A Break in the Clouds Over E-Commerce

An increase in visits to e-commerce sites - up 35 percent year-over-year in May - has prompted Goldman, Sachs analysts to predict that results for top online retailers should get better from here, with a re-acceleration in year-over-year growth rates in the coming months.

In fact, GS said in an advisory to clients that "we think that the shake-up and capital-constrained environment that characterized 2000 and early 2001 may be abating."

"...Year-over-year comparisons (are) expected to be easier in the second half of 2001, (and) investor sentiment should continue to improve," GS said.

Media Metrix reported that the number of visitors to leading e-commerce companies were up 14 percent in May from the months before.

Amazon traffic was up 34 percent year-over year and up 4 percent from April to 20 million visitors, according to the May traffic figures from Jupiter Media Metrix. eBay traffic (including its Half.com fixed-price unit) was up 59 percent year-over-year and 4 percent from April to 19.2 million visitors.

Media Metrix figures also showed that Expedia.com was up 21 percent year-over-year and up 15 percent sequentially to 7.8 million visitors; Travelocity was up 7 percent year-over-year and flat sequentially at 7.4 million; Walmart.com was up 126 percent year-over-year and up 41 percent sequentially to 3.1 million; Barnes & Noble.com was up 2 percent year over year but down 6 percent sequentially to 5.3 million; 1-800-flowers.com was up 18 percent year-over-year and up 29 percent sequentially to 1.9 million due to seasonality (Mother's Day sales); Global Sports Network was up 150 percent year-over-year and up 7 percent sequentially to 996,000; Priceline.com was down 46 percent year-over-year but up 20 percent sequentially to 2.6 million visitors; and Bluelight.com was down 8 percent sequentially but up 37 percent for the year to 2.6 million visitors.

Unique visitors to automotive sites rose by 6 percent sequentially in May following an 8 percent sequential decline in April and rose 20 percent year-over-year. Autoweb and Autobytel both posted strong sequential gains in May, up 34 percent and 65 percent, respectively. Autoweb also posted a year-over-year change of 71 percent.

Although there is not necessarily a one-to-one correlation between site traffic and sales, the figures were indicative of a trend, and GS said that "we continue to estimate a 35 percent to 40 percent gain in industry e-commerce sales (for the year)."

"We continue to favor platform companies that are clear leaders in a large market, that can drive multiple revenue streams, and that have limited financial risk of physical fulfillment and superior ROIC," GS said.