Electronic Shopping
The Electronic Shopping (ES) revolution has started and is already having a
major impact on the shopping and retail scene.
To quote Bill Gates, CEO of Microsoft “The Internet is a tidal wave. It will
wash over nearly all industries drowning those who don’t learn to swim in its
waves”. Andrew Grove, CEO of Intel suggests “It won’t be too long before 20
to 30% of households will be buying electronically. This will mean boundless
potential for bypassing traditional distributors”.
So how do you react as a retailer or a distributor? You recognise the dangers
in being left behind, but are wary of the effects of change on your relationship
with existing business partners. You may be concerned that your Internet business
gain will be at the loss to your real estate premises. You also suspect that
the short and medium term costs will be excessive with little certainty of long
term gain. You understand the principles of the new Internet technologies but
cannot fully picture a good business or technical fit with your existing business
systems.
The only certainty is that the determination of the most appropriate strategy
for your organisation will require an in depth assessment of your business and
the environment in which you operate. An effective and long-term strategy also
requires a clear understanding of future technology trends and how that technology
will become a part of the world business and consumer culture.
Shared Skills have extensive experience in the development of e-commerce and
ES strategies and a clear understanding of the full implementation life cycle.
We have developed an ES Test that establishes the suitability of your business
to the electronic shopping culture and guides you towards an appropriate strategy.
Shared Skills have the significant advantage over some other strategy development
consultants, in that we do not develop our own Middleware, ERP or Web-store
solution. We believe that by remaining independent we can select the best of
breed solution and continue to provide your organisation with impartial and
objective advice throughout the tender and subsequent implementation process.
ES Test
The ES Test methodology was originally proposed by Michael De Kare-Silver.
It provides a simple three-step approach towards establishing your organisations
natural approach towards selling over the Internet. The test applies to all
types of products and services in all industry sectors. It can be used by any
organisation participating in the retail value chain, whether retailer, manufacturer
or distributor. The term “product” is used to describe both product and service
industry outputs.
The three steps in the test are:
- Product Characteristics – the product’s fundamental appeal to the senses.
Does it need to be physically touched or tried before buying?
- Familiarity and Confidence – assesses the degree the consumer recognises
and trusts the product.
- Consumer Attributes – Assesses the consumer’s underlying motivation towards
shopping.
Product Characteristics
Throughout history salesmen have recognised the innate appeal characteristic
belonging to a product. Bread is sold by its smell and look, music by its sound
and look and perfume by its smell. In general it has been assumed that products
with a high Sight / Sound primal product appeal have the greater ES potential.
This is however a simplistic approach. One of the most successful ES exponents
have been the organic produce suppliers, who at first appearance might have
relied on taste and smell.
Experience shows that we need to “drill down” into more detail and to look
at individual product lines. In some cases a commitment to electronic shopping
may require a change in packaging, design and presentation.
Some products cannot be naturally categorised within the standard 5 senses.
Products such as consultancy service’s or financial service’s characteristics
lie broadly within a sixth sense which might be described as “Intellect”. Buying
these products is typically a rational analytical process.
Familiarity and confidence
The second step in the ES Test establishes how confident and familiar customers
are in purchasing an individual product. This may often depend on whether they
have used it before; their individual experience with the product; the range
of substitute products and the degree of attention and value added services
attached to the product by the vendor. In general the greater level of familiarity
and comfort with a product, the less the need to be physically involved its
repurchase and the easier to buy electronically. The decision often relates
to the need to build confidence, whether through the clear branding or the differentiation
of improved value added services and care.
Consumer attributes
If the product’s characteristics have electronic appeal and the consumers are
familiar and confident in buying it then its ES potential is high. It may still
be however that consumers prefer to visit the store. Alternatively they may
switch from ever visiting the store and ultimately reduce the profit margin
of the physical store.
De Kare-Silver proposes 6 categories of consumer categories:
- Social shoppers – enjoy shopping
- Experimenters – ready to try new things
- Convenience (frenzied copers) – responsive to things that save time or make life easier
- Value shoppers (mercenaries) – will purchase wherever they perceive value
- Ethical – will purchase so long as they perceive the goods or the company to be honest
and ‘PC’
- Habit die-hards – stuck in their ways, the old ways are always best.
Clearly an understanding of the segmentation of your existing
customer base will be key in determining the likely effectiveness of various
E-Shopping strategies for your business.
Scoring System
Shared Skills have adapted the scoring system proposed
by de Kare-Silver in the form of a computer aided decision support system. We
can work with your company and its key, trusted stakeholders (which may include
employees) to assess suitable strategies for E-Shopping.
E-Commerce Strategy
Whilst the ES Test is an important indicator
if your businesses natural propensity for selling over the Internet,
it is only one factor in establishing an E-Shopping Strategy. Furthermore,
it would clearly be foolish to consider the E-Shopping Strategy
in isolation. In practice your E-Shopping
Strategy will form a chapter in your organisation’s E-Commerce
Strategy.
|