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|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|21030||2005||11 صفحه PDF||سفارش دهید||5176 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Business Horizons, Volume 48, Issue 2, March–April 2005, Pages 113–123
To succeed, Internet retailers must make a profit on the goods and services they sell. But e-tailers are still searching for strategies that work. To test current practices, we became “phantom shoppers” and bought a randomly chosen set of CDs from a variety of Internet retailers. Our findings suggest that order management and logistics skills are pivotal for selling profitably on the Internet. In this article, we show how Internet retailers can deploy resources creatively to attract the right shoppers, convert these shoppers into buyers, and improve the chances of repeat purchase while maintaining profit margins.
Internet retailers have been remarkably successful in attracting visitors and shoppers to their sites. Despite the economic downturn in the U.S., Internet retail sales increased 48% from 2001 to 2002, with preliminary data indicating another 30% increase for 2003. Recent surveys find that online purchases account for 32% of dollars spent on computer hardware and software, 17% of event ticket sales, and 12% of book expenditures. The Internet's importance as a retail channel is no longer in dispute; online sales will continue to grow and are one of the brightest spots in a recovering retail industry. Internet retailers are also starting to show positive returns. In 2002, 70% of large Internet retailers claimed to be profitable before interest and special charges, and leading industry players such as Amazon.com are headed toward consistent profitability. More and more, stockholders in these firms are debating not whether profits will be realized but when and how much. What strategies lead to profits from Internet sales? Many first movers seized on the obvious characteristics of the Internet: minimal search and low transaction costs. These pioneers concluded that low prices and high volumes would result in consistent profits. With essentially zero selling cost, any revenue, however small, must go to the bottom line. Many of these firms, such as Boo.com and Webvan, are no longer in existence, while other firms thought through all of the Internet's implications and thrived. Some of these businesses operate solely on line, the so-called “Pure-Play” Internet retailers. Alternatively, established retailers also started Internet sales sites, converting themselves into “Brick-and-Click” merchants. To sort out the implications of these strategies, we needed to understand how Internet retailing really works, so we became “phantom shoppers” and executed over 250 purchases of music compact discs (CDs) from a variety of leading Internet music retailers. We recorded the price we paid, the service we received, and the information available from each Web site. We also recorded the retailer's cost for each CD based on information from the wholesaler that filled our orders, using its own inventory. We then computed the retailer's margin by subtracting the retailer's cost from the price we paid. In summary, we were able to get complete information on prices, costs, margins, and service for over 250 Internet retail purchases. This rich set of data allowed us to model the relationship between transaction margins, retailer-provided information, and order fulfillment for both Pure-Play and Brick-and-Click Internet retailers. It turns out that profitable electronic retailers design their product and service offerings to (see Fig. 1) (a) attract visitors to their sites with excellent connectivity and cross-marketing and preempt competitors from using low prices to maximize market share and revenues; (b) convert visitors into customers through attractive inventory selection and product information, allowing retailers to offset competitor prices through a superior ordering experience; and (c) retain customers with fulfillment services that match compelling performance promises. Full-size image (22 K) Fig. 1. Order management stages in Internet retailing. Figure options Successful Internet retailers apply resources selectively to maximize the chance of a profitable sale. Supply chain execution is critical because delivery as promised turns out to be an important part of the quest for positive profit margins.
نتیجه گیری انگلیسی
Amazon.com and its Internet retail competitors are just starting to see profitability. Consumers love the convenience of skipping a trip to the store, but pricing on the Internet is potentially hypercompetitive. Thanks to industry partners and an organized “phantom shopping” exercise, we were able to match markups on Internet sales with strategic choices made by Internet retailers. It appears that companies with the best margins share several strategies. First, there are at least two ways to use branding to support high margins. Being the “click” part of a Brick-and-Click operation is associated with higher markups. Online retailers who share their brand identity with a physical chain almost certainly enjoy economies of scale in other areas as well. For pure Internet retailers, brand building and higher margins come at least partly from being connected to the right search engines, shopping services, etc. In any case, being “top of mind,” “top of search engine,” or both leads to higher margins on the Net. Second, web-enabled services offering product attribute information separate high-margin and low-margin Internet retailers. Several retailers provide excellent information and product previews, and their markups reflect that service. Firms like Amazon.com neutralize the physical advantages of Brick-and-Click retailers by going the “extra mile” in product information. Third, product mix has some influence on retail profitability. Popular products do not command premium prices; if your favorite site does not have them, another site will. If a popular product is available at all, it can be located and is therefore not scarce. High-margin sites choose niches and establish their reputations by appealing to niche audiences who are willing to pay for special access and expertise. Amazon.com is the apparent exception here, but notice that it provides access to both popular and scarce items as well as offering selection to many product categories beyond CDs. Finally, many high-margin e-tailers promise what they can deliver and expect to get paid for it. Another group of Internet retailers, some with very low margins, delivers the same service but promise less. The difference is that the high-markup group promises good service upfront before purchases are finalized. Small package delivery in the U.S. is effectively an oligopoly, as is the CD distributor community, so service levels are uniform. Low margin retailers may as well take advantage of this by upgrading their delivery promises, as customers are getting the benefit anyway. Assurances such as these are so crucial that even small companies like XDR2.com, which sells CD cases, are putting in proactive customer notice systems to automate the process. The best Internet retailers are executing good retail practices, should charge for the service values they provide, and align their promises with service realities. This is particularly true for Internet retailers regarding a key service they offer consumers: substituting delivery for trips to the store. Even on the Internet, searching has some cost, so e-tailers should pay attention to identity and brand awareness. Similarly, e-tailers with better information can charge more since they are saving consumers time and making it more likely that customers will get exactly what they want. Internet retailers should beware of chasing popular items, which invites the price comparisons that the Net makes easy. The better option would be to choose niches and cater to customers who need access to the unusual and unique. If all of this sounds familiar, it is because Internet retailing is still about selling the right stuff to customers who are willing to pay a fair price, and then taking care of these customers over time. Being on the Internet will not shield managers from bad product choices. In fact, the retailers we bought from continue to struggle because their core business, CDs, is being rendered obsolete by the very medium through which they have based their businesses. However, buying physical products on the Internet will continue to grow, and the need for sharper pricing, more focused information, brand building, smart product selection, and focused fulfillment service will become more important as the virtual marketplace takes over.