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Cyber-enhanced retailing
Information exchange information. For example, a buyer
Market barriers can search a large database of thou-
Convenience sands of products in a matter of
Personal service seconds. In this way, e-commerce
Value added services can increase the amount of infor-
Immediacy mation exchanged during the buy-
Monetary instruments ing and selling phase.
Taxes Convenience: With cyber retailing,
Shipping costs products can be searched and paid
Otto and Chung
expire in October 2001 (O'Connell with cyber retailing. Credit card stores to cyberspace, then by default
1999). It should be noted that this and other personal information we must move cyber retailing to the
tax advantage is only temporal over the Internet can be intercepted physical-retailing realm. In other
rather than an advantage inherent en route from the browser to the words, enhance the physical shopping
to cyber retailing. web server (unless encryption is experiences using cyber-retailing tech-
Shipping costs: Online shoppers will used) or stolen from a server. Ad- niques. We call this concept cyber
generally incur shipping costs in ditionally, many disreputable mer- enhanced retailing.
addition to the purchase price. chants may misuse credit card or With cyber retailing competitors,
Anonymity: There are advantages in personal information once they re- such as Amazon.com, making strong
being able to shop for products ceive it. For example, thieves some- inroads, the brick-and-mortar stores
anonymously on the net. This is in times set up pirate sites to collect may be able to leverage their physical
stark contrast to traditional shop- credit card numbers that they then presence near the customer to compe-
3 ping that generally requires one to sell to other criminals or misuse titive advantage by employing cyber-
enhanced physical retailing. They can Kalakota and Whinston's (1987) could be employed before the custo-
provide additional services and func- eight steps of consumer mercantile mer enters the store (such as on a
tionality with their physical stores that activities provide a useful framework home computer), or when a shopper
cannot be provided by the Internet for conducting this analysis. The first enters a store (such as on an in-store
only stores. For example, traditional four activities primarily pertain to the PC or kiosk). Note that, for simpli-
retail outlets can offer immediate cash process of gathering information city, we use the term kiosk to repre-
and carry and allow the customer to about the product of service to satisfy sent any type of publicly accessible
physically inspect the product. By the consumer's needs. The next two Internet or Intranet access located in
enhancing their mercantile processes activities commit both parties to a a public place. Discussed below is
with cyber-retailing techniques they transaction. Finally, the last two how the traditional retailing activities
can also provide individualized service activities are necessary to fulfil the can be potentially integrated with the
and product database searches along consumer's satisfaction from the cyber retailing techniques in order to
with a wider exchange of goods that transaction. In Table 2, we compare support retailers during each of the
compete directly with cyber store ser- how the different consumer phases phases.
vices. are addressed in the e-commerce and
To develop potential cyber- traditional physical retail environ- Product Service Search Phase: Dur-
enhanced retailing opportunities, we ments. ing this phase, consumers are
developed and exercised a model of As can be seen in each of the steps, searching for a product with the set
how both shoppers and retailers con- the retailing process involves a signifi- of attributes (e.g., price, service,
duct mercantile transactions. Ac- cant exchange of information. It is in quality) that best meet their needs.
cording to Kalakota and Whinston this area especially, the support of In the physical-retailing realm, the
(1997), consumer mercantile activities information exchange between buyer consumer will generally visit or
take place in eight consecutive steps and seller, where cyber-retailing tech- phone multiple retail establish-
as shown in Figure 1, which are: niques and technologies can enhance ments, search catalogues or review
product service search; comparison traditional retailing. advertisements. In the e-commerce
shopping; product selection; negotia- A close examination of the details realm, this process can be aided
tion of terms; placement of order; shown in Table 2 enables us to gener- considerably by database and search
authorization of payment; receipt of ate possible approaches to applying engine technologies. The consumer
product; and customer service and cyber techniques to physical retailing can implement a database or web
support. practices. These cyber techniques search (or employ software agents)
to search for products that meet
their requirements. For example,
consumers can search for airline
flights based on any number of
criteria such as lowest cost, carrier,
or a given level of service (e.g.,
economy versus business class).
This same technology can, and is,
being applied to support physical
establishments. One of the most
Cyber-enhanced retailing
obvious approaches would be for a
physical retail establishment to
establish a presence on the web that
facilitates consumer searching prior
to a visit to the establishment. They
can use cyberspace to drive custo-
mers to their physical retail stores.
For example, Perfumia, Inc. uses its
website to advertise in-store promo-
Otto and Chung
and special order items. In this way fications. Another potential use for the Dell website, the shopper can
the consumer has more informa- cyber retailing might be in the dis- mix and match product options and
tion, more quickly, to support the play of a product that does not yet compare price and performance
search process. This also provides exist. For example, a customer (Dell 1999). Such a capability
information to the consumer con- might take a virtual tour of a house might be useful for an in-store
cerning products not available for that is not yet built. In a related kiosk as well as a traditional retail
inspection in the store. Another manner, customers might be able establishment's web page. Addi-
potential use of in-store e-com- to view or listen to snippets of tionally, the shopper can compare
merce technology is to provide a entertainment products. Cross pro- product attributes against one an-
map of product locations within the motion with related, but noncom- other or search products based on a
store or to other affiliate stores that petitive products or stores, is also priority attribute such as lowest
might have the product. Addition- possible. price or best warranty. If the store
ally, since the customer is already in Comparison Shopping Phase: During does not sell the product of inter-
Electronic Markets Vol. 10 No 3
the establishment, and can physi- this phase, the shopper is compar- est, a decision support system
cally inspect products that are in ing the basket of attributes available might be able to suggest an alter-
stock, the possibility of a sale may from each product. For traditional native product that might meet the
increase. The system could be inte- retail establishments, the customer customer's requirements.
