Well, the brave (and some stupid) venture capitalists and entrepreneurs who made the first stakes in the online world can now (and we’ve already seen this much earlier – via eBay and many smaller online retailers) are now surely vindicated.
The NY Times is reporting that INTERNET retailers killed in the dot-com bust can now scratch a postscript onto their tombstones: “We were right – at least in theory.”
Online retailers executed a sharp turnaround to profitability last year, according to a report released by Shop.org, an industry trade group. The numbers indicate that some of the reasons Web merchants attracted investors during the dot-com boom were not so far-fetched after all.
The annual report, based on surveys of 150 online retailers earlier this year, indicates that merchants generated profit margins of 16 percent last year, compared with losses of 15 percent in 2002. Offline retailers, by contrast, typically generate profits of 3 to 10 percent, according to the study.
Over all, 67 percent of online retailers – those who sell exclusively through the Internet and are still struggling to achieve profitability – reported pretax profits. In comparison, 93 percent of catalog businesses with Web sites and 85 percent of traditional retailers with Web sites reported pretax profits. Although the report also pointed to some potentially ominous signs for the industry, Internet executives not surprisingly chose to accentuate the positives. (full story)
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