E-Commerce Future Unclear for Portals

Fewer than 5 percent of e-commerce executives say they are “highly likely to renew” their current agreements with portals, according to research conducted by Jupiter Communications.

Jupiter found that, despite the huge volume of traffic portals can direct to commerce sites, revenue expectations for portal tenancy deals are often overly ambitious and cannot be realized. Jupiter estimates that 18 percent of online commerce will be directly driven by the major portals in 1999. By 2002, that number will rise only to 20 percent.

In order to reach the growing numbers of online shoppers, Jupiter advised commerce players at the Jupiter Shopping Forum to diversify their marketing strategies, including investments in affiliate programs, affinity sites, and offline marketing.

According to Jupiter’s research, 92 percent of e-commerce executives with portal deals believe that portal tenancy helps drive sales. More than 60 percent indicate that the deals contribute less than one-third of total online sales.

Portal deals tend to be structured to deliver what the portals deliver best — mass traffic, according to Jupiter’s Marc Johnson.

“Commerce players simply have not demanded enough from their portal partners,” Johnson said. “While they offer an effective means to drive traffic, primary portals do not help commerce players retain customers. Portals must develop compelling loyalty programs that help deliver repeat purchases for commerce partners, or they will risk losing the ability to garner huge anchor tenancy deals.”

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