Do Business Well

Despite the disadvantages and the dotcom crash, the advantages are driving a growth in e-Shopping in the UK, at least in certain categories. Sales had reached £3.3 billion by 2001. It was forecast that ‘most people’ will buy groceries, books, CDs and even clothes by e-Shopping, making up 10 per cent of total shopping by 2009. It has been forecast that 94- per cent of e-Retailing will be at the expense of the high street, with only 6 per cent arising from incremental growth (Gibson 1999; Prefontayne 1999; RICS Foundation 2000; Verdict 2000, 2001, 2002).

According to Verdict, in 2001 grocery would account for half of all e-Sales — £1.3 billion, which sounds massive, but accounts for only 5.6 per cent of groceries. The market leaders in their sectors were Amazon (books, plus CDs and videos), Tesco (groceries), Dell (computers) and Next (clothing). Average spend has risen faster for men (+15 per cent) than women (+5 per cent), leading Verdict to comment that ‘the proliferation of female-orientated sites . . . have failed to motivate women to shop significantly more’. Continue Reading »

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Interactive Digital Television (iDTV) looks similar to PC-based Internet but is delivered through a television set and can be operated using a remote control. From a standing start in 1999, market penetration by 2002 is currently around 40 per cent of UK households and is projected to rise to 95 per cent by 2010, according to a Netpoll survey. Leading providers include Sky Digital, ON Digital, Telewest and NTL. One of the key drivers for this surprisingly rapid growth has been the provision of free set-top boxes by these platform providers. Services currently provided include home shopping, email, video, banking and travel. Forrester Research (2001) predicts that more people will access the Internet through a television than through a PC by the end of 2004.

Advertising through this mechanism can be interactive, as viewers can respond immediately to request further information or to sign up for a promotion. Digital television has helped increase Continue Reading »

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Disadvantages

Retailers have been slow to take up e-Retailing. This is to some extent under standable in the light of the many disadvantages and problems. Retailers, for example, may lack the technical know-how, the substantial investment required or the order fulfilment capabilities. Set-up costs start from around £20,000 fo a small site, up to £500,000 for a large operation. And set-up costs are only th start: Datamonitor estimates that high street retailers are spending more o ongoing costs than on setting up new sites.

DISADVANTAGES OF E-RETAILING FOR RETAILERS

* May lack know-how and technology

• Substantial set-up, investment and ongoing costs

* Complex logistics of fulfilment

• e-Selling less powerful than face-to-face — uptake slow for goods selected by taste or smell

* Fewer impulse purchases

* Legal problems

Less role for traditional high street retail expertise

• Pressure on margins and prices in-store

* After-sales care difficulties

There can be legal problems. For example, if purchaser and supplier are ni_l
different countries, there may be conflict between the laws of the two countries.’
A further disadvantage is that e-Selling is less powerful than face-to-face selling

(it is easier to say ‘no’ to a computer). This viewpoint is linked to a concern of raditional high street retailers that e-Retailing offers a diminished role for their expertise. For example, there are obvious difficulties with products sold by `atmosphere’ — touch, feel, smell — and with impulse purchases. In addition, consumers have a perception of lower prices online. This puts pressure on margins for e-Retailing, and can lead to shoppers expecting consistent low prices in store. Finally, after-care can be difficult, especially if the shopper is overseas.

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`Place’ (Convenience in the 4- Cs) means the elements of the marketing mix that marketers use to enable customers to access the benefits of a product or service. Traditionally, this has meant ‘channels of distribution‘ through (e.g.) various wholesaler and retailer combinations. Viewing from the ‘convenience for the customer‘ (4-Cs) perspective gives a more customer-orientated focus. This is a vital decision area for the e-Business for three reasons. First, relatively small local companies can widen their market and even export (e.g. Botham (www.Botham.co.uk), to be described further in Chapter 9). Second, many e- Businesses aim to gain competitive advantage by using e-Systems to de-layer the distribution chain. For example, Dell (www.dell.co.uk) supplies customers directly, rather than through distributors, wholesalers or retailers. Third, distribution is an area where some e-Businesses have been severely criticized for failing to deliver customer service (see Chapter 9 for more details).

Place elements of the marketing mix have been changing rapidly over recent decades, and these changes impact in many ways on the marketing operations of the e-Business. First, the growth of retailer power has involved major retailers taking more control of their supply chains. The involvement of wholesalers has been reduced, tending to give way to contract logistics (under retailer control). At the same time, supply chains have become more efficient, with computer network links between suppliers and retailers — many still based on EDI. Predating the Internet, EDI is based on privately owned third-party computer networks. Stock levels have been reduced using techniques such as JIT and Enterprise Resource Planning (ERP). Control of the physical distribution, ordering, invoicing and payment systems, particularly for major retailers, is often still carried out using EDI networks such as Tradanet (www.gegxs.com/gxs/ products/product/traser). Increasingly, though, retailers such as Tesco are allowing Internet access to their suppliers for real-time electronic point-of-sale (EPOS) data. Trusted supplier partners can thus respond more quickly to changes in customer demand. Continue Reading »

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