“All of the animals except man know that the principal merchandising of life is to enjoy it.”
—Anonymous
The Internet is changing the basis of competition for companies of all sizes. Although many successful formulas for e-business development now exist, most are based on one of the following merchandising strategies: Web entrepreneurship, virtual build-out, and operations improvement. This chapter explains how each strategy relies not only on a great Web site, but on high quality, system-ready information about products and the merchandising programs that drive sales.
Web entrepreneurship is all about transforming an industry—without using brick and mortar. The core business development concept is to build a massive online customer base to gain economies of scale through educating buyers to use online services and transactions. The MicroAge x-Source business-to-business procurement service, Borders Books and Music, and e-Chemicals are a few examples.
Virtual build-out means expanding nationally or globally—beyond the limits of brick and mortar. The core concept is to transform an actual in-store experience into a Web experience available to anyone, anywhere. For practitioners of virtual build-out, the Web may supplement or be used in place of a catalog and telephone order expansion merchandising strategy. For example, REI, an outdoors outfitter in the Pacific Northwest, is using the Web to reach hiking and camping enthusiasts across the country. Its online stores sell as much as its largest regional stores—and in-store sales have not been impacted.
Operations improvement is targeted toward increasing the profit margins of an existing national or global business. The core concept is to replace the costs of sales and support staff, paper order processing, and brick-and-mortar operations with customer self-service, automated sales, delivery, and support services on the Web. Goodyear, for example, has saved millions of dollars in its dealer channel by using Web process automation to drive costs out of the sales process. Banks, financial firms, wholesalers and distributors, retailers, insurers, and even colleges and universities are pursuing Web-based operations improvement strategies to increase profits and enhance customer service. You need to seriously consider strategies such as Web entrepreneurship, virtual build-out, and operations improvement to ensure you capture market share before your competitors do.