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RealTime IT News

Mercer Study Yields Potential Net Profits

A new study Monday tore a hole in the theory that e-commerce will take a toll on the bottom lines of "brick and mortar" companies.

Conducted by Mercer Management Consulting, the report concluded that the Internet can stimulate consumer spending and lead to more customer loyalty.

It is believed that companies who develop a strong client base should see significant profits.

According to the report, consumers who become more experienced online are more likely to go to their favorite e-commerce site rather than through a portal.

It also said "clicks and mortar" business designs -- companies that have both an online and conventional presence -- may play an important role in the future.

"Although our study indicates profitability is possible on the Internet, simply being online is not enough," said Richard Christner, a Mercer vice president.

"We found that the potential benefits of the Internet are likely to elude companies that fail to create customer loyalty by anticipating changing customer priorities."

The study found that 38 percent of online book purchases said they buy more books than they did prior to using the Internet and 31 percent of online investors reported that they buy more stocks, in number and dollar value of trades, than before.

However, not every e-commerce venue is a sure-shot. While online book purchasers pledged greater loyalty to their sellers than their offline counterparts, online investors are more likely to switch online brokerages in a one-year period.

Twenty-four percent of online book buyers are likely to stick to their online sellers while only 8 percent of offline purchasers remain loyal.

Conversely, 15 percent of online investors are likely to switch brokerages compared to a 4 percent switch by offline traders in one year.

Also, the study indicated that corporate giants could be in for a rough ride as 61 percent of experienced consumers bypassed portals like Yahoo! (YHOO) and Internet service providers such as America Online (AOL) in favor of investment tracking sites as opposed to 35 percent of users with less than a year of experience.

This suggests that users who become more comfortable with navigating the Net may need these services less and less as the industry grows.