In conclusion, it is now widely acknowledged that there is a need for a company to have
a coherent e-strategy underpinned by a clear vision of how it may take advantage of the
Internet. An online retailer’s strategy is likely to be affected by the type of online format it
adopts, the type of products and services it sells and the market segments it chooses to serve.
Retailers will defend their existing market share through consideration of strategic
and competitive forces. It is the actions of retailers and their on- and offline behaviour
in response to peer actions and new entrants’ behaviour and success rate that are likely
to shape the future of the Internet as a retail environment. Retailers need to ensure that
the value created by e-retailing is additional rather than a redistribution of profitability.
It has been suggested that by removing the physical aspects of the retail offer the
Internet may also provide the opportunity for increased competition (Alba et al., 1997).
Pureplays can easily combine e-commerce software with scheduling and distribution to
bypass traditional retail distributors. These virtual merchants could therefore threaten
existing distribution channels for consumer products. The Internet is thus likely to
appeal to new entrants who have not already invested in a fixed-location network.
However, the boom and bust of the dot-com era has demonstrated that this opportunity
must be supported with a sound business plan aimed at generating profits and not
media attention per se.CHAPTER 10· BUSINESS-TO-CONSUMER INTERNET MARKETINGlastminute.com: establishing and maintaining a
competitive positionCase Study 10
Retailing online renders one of the established mantras of
the fixed location retailer ‘location location location’
redundant. So how are the new e-retailers establishing
and maintaining a competitive position in the Internet’s
marketspace?
lastminute.com was an early leader with its develop-
ment of a web site which operated as an online travel
agent and retailer (see Figure 10.9). The company founded
by Martha Lane Fox and Brent Hoberman in 1998 has
recently been acquired by Travelocity and Sabre Holdings.Strategy and business model
The valuation achieved by the company at its float was
seen by many at best as very unrealistic – its paper value
exceeded the value of longstanding established travel
agents like Thomas Cook Plc. Many dismissed last-
minute.com’s valuation as being an indicator of the
absurdity of the dot-com phenomenon and dismissed
excessive investment as irrational.One of the problems with most of the commentary
about lastminute.com in particular and e-commerce in
general was that it focused too much on the front-end busi-
ness idea behind the models and too little on the model’s
place within its sector (Panourgias, 2003). Over time the
company has proved to be an established online brand.Sales and marketing
lastminute.com built its market share by focusing on making
innovative use of Internet technologies to deliver services to
the end consumer that were close to the end of their shelf-
life, i.e. late booking of holidays and hotel rooms. One of the
core advantages is that there were few logistical issues to
deal with when the purchaser takes themselves to the point
of consumption (e.g. visiting the theatre, see Figure 10.10). In
this way the company is able to supply both niche and
increasingly mass market needs.
lastminute.com use advanced personalisation tools
to deliver a highly customised online experience, sending
different tailored me-
sages to online cus-
tomers who have opted
in to receive online
marketing, promotions
and newsletters. The
messages are varied
according to the profile
of the target customers
and personalised e-mailsFigure 10.9Lastminute.com products and services