Academic journal article The McKinsey Quarterly

The Numbers Behind On-Line Profits. (Snapshot)

Academic journal article The McKinsey Quarterly

The Numbers Behind On-Line Profits. (Snapshot)

Article excerpt

Thousands of Internet retailers, undone by their own flawed business models, have closed shop during the past three years. But not every such company shut its doors. A 2001 McKinsey study of more than 120 Asian, European, and North American e-tailers found that 19 percent of them were profitable, because they have pursued one of three winning strategies: niche sites offer expensive goods, such as certain luxury items, specialty foods, or apparel; dominant sites have a disproportionate share of the traffic for low-ticket goods (such as compact discs and books) or travel-related items; and in-the-middle e-tailers use a very strict cost-efficiency strategy. (1) The best niche sellers spend more money on marketing and reap higher margins per transaction than do companies in the other two categories, while successful dominant sellers focus on attracting traffic. In-the-middle sites ruthlessly manage customer-maintenance costs. All three groups focus on converting visitors into customers. Aspiring companies in each category can use the key benchmarks below to assess their performance. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.