994 and company officials say was profitable from the start.
The Delray Beach, Fla., office supply chain is on track to do $1.5 billion in sales on the Internet this year, said Monica Luechtefeld, Office Depots executive vice president of e-commerce.
"We spent a little bit more time and put in the sweat equity in the beginning to create a profitable Web business," Luechtefeld said. "Were part of a publicly traded company. We dont have any venture money behind us and, at the end of the day, we have to make money."
Specific Web earnings numbers are not available.
Office Depot is not alone. As the unprofitable dot-com retailers close up shop, more and more established companies with multiple shopping channels, such as stores, catalogs and Web sites, have gained market popularity with consumers shopping online.
Barnes & Noble, Dell Computer, Gateway, J.C. Penney, Nordstrom, Sears Roebuck and Co. and Staples are all among the top 20 online retailers and they continue to climb the list, displacing pure dot-coms as they expand their Internet presence. Thats because, despite high-profile failures like eToys, Garden.com and Pets.com, online retailing is growing dramatically.
U.S. online retail sales will reach $104 billion in 2005 and $130 billion by 2006, up from $34 billion in 2001, according to Jupiter Media Metrix, a New York Internet research company.
"While short-term market factors have slowed the pace and shifted the playing field toward multichannel retailers, the long-term outlook is still positive," said Heather Dougherty, an analyst at Jupiter.
Nordstrom, the upscale Seattle shopping store chain, created a separate company Nordstrom.com to handle its online sales. The site had an estimated $310 million in sales last year with 554,000 unique visitors each month.
"The Internet is a great way for us to provide customer service and receive direct feedback from customers," said Julie Bornstein, Internet general manager at Nordstrom.com. "Its also a huge source of growth for the company and it deepens our market penetration."
Its expensive for Nordstrom to open a new store, but the Web allows the company to reach customers nationally and internationally who normally wouldnt have easy access to a store, she said.
Lands End, a casual clothing retailer based in Dodgeville, Wis., racked up $220 million or 16 percent of its overall sales of $1.3 billion on the Internet last year, up from $140 million in 1999, said Bill Bass, the companys senior vice president of e-commerce.
"This is not a bloodbath," Bass said. "This is good news."