Retailer Adoption of the Internet Essay Example

formats.

To address these issues, this paper reviews recent literature on how the internet impacts retail marketing and categorizes the online activities of UK retailers from top organizations. The findings have implications for developing effective retail marketing strategies which are explored before presenting conclusions.

Over time, there has been a shift in focus regarding retail marketing and the internet's role. In the 1990s, there was an emphasis on utilizing databases for customer management.

The new millennium brought a desire for integrated retailing through interactive customer management. Key IT technologies, like EPOS and EFTPOS, loyalty cards, and database marketing, played a significant role in this evolution. These technologies not only allowed retailers to identify customer buying behavior but also connect it to their merchandising practices. However, the internet revolutionized retail marketing by providing a means of communication for retail organizations. It served as a marketing tool to engage consumers actively and offered an alternative channel for online transactions. This shift allowed retailers to target and interact with consumers individually throughout the entire product transaction process.

Websites and online platforms enable retailers to share information about their products and services with potential customers while using personalized advertisements or virtual tours to provide detailed product information that aids in informed buying decisions. Retailers also view the internet as a way to attract new customers, enter new markets, effectively promote their brand image, and enhance customer retention. Additionally, selling products online has become another way for retailers to utilize the internet for retail purposes.Embracing technology, such as databases and IT systems, has greatly transformed retail marketing over time. The advent of e-commerce has provided retailers with more opportunities to engage with

consumers and conduct sales online. If successful, this format has the potential to replace physical stores and completely transform the retail landscape. The internet holds the power to revolutionize consumer shopping habits, turning local high streets into global cyber high streets.

The success of online shopping relies on factors like consumer demand, accessibility, and perception of online platforms. Internet retailing offers a distinct experience compared to traditional brick-and-mortar stores by making it easier and faster for consumers to compare prices across multiple websites.

Although research suggests that US consumers primarily use the internet for product research rather than direct purchases, there are challenges related to cognitive ability and information searching that may discourage some from transitioning to online shopping.

Applying store image theory and retail patronage behavior to virtual stores is not always straightforward since certain aspects do not easily translate from physical stores to online ones. Dimensions relevant in traditional stores may no longer hold true in the context of online retailing. Future consumer research may need to determine new dimensions for assessing the image of virtual stores.

Consumer predisposition might limit the growth of online retail in the UK.Unlike other countries, retail formats in the UK experience gradual growth and allow consumers to adapt to new delivery methods. The speed at which retailers adopt the internet can impact consumer adoption and potentially lead to a decline in older formats. Well-established retailers with strong brands and investments in traditional formats are less likely to expand into electronic formats. However, newcomers to the retail sector face fewer barriers and are more inclined to embrace the internet format, as seen with Amazon's success. Smaller retail organizations tend to be more

flexible and open towards adopting the internet due to their limited resources (Morganosky, 1997). It has been observed that smaller companies in the US were less likely to have an online presence (Morganosky, 1997). Different types of goods attract online consumers differently; for example, there was a preference for electronic products, banking services, books, and magazines in the US (Morganosky, 1997). However, grocery shopping was considered less compatible with internet shopping. In the UK, food multiples may view the internet as a means of increasing sales in an industry with stagnant food sales and intense competition. Meanwhile, non-store or mail order companies in the UK may be early adopters of e-commerce to extend their paper formats. Nevertheless,'the home shopping market struggles to maintain 5% of all retail sales'in Europe.
Online retailers face challenges in fully utilizing the marketing potential of the internet due to consumer resistance. Currently, online shopping only accounts for 0.2% of retail trade in the UK, but sales are expected to increase significantly within three years as older consumers become more accepting of online shopping. Some UK retailers have been criticized for not taking advantage of internet marketing opportunities, leading to questions about whether this criticism applies universally or if certain sectors are more advanced online. The flexibility of websites allows retailers to introduce and update products or services at any time, making it difficult to accurately assess the current and future potential of using the internet as a marketing channel for businesses.

In 1996, Internet commerce was valued at IJS$518 million and was projected by Field (1996) to reach IJS$6.6 billion by 2000. Pyle emphasized the unique business opportunities provided by the global

connectivity of the Internet, surpassing traditional commerce capabilities. However, concerns regarding security, payment methods, access restrictions, and technological limitations have hindered the success of the Internet compared to conventional marketing tools. The exact size of the Internet remains uncertain; however, registered domains increased significantly from 213 in 1986 to 29,650,000 in 1998The challenge of accurately measuring the number of end-users or potential online customers is acknowledged by businesses. Many are planning to offer internet-based services soon, as they recognize the expanding market (Retailer adoption of the Internet 957 European Journal of Marketing 34,8). However, making precise predictions about the commercial potential of the Internet or electronic commerce remains challenging until more reliable data becomes available (Whinston, 1997).

Several academic studies have been conducted on the commercial adoption of the internet (O'Keefe et al., 1998; Hoffman et al., 1996; Cappel and Myerscough, 1996; Cockburn and Wilson, 1996; Auger and Gallaugher, 1997; Spiller and Loshe, 1997; Griffith and Krampf, 1998 ;Jones and Biasiotto, 1999). However, these studies have limited contributions to understanding its structure or scale of adoption. Previous research has mainly focused on active websites with a strong global/brand presence. Most studies have concentrated on the top US retailers (Morganosky, 1997), providing limited evidence regarding how European (KPMG ,1996) or UK retailers as a whole have embraced Internet usage.