grated with the existing barcode can visit or phone multiple retail Product Selection Phase: The pro-
scanning information systems to al- establishments, search catalogues, duct selection phase occurs when
low the customer to independently or review advertisements to com- consumers determine which pro-
retrieve additional information on a pare the attributes of multiple pro- duct(s) best meets their needs.
product. For example, a customer ducts. A decision support system, They might also choose from a
could take a food item off the shelf available on many cyber retail estab- variety of options for the specific
and scan its barcode at a kiosk to lishments (such as www.dell.com), product selected. For example, the
retrieve information about the pro- might be able to help the user make product may come in different col-
5 duct's pricing, promotions or speci- these comparisons. For example, on ours or sizes. Upon selection by a
customer (while either on a PC at kiosk printed my tickets and deliv- may be able to sell music titles that
home or at a kiosk in the store), the ered them on the spot. This same might otherwise go unnoticed (Hil-
shopper could be presented with a type of onsite e-commerce is very lis 1999).
variety of useful information con- common at petrol stations. Using a Customer Service and Support Phase:
cerning the product. For example, kiosk, a shopper could also place a A traditional store has significant
the size, weight, final cost including product on layaway. Other business advantages when it comes to re-
tax, where the product is located models that have integrated the turning products. The customer
within a store, loan terms, addi- Internet for placement of orders does not need to pack up and mail
tional product requirements (such include Peapod, Inc. which delivers the product back to the company.
as batteries or fuel), and maybe grocery items from local stores to Instead, the customer only needs to
even coupons for printing. If custo- customers who order online (Math- return it to the store for a credit or
mer service is important, the store ews 1997). In this way, the custo- their money back. Ironically, how-
can have the products waiting for mer can get their products almost ever, it is in this after sale support
the customer for immediate pickup immediately and local stores can phase where cyber retailing may be
and checkout at the front door or extend their boundaries to custo- able to most strongly enhance tradi-
loading dock. At the time of pro- mers who may not be willing to tional retail outlets. If the customer
duct selection, it may also be ad- travel to the store to purchase their is willing to provide some identify-
vantageous to present the customer products. Finally, by allowing kiosk ing information, such as name, ad-
with additional ideas on related ordering, it may be possible to sell dress, and email, then the store can
products that the consumer might the customer additional related pro- send information of interest to the
find useful. For example, if a custo- ducts or warranties. shopper. For example, if a fre-
mer selects a video cassette recorder Authorization of Payment Phase: quently purchased item goes on
product, then that customer might Traditional stores have a significant sale, then the store can send an
be presented with information re- advantage over cyber retailing in email or flyer to the customer. In
lated to available recording tapes. that they can accept cash at the this way traditional retailers may be
Negotiation of Terms Phase: During checkout counter. However, an in- able to increase their customer
this phase, a kiosk could present the store kiosk may be able to help relationship management services.
customer with a variety of terms automate this payment authoriza- Additionally, an in-store kiosk may
regarding price, delivery, and loan tion process by accepting credit be able to provide detailed support
terms to select from. In special cards and allowing customers to and service information on products
circumstances, the negotiation pro- avoid queues at the checkout coun- in the store. Examples might in-
cess could be mediated by software. ter (as previously exemplified by the clude product support websites,
For example, on certain in-store theatre tickets example). technical support phone numbers,
products, online auctions could be Receipt of Product Phase: Tradi- part numbers and parts ordering.
held with the support of one or tional stores have a decided advan-
more kiosks. tage over cyber stores when it
Placement of Order Phase: During comes to product delivery. In many
the order placement process, a cases, the customer wants the pro- FURTHER DISCUSSION AND
shopper and merchant exchange duct immediately. This is possible CONCLUSION
necessary information to order and in physical retail establishment be-
Cyber-enhanced retailing
pay for the product. In most tradi- cause the customer can walk out Based on the previous discussions on
tional stores, this process involves with the product. Nonetheless, in how e-commerce technologies can be
taking the product to the checkout the case of information-based pro- used to enhance the mercantile phases
and paying for it. This immediacy is ducts, such as music, tickets, books, in traditional physical retail stores, the
an advantage of the traditional retail stock trades, etc., where the pro- following list considers a number of
process. Cyber processes might be duct is not a physical one, cyber other potential services that might be
able to enhance this process by retailing techniques may enhance provided.
allowing the customer to purchase the traditional in-store mercantile
and receive the product electroni- process. In addition to the theatre Free email and web services pro-
Otto and Chung
cally. For example, recently I ticket example discussed earlier, vided with membership logