beyond pt 0 23/1

Elimination of value generally occurs where the involvement of the purchaser is
low and there is a drift to commodity status. This in turn is creating the drift to
the creation of loyalty programs to attract and retain customers and the
aggregation of purchases under these schemes. The cost of developing and
maintaining such schemes can be significant.
Interview: David Hart, Australia Post,
IRG member, 12 July 1999
8.5 New business models
One area where retailers (and manufacturers) can create new value is by
delivering existing products digitally. Products lending themselves to
digital delivery include software, information, and music.
Purchasing software online still remains a large category, and enjoys an in-built
advantage because the products are aimed at a target market already online and
the latest software is much more readily available compared to waiting for outlets
to stock their shelves.
www.consult, http://www.consult.com.au
Another way is for retailers to use e-commerce technologies to provide
new, or better, services to consumers. For example, automatic price
changes as fresh produce deteriorates on the shelves, rather than
remaining unsold, or using barcoding and small chips to provide more
information about a product that can fit on the label.
In a recent listing of the top ten websites, none of the place getters also
operated as a traditional retailing organisation. Given that these top ten
sites added together can claim 204 million unique users, and taking the
US figure of 53 per cent of users shopping online as a guide, there are a
great many online customer relationships being primarily managed by
parties other than traditional retailers, and most of them are e-commerce
companies. This is reinforced by a study of the top travel sites, and again
traditional travel retailers are rarely represented.
As already noted one source of new retailers online are the manufacturers
selling directly to end consumers. Well known examples include firms in
the IT/communications sector such as Cisco and Ericsson.
It also seems likely that making the decision to trade on the Internet will
impact on more than just the nature of marketing channels that a business
uses. There is also reason to expect that it may change the offering that
the company makes.
Box 8.7
Changing the business mix
We think that as much as ten to 20 per cent of total retailing could be taking place
via the Internet within the next ten years. And then, finally, we think there’ll be a
kind of new type of business emerging, where affinity groups will come together and
where companies will spring up that sell merchandise, but also sell advice and also
sell advertising to the communities that grow up around that affinity group. So you
might have a company that sells plants or flowers or garden implements via the
Internet, but it will also be selling consulting advice from different places and also
advertising to people, for advertisers who are interested in reaching gardeners or
people who like to raise flowers and so on
Source: Intellectual capital interview, 17 July 1997.
Greater reliance on the e-commerce and the Internet may also change the
relation the business has with other businesses. Some retailers already find
that their customers search their Internet sites when looking for products
or services that the customer associates with them, even if the business
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