Will the Web Deliver on Its Promise of Fortune?
Survey results show that retailers haven't yet struck it rich
by Noelle Backer
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The Gold Rush of the 21st Century: Will the Web Deliver on Its Promise of Fortune? Survey results show that retailers haven't yet struck it rich by Noelle Backer |
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CHARTS |
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Click on a link below to view the chart. Charts will open in a new window. |
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Number of Store Locations: Number of Years in Business: Gross Annual Sales: Wholesale vs. Consignment: Best-selling Price Points: Style of Crafts Sold: *Other was not a category on the survey, however, 6.1 percent of retailers who mailed their responses in (rather than submitted them electronically) wrote in a non-listed category. Rather than discount these responses, we entered them as "other" in the data collection process. |
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* Web site plus retail location: 37.8% * Featured on someone else's Web site: 9.8% * Both of above: 12.2% * No Web presence, but has plans for one: 22% * No Web presence, no plans for one: 13.4% * Store exists online only: 4.9% |
THE SHAPE OF THE CRAFT FIELD'S FUTURE ONLINE IS NOT ONLY OBSCURE AT THIS POINT, BUT COMPLETELY SUBJECTIVE. WHERE ONE SEES A MARKET OF UNLIMITED POTENTIAL, ANOTHER SEES A DEAD END FOR CRAFT SALES.
RIGHT NOW, FOR RETAILERS, THE WEB'S POTENTIAL IS STILL JUST THAT -- POTENTIAL, ACCORDING TO THE RESULTS OF "ARE CRAFT RETAILERS BUYING AND SELLING ON THE INTERNET?," PART II OF THE CRAFTS REPORT'S ONLINE CRAFT SALES SURVEY. MANY RETAILERS ARE SUPPLEMENTING THEIR SHOP'S ANNUAL SALES WITH ONLINE SALES, BUT NONE HAVE STRUCK IT RICH JUST YET.
Like craft artists, some retailers who are spending nothing are making money online, and some who are spending money are making nothing. So what's the point of even trying if it's such a gamble? Many retailers and artists might be asking that question, but they're going online anyway.
Almost two-thirds of the craft shops and galleries surveyed are currently online. Of those, two-thirds have gone "online" in the last two years. (See "Length of Online Presence".) Of those with no Internet presence, nearly two-thirds have plans for one in the future.
Why? The Gold Rush comes to mind. It is not such a stretch of the imagination: Unexplored territory ... the promise of possibly finding your fortune.
According to a recent survey by the National Retail Federation and Forrester Research, Inc. (an independent Internet research firm), 15.5 million households shopped online in September 2000. Yes, in one month. They spent a total of $4.2 billion -- an average of $272 per person. And this number actually represented a slight decrease in total spending, but an increase in the number of shoppers.
Online commerce revenues are predicted to reach $65.6 billion in 2002, according to an e-Consumer Shopping Report by eMarketer.com, a New York City-based provider of Internet statistics.
Plain and simple: There's gold out there. But will craft retailers find their share? Well, as of yet, they haven't on any grand scale, but they do seem to be seeing traces of gold in their pans.
Nearly 65 percent of retailers are selling direct to the public from their sites, recognizing the recent boom in online shopping.
Of the retailers who have an online presence: More than 13 percent are making between $10,000 and $50,000 online annually, and half of those report between $25,000 and $50,000 in annual online sales. Also, 80 percent of retailers who sell direct from their Web sites are making money. (See "Annual Sales Derived from Online Sales").
Two-thirds of those with an online presence are making less than $10,000 in annual online sales, and a third of those are making less than $1,000.
IF YOU PROMOTE YOUR PANNING EFFORTS, WILL THE GOLD FIND YOU?
According to the survey, big spending on Web site promotion doesn't correlate directly with online income. In fact, there really aren't many big spenders right now. (See "Annual Internet Budget" and "Internet Promotion Budget vs. Online Income".)
A third of retailers spend nothing on online promotion, and another 40 percent spend less than $1,000 annually. More retailers who spend less than $1,000 promoting their online presence say they make more than $25,000 online in a year than those who spend more than that.
IF YOU STAND IN THE RIVER LONG ENOUGH ...
Part I of the online craft sales survey (TCR January 2001) showed that those artists who were online the longest were making the most money. Maybe because they stuck it out long enough to reap the benefits. Maybe they stayed online because they were making money.
Regardless, for retailers, the signals are slightly crossed. Those who have been online the longest (more than five years) report making the least in online income; however, none of them report making nothing. (See "Length of Presence vs. Online Income".) Retailers who have been online almost that long (three to four years), however, are making more money; in fact, those retailers are the only ones making more than $25,000 online. Most retailers who have been online for only one or two years are making between $1,000 and $10,000.
DO THOSE WITH BIGGER PANS PAN MORE GOLD?
It doesn't seem to matter what your annual sales are offline. As shown in the "Gross Annual In-store Sales vs. Annual Online Sales" chart, 66.7 percent of retailers with annual in-store sales of more than $400,000 report making between $10,000 and $24,999 online; at the same time, no retailers with this level of annual in-store sales report online revenues over $25,000, while retailers with lower annual in-store sales do.
Across the board, retailers with annual store sales of less than $75,000 make more online than those with annual store sales between $75,000 and $149,999.
KEEP ON SEARCHING
Despite its unpredictability and unclear future in this field, the covered wagons are heading out on expeditions as fast as the forty-niners headed for California in their quest for gold. For now, we'll just have to wait and see how things pan out.
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About the Surveys
Part I of TCR's survey, "Are Craftspeople Making Money on the Internet?" is available online at www.craftsreport.com/january01/2000artistresults.html. The Crafts Report's Internet Survey Series, Part I and II, were conducted by The Crafts Report staff. The objective of the surveys is to provide current information about craft sales on the Internet to artists and retailers. The scale of the surveys is believed to provide a fairly representative sample of artists and retailers, although the artists' portion of the survey is based on a larger, more representative base of respondents. For more information about the methodologies of the Internet surveys, visit our Survey Methodologies page. |
Noelle Backer is editor of The Crafts Report.
Copyright© 2001
APRIL 2001: TABLE OF CONTENTS