Retailing focuses on the final transaction, with the business and the customer (B2C). This is in contrast with business to business transactions (B2B) which still remains the largest sector for transactions (about 80% of all transactions). Emerging sectors, are consumer to business (C2B, Example: Priceline) and consumer to consumer (C2C, Example: EBay) transactions. These sectors are able to take advantage of the hypertext nature of this medium to evolve into a potentially major sector within the retail industry. Previous to the web, these sectors played an insignificant role in retailing. Thus we will consider B2C, C2C and C2B as being retailing transactions, as they are all transactions facilitated by a business, and involving the final consumer.We should also consider the broader impact of the web on retailing. While it may not be the facilitator for the final transaction between the customer and the business (or other customer in the case of C2C), it may still play a role. Thus when a consumer purchases a car, she may not purchase the car via the web, but may use the web to do a significant part of the research (80% of car buyers do this). Thus the web's overall impact on retailing extends beyond its total impact on transactions via the web, but also plays a role in educating the consumer to make the right choice throughout the consumer purchasing process.
The following Retailing Section of Cyberatlas is current in terms of the state of the e-tailing sector. E-tailing currently accounts for 2% of retail purchases in the U.S. ($17.2 bn fourth quarter 2003; up more than 25% from the fourth quarter 2002). Amazon.com is clearly the leading e-tailer in terms of reach, projected buyers and unique users.
E-tailing can be considered another form of non-store retailing. Its closest "cousin", in terms of other forms of non-store retailing, is catalog retailing. Catalog retailing accounts for about 10% of all retail transactions. It is therefore instructive to compare e-tailing to catalog retailing to gain some insight into its potential impact. Catalog retailing, which evolved over a century ago, grew rapidly in its early stages (similar to e-tailing) and it was assumed to become a very important part of the overall retailing environment. It allowed people to shop from home, when they wanted, at their own convenience. While this proved enticing for some consumers and some types of products, there appeared to be a limit to its overall impact (rapid growth to 10% of retail transactions, limited growth thereafter). Will the same happen to e-tailing?E-tailing has certain advantages over catalog retailing:
Customers have a much wider choice at their fingertips (many e-tail sites etc.) Thus the web creates a global bazaar style marketplace that brings together many consumers and many retailers.
With web search capabilities (which need further development) it is easier to find the types of goods a customer is searching for, catalogs are received passively, at the behest of the retailer.
Customers can execute transactions via the same medium the information is provided, so there is no disconnect between the desire to purchase and the ability to purchase. (Payment schemes are still evolving and therefore this advantage is likely to become more apparent in the future.)
E-tailers can use price descrimination more efficiently than catalog retailers (which may use coupons to lower certain "fixed" prices). E-tailers can use previous transactions to identify the likelihood of products being purchased at certain price points.
E-tailers can change the product placement (user display) based on previous transactions, to increase the visibility of goods that the user is more likely to purchase based on their close relationship with previous purchases. Thus placement can be designed based on the context of the previous purchases.
E-tailing has certain disadvantages over catalog shopping:Not all customers have access to the web, as they do to the postal system. This is a temporary issue as the evolution of the web continues.
Ease of use is a problem, as the web design is still complex, or at least somewhat chaotic. E-tail stores are not standardized in design in the way catalogs and retail stores have become. Therefore different user bahaviors (navigation schemes) need to be learned for each e-tail store. This is a temporary issue as the evolution of the web continues.
Trust, security and privacy concerns prevail. Consumers are concerned with the use of the data they provide during transactions.
Graphic presentation is not as compelling for the web as it can be for catalogs. This is a temporary issue as the evolution of the web continues.
E-tailing includes some advantages to the consumer that no other form of retailing can provide. The hypertext nature of the medium allows for more flexible forms of transactions (growth of C2B and C2C illustrate this point). It allows for ease of comparison across broad product categories with the evolution of shopping bots and allows for more flexible pricing mechanisms (dynamic pricing). These evolutions can create less friction in marketplaces, and therefore increase the use of the web as a retail environment. This will benefit marketers who provide products with real (perceived) value, and consumers in general. This will penalize marketers who have thrived in marketplaces that had "information" barriers to entry, where lack of information for customers restricted their choices and led to inefficient pricing and localized monopolies.
