The impact of an increasing number of consumers and businesses accepting the Internet
and other forms of digital media as a stable channel to market is an increase in customer
expectations, which creates competitive pressures and challenges for e-retailers. In part,
this has been caused by new market entrants that have established their market position
by, say, offering very wide and deep product choice, dynamic demand-driven pricing or
instantaneous real-time purchase and delivery.
The growth in spending is amply demonstrated in Table 10.5.As a result, due to advances such as speed and interactivity brought about by digital
technologies and the extension of trading time, customer expectations of levels of serv-
ice have risen significantly. Therefore organisations are required to adopt a more
dynamic and flexible approach to dealing with these raised expectations.
Allegra Strategies (2005) identified a number of performance gaps and Table 10.6 pres-
ents some of the most significant gaps and the managerial implications.
For the e-retailers it is important to identify any performance gaps and develop strate-
gies which help to close the gaps. For example, in the case of logistics, research has found
that utilising carriers (road haulage, air freight) that have higher levels of positive con-
sumer awareness with appropriate online strategies (i.e. offering a choice of carriers) can
contribute to the consumer’s willingness to buy and overall satisfaction with the online
buying experience. Therefore, development of strong awareness and brand image among
consumers can prove to be a beneficial strategy for both the e-retailer and the carrier, since
consumers have traditionally carried out the home delivery function themselves (i.e. shop-
ping in ‘brick and mortar’ retail stores). Of course, this in itself raises the expectations of
the care taken by the delivery agent, which has the implication of having to introduce
better handling of goods as well as the speed with which the goods need to be delivered
(Esper et al., 2003). A further consideration is that the retailer and the chosen carrier need
to be able jointly to satisfy the consumer so that they may benefit from co-branding.
How the online consumer accesses the retailers’ goods has given rise to various for-
mats (discussed earlier in the chapter) and distribution strategies but this only forms part
of the retailers e-strategy. Nicholls and Watson (2005) discuss the importance of creating
e-value in order to develop profitable and long-term strategies and agree that logistics
and fulfilment is a core element of online value creation but at two other important
platforms: firm structure, and marketing and sales.
Firm structurecan be used strategically depending on organisational capabilities and
technology infrastructure. Porter (2001) described the emergence of integration and the
potential impact on e-value chains. Integration can ensure faster decision making, more
flexibility and attract suitable e-management specialists and capital investment (Nicholls
and Watson, 2005). In the case of the UK grocery sector, larger retails have adopted dif-
ferent approaches towards structuring their online operations: Tesco serves 95% of theCHAPTER 10· BUSINESS-TO-CONSUMER INTERNET MARKETING
Implications for e-retail marketing strategy
Table 10.5Growth in online buyers and their spend2000 2001 2002 2003 2004 2005F 2006F
Online shopping spend (£ million) 4,055 7,124 10,210 12,614 15,692 18,568 21,444
Online shopping buyers (millions) 5 8 11 14 17 20 23
Source: Allegra Strategies Forecasts/Euromonitor/APACS/ONS/IMRG