In the middle of last year (June 2001), Amazon.com made headlines by announcing that they were going to offer free shipping and handling for any purchases over $99. Is this a trend for the future? Maybe…but only for the rich.
While Amazon’s offer brought millions of dollars worth of publicity to the company, not too many of us regular ecommerce website owners can afford to offer free shipping and handling. The latest issue of eMarketer’s “eCommerce: B2C & Demographics” emphatically states that shipping and handling is a “sizable” business expense. The online metrics company, Jupiter, stated that 45% of ecommerce website owners loose money on shipping and handling.
In fact, according to eMarketer’s eStatNews of 25 January 2002, only 4% of websites offer unconditional free shipping. A larger number (30%) offered conditional free shipping. From the merchant’s perspective, determining factors for free shipping has been amount of money spent (66%), specific items bought (27%) and if they used a particular credit card which the seller had co-branded (7%). When the merchants do charge for shipping, most base the cost on the order size (54%), while a substantial number (30%) figure the cost depending on weight. Well, this seems to make sense. However, how do customers feel about the shipping and handling policies of merchants? According to Jupiter Media Metrix, 46% percent believe that weight should be the determining factor of shipping and handling costs. Even more interesting a finding, only 10% of consumers feel that price and the size of the order should be the determining factor of the costs. When Vividence Corp. did their survey of why shopping carts were abandoned, the top reason was HIGH SHIPPING PRICES (72%) Furthermore, when Direct did their survey in September of last year regarding why shoppers don’t shop online, their top reason was also HIGH SHIPPING PRICES (59%) Note: In a good common-sense move, 83% of website owners, used the list of people who bought products from their site as a targeted list to which they sent promotional information.
Sources:
eMarketer.com
Jupiter Media Metrix
Vividence Corp
Direct
e-tailing.com
Who Spends the Most Online (average spent per month) in 2001:
At-work buyers spent $229
At-home buyers spent $165
college buyers spent $146
Source:
emarketer.com
Smart Innovative Ideas: eBay
eBay, the huge online auction initially had problems selling their cars and car parts. Lately, however, sales from the site total around 2 billion dollars.
Here are some ideas they implemented to keep their sales figures up:
1) Warranty Protection
Protection against buying a lemon from their site. If you buy a car that has less than 125,000 miles on it, eBay’s warranty will protect it for one month or 1,000 miles after purchase.
Cars not included in this program are: Ferrari, Aston Martin, Acura NSX, Dodge Viper and Honda’s Insight.
2) Free Insurance Program (With Limits)
If you pay for a car that wasn’t delivered or was substantially different than what was advertised, eBay will reimburse the buyer up to $20,000 with a deductible of $500
3) Vehicle Inspection Service for $99.95 USD
The inspection will take place within two days after purchase at the seller’s home or office.
Source:
CNET News.com
January 29, 2002
Q: Other than porn, what is one of the top online business to be in today?
A: Travel
Venture Capital
What are the trends for venture capital firms?
There seems to be some conflicting opinions by the “gurus.” However, what seems to be clear is that venture capital funding, which started drying up two years ago, is slowly coming back.
Less and less money has been invested into startups since the early part of 2000. Most of the dips have been pretty significant. However, the fourth quarter of 2001 gave hope as the dip was relatively slight (4%). To many pundits, this means that 2002 will end up with $25 million invested into startups by VC firms. This is more than the $17.6 billion invested in 1998, but much less than the craziness of 1999 when more than $47 billion was poured into new companies.
On the flip side of the coin, the January 25, 2002 article from CNET called, What’s Ahead for Venture Capital?, started off by saying that The Barksdale Group, started by Jim Barksdale (founder of Netscape), was a high-profile $180 million venture capital company which closed down. They used that example as a sign of the times.
Well, although this is coming from the highly respected CNET site, I wouldn’t have used the fromer Netscape CEO, Jim Barksdale’s VC fund as the example. Barksdale, is well known to be a person who starts companies, tries to get them successful and then sells out for a profit. The last I knew, Barksdale had started eight companies like this. It is quite possible that Barksdale just wasn’t making the profit which he hoped for and just closed the doors. He is not one who I would call a reliable pillar to gauge the truth of where the venture capital industry is at this time.
Lately, there have been several companies who have been pretty happy with the venture capital funds they have received. Two of these are the San Francisco-based, Quiver and the Sunnyvale, California-based MontaVista Software.
Quiver raised $5 million bucks in its third round of funding, which brought its total up to $22 million. Their investors included LMS Capital, El Dorado Ventures, Hummer Winblad Venture Partners and Partech International.
MontaVista Software has raised $28 million in a third round of funding from IBM, Sony, and previous investors U.S. Venture Partners, Alloy Ventures, Intel Capital, RRE Ventures and WR Hambrecht This has brought their total up to over $60 million.
Sources:
VentureOne Corp.
Sfgate.com
News.com
Today’s article is an in depth investigation by Murdok’s very own Peter Thiruselvam. We’re proud of his latest work, and think it will be useful to our Internet community.
