E-Commerce Getting A Bit More Respect

Written by Evan Schuman
June 20th, 2008

The Moody’s Investor Service has upgraded how important a retailer’s E-Commerce activity is when assessing that retailer’s overall economic health.

Although this isn’t a radical change for the financial firm—and the thought that E-Commerce is important is hardly surprising—it’s one of several recent moves suggesting that the young teen-age Web is starting to be taken a wee bit more seriously.

"As online sales become a larger percentage of total sales for individual issuers, and as online spending gains a bigger share of overall retail spending, a retailer’s Internet strategy is becoming a more important factor in Moody’s credit analysis," the financial firm said this week. "A strong online presence is considered a ratings positive more frequently than in the past, because it represents such an important channel of distribution and can mitigate declining comparable-store sales trends."

It wasn’t clear how Moody’s would define an online sale. Will it limit it to a product purchased directly on the Web site? What if the product is purchased online and picked-up in-store? What if the Web site is responsible for sending tons of customers to the physical stores? Would the retailer then get points for intelligently using online to boost revenue?

What about mobile? Would that be considered online revenue? What if the mobile phone is just being used as a browser to buy from a regular Web site? A mobile-enhanced Web site? A pure-mobile Web site?

But Moody’s isn’t the only hint. La-Z-Boy, the furniture manufacturer and retailer, announced Monday (June 16) that it was finally launching its first E-Commerce site. (As Aaron Sorkin once wrote, let’s not complain they’re coming late to the party and just be happy they showed up at all.)

Recent earnings details—revealed in SEC filings reviewed by Internet Retailer—showed that Web revenue is soaring at Kohl’s and Foot Locker. The interesting part is that both retailers were seeing either anemic growth (1.4 percent for Kohl’s) or a small loss (0.53 percent for Foot Locker) in their overall revenue, while their online sales soared, with Kohl’s reporting a boost of 29.5 percent and Foot Locker a 7.1 percent hike.

Yes, the actual dollars in revenue were much lower online for both chains, but the direction of the numbers is getting some serious attention. Hey, Web kid! Sit up straight. People are starting to notice you.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.