Will web technology be seen as a "major step forward for most successful companies in the twenty-first century"?

M Reynolds and F Sinclair

.... be seen as a major step forward by who?

1. The Industry View (mostly abstracted from www.ey.com)

   Despite the dramatic failure of a number of online retailers and dot.coms, Ernst & Young's new Global Online Retailing Survey shows that online shopping has a future:

   UK online consumers had, on average:

   • made 14 purchases over the previous 12 months
   • spent £551
   • bought CDs, books, computers, tickets and videos
   • purchased from 4 websites or less
   • purchased from an overseas company
   
   

   The most common ways shoppers accessed sites were:

   • clicking the sites they'd saved in their Favourites file
   • keying in a company name
   • keying in a site they'd seen in an ad
   • using a search engine.
   
   

   Some of the implications that Ernst & Young draws for retailers are:

   • a multi-channel retail strategy is not an option but a business requirement
   • brand is what matters
   • strategic alliances are already important and will become even more so
   • retailers need to have the technology and logistics systems that will deliver beyond the customer's expectations
   • retailers must adapt quickly to changes in consumer demand, new technology and business requirements
   • some of the main obstacles still to be overcome are cultural, language, tax and fulfilment.

   Altogether they surveyed 4,000 online shoppers and conducted telephone interviews with executives from 74 companies in 12 countries.

   Ernst & Young also commissioned an e-commerce survey, believeing e-commerce to be not a phenomenon but a supply chain opportunity that can revitalise the sector and take it into the new economy. The research indicated that European "B2B" e-commerce will grow from £33 billion in 1999 to over £1.3 trillion in 2004. (Business-to-consumer e-commerce is predicted to grow from £3 billion to £232 billion in the same period). They conclude that British industry may be missing an opportunity to exploit the full power of e-commerce because it is too focused on web sites and wrongly focused on the vicissitudes of business-to-consumer activity amongst the dot coms.

   Stephen Finn (Ernst & Young) says "the store is arguably nothing more than a manufacturer's distribution arm" but seems to feel that the Internet brings the perfectly competitive market closer to reality: "the Internet brings consumers the power of information immediacy" - and here is a demonstration of that immediacy
   

2. The futurist view

   Ryan Matthews (interviewed by E&Y), who is clearly not suffering from Toffler's "futureshock", enthuses that the Internet is "where people who aren't equal can become equal", with which the Big Issue seller in Lancaster might argue, although she might agree (if she had the chance) with his more depressing assertion that "increasingly the experience of the real world will pale [in significance] with the experience of the Internet world". Eagerly exposing his definition of bliss, Ryan describes buying his shoes as "an extended shopping experience where I'm intrigued in the physical world and fulfilled in the virtual world".

   
   

3. The environmentalist view

   Will virtual shopping put the last nail in the coffin of local specialities, local employment, traditional methods of production and thriving town centres?

   Or will it reduce fossil fuel consumption and open up the market for local and traditional produce and, consequently, local employment?
   

4. The pragmatist view

   Despite

   • power cuts (and NB rise in extreme weather events)
   • computer viruses
   • the rise in electronic fraud (only 1% of Visa's European transactions are online yet 47% of their European complaints/disputes are Internet related [The Guardian. 3 March 2001])
   • vagaries of hardware and software
   • and the economically interesting fact that Maxine's friend, when shopping on the Internet, sticks rigidly to her list and is not tempted by other products as she would be in the store,
   we agree with Ernst and Young that "comprehensive business plans for the Internet that include brick and mortar will be the survivors". It is "not a simple technological imperative but a strategic business imperative" and those firms which integrate the Internet seamlessly into their operations will clearly have "another store ... and a marketing vehicle".

   This juggernaut of a marketing vehicle, however, brings its own particular risks. Customers will be far less forgiving of faults and irritations on the Internet than they would be of a visible human error in a store - especially when the competition is only a click away rather than a ten minute drive.

   

   The Example of Tesco	Electronic Points of Sale	Conclusion

   It's also interesting to compare these three sites for visual appeal and user friendliness:

   Tesco	Sainsbury's	Asda

   
   

   F Sinclair. 6 March 2001