E-Commerce Commission Press Kit

This pattern of lower prices is not universal. Some retailers have determined that their currentInternet customers buy products from them primarily because of convenience, selection or quality.In the short term, they do not feel that lowering prices would lead to additional sales. Sometraditional store-based retailers set their prices for products they sell through the Internet at thelevel found in their stores in order not to adversely impact their store-based business.If retailing continues to grow on the Internet, competition and the favorable economics of theInternet are likely to translate into lower prices for the average consumer.CUSTOMIZATIONThe Internet offers the potential for increased customization. Some Web businesses, particularlymedia businesses, already customize the product to an audience of one. Readers can select onlythe news they want to read, and it gets “delivered” to their personalized Web page on the site, toan e-mail box, or as a service that the computer defaults to when at rest.Music and computers are other products where the combination of innovation and economics isencouraging increased customization. Customers at online music stores have the choice ofpurchasing CDs available at record stores. Or, if they desire, they can create their own CDs froma growing number of digital recordings. Buying a laptop computer is no longer limited to what astore or a manufacturer has in stock. Instead, consumers can choose from a variety of basemodels, and purchase the standard configuration or customize the machine according to price andperformance requirements. (For instance, the customer can decide whether to pay extra for aspeedy 266MHz processor or save some money with a somewhat slower 166MHz processor.Similarly, the base model may have 48 MB of memory (RAM), but additional memory is availablefor those who need it. Different modems, network adaptors, extra batteries and softwarepackages can be installed by the factory at the customer’s request. Even the service package canbe tailored to the customer’s needs. Traditional retail and mail order outlets, in addition to Webbusinesses, offer customers the opportunity to customize their computers; the Internet and privatenetworks speed the flow of information and thereby improve the economics of customization.Web-based clothing stores may soon incorporate technology that allows customers to “try on”clothing. Deciding between a Large or Extra-Large sweater may be as simple using the computermouse to “drag” the virtual sweater over a 3-D image of oneself to see whether it is too snug or aperfect fit. For retailers and manufacturers who continue to produce standard sizes for theircustomers, this technology will simulate the physical act of trying on clothing in a store’s dressingroom. Other businesses may decide to build a business around tailored clothing, using the 3-Dimage to customize the size and fit of the sweater to that individual customer.The Internet and other new technologies may encourage businesses to explore the feasibility ofmass customization; whether and how extensively retailers and manufacturers start to customizeclothing, furniture, and other products based on individual customer specifications will ultimatelydepend on market demand.44