The European e-Business Report 2004 - Berlecon Research GmbH

The European E-Business Report 2004Economic return of e-business: Investments required for e-business solutions may be considerablefor many small and medium retailers. SMEs are usually not in a position to plan investments withlong/medium term returns. In particular, future costs for maintenance and upgrades are difficult toforecast and may lead to non-adoption.2.6.5 OutlookThe structure and the recent evolution of the retail industry give ICT a very important role. This role isconnected to the necessity of upstream integration in the supply chain and of downstreamcommunication with customers. It is also related to the exchange and integration of information withinthe same enterprise, as a consequence of network organisation of the points of sale. In this context,the size of the firm is an important variable along with the number of points of sale and theorganisational structure of its distribution network.Retailers have to manage a high degree of complexity due to the large number of products traded andthe need to optimise the balance between service (constant availability of goods in stock) andefficiency (minimum inventory). For retailers, information technology is mostly a "production"technology that can affect the productivity of physical processes.Exhibit 2.6-8: Overview of e-business enablers and barriers in the retail industryEnablers• Dynamics in demography , modern life style,consumer choice, legislation are positivesignals for the promotion of e-business• Need to set up supply relationship• The majority of retailers intend to expand theiroffer of private label products. This sets theground for improved relations and the exchangeof information with suppliers and customers.Barriers• Lack of basic interest in Internet among a largenumber of retailers• IT skills gap• Trust and securitySource: e-Business W@tch (2004)The retail sector is characterised by rather low sales margins, even if these margins can varyconsiderably in different sub-sectors of the retail industry. For this reason, electronic procurement is ofparticular importance for retailers. Adoption of e-business applications are driven by the goal ofimproving profitability and efficiency of the supply system. Retailers tend firstly to invest in e-procuringactivities and supply chain integration, and secondly in e-commerce and e-marketing practices. Mostof firms seem to prioritise the use of efficient tools, in the sense that profitability is a major condition forsetting up ICT systems. For the moment, however, ICT does not seem profitable enough, especiallywhere e-commerce and e-marketing is involved.Selected referencesColla E.: La grande distribution Européenne – Paris Vuibert – collection Gestion Internationale, 2001Colla E.: The Outlook for European Retailing : competition and format development, International Review of RetailDistribution and Consumer Research, 4(1)Colla E.: The outlook for European Grocery Retailing: Competition and Format Development, InternationalReview of Retail, Vol. 14, January 2004Reynolds J.: e-Commerce: a Critical Review. International Journal of Retail &Distribution Management, Volume28. N° 10-2000. MCB University PressReynolds J.: Charting the multi-channel future: retail choices and constraints. International Journal of Retail&Distribution Management, Volume 30. N° 11-2002. MCB University PressZiliani C.: e-marketing – direct, database e Internet marketing, McGraw-Hill, 2001140