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Chapter 5 E-business strategy 305

Activity 5.3 E-business strategies for a B2C company

Purpose
To evaluate the suitability of different e-business strategies.

Introduction
Many industry analysts such as the Gartner Group, Forrester, IDC Research and the ‘big
five’ consulting firms are suggesting e-business strategies. Many of these will not have
been trialled extensively, so a key management skill becomes evaluating suggested
approaches from reports and then selecting appropriate measures.
Questions
1 Review the summaries of the approaches recommended by IDC Research below
(Picardi, 2000). Which elements of these strategies would you suggest are most
relevant to a B2C company?
2 Alternatively, for a company with which you are familiar, review the six strategy defi-
nition choices presented in the previous section.

Summary of IDC approach to e-business strategies
Picardi (2000) identifies six strategies for sell-side e-commerce. The approaches are
interesting since they also describe the timeframe in which response is required in
order to remain competitive.
The six strategies are:
1 Attack e-tailing. As suggested by the name, this is an aggressive competitive
approach that involves frequent comparison with competitors’ prices and then
matching or bettering them. This approach is important on the Internet because of
the transparency of pricing and availability of information made possible through
shopping comparison sites such as ShopSmart (www.shopsmart.com) and Kelkoo
(www.kelkoo.com). As customers increasingly use these facilities then it is impor-
tant that companies ensure their price positioning is favourable. High-street white-
goods retailers have long used the approach of matching competitors’ prices, but
the Internet enables this to be achieved dynamically. Shopping sites such as
Buy.com (www.buy.com) and Evenbetter.com (www.evenbetter.com) can now find
the prices of all comparable items in a category but also guarantee that they will
beat the lowest price of any competing product. These sites have implemented real-
time adjustments in prices with small increments based on price policy algorithms
that are simply not possible in traditional retailing.
2 Defend e-tailing. This is a strategic approach that traditional companies can use in
response to ‘attack e-tailing’. It involves differentiation based on other aspects of
brand beyond price. The IDC research quoted by Picardi (2000) shows that while
average prices for commodity goods on the Internet are generally lower, less than half
of all consumers purchase the lowest-priced item when offered more information from
trusted sources, i.e. price dispersion may actually increase online. Reasons why the
lowest price may not always result in the sale are:
• Ease of use of site and placing orders (e.g. Amazon One-Click makes placing an
order with Amazon much easier than using a new supplier).
• Ancillary information (e.g. book reviews contributed by other customers enhances
Amazon service).
• After-sales service (prompt, consistent fulfilment and notification of dispatch
from Amazon increases trust in the site).
• Trust with regard to security and customer privacy.