Page 264 - DMGT550_RETAIL_MANAGEMENT

Unit 14: Information System in Retailing

14.8.4 Limitations of Web Notes

Most of the retailing ventures on web have not been as profitable as they were expected to be,
the primary reasons were:
1. Security issues: Security issues hold the center stage when it comes to consumer concerns
while shopping through the online media. A lack of trust and privacy concerns prevents a
lot of consumers from making online purchases. Consumers are also concerned with the
use of their personal data provided during the online transactions.
2. Customer retention: In e-tailing, an increase in the customer retention by 5% leads to a
corresponding increase in profits by 25%. Most of the people buying on the Internet do so
out of curiosity and this makes a repeat purchase highly unlikely.
3. Unsuitable for certain product categories: In case of product categories that require
relatively higher customer involvement, the e-tailing route is found to be grossly
inadequate in providing sufficient information to the customers. Examples include retailing
of products like clothes, cosmetics etc. Most customers are comfortable buying books and
music on the Internet because the information required for making a purchase and the
customer involvement is low. However, in case of a blue Trouser, the customer may want
to know things such as: Which shade of blue is it? How does it feel on the skin? How easily
does it crease? The traditional retailing does not suffer from such a problem. In the non-
standard product categories, the Internet offers limited amounts of crucial information to
the customer. In such cases, only the seller knows about the true quality of the trouser and
this leads to an ‘information asymmetry’.
4. Shopping is still a touch-feel-hear experience: Some do not suffer from ‘time-poverty’ and
shopping is still considered to be a family outing. Hence this type of an environment
creates a problem of customer retention.
5. Complicated medium: Ease of use is a problem, as the web design may suffer from high
complexity bordering on total chaos in some cases.

6. Navigation hiccups: E-tail stores do not have standardized designs in comparison to the
physical retail stores and product catalogs. Therefore different user behaviors (navigation
schemes) need to be learned for each e-tail store. This is a temporary issue as the evolution
of the web continues.

7. Website design flaws: Graphic presentation and aesthetics may not be as compelling for a
web site as in case of a physical retail store or a product catalog. This is a temporary issue
that may resolve with the evolution of the web design.

8. Limited access to the Internet: Not all customers have access to the web, as they do to the
postal system. This is a temporary issue as the evolution of the web continues.

14.8.5 Future Trends in E-tailing

The investment and improvements in the communication infrastructure will lead to the mass
offering of electronic services in the home from several appliances. Established appliances,
including the television and telephone will be equipped to provide simple access to electronic
products and services. Furthermore, the increased power and portability of computers will
facilitate easy, carefree, and daily use of electronic shopping options.

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