What Matters Most in Internet Retailing
What Matters Most in Internet Retailing
Online retailing is far and away the fastest growing retail sector in the United States, with overall growth of about 15% in the past year and with categories such as apparel and footwear up by more.1 Internet retailing currently represents approximately 8% of U.S. retail sales, and in many countries it’s an even larger percentage. Forrester Research expects that from 2010 to 2015 online retail sales in China will more than triple, to about $160 billion.
What’s driving the growth, and to what extent do the principles of success for online retail differ from those of traditional brick-and-mortar retail? Internet retailing expansion is being fed by two forces: (1) traditional retailers are getting their “Internet acts” together, and (2) “pure play” retailers are becoming increasingly innovative. Consumers are now at least willing to consider purchasing more categories of products online than before. Many are expanding from an early emphasis on items such as books and CDs (which can be specifically described online in terms such as title, number of pages and shipping time) to other types of merchandise such as fashion apparel and gourmet food (which are characterized by “nondigital” attributes such as the fit and feel).2
Traditional and Internet retailing differ in two critical ways. First, in theory at least, Internet retailers have “unlimited” trading areas.3 Second, and less obvious, while traditional retailers can identify and target customers with relative ease (most customers either work or live within a few miles of the store), Internet retailers without physical stores find this much more difficult to do. Many Internet retailers have trouble getting noticed and acquiring customers. Indeed, having an unlimited trading area can be a mixed blessing: There are no straightforward rules about where to look for customers. As a result, some Internet retailers are making small forays into traditional retailing, using
Online retailing is far and away the fastest growing retail sector in the United States, with overall growth of about 15% in the past year and with categories such as apparel and footwear up by more.1 Internet retailing currently represents approximately 8% of U.S. retail sales, and in many countries it’s an even larger percentage. Forrester Research expects that from 2010 to 2015 online retail sales in China will more than triple, to about $160 billion.
What’s driving the growth, and to what extent do the principles of success for online retail differ from those of traditional brick-and-mortar retail? Internet retailing expansion is being fed by two forces: (1) traditional retailers are getting their “Internet acts” together, and (2) “pure play” retailers are becoming increasingly innovative. Consumers are now at least willing to consider purchasing more categories of products online than before. Many are expanding from an early emphasis on items such as books and CDs (which can be specifically described online in terms such as title, number of pages and shipping time) to other types of merchandise such as fashion apparel and gourmet food (which are characterized by “nondigital” attributes such as the fit and feel).2
Traditional and Internet retailing differ in two critical ways. First, in theory at least, Internet retailers have “unlimited” trading areas.3 Second, and less obvious, while traditional retailers can identify and target customers with relative ease (most customers either work or live within a few miles of the store), Internet retailers without physical stores find this much more difficult to do. Many Internet retailers have trouble getting noticed and acquiring customers. Indeed, having an unlimited trading area can be a mixed blessing: There are no straightforward rules about where to look for customers. As a result, some Internet retailers are making small forays into traditional retailing, using