Summary of Implications and Limitations

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We have studied the stages of pure e-tailers, C&M, and B&M for three points of time: June 1999, June 2000, and June 2001. To evaluate the dynamic stages of the e-tailing business as an innovative venture, we have proposed four stages: exploration, breakeven, growth, and maturity. The stages are measured by the impacts of revenue and income on the firm value. This stage model explains the evolution of pure e-tailers as follows. The year 1999 was the late exploration stage, which has positive revenue and negative income impacts on the firm value. The year 2000 evolved to the breakeven stage, which has positive revenue and insignificant income impact on the firm value. The year 2001 evolved again to the growth stage, which has both positive revenue and income impacts on the firm value.

Unlike our hypothetical expectation, the stage model could not adequately explain the effect of online business to C&M. In this regard, the impact of online channel to traditional retailers was not revolutionary. In 1999 and 2000, the primary contributing factor to firm value was income. On the other hand, both income and revenue contributed in 2001. According to this result, investors were very conservative to the risky investment on the click business to traditional retailers.

However, we have discovered some interesting conclusions between C&M and B&M. C&M had significantly larger revenue and market capitalization from the beginning. This implies that larger retailers tended to invest on the online channels. Unlike C&M, B&M had pursued balanced revenue and income throughout the entire period of this study. However, C&M has performed better than B&M in terms of revenue, income, income/revenue, stock price, and market capitalization. In addition, the revenue effect of C&M at 2001 was significantly higher than that of B&M. In Korea, the revenue growth of many leading e-tailers is about 100%, and they became profitable as the broadband environment widely propagated. This phenomenon gives hope to a second wave of high growth of e-tailers.

A limitation of this study is in the availability of stock prices. To obtain the market price of stocks, we have picked the listed companies in the U.S. stock market. This population cannot explain the behavior of all e-tailers and retailers. In 1999, we had only six pure e-tailers, which listed till 2001. So the small sample size for that period was unavoidable. Nevertheless, this study provides valuable information about the stages of e-tailers and retailers.

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