ICT and e-Business Impact in the Retail Industry - empirica

e-Business in the Retail Sector19% said they make between 5 and 10% of their sales online, and in 6% the reportedshare was between 11 and 25%. More than a quarter (28%) of the online sellers reportedan online sales volume above 25% of their total sales: 12% said they sell between 26 and50% online, and 16% of the online sellers stated to sell more than 50% online. Comparedto 2003, the share of firms in which online sales account for more than 25% of their salesvolume increased sharply, from 5% to 28% - see Exhibit 3.5-6. Thus, in the past fiveyears there has not only been an increase in the share of online sellers but also in theamount of sales conducted through the internet or other computer networks. This findingmay confirm predictions that the industry will experience growth in online sales (Butler2007).Two of the case studies conducted for this report mention the share of online sales.Neither Smart Supermarket (Section 5.8) nor Fleria Floral Creations (Section 5.7) areselling a huge amount online: at Fleria Floral Creations, 0.24% of total annual sales aremade online and at Smart Supermarket only about 1% of total sales volume comes fromonline shoppers. The regionally-based micro firm 4fitness in contrast sells more than 2/3of its goods over the internet. Unlike Smart Supermarket and Fleria who are establishedbusinesses that have been trading ‘offline’ for a number of years, 4fitness is a newly setup firm (new in the sense that it has been trading for less than 4 years). The businessmodel of 4fitness has ever since the firm was set-up included the internet sales channelwhereas for Smart Supermarket and Fleria the internet sales channel is a new addition toan existing, successful business model. Furthermore, the products sold by these threefirms differ regarding their suitability for internet sales: selling grocery and flowersrequires a different approach than selling fitness equipment and accessories over theinternet.Geographic origin of online orders: SMEs extend their customer baseRetailers selling online were also asked about the geographic origin of their customers.Retail firms representing approximately half of the industry’s employment (51%) said thattheir online orders are mainly regional, and the share of mainly national orders (46%) wasalmost equally large. In only 3% the orders are mainly international. Compared to thefigures about general sales (see Exhibit 3.5-1 and 3.5-7), it appears that online saleshelps to extend the geographic focus slightly from regional to national sales while theinternational focus remains on the same low level. This was also found to be the case fornon-food stores and other retailing. However, food stores apparently use the internet tofurther extend their regional sales focus: the employment-weighted share of firms sellingmainly to regional customers was found to be 72% and the share of mainly regionalonline sales 79%.Regarding size classes, it is striking that SMEs apparently use the internet to extend theirsales beyond the regional focus to national markets. The share of firms with a nationalsales focus is much larger in online sales than in overall sales for micro firms (50%national focus in online sales compared to 25% national focus in overall sales), smallfirms (33% compared to 22%) and medium-sized firms (61% compared to 26%). On theother hand, large firms apparently tend to use the internet to extend their regionalcustomer base. The share of large firms selling mainly to regional customers was foundto be 43% for overall sales and 50% for online sales. However, the figures for large firmsneed to be interpreted with caution because the online sales data are based on a smallnumber of cases.62