Many ecommerce firms are relying on agreements with portal sites to attract customers and generate sales but these fashionable Web fronts may not be all they're cracked up to be.
Signing a deal with a portal site such as Yahoo or AOL maybe a quick way for ecommerce hopefuls to pull Web surfers on to their online store but this traffic will not necessarily lead to sales revenue, according to a new report from analysts, Jupiter Communications.
It suggests that only 18 per cent of online commerce in 1999 will be driven directly by the primary portals. That percentage is set to increase only slightly, reaching 20 per cent in 2002.
Around 92 per cent of ecommerce executives believe that so called ?tenancy? deals with portals help drive sales but more than 60 per cent admit these deals contribute less than one third of total online sales.
As a result, only five per cent of these executives said they were "highly likely" to renew their current agreements with portals.
"We think portals do very well for generating traffic," said Fiona Swerdoow, an analyst with Jupiter Communications. "Portals have been very focused on customer acquisition, and that?s fine, but commerce players should start to focus on customer retention."
To ensure customers keep coming back, ecommerce companies will have to create other types of promotion, said Swerdoow. These include ?offline? marketing, deals with vertical portals that address a specific target audience, and so called "affiliate" programmes whereby partners? Web sites provide direct links to the online store.
"As with all things in life, putting all your eggs in the same basket is not the best idea," concluded Swerdoow.
Jupiter Communications is also encouraging ecommerce companies to negotiate a better deal with the portals, for instance by insisting on quantifiable returns.
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