Profits in store for e-supermarkets.
| Author | Kinsella, Rebecca |
| Position | Research by E-Insight - Brief Article - Statistical Data Included |
Leading on-line food retailers should start to make a profit by 2005, but they will have to invest heavily to beat off foreign competition and maintain market share.
Tesco and Sainsbury's should start profiting from their internet shopping divisions by 2005, but only if they commit even more investment. In the meantime, further losses are inevitable.
According to research by consultancy E-Insight, business-to-business (B2B) exchanges will thrive in food-related markets as consumers put a higher value on ease and convenience. Experts predict that the on-line market will grow to 30 billion [pounds sterling] by 2008 and this is likely to trigger fierce e-commerce price wars.
The report concludes that US and European e-commerce supermarket brands are likely to launch in the UK, but Tesco and Sainsbury's will be strong competition. Tesco is expected to emerge as the on-line winner with around 8 billion [pounds sterling] of UK sales by 2008.
Neither supermarket has yet reached the top 10 of global retailers -- US-based Wal-Mart dominates the list of the world's top 100, ranked by 1999 sales, according to research by PricewaterhouseCoopers. But Tesco (at number 15) and Sainsbury's (at 22) have the potential to take more of a share of the global market. Of the global top 100 retailers, 70 per cent now have transactional websites, suggesting that e-commerce could be the key to future success.
It is no surprise that Wal-Mart once again dominates the list of the world's top 100 retailers. What is unusual about this year's list is the global emergence of US retailers, the deceleration of globalisation and the differences between the growth strategies of the fastest growing US and European retailers.
The 1999 top 100 retailers worldwide list, compiled and analysed by PricewaterhouseCoopers, indicates that, while US-based retailers tend to be the biggest (seven of the top 10), large European retailers are more global, have a strong incentive to invest in new markets and are becoming more cosmopolitan than their US counterparts. And e-commerce is set to play a key part in their growth.
"On-line net profits should start to come good for...
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