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What Are They Selling?

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Let's take a quick look at the largest online retailers. In a "normal" ad environment, their fortunes would impact ad rates and inventory directly. We're not in that marketplace here, yet it's still important to share performance stats about these big spenders.

Internet Retailer just produced their 2006 sales tallies. Nearly $84 billion came from the Top 500 retailers alone, reflecting over 21% growth versus last year. They reported under $19 billion from smaller retailers, and another $34 billion from eBay.

Among the largest retailers, product categories tell more interesting stories.

* Volume changers: Apparel & Accessories jumped from 10.2% to 11.9% of total sales. Computers & Electronics decreased from 25.6% to 23.6% of total sales.

* More competitors: Some 12.4% of the top retailers offer Housewares & Furnishings, and only contribute 3.9% of total sales. Likewise, Non-Apparel suppliers represent 13.6% of top retailers and 3.7% of total sales.

* Smaller contributors: Categories which sell the least include Flowers & Gifts (1.5%); Hardware (1.4%); Jewelry (0.9%); Sporting Goods (1.5%), and Toys & Hobbies (1.2%).

* Larger contributors: Categories which sell the most include Computers & Electronics (23.6%); Mass Merchandisers & Department Stores (26.8%); and Office Supplies (14.7%).

What does this all mean? Deep-pocketed suppliers impact the ad market. The sheer number of direct competitors matters. However online players know that products, brands, prices and seasonality all impact the outlook as well. We could use a few strong economists to guide the way.

June 10 Update: eMarketer announced its E-Commerce Study which projects annual growth dropping from 24.7% in recent years, down to 17.5% annually through 2011. The growth in online buyers also decreases from 11.8% to 3.5%. These projections mean that retailers can't just rely on marketplace expansion -- and will need to advertise more aggressively.


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