The Future of Internet Retailing

Question 1

1. Grewal, Roggeveen, and Nordfält (2017) identified five key areas that are moving the internet retailing field forward. What are these areas? Deeply describe one of them.

Answer 1

(1) technology and tools to facilitate decision making, (2) visual display and merchandise offer decisions, (3) consumption and engagement, (4) big data collection and usage, and (5) analytics and profitability
5: Kumar, Anand, and Song (2017) highlight the importance of carefully developed, thought-through retail strategies supple- mented with analytics. They also link these strategies to retail profitability. Such strategies can be explained at four levels: market, firm, store, and customer. For example, at the store level, these authors highlight what we know about strategies asso- ciated with marketing mix location and atmospherics, and then specify topics that need further exploration. In addition, they lay out actions that need to be undertaken to execute these strategies. As an illustration, at the store level, key executional actions include personalized pricing, dynamic pricing, mobile targeting, and technology to improve customer experiences.
In addition, retailers should carefully develop and manage their vendor relationships. Ailawadi and Farris (2017) highlight important issues that retailers wrestle with as they move toward and manage multi- and omnichannel distribution operations. There are clear benefits to an omnichannel distributional struc- ture from a consumer’s point of view, ranging from transparency to uniform policies. However, for retailers and suppliers, such forms of distribution pose unique challenges. To understand the challenges and the important questions they raise, Ailawadi and Farris (2017) specify some key insights from academic research as it pertains to the focal metrics being used in practice, in terms of the depth and breadth of distribution.

Question 2

2. Pauwels and Neslin (2015) address the crucial decision firms face today about which channels they should make available to customers for transactions. By using a case-study, their work supports the decision of opening brick-and-mortar stores. What are the main findings of their work?

Answer 2

Many consumers seek for an “enjoyable” buying experience and find that online stores can not fully replace the physical ones. Pauwels & Neslin found that physical stores’ introduction increased the company’s net revenue by 19,8%. The research revealed interesting findings: the physical store’s addition has no significant impact on the Internet
Channel. In-store purchases more than compensate for the decline of purchases in catalog channels. Store introduction increases the total returns and exchange frequency. The study result implies that setting up brick and-mortar stores will have little impact on their existing channels and significantly boost the company’s net revenues. This phenomenon is associated with a so-called “availability effect,” meaning that adding channels is a form of increasing distribution, lowering customers’ search costs, and increasing sales. Store introduction also increases customer retention.