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    Advantages and Dis Advantages

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    Pradeep Muthayala
    Etailing has cost advantages over traditional retailing like lower costs from eliminating physical storefronts and intermediaries. Etailers can also collaborate with manufacturers and warehouses to lower distribution costs. However, etailing faces disadvantages in India including a small internet user base concentrated in cities. Traditional brick and mortar stores are conveniently located and offer services like home delivery and credit that are hard for etailers to match. Indians also prefer physically examining products like clothes before purchase where etailers have difficulty conveying important product information to customers.

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    Advantages and Dis Advantages

    Uploaded by

    Pradeep Muthayala
    45 views2 pages
    Etailing has cost advantages over traditional retailing like lower costs from eliminating physical storefronts and intermediaries. Etailers can also collaborate with manufacturers and warehouses to lower distribution costs. However, etailing faces disadvantages in India including a small internet user base concentrated in cities. Traditional brick and mortar stores are conveniently located and offer services like home delivery and credit that are hard for etailers to match. Indians also prefer physically examining products like clothes before purchase where etailers have difficulty conveying important product information to customers.

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    Advantages and Dis Advantages[1]

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    Etailing has cost advantages over traditional retailing like lower costs from eliminating physical storefronts and intermediaries. Etailers can also collaborate with manufacturers and warehouses to lower distribution costs. However, etailing faces disadvantages in India including a small internet user base concentrated in cities. Traditional brick and mortar stores are conveniently located and offer services like home delivery and credit that are hard for etailers to match. Indians also prefer physically examining products like clothes before purchase where etailers have difficulty conveying important product information to customers.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    45 views2 pages

    Advantages and Dis Advantages

    Uploaded by

    Pradeep Muthayala
    Etailing has cost advantages over traditional retailing like lower costs from eliminating physical storefronts and intermediaries. Etailers can also collaborate with manufacturers and warehouses to lower distribution costs. However, etailing faces disadvantages in India including a small internet user base concentrated in cities. Traditional brick and mortar stores are conveniently located and offer services like home delivery and credit that are hard for etailers to match. Indians also prefer physically examining products like clothes before purchase where etailers have difficulty conveying important product information to customers.

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    of 2

    1.

    Advantages And Dis advantages of E- tailing and reailing

    Etailing

    What kind of retailing model is going to deliver the goods in the Indian scenario?
    o
    For an answer, consider the following. The most important cost advantage of
    e-tailing
    comes from whittled down shop front costs and elimination of intermediaries and
    economical distribution. For example, book e-tailing means giving out with big shops
    replete with slow-moving stock. Consider the case of Amazon.Com, where the orders go
    straight to the wholesaler. That means the working capital costs are cut down drastically.
    Not just that, an e-tailer is paid before he pays his distributor. The implication: need for
    lower working capital.
    o
    Collaborative commerce ( e-commerce)
    An e-tailer may collaborate with some manufacturers and suppliers. Something that
    Easybuymusic.com has done. It has hooked up with warehouses of music companies and
    their distributors. So every time an order is placed with easybuymusic.com, it scans the
    warehouse closest to the customer. In most cases the distribution costs are substantially
    lower since fulfillment is done locally
    o
    Create economic value
    E-tailers should create economic value for the customer rather than a curiosity value.
    They should find out reasons, as to why customers should buy from a web site rather
    than a brick and mortar store and try to communicate this reason effectively.
    o
    According to the KSA annual consumer outlook, the consumers are more comfortable
    buying certain items. An illustrative list with a percentage of the consumers are: books
    and music 47 per cent, home furnishing 29 per cent, sports apparel 25 per cent, casual
    clothes 21 per cent, shoes 14 per cent, groceries 9 per cent and tailored clothes 9 per
    cent.
    e-tailing in India can be a success if the e-tailers change their business models and
    understand their
    customers more.

    Dis advantages

    The hurdles
    Most of the e-tailing ventures have not been as profitable as they were expected to be, the
    reasons
    being: -
    y
    One estimate is that India has a mere 4 million Internet users, mostly are from metros.
    According to web analysts many areas of retailing, Internet is unlikely gather a sizable slice
    of
    market. And that could be several years to come. , Especially in businesses where margins
    are
    thin.
    y
    Despite a higher Internet penetration, cities like Mumbai or New Delhi might not be a haven
    for
    an e-tailer. Reason: for things like grocery, there is a shop out there at every nook and
    corner.
    All that an individual has to do is just make a phone call and the goods are delivered at his
    doorstep. Thrown in along with free home delivery is a month's credit.
    y
    Cheap labour Thanks to easy availability of domestics at an affordable wage bill, quite a few
    of
    the rich customers hire them for doing domestic chores, which include shopping. The usual
    Indian aversion to use credit cards. Thanks to low penetration of credit cards and the lack of
    popularity of debit cards, e-tailing might find it an uphill task to catch on.
    y
    Mounting competitive pressures
    The market for online buying is still at a nascent stage. The turnover of the sector is
    relatively
    small and many players have already entered into it. Thus many e-tailers are eyeing a small
    market, exerting more pressure on operating margins.
    y
    Shopping is still a touch--feel--hear experience
    Unlike the Americans, Indians do not suffer from 'time-poverty' and shopping is still
    considered
    to be a family outing. Hence this type of an environment creates a problem of customer
    retention.
    In e-tail, customer retention by 5% leads to increase in profits by 25%. Most people buying
    on
    the net do it out of curiosity and a repeat purchase is unlikely.
    y
    Inadequate information provided when the customers discerns it certain products like
    clothes,
    cosmetics etc. involve higher customer involvement. Most customers are comfortable buying
    books and music on the Internet because the information required making a purchase
    decision is
    simple.
    But not so when a customer has to buy, say a blue Trouser. Here the customer wants to
    know:
    Which shade of blue is it? How does it feel on skin? How easily does it crease? This problem
    does
    not crop up in traditional retailing. In cyber space, on the other hand, the buyer is normally
    starved of crucial information. Only the seller knows about the true quality of trouser. This
    is a
    clear case of " information asymmetry"

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