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Online Subs Help Drive e-Commerce Growth: Study

Paid search and online subscriptions are the usual standouts in e-commerce growth so far in 2003, according to Deutsche Bank's survey "Net/net: Internet Insights."

But the survey also notes that several non-traditional categories in e-commerce, such as apparel and home and garden purchases, are generating well over 70 percent of new e-commerce dollars in the second quarter alone. The study said that sales in the "Apparel & Accessories" category are up 42 percent over the same period last year and that "Home & Garden" e-commerce purchases increased by 41 percent.

Overall, e-commerce sales up are 10 percent in the first two months of the second quarter of 2003 compared to the same time last year.

For media companies trying to derive revenue from Internet publishing and production ventures, the report's stats on paid online subscriptions were reason to be optimistic.

"Paid subscriptions are showing significant growth through the first two months of 2Q," up 209 percent year-over-year, Deutsche Bank said. "We expect the key beneficiaries to include Yahoo! through its Personals and premium services offerings."

In its analysis of current trends in the Internet market, Deutsche Bank said "Google will deliver paid listing to AOL Mapquest users, determined in part by use zip codes. As such Google's Adwords is an evolving competitor to CitySearch's local paid listings launched three months ago. Overture is also expected to launch a local paid search service in 2003." Overture's stock price has lost nearly a third of its value this year as it tries to protect other paid search providers from encroaching on its share of the market for paid search revenues.

Citysearch is an operating business of InterActiveCorp , formerly known as USA Interactive. The company has a big investment in online travel which in DB's word "remains the big success story among all categories." The report was bullish on the company, noting that "InterActiveCorp. is best-positioned to benefit from online travel growth via its Expedia and Hotels.com subs."

In addition, to growth in online travel, paid subscriptions and apparel, computer hardware sales online increased by 21 percent, compared with a 6 percent drop in purchases, for the same period last year.

As for its full-year forecast, Deutsche Bank's report said its outlook for 20 percent growth year-over-year is lagging its prior outlook of 28 percent growth consensus. But it also said it expects the 28 percent growth expectation can be achieved through growth in second half online sales of 33 percent.