Internet retailing

A traditional business s first encounter with e-commerce may well be as a supplier to one of the increasingly common Internet Web stores. Supply chain management is in fact a key, if not a critical, factor in the success of an Internet retailer. The number of products offered in a Web store depends not on available shelf space but on the retailer s ability to manage a complex sets of procurement, inventory, and sales functions. Amazon.com and eToys (http //www.etoys.com), for example, offer 10 times as many products as a typical neighborhood bookstore or toy shop would stock. The key application that enables these EC enterprises is an integrated supply chain. 

Internet retailers understand this, and independent or third-party businesses are offering almost immediate delivery in major metropolitan areas. If this is successful, Internet retailers will be removing one of the only barriers and will be competing head-on with store retailers. This suggests... 

Nearly two-thirds of all North American households have purchased online. Although the majority of retail sales still take place at traditional brick-and-mortar stores, online sales overthe next five years are expected to grow at a compounded annual growth rate of 14% (Forrester, 2005). The fast growth rate of Internet retailing provides new challenges for management. 

Amazon.com, one ofthe most successful pure Internet retailers, has grown from a book reseller to a retailing giant on the Internet. Amazon.com reported its net profit in 2005 as 359 million on 8.49 billion in net sales (Finfacts Team, 2006). From its humble beginnings using one distribution center in Seattle, Amazon.com has expanded to seven distribution centers across the United States as listed in Table 1. 

Forrester. (2005). Online retail sales will hit 210 billion in 2010. Internet Retailer. Retrieved November 10, 2005, from http //www.inteme-tretailer.com... 

Randal, T., S. Netessine, N. Rudi. 2002. Inventory Structure and Internet Retailing An Empirical Examination of the Role of Inventory Ownership. Working paper, Wharton School, University of Pennsylvania, Philadelphia, PA. 

One of the most successful and well-known internet retailers is Amazon.com. In less than 10 years of existence, they have become a retailing giant with 2002 revenue of nearly 4 billion, coming entirely from online sales. They neither manufacture the products they sell, nor maintain a traditional retail channel. They participate in a supply chain that includes product manufacturers (Random House, HarperCollins, Sony, etc.) that are separate entities from the traditional retailers (Barnes Noble, Borders, Waldenbooks, etc.) against which Amazon competes. The pricing decisions made by new, online retailers will have an important impact on the performance of all the members of the supply chain. 

Tsay and Agrawal (2001) present a model where a traditional and internet retailer compete against each other for customers based on both the price they charge and effort they put forth. A price increase by one competitor drives... 

Smart Guides are available at your local bookseller or from the following Internet retailers www.SmartGuidePublications.com www.Amazon.com www.BarnesandNoble.com Smart Guides are popularly priced from 18.95... 

Stacey King, The Internet Retailers New Challenge, Professional Jeweller Magazine, August 1999. 

Jay Greene, Blue Nile No Diamond in the Rough, BusinessWeek e.biz, May 2000. King, The Internet Retailers New Challenge. ... 

It s hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com ) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull it off, the company will permanently alter how we shop. To put it more bluntly Physical retailers will be hosed." ... 

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