The primary objective of this paper is to explore possible web usage strategies for online direct sales. For this purpose, this paper proposes a framework that can help managers to utilize their web site as a sales channel. This framework is, based on two factors: (i) channel conflict and (ii) web appropriateness. Sixty-three Korean firms across 13 industries are selected as the sample base for an empirical investigation. Our analysis results suggest four web usage strategies. The channel relationship enhancement strategy attempts to strengthen relationships with existing off-line sales channels. The emphasis of the customer relationship enhancement strategy is on the organization-to-customer relationship via the web. Collaborative transformation focuses on the use of a web-based sales channel via collaboration with existing channel partners. Quick transformation results in an aggressive and quick transformation into an online channel. Our findings are more likely to help managers to formulate web usage strategies that can lead to competitive advantages.
While some Internet companies have built strong brands and defensible business models, many pure players have experienced major setbacks on the stock market. The technology markets crashed along with the collapse of a number of pure players (Evans & Wruster, 1999). As a consequence of these cascading failures, managers realize that the key question is not whether to deploy Internet technology, but how it should be deployed (Porter, 2001). Attention is currently shifting to off-line companies that endeavor to use the Internet as a complement to traditional ways of competing (Pateli & Giaglis, 2004). In particular, managers are currently seeking to incorporate the Internet into their new direct sales channels, as sales conducted via the Net have grown as fast as, and in some cases faster than, those conducted via traditional channels (Nair & Pleasance, 2005). By adopting the Internet as a direct sales channel, firms can sell their products and services directly to their consumers, frequently at lower prices, thus reducing costs. They can bypass intermediaries such as distributors and retailers, thereby resulting in improved competitiveness (Lee, Lee, & Larsen, 2003). For example, Dell rapidly adopted the web as a direct sales channel and significantly increased its revenues (Korper & Ellis, 2001). Managers are currently becoming increasingly dependent on the Internet, in order to create business value (Cao & Li, 2007).
However, the decision as to whether a firm should implement a business web site as a direct sales channel is more difficult than it might appear. Firms are attempting to reconstruct their sales channels in response to shifts in consumer shopping behavior; this restructuring inevitably induces conflicts among the channel members (Turban, King, Lee, Warkentin, & Chung, 2002). Channel conflicts are considered to be the biggest obstacle to the adoption of the web as a direct sales channel. A survey conducted by Forrester Research reported that 66% of manufacturers felt that channel conflicts were the largest issue they faced in their online sales strategies (Gilbert & Bacheldor, 2000).
Channel conflict is not the only factor that requires attention in electronic business. The appropriateness of the products or services being offered over the web must also be considered. Certain products or services appear more appropriate for online direct channels (Rosen & Howard, 2000). Firms may fail to seize the opportunities presented by the Internet if they do not accurately assess the suitability of their products for electronic commerce. The characteristics of products to be sold online should be considered in order to develop successful web strategies for online direct sales (Lee and Park, 2009 and Venkatraman, 2000).
Although the fear of alienating existing channels runs deep among firms that attempt to adopt the web as a sales channel, a deeper fear is having no web usage strategy at all (Gilbert & Bacheldor, 2000). Therefore, the primary objective of this paper is to explore possible web usage strategies for online sales. Thus, this paper proposes a decision framework that can guide managers to select appropriate web usage strategies, thus helping them to properly utilize their web site as a sales channel. The framework is derived on the basis of channel conflict and web appropriateness. Sixty-three Korean firms across 13 industries are selected as the sample base for an empirical test. Four web usage strategies are suggested on the basis of these empirical results.
This paper is organized as follows: the related literature is surveyed and summarized in the next section. Then, the decision making framework for using the web as a sales channel is illustrated, followed by an explanation of the sample and measures for an empirical test. Subsequently, the analysis and results are summarized. This paper concludes with the discussion and implications, and limitations.
In order to help managers establish web usage strategies, this study empirically investigates the manner in which web usage strategies differ in electronic commerce. Four web usage strategies for online sales channels are suggested, by taking into consideration channel conflict and web appropriateness. Our results echo that managers should align the company’s web strategies in accordance with both the level of channel conflict and the products or service characteristics. Managers must take a closer look at the web opportunities suitable for their company’s competitive dynamics prior to enlisting them.
