Literature Review

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The purpose of this chapter is to investigate factors that may have contributed to the success of retail websites. What is proposed is a classification scheme that identifies the factors under two broad headings: organizational factors and industry specific factors. This classification was adopted as it enabled the research to investigate both the generic factors—common to all organizations—and also the factors that are specific to the retail industry. The organizational factors investigated are early adoption of a website, IS/IT expertise, possessing an e-business strategy, having a web champion, use of planning and the amount spent on the development of the website. The retail-specific factors investigated are the characteristics of products sold, number of products sold and the integration of the physical store with the on-line presence.

Organizational Factors Influencing Website Success

Some commentators believe that many of the successful companies on the web owe their success merely to the fact that they were first to exploit the capabilities of the Internet as a channel for business (Enders & Jelassi, 2000; Mellahi & Johnson, 2000). De Figueiredo (2000) points out that first movers will have some advantage and early movers have the highest website stickiness. However, Golder & Tellis's (1993) study of first mover firms found that first movers did not enjoy exceptional and sustained benefits. Kerin et al. (1992) also support the view that being first to market does not automatically ensure dominant market share or long-term rewards.

Bhatnagar, Misra & Rao (2000) state that the companies who are successful on the Internet have previous technological experience. Companies that have staff with IT skills and an IT department in their business will be more successful when operating on-line (Bhatnagar, Misra & Rao, 2000). Mellahi & Johnson (2000), after conducting a case study on Amazon.com, conclude that the critical resources in the electronic commerce industry resulting in competitive advantage are largely intangible assets and capabilities, such as innovation, technical expertise and knowledge. Thus, the technological experience and knowledge that companies have are critical factors in determining success in electronic commerce (Savin & Silberg, 2000).

Venkatraman (2000) comments that a business strategy that fails to recognise the Internet is destined to fail. A recent KPMG survey shows that mangers are aware of the need to execute a web strategy to complement existing business models (Venkatraman, 2000). They point out that it is critical for traditional retailers to begin to clearly define their web strategy. Griffith & Krampf (1998) indicate areas where managers can build an e-business strategy: on-line sales which are consistent with the definition of retailing, communication which involves advertising, promotion and building corporate brand image, and customer service where the Internet provides a rare opportunity for retailers to provide exceptional customer service by being both accessible and responsive. Venkatraman (2000) points out that every company will need to develop a strategy for the dot-com world and ultimately, business strategy will be dot-com strategy. Vision, governance, resources, and alignment are the stepping-stones to a successful web strategy (Griffith & Palmer, 1999; Venkatraman, 2000; Hackbarth & Kettinger, 2000).

An individual with responsibility for the web project is an important factor in successful e-businesses (Chen & Leteney, 2000; De Figueiredo, 2000). Many organizations lack a central decision maker for e-business and need someone to oversee all aspects of e-commerce, including e-commerce strategy development and implementation (Schuette, 2000). Barry (2000) and Bergstein (2000) found that companies who have a web champion to run, maintain, and update their website have a higher number of hits and repeat visits than websites that do not have an appointed web champion.

Planning is required to facilitate the maintenance of a fully interactive website. Competitors who spend time and effort designing well thought out web presences will most likely gain from the mistakes made by businesses that proceed without planning (Van Doren et al., 2000). Indeed, the difference between success and failure on the web often hinges on how carefully people sift through details and fine-tune plans (Brown et al., 1999). A case study conducted by Chan & Swatman (2000) revealed Internet based e-commerce requires the same amount of planning and foresight as any previous form of e-commerce, even though it may appear simpler. In another study, Spiller & Lohse (1997) investigated the effects of effective customer interfaces on traffic and sales in on-line stores. They posit that the promise of electronic commerce, and on-line shopping in particular, will depend to a large extent upon the interface and how people interact with the computer.

Retail Specific Factors Influencing Website Success

Kiang et al. (2000) contend that product characteristics play a major role in the successful marketing of a product on the Internet. Phau & Poon (2000) state that one weakness of the Internet is that it can realistically reproduce only two of our five senses—sight and sound. The Economist Shopping Survey (February 26, 2000) shows the simplest distinction is between 'high touch' and 'low touch' goods. High touch items are goods that consumers would prefer to see and touch before they purchase, whereas low touch items are more standard items such as books, CDs, and computers. Therefore this limitation will restrict the types of products that are saleable on the Internet. Peterson et al. (1997) classified products and services for sale on the Internet versus a retail store along three dimensions: cost and frequency of purchase, value proposition and degree of differentiation. In general, when purchase fulfilment requires physical delivery, the more frequent the purchase and the smaller the cost, it is less likely that there is a good 'fit' between a product and e-tailing. Along the second dimension—value proposition—e-tailing is particularly well suited to certain types of intangible or service related goods (i.e., those based on digital assets) (Enders & Jelassi, 2000). The third dimension reflects the degree to which a product or service is differentiable. When products are capable of significant differentiation, the Internet can serve as an effective segmentation mechanism for guiding buyers to their ideal product (Peterson et al., 1997).

The merchandise a retailer holds defines the store for the customer (Reardon & Hasty, 1997). However, a web store can offer a selection that no bricks and mortar store can match (Christensen & Tedlow, 2000). Customers are migrating to these web stores which offer a larger database of products for sale (Ng, Pan & Wilson, 1998; Walsh & Godfrey, 2000), yet many retailers do not take advantage of this by adding rich product descriptions—many just transfer paper catalogues directly onto the web (Spiller & Lohse, 1997).

In order to be successful, retail organizations need to possess an integrated clicks and bricks strategy (Gulati & Garino, 2000). Internet retailers are being forced to recognise the importance of having a physical presence (Chen & Leteney, 2000), while traditional bricks retailers need to establish effective electronic commerce ventures to protect their core business (De Figueiredo, 2000). Selling through existing physical stores and through Internet channels allows retailers to leverage the strengths of each channel with stores and websites working well together, thus increasing sales at both (Chen & Leteney, 2000; Quinn, 1999; Gulati & Garino, 2000; Enders & Jelassi, 2000). Despite all these advantages, as retailers move online they face challenges such as organizational restructuring and the adaptation of the existing distribution infrastructure to the new requirements of the on-line market (Enders & Jelassi, 2000). Conversely, many Internet e-tailers who have so far focused solely on the Internet aim to expand their access to new customers by moving into the physical front end of the value chain by adding physical retail stores (Enders & Jelassi, 2000).

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