While these studies may reveal variations in online marketing strategies, they cannot solely examine online companies to provide insights into retail marketing. The adoption of electronic commerce by established companies is not automatic and will impact its future penetration.The research aimed to understand how retailers use the Internet to engage with consumers and determine the extent of Internet adoption

within the UK retail sector. A secondary objective was to establish a reliable survey method for studying the relationship between online vendors and consumers, while providing a reference point for future research. Previous surveys focused on high-profile or active online retailers, while this survey targeted all major retailers in the UK. The main objectives of the survey were: 1) to explore overall Internet adoption by UK retailers and its variation based on retail activity type, 2) to examine types of online marketing activities and services offered by major retailers, including information services and online sales.
This research aims to investigate whether the number of retail outlets affects the adoption of internet by retailers. The methods used for investigation are detailed in the following section along with their findings. The research methodology involved analyzing websites of retailers to determine their functions and services. Additionally, an online survey was conducted.A standardized web assessment document was created to collect consistent and accurate information about the different functions and services offered on websites. The content for this document was developed by analyzing the websites of prominent online retailers. A classification system was established to categorize internet functions, including registration and information provision. Registration refers to the initial phase of website development. Many websites use the Internet as a means of communication with customers and provide them with various types of information. The main focus of this study was not on the depth or quality of information provided, but rather on the type of information presented. It was discovered that besides serving as an information source, the Internet also facilitates interactive communication and transactions, with email being the primary method for

online communication. The text explores different aspects of website development, such as online ordering and payment systems. These services varied in terms of geographical limitations, merchandise ranges, and security levels. To delve deeper into interactive services, an online survey was conducted using a retail activity categorization scheme that gathered specific information about each retailer's area of operation. This scheme incorporated classifications from sources like Business Monitor and Corporate Intelligence on Retailing Survey.The acknowledgment of the global nature of Internet retailing is demonstrated through reference to The American Standard Industrial Retailer adoption of the Internet (Levy and Weitz, 1995). The categorization process took into account factors such as product type, assortment, size of operation, retail activity, and ownership. A pro forma data capture document was created to collect information on retailer size based on the number of outlets. To ensure the validity of this document, it was pre-tested on 20 retail websites. The research primarily relied on data from the Corporate Intelligence on Retailing survey (1995), which included major retail organizations as well as those considered innovative or influential within their niche market. In total, 330 leading UK retail organizations were identified and their websites were reviewed during the data collection process.

To guarantee unique names for internet sites in the UK, the Domain Name System (DNS) is utilized. The top-level domain name for the United Kingdom is '.uk', falling under the '.com' domain. Generally, a subdomain in the UK matches a company name. An online search tool specifically designed for finding domain names was used to determine if a URL was registered. Once registered URLs were identified, site activity checks were conducted. If an error message

occurred or if there was incorrect spelling that prevented connecting to a website, it was considered inactiveWebsites deemed inactive were those that displayed indicators suggesting an imminent launch. On the other hand, websites clearly associated with a retail company through logos, names, or address details were classified as active, regardless of their informational content. Each active website underwent a thorough review and documentation process using a review guide document. This meticulous approach to data collection ensured accurate findings in this study on retailer adoption of the internet. The data capture exercise took place from January 1997 to June 1997 and yielded valuable research results.

The focus of this study is analyzing Internet adoption in the retail sector and addressing previously outlined research objectives by examining three key areas of Internet activity: registration, information provision, and interactive services. The results of an online survey reveal limited Internet usage in the UK retail industry. Only 31% of retailers surveyed have a registered URL, indicating that the majority (69%) do not have an online presence. Additionally, only 10% of retailers have live websites offering informational or interactive services. This finding aligns with previous research conducted in the United States that also reported a similar disparity between registered URLs and active websites.One possible explanation for this phenomenon is that retailers prioritize the development and maintenance of their websites rather than engaging in online activities, as suggested by Morganosky (1997). Another reason could be a lack of a clear internet strategy or insufficient resources available for implementation. Among various categories of retailers, such as electrical goods, toys, and DIY stores, registration rates are approximately 5%. However, convenience stores, footwear shops, mixed

retail stores, news outlets, health and beauty establishments display lower registration levels below 30%. According to the text, the highest percentage of retailers providing informational services is seen in the electrical sector at 33%, followed by grocery retailers at 31% and toy stores at 24%. Adoption rates for other sectors are below 20%, with specialist food retailers having the lowest rate at 1.5%. Interactive sites are slightly less prevalent than informational sites across all retail sectors. The relationship between retailer category and adoption was examined using a chi-squared test; results can be found in Table III. Although some expected values fall below 5, this is acceptable for large cross-tabulations. The analysis reveals a highly significant relationship (at the 0.001 level) between retailer category and internet adoption levels. Comparing actual and expected values demonstrates that grocery, electrical, and mail order organizations have a higher probability of having a registered URL and transactional site.Specialty foods and the health and beauty sectors are less likely to have these features in comparison.