SECTION HEADING Keywords: e-commerce, cyber-enhanced retailing, consumer mercantile phases, brick-and-mortar retailing, kiosk, comparative analysis
Along with the exponential growth of e-commerce activities, the world marketplace is undergoing a rapid transformation and retailing is one of the key areas of this revolution. In this paper, we introduce a concept called `cyberenhanced retailing'. Cyber-enhanced retailing is a paradigm that melds the advantages of e-commerce with the advantages of traditional physical retailing. The paper introduces a framework that compares and contrasts the general advantages and disadvantages of both e-commerce and traditional `brickand-mortar' retailing. Based on this framework, we analyse possible approaches to applying e-commerce retailing techniques to the consumer mercantile activities in the traditional retailing realm. This analysis leads to a discussion of a number of potential scenarios for enhancing the traditional retail experience by integrating e-commerce technologies.
A Framework for Cyber-enhanced Retailing: Integrating E-Commerce Retailing with Brick-and-Mortar Retailing JAMES R. OTTO AND Q.B. CHUNG
It will no longer be possible operationally or strategically to ignore the massive changes taking place both in the physical and virtual market places (Rayport and Sviokla 1995; Shaw 1999). Electronic commerce (e-commerce) retailing has grown dramatically since 1997 and continued dramatic increases are projected. The active user population was estimated to be 37 million in December 1998, up from 27 million in December 1997, and is estimated to grow to 142 million by 2002 (eMarketer 1998). Nonetheless, it is unlikely that Internet retailing will supplant any more than a modest amount of traditional (or physical, brick-and-mortar) retailing. According to New York-based research firm Jupiter Communications, in 1998 US Web retailers sold $7.1 billion worth of goods and services, compared with $3 billion in 1997. Retail online sales are expected to reach $41.1 billion in 2002 (Hong 1999). While this is a large dollar amount, it still represents a small percentage of the overall US retailing market. For example, Wal-Mart's 1998 sales were in excess of $137 billion (Nelson 1999). There are a number of reasons why cyber-retailing will probably not dominate retailing: including limited access to computers; shopper concerns about security; inability to physically touch and inspect
products; and delayed product receipt. Nevertheless, the growth trend shows no sign of slowing down in various electronic markets, such as flowers, clothing, automobile, music, books, airline tickets, electronic magazines, and stocks and securities (Strader and Shaw 1997). The purpose of this paper is to propose a concept, along with a framework for analysis, that we call `cyber-enhanced retailing,' which melds the advantages of e-commerce with the advantages of traditional physical retailing.
TWO MODES OF RETAILING
As the retail industry faces this new trend, it is natural to compare the two modes of retailing ± physical and online. Only a clear understanding of the differences and their implications can help retailers establish sound strategies that can materialize (Terhune and Ferrara 1999). Thus, let us compare and contrast the general advantages and disadvantages of both ecommerce and physical retailing. To do that, we have come up with a fairly comprehensive list of attributes of the modes of retailing, and for each attribute we attempt to determine which of the two modes exhibits a relative advantage over the other. For instance, online retailing is considered at significant advantage over physical
Copyright & 2000 Electronic Markets Volume 10 (3): 1±7. www.electronicmarkets.org
James Otto (James.Otto@Villanova.edu) is Assistant Professor of Management...