Consumers will spend $1.4 billion online for apparel this year, according to a November 1999 projection by Jupiter Communications. That's not even a sliver of real-world apparel sales: The Gap alone racked up revenue of $11.6 billion in the year ending Jan. 29, 2000.

Nonetheless, dotcom retailers are hot to grow their sales. According to an April 2000 Forrester Research survey of 50 site execs, 86% put "growing the business" as the top of their strategic priorities list. Profitability came in seventh on the list at 18%. Fewer than 40%, or 20 sites, are shooting for profitability by 2002.

Maybe the evangelizing and loss-leader sales tactics will prevail: virtual window shoppers will number 85 million by 2003, according to Jupiter.

In the meantime, market lessons loom large. Boo.com's spectacular flame-out earlier this year sent shivers through the ranks of pure-play online apparel outlets. If $188 million worth of inventory, marketing and executive perks can't make a dent in the collective psyches of virtual fashionistas, what can?

Originally, Boo.com told investors that they expected to bring in 55% gross margins. By contrast, offline retailers Nordstrom and Saks reported gross margins of 35% and 38%, respectively, in the first quarter of this year. According to the National Retail Federation, a net profit of 1-2% is standard for brick-and-mortar retailers.

A more realistic picture of the online apparel model was drawn by analysts at McKinsey and Co. and Salomon Smith Barney last month. Their research points out that apparel manufacturers, such as Victoria's Secret and The Gap, stand to pull in higher margins than sites that resell other manufacturer's goods:

Hypothetical apparel site revenue models

	Apparel Manufacturer Site	Multi-label Apparel Retailer
Total per-order revenue	$94.70	$61.82
Cost of product	43.60	47.01
Shipping costs	7.80	9.01
Gross margin*	43.30	5.80
Gross margin % of revenue	46%	9%
Fulfillment costs**	$10.70	$11.00
Contribution margin	$32.60	( $5.20)

Source: McKinsey and Co., Solomon Smith Barney. Figures for
Q4 1999. * Gross margin equals total per-order revenue less
cost of product less shipping costs. ** Includes customer-
service and credit-card processing costs.

Using traffic as an indicator of (potential) sales, Media
Metrix June's data shows that the top apparel sites are all
multi-channel retailers with either storefronts and/or
catalog sales supporting the bottom line:

Rnk	Site	Unique Visitors (000s)
1.	VICTORIASSECRET.COM	1,225
2.	GAP.COM	1,070
3.	OLDNAVY.COM	971
4.	LLBEAN.COM	966
5.	LANDSEND.COM	964
6.	EDDIEBAUER.COM	779
7.	ALLOY.COM	721
8.	JCREW.COM	611
9.	NORDSTROM.COM	464
10.	CHADWICKS.COM	463

Source: Jun. 2000 Media Metrix Inc.