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Customers who access troubleshooting tips online save Dell a $15 call to a technical
support person. If 2–3 per cent of the 30 000–40 000 technical information queries
the website receives each week had reached Dell’s technical support staff, it would
have cost an additional $9 000–18 000 per week.
One large customer in the auto industry reports saving $2 million in its own technical
support ‘help desk’ costs. Rather than calling up Dell’s telephone support center and
usually holding for about 3–5 minutes, they go to Dell’s website for help.
Source:
Henry D, Cooke S, Montes, 1998, The Emerging Digital Economy, US Department of
Commerce 1998, p. A3–14.
Box 8.5
WW Grainger case study
In spring 1995, Grainger launched its website, giving small and medium-sized
businesses the ability to search and order from its online catalogue, check product
availability and pricing, and set up rules for who in the company is authorised to
make a purchase from the website. Customers can identify and select products, check
pre-negotiated account prices and determine product availability without leaving
their desk, making a phone call, or generating a single piece of paper.
Not only does the site offer customers greater convenience, it also offers greater
selection. Through its traditional paper catalogue, Grainger has a standard product
offering of about 80 000 products. Its website has a selection of nearly 200 000
products. In the future, Grainger plans to significantly expand its Internet product
offering by partnering with other ‘best of class’ suppliers.
Source:
Electronic Trading Concepts.
Box 8.6
Daewoo plans Internet auto sales
Daewoo has stepped boldly into the future by being the first auto manufacturer to
sell automobiles entirely through the Internet in the US. ‘That would make Daewoo
the first automaker in modern times to skip the middleman. This is potentially one
of the most important developments in automotive retailing the last 20 years’, says
Chris Denove, director of consulting operations for industry consultant J.D. Power
and Associates.
Source: USA Today, 3 February, 1999.
8.4 New costs
Retailers and their customers generally have to obtain access to the
Internet or other networks in order to participate in e-commerce. This
involves purchase of inputs from new intermediaries.
Retailers also face a challenge with the rise of what Kevin Kelly calls
‘following the free’ (New Rules for the New Economy, 1998). Increasingly
products are being given away to sell ancillary products or services.
Mobile phones are given away to sell phones services, refrigerators are
given away to sell home shopping services, and computers are given away
for information.
One example of value creation is of firms in the US providing free computers to
consumers who fill in a lengthy questionnaire. The information is then sold to
marketeers to offset the capital cost of the technology.
Interview: David Hart, Australia Post,
IRG member, 12 July 1999
In addition to losing goods to sell, retailers risk their customers moving to
other forms of buying, such as online shopping, and to e-commerce
companies intermediating themselves. Efforts to retain such customers
may involve additional costs on the part of traditional retailers.
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