Page 113 - Introduction to Electronic Commerce and Social Commerce

92 3 Retailing in Electronic Commerce: Products and Services

Channel Conflict includes sophisticated access to order information, shipping
information, product information, and more through Web
Many traditional retailers establish a supplemental market- pages, touch-tone phones, Web-enabled smartphones, and
ing channel when they start selling online. Similarly, some tablets over wireless networks. Faced with all of these vari-
manufacturers have instituted direct marketing initiatives ables, the challenges to profitably in implementing EC can
parallel with their established channels of distribution, such be daunting.
as retailers or dealers. In such cases, channel conflict can A traditional brick-and-mortar store with a mature web-
occur. Channel conflict refers to the case in which online site that uses a successful click-and-mortar strategy such as
sales damage the well-being of an existing channel partner. those used by Target, Walmart, and Staples can create a suc-
The extent of this conflict varies according to the nature of cessful multichannel business whose benefits can be enjoyed
the industry and the characteristics of particular firms, but by customers who like to have options on how to buy.
sometimes a move to sell online can damage old, valued rela-
tionships between trading partners. Channel conflict may
occur when a move to online trading simply shifts a compa- SECTION 3.10 REVIEW QUESTIONS
ny’s customers from their traditional stores to an online envi-
ronment, thus cannibalizing the sales from the former, and 1. Define disintermediation.
potentially negatively affecting the traditional outlets by ren- 2. Describe reintermediation.
dering them less profitable. One model that can solve the 3. Describe channel conflict and other conflicts that may
conflict is to allow ordering and payment online, but the item appear in e-tailing.
is delivered to a physical store for pickup. 4. Explain personalization and customization opportunities
in e-tailing. What are their benefits to customers?
5. What makes click-and-mortar companies successful?
Product and Service Customization
and Personalization
MANAGERIAL ISSUES
The Internet also allows for easy self-configuration (“design
it your way”). This creates a large demand for customized Some managerial issues related to this chapter are as
products and services. Manufacturers can meet that demand follows.
by using a mass customization strategy (see en.wikipedia.
org/wiki/Build_to_order). As indicated earlier, many com- 1. What are the limitations of e-tailing? Where is e- tailing
panies offer customized products on their websites. going? In Korea, Internet retailing has become the second
In conclusion, e-tailing is growing rapidly as an addi- most important distribution channel, exceeding the
tional marketing channel. In other words, the click-and-brick national sales volume of all department stores. In many
model is a successful one regardless of the conflicts cited. countries, B2C is the fastest growing form of retailing.
For more about e-tailing and multichanneling retailing, see The question is what will be the limits of e-tailing? The
dmsretail.com/etailing.htm. market concentration has already begun, setting a high
bar for new e-tailers. However, small businesses can eas-
ily start their online channel as part of a stable e-mall ser-
Lessons Learned from Failures and Lack vice platform when they find a niche opportunity.
of Success of E-Tailers Because many easy sources of funding have dried up
and revenue models are being scrutinized, vendor con-
As in the physical world, companies can also fail when doing solidation will continue until greater stability within the
business online. Although thousands of companies have e-tailing sector occurs. Ultimately, there will likely be a
evolved their online strategies into mature websites with smaller number of larger sellers with comprehensive gen-
extensive interactive features that add value to the consumer eral sites (e.g., Amazon.com) and many smaller, special-
purchasing process, many other sites remain simple “bro- ized niche sites (e.g., Net-a-Porter, Blue Nile).
chureware” sites with limited interactivity. Many traditional 2. How should we introduce wireless shopping? In some
companies are in a transitional stage. Mature transactional countries (e.g., Japan, Korea, Finland, USA), shopping
systems include features for payment processing, order ful- from smartphones is already very popular. In other coun-
fillment, logistics, inventory management, and a host of tries, mobile shopping is not popular yet, although the
other services. In most cases, a company must replicate each platform itself may be available. Alternative channels
of its physical business processes and design several more (multichannel marketing) and a culture of a variety of
that can be performed online only. Today’s environment communication channels is developing in many coun-