According to a survey, 50% of B2C web sites are profitable. The
report claims that of all the web sites surveyed (B2B, B2C and
content-only sites), just over one-third are currently profitable,
but overall, 60% will be within 12 months.
ActivMedia Research observes that one reason why few on-line
firms are making a profit is the relative newness of the internet
as a commercial medium. The company said in a statement:
"On-line firms have not had much time to
make the necessary investments to be profitable. Many have
conducted business off-line and know how to run a profitable
business, however few have equivalent experience selling on-line.
They are fast realising that selling on-line is not quite the
same."
The report claims that:
- One in three B2B e-tailers are currently profitable, and
another one in three expect to be profitable in the next few years.
However, a substantial proportion don't intend to be profitable
since their web sites are marketing communication vehicles.
- Half of today's B2C e-tailers are profitable because they are
the most active web sites in terms of directly selling products and
services to customers on-line.
- One in four On-line Content firms are profitable, but most
expect to show profits over the next couple of years as the market
matures.
- Only one in four Internet Services & Support firms (ISPs
and ASPs) are profitable, but they have hopes for the future.
Burdened by heavy competition online, they are particularly
affected by other media that offer internet access along with other
services.
ActivMedia Research's VP of Market Research, Harry Wolhandler
rejects the claims of many of today's analysts. Wolhander said:
"Many analysts report that the greatest
e-commerce success is among the most known dot.coms. I disagree.
On-line successes are instead found most broadly in the mid-sized
business arena where companies with in-place businesses
increasingly capitalise on their extended communication
capabilities.
"High-flying dot-coms are forced to expend
resources on building a business backstage to accommodate the high
level of sales that they generate. As long as they are experiencing
stratospheric growth it will strain their ability to grow. They
will not begin to effectively accumulate cash until growth slows to
more modest, steady levels. The challenge for them will be to
remain standing when online markets mature five or ten years from
now."
The survey was based on research into 1,013 companies of which
69% were from the US and 6% were from the UK.
