Brick-and-mortars, brand names boost '00 online sales

'Tis the season to have a strong brick-and-mortar presence or a dominant brand name.

At least that appears to have been the lesson today when several online retailers announced some strong holiday-season numbers (see story).

  • DisneyStore.com announced that revenue from online sales were up 85% from last year.
  • Yahoo Inc. said holiday sales in the U.S. doubled from last year.
  • BlueLight.com, Kmart Corp.'s online spin-off, announced that its sales increased by 1,060% between Oct. 30 and Dec. 21 over the same period last year.

Federated Investments Analyst Monica Logani and others said those good numbers were helped by a strong brick-and-mortar foundation and some well-known brand names.

A number of analysts have said that while some online retailers may post strong results, others are likely to struggle to meet growth targets.

But even though analysts may be cautious about the initial returns from online vendors, investors seemed to like the news. At midday, Yahoo shares were up $4.23 to $30.81, and Amazon.com saw an increase of $1.25 to $16.81. The Disney Internet Group remained unchanged at $4.38.

BlueLight.com spokeswoman Abigail Jacobs said being backed up by Kmart's huge chain of stores and advertising resources helped the privately held BlueLight.com turn in a vast improvement over last year's poor showing by its predecessor Kmart.com.

BlueLight.com leveraged Kmart to get its name in front of the 30 million shoppers that come to the brick-and-mortar chain every week, and it took advantage of the 72 million circulars that Kmart sends to customers weekly.

"We have the kind of advertising and assets that the people running Super Bowl ads last year can only dream about," Jacobs said.

Jacobs said Kmart's strong line of brand-name products, such as the Martha Stewart and Route 66 clothing lines, also helped BlueLight.com. The Martha Stewart line was the third-most-popular item on the site behind toy and electronics sales, Jacobs said.

The improvement can also be attributed to the strong investment that Kmart made in BlueLight.com, Jacobs said, as opposed to the way Kmart.com was launched a year ago.

Kmart.com had only 1,000 or so products a year ago, Jacobs said, while BlueLight.com had access to 250,000 products. She said the infrastructure of the BlueLight.com site also worked a lot better than the Kmart.com site, and that helped boost sales.

Most shoppers at BlueLight.com were married females in their 30s, which is in line with the typical shopper - married females in their 40s - at its brick-and-mortar stores. The top five cities for BlueLight shoppers were New York, San Francisco, Chicago, Philadelphia and Houston.

Logani said she isn't surprised that Kmart managed to use its established customer base and strong real-world presence to support its online efforts.

"I think there is a lot of validity in that," Logani said. "Just having an online presence is not enough. [The Web] is just another channel."

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