beyond pt 0 23/1

Making a purchase over the Internet is a new form of direct sales between
the buyer and the manufacturer. It is a form of retail activity that is
becoming more popular. Indications from the US suggest that there is
already a large market where people are comfortable with this new type
of transaction. The expected growth in Internet sales will in part come at
the expense of existing direct shopping (e.g. via mail order) as well as
traditional retail sales.
Box 8.2
Shift in direct shopping practices
When it comes to shopping, consumers are becoming more direct, says a new study
released by Peppers and Rogers Group, Stamford, CT, and the Institute for the
Future, Menlo Park, CA. According to the research, sales of products and services
delivered directly to the home will realise enormous gains by 2010 and may account
for as much as 24 per cent of all retail sales. However, while direct marketeers may
benefit from the growth in consumer-direct sales, only those who adjust to
changes in shopping channels will reap a chunk of the predicted $438 billion to
$1.1 trillion revenues.
One of the factors driving the move toward direct shopping is the continuing growth
in e-commerce—news that isn’t all positive for traditional direct marketeers. The
study predicts that the percentage of households shopping via direct mail and
catalogues will drop 17 percentage points, to 50 per cent, from 67 per cent today.
According to the study’s authors, the businesses that capitalise on the growth in
consumer direct sales will be those that develop systems to capture what they learn
about a single shopper across all delivery channels—in stores, through catalogues
and online — and personalise their response to individual customer interactions.
Source:
Tipline, July12 from http://www.targetonline.com
As well as shopping online, consumers are shopping around online.
Instead of visiting a number of retailers to compare products and prices,
pre-purchase research is increasingly conducted on the web. This means
that the only retailer they contact is the one they intend to buy from,
reducing the effectiveness of sales staff, and emphasising the importance
of the product information on the web.
A new study from JD Power & Associates has found that 40 per cent of US
consumers who recently purchased a car or truck used the Net to shop for the
vehicle. This compares to just 25 per cent of auto consumers last year.
The study calculated that in the first quarter of 1999, more than 25 000 car or
truck buyers a month used the Internet when researching a new vehicle purchase,
up from 12 500 per month in 1998. Overall, 2.6 per cent of car buyers now use
the Internet, compared to 1.1 per cent last year.
In terms of used car buyers, the study found that 26 per cent of US car
consumers that purchased a model in the 1994 to 1999 range used the Internet
when making a decision. This compares roughly 14 per cent of the same
consumer group in 1998.
Nua Internet Surveys, 19 July 1999
http://www.jdpower.com
8.3 Cost savings
Businesses that are implementing e-commerce solutions are finding that
the process throws the costs of their supply chain under the spotlight.
With e-commerce they have been able to slice out parts of their supply
chain that add little value. Applied more generally, this could result in
significant economic savings in traditional retail activities.
A Coopers & Lybrand (C&L) study (1995) estimated that supply chain
management improvements could result in savings of $1.1 billion on total
Australian sales of $20 billion for dry grocery items (i.e. 5.4 per cent of sales).
PECC the way forward, Price Waterhouse,
Department of Industry, Science and Tourism, 1998
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