Beating the Odds?

As online retail sales slow, apparel may be bucking the trend

It seems that the rapidly accelerating growth of online retail sales may be slowing.

Amazon.com, the online selling superstar, last month posted quarterly earnings that fell short of Wall Street forecasts. The company’s core products—the books, CDs, DVDs and similar media commodities that had established its meteoric growth— showed the greatest deceleration. Amazon did not break out numbers for its most recent additions, apparel and electronics, so it remains to be seen if apparel, now the second-most popular online retail sales category overall, will follow.

Revised estimates anticipate online retail sales will grow 27 percent to $144 billion in 2004. This pace of growth marks an unanticipated slowdown from last year’s robust 51 percent increase, according to an annual industry report recently released by Philadelphia-based Shop.org, the members network for online and multichannel retailers formed in partnership with the National Retail Federation in 2000.

The report states that although slower online growth is expected, “apparel [is still] seen as strong.”

“Consumers continue to expand their online buying into new product categories as they become more comfortable shopping online,” said Carrie Johnson, senior analyst with Cambridge, Mass.–based Forrester Research Inc., which conducted the study for Shop.org.

The Shop.org report projects apparel will be the top-performing category, with an increase of 42 percent this year. The study also states that 79 percent of all e-tailers were profitable in 2003, up from 70 percent in 2002. Apparel purveyors such as Delia’s, International Male and Big Dogs and such majors as J.C. Penney Co. Inc. and Federated Department Stores Inc. are prospering in the current online milieu.

The success of online apparel retailers may be caused by what has become an old adage by now.

“Bricks-and-mortar retailers are bolstering efforts to integrate channels, and they have also gotten serious about cross-promoting channels,” Shop.org Executive Director Scott Silverman said. “Retailers understand that in a multichannel environment, each channel has unique strengths and benefits. We are beginning to see retailers crack the code of maximizing each channel so that the whole is greater than the sum of its parts.”

For some, this lesson has been a tough one to learn. Many companies trying out manufacturer-direct sales to the consumer, initially thought to be another wild new Web bonanza, have hastily pulled back or regrouped their efforts. Levi Strauss & Co. tried manufacture- direct sales in 1998 and 1999 and then withdrew from the logistical nightmares and slower-than-anticipated sales that resulted. By letting retailers do what they do best, Levi’s enjoyed a quadrupling of online sales from 2000 to 2003 and is continuing to experience strong online sales through its partnerships with companies such as the Kohl’s Corp., JCPenney and Macy’s, which operate user-friendly Web sites.

Site Review: MAGIC Online Redux

Watching the many incarnations of MAGIC International’s Web site, www.magiconline.com, since its inception in 1995 has been as much of a trip as the biannual trek to Las Vegas, where the massive trade show is held.

The Web site started small, got bigger, became an industry-wide mega B2B portal, downsized, and now is back to a realistic and practical scale again.

In the early days of the Web, the site was simple and straightforward, presenting exhibitors and attendees with a pressroom and contact information.

As MAGIC became associated with other shows, the site added them to the mix. Then, in late 2000 and early 2001, at the very peak (and quickly tail end) of the Internet bubble, MAGIC’s site became much more than a promotional channel supporting the trade show. It attempted to become a self-described 24/7 apparel sourcing trade show in and of itself and—as if that were not enough—a worldwide wholesale B2B transaction center, marketplace and industry news portal. It was a brave new Web site, groundbreaking and cutting-edge by any standard.

The only problem: Building it did not mean they would come.

The newest incarnation of MAGIC online, created by New York–based Plot Design, is beautiful and appropriate. Through well-adjusted Flash-animated navigation features and clear-cut organization, it does everything a great trade show site can do.

Exhibitors and attendees will enjoy the informative 3-D floor plans of the vast show complex (downloadable via PDF format). Applying to exhibit or attend is easy and convenient.

MAGIC and a host of satellite shows are set to descend on Las Vegas—not just virtually but actually—Aug. 30–Sept. 2.