Online retailing moves closer to profitability

12 June 2002 Despite the dot-com crash, online retailing is booming, according to a new report from the Boston Consulting Group and Forrester Research. They found that in 2001, 56% of US-based retailers recorded a profit from their online operations, against 43% in 2000.

According to the report, shoppers spent $51.3 billion (€54.2bn) online in 2001 – a year-on-year increase of 21%. Consumer spending over the Internet is expected to reach $72.1 billion (€76.2bn) in 2002 – a rise of 41%.

Multi-channel and mail-order catalogue retailers were the most successful, as the US online retail market as a whole moved closer to profitability. The US ‘e-tail’ sector is on track to achieve break-even on operating margins in 2002, according to the survey.

“Consumer adoption of the online channel has reached critical mass, and retailers have been able to respond by turning this trend into profits,” said chairman Elaine Rubin. She added that this was particularly encouraging since “a weakened economy” dominated 2001.

Many of the most ambitious ‘e-tailers’ that rose during the dot-com boom – such as eToys and – went out of business in 2000 and 2001, helping to weed out the weaker players. The bulk of online sales no longer comes from specialist web-based distributors such as, but from retailers that can combine catalogues and/or bricks-and-mortar stores with a web presence.

The research was conducted on behalf of, the online retailers association.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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