This study proposes a stage theory of e-tailers which can explain the life-cycle of e-tailers. For this purpose, the financial characteristics of pure e-tailers and traditional retailers who have evolved to click and mortar are studied for the years 1999 and 2000. Our concern is whether there is a structural difference between the two groups of business models, as well as their evolutionary changes. To study this problem, 18 financial variables are selected, and the structural difference between two business models, and the time effect are investigated. Next, the impact of revenue and net income on market capitalization is studied for the two groups in each year. By analyzing the change pattern of e-tailers and retailers, we could derive a stage theory of the life cycle for e-tailers. The four stages are exploration, shakeout, stable growth, and harvest. From this framework`s point of view, it turns out that the e-tailers moved from the exploration to the shakeout stage, while the retailers moved from the stable growth to the harvest stage. We expect the e-tailers will move to the stable growth stage in the next few years.
