Online computer sales soaring

Online computer sales soaring

Recent analysis from Internet research company www.consult confirms that online sales are growing at a rate that can only be described as alarming by those who are not playing, or positioning to play, in the market.

Chiko Wong, analyst manager with Internet research company www.consult, told ARN its research showed that business-to-consumer online sales would generate in excess of $920 million in the 1999 calendar year. That grew by just under 400 per cent over the previous 12 months from $253 million and predictions claim sustained growth will continue with revenues topping $10 billion by 2001.

Wong said all the indicators are showing that 'the trend should continue' in the next few years and that growth would be 'exponential'.

Travel, books, music and computer products were the biggest sellers online at this stage, according to Wong. Meanwhile, research shows that the current buyers are generally experienced Internet users and traditional 'early technology adopters'.

Brendan Walsh, marketing director with PAW Products, a catalogue retailer that has successfully set up on the Web, concurred that sales are on the rise. About to celebrate its second birthday of e-commerce, he said sales are 'strong and getting stronger' but there have been a few hindrances along the way.

Sales and Web site traffic increased nearly 600 per cent from the first 12 months to the second, he said.

'We are a little behind where we wanted to be with some of the Web site features but are fast-tracking at the moment to catch up.

'There have been a few scary aspects to the whole thing at the moment, mainly to do with the banks and how they handle credit card payments. Online fraud is rampant and until the banks play a role in automating authorisation, you still have to have manual checks in place,' Walsh added.

According to Walsh, the lag between an order being placed over the Web and a bank advising that the credit card details used to pay for it were fraudulently obtained can be as much as three months and any financial pain is worn by the seller.

'The way the banks work at the moment, they take none of the responsibility for credit card fraud and that suits them. So for every new client that comes in, you have to be very careful,' Walsh said.

This, he says, spells danger for those operating on a low margin as one returned expensive item can negate a lot of low-margin sales. This also demonstrates why repeat customers are so important to online businesses. Once you have established their bona fides it is far easier to do business with them, according to Walsh.

'[Fraud] is a major stumbling block and because the banks aren't really affected by the problem, so it is going to get worse before it gets better,' Walsh said.

'The advantage of us coming from a mail-order heritage is that we already have the checks and balances in place to ensure we minimise the impact of credit card fraud, but they are manual processes.'

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