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| E - Retailing High Potential |
Shopping over the Internet provides the convenience and safety benefits offered by catalogs and other non store formats. However, the Internet, compared with store and catalog channels, also has the potential to offer a greater selection of products and more personalized information about products and services.
- Broader Selection: One benefit of the Internet channel, compared with the other two channels, is the vast number of alternatives available to consumers.
People living in Columbus, Ohio, can shop electronically at Harrod’s in London in less time than it takes them to visit their local supermarket.
2. More Information to Evaluate Merchandise: An important service offered by retailers is the provision of information to help customers make better purchase decisions. Some catalogs provide only a few facts about each item, such as price, weight, and brand/model, along with a photograph. Other catalogs offer much more detail about each item carried.
Stores also differ in the information they make available to consumers. Specialty and department stores typically have trained, knowledgeable sales associates, whereas most discount stores do not.
Unlike in catalogs, the information on an electronic channel database can be frequently updated and will always be available – 24/7, 365 days per year. Furthermore, retaining knowledgeable sales associates difficult and, in many cases, not cost effective. The cost of adding information to an Internet channel is likely to be far less than the cost of continually training thousands of sales associates.
In addition, when using the Internet channel, customers can format the information so that they can effectively use it when evaluating products. In contrast, customers in stores usually have to inspect each brand, one item at a time, and then remember the different attributes to make a comparison.
Virtual communities, networks of people who seek information, products, and services and communicate with one another about specific issues, are examples of these problem-solving sites. For example, iVillage (www.ivillage.com) is a virtual community for women, with sub communities for pregnant women, women with babies, and working women.
- Personalization: The most significant potential benefit of the Internet channel is its ability personalize the information for each customer economically. Catalogers cannot economically tailor their merchandise and information to the needs and preferences of all individual consumers. To be cost effective, they have to send the same catalog to a large segment of customers.
To online chat provides customers with the opportunity to click a button at anytime and have an instant messaging e-mail or voice conversation with a customer service representative.
- Selling Merchandise with “Touch and Feel” Attributes: When you buy products, some critical information might be “look and see” attributes like color, style, and grams of carbohydrates or “touch and feel” attributes like how the shirt fits, the ice cream flavor tastes, or the perfume smells, Fit can only be predicted well if the apparel has consistent sizing and the consumer has learned over time what size to buy from a particular brand. Due to the problems of providing touch and feel information, apparel retailers experience return rates of more than 20 percent on purchases made through an electronic channel but only 10 percent for purchases made in stores.
- Role of Brands: Brands provide a consistent experience for customers that helps overcome the difficulty of not being able to touch and feel merchandise prior to purchase online. Because consumers trust familiar brands, products with important touch and feel attributes, such as clothing, perfume, flowers, and food, with well know name brands are being sold successfully through non store channels including the Internet, catalogs, and TV home shopping.
Consider branded merchandise like Nautical perfume or Levi’s 501 jeans.
Using Technology:
Retailers with electronic channels are using technology to convert touch and feel information into look and see information that can be communicated through the Internet. Web sites are going beyond offering the basic image customers the opportunity to view merchandise from different angles and perspectives using 3D imaging and/or zoom technology. The use of these image enhancing technologies has increased conversion rates (the percentage of consumers who buy the product after viewing it) and reduced returns.
To overcome the limitations for trying on clothing, apparel retailers have started to use virtual models on their Web sites.
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Perceived Risks in Electronic Shopping:
Although most consumers have had the opportunity to try out electronic shopping, they also have some concerns about buying products through an electronic channel. The two critical perceived risks are :
(1) The security of credit card transactions on the Internet and
(2) Potential privacy violations.
Consumers also are concerned about the ability of retailers to collect information about their purchase history, personal information, and search behavior on the Internet. Consumers may be worried about how this information will be used in the future
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