Activity category
The particular products and services offered to consumers can affect a business’s usage of
the Internet (see Mini Case Study 10.4). Products and services may be in a tangible or
intangible form, each of which has associated advantages and disadvantages. Delivery is
an issue for sellers of physical goods as is the Internet’s inability to let customers experi-
ence the tactile qualities of a product prior to making a purchasing decision. Indeed,
product category has had a profound effect on the success rate of certain online busi-
nesses. For instance, in Europe, the top product categories account for over 75% of the
sales and these categories include books, music, DVD (movies), groceries, clothing games
and software (Dennis et al., 2004). Whilst some of these products do not require exten-
sive product descriptions, high-fashion items present difficulties and often there is a
high return rate for clothing sold online. Digital products do not encounter the logistical
difficulties associated with physical goods but encounter problems with pricing and con-
trol of copyright as a digitised product can be copied, as can music products. Ticket and
online booking services (e.g. e-bookers.com, expedia.com) are enjoying comparative
success online as they offer secure online transaction facilities.Logistics
Accommodating demands for new levels of service in global electronic marketplaces
could reinforce the critical significance of logistical infrastructures in determining online
success (see Chapter 11). Logistical infrastructure might even determine the next genera-
tion of market leaders as its effective management provides an opportunity to create
competitive advantage (Fernie and Sparks, 1998). From a retail perspective it is important
to consider how the Internet is incorporated into retail activities in order to determine
the importance of logistics (see Activity 10.3). If the Internet’s primary role is as a promo-
tional tool rather than a retail channel to market there is obviously less emphasis on the
logistical infrastructure. Establishing a new logistical infrastructure to service the needs of
Internet customers is proving to be a barrier to its immediate development as a retail
channel. Established mail-order and direct marketing operators (e.g. Great Universal’s
http://www.greatuniversal.com) are taking advantage of the Internet channel, due to their not
being store-based and having established direct distribution systems.Outsourcing
If companies lack internal capacity they could decide to employ a third party to manage
their online access, outsourcing some or all of their Internet operations (Abdel-Malek
et al, 2005). From an operational perspective, fixed-location retailers might involve a
third-party distribution company to bridge the gap between the customer order and
delivery to the customer.CHAPTER 10· BUSINESS-TO-CONSUMER INTERNET MARKETING
Activity 10.3 The last mile problem
Consumers are becoming increasingly aware of the Internet as a channel to market. As
established brand names move part or all of their offer online, customers are regularly turning
to the web to make their purchasing decisions. They are not only reviewing product
information and reviews but also are now ready to buy online as a mainstream way of
shopping rather than as just a novelty experience. As a result the home delivery market is
growing. Paradoxically, this success is causing logistical problems, which threaten the future
success of online business-to-consumer trade. The problem is how to get the goods the