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Abstract
The Web has been changing the retail market in many ways. Following a new market framework, this paper analyzes the unique characteristics of the Web for retail applications, examines its market effects, and presents two perspectives for business response strategies. The Web can either be used as a marketing tool, which is integrated into traditional business strategies, or can be viewed as a new marketplace, which demands new business design. Differences between these two views will have strategic and implementation implications for both traditional and startup retailers as they adapt to Web marketing. Finally, we propose some research issues and challenges that should be addressed to better our understanding and promote the success of this new marketplace.
A Web Market Framework
Electronic retailing, which involves the selling of goods and services to the consumer market via the Internet, is also called e-tailing, e-retailing and electronic commerce (EC) in the business-to-consumer (B2C) market. The emergence of this electronic retail market has been rapid. Dramatically expanding reach (people/ location) and range (variety) of information, the World Wide Web can create benefits for both marketers and consumers. For consumers, the Web can provide access to a wide range of products and services with low cost (Bakos 1997), extensive and tailored information, at-home convenience for product comparisons, enhanced interactivity (Cross & Smith 1995), and facilitate the formation of virtual communities (Internet users with common interests) (Armstrong and Hagel 1996). Marketers can benefit from lower real estate-related expenses (Schlauch & Laposa 2001), improved market research (Burke 1996; Murphy et al. 2001), new retail models, increased sales, and enhanced consumer relationships.
During the past few years numerous e-tailing startups have appeared, seeking new market opportunities. However, market development has not been as successful and rapid as expected. Troubled with a lack of profitability, many etailers, such as valueamerica.com, pets.com, living.com and furniture.com, were forced to close their businesses. Unfortunately, these are not isolated cases, as other e-tailers may soon face this same fate.
Researchers have examined various aspects of B2C interactions to help businesses realize the potential benefits of e-tailing. To understand online consumers, Wolfinbarger and Gilly (2001) examined consumer motivations for online shopping, and Bellman et al. (1999) addressed the personal characteristics that predict online buying behavior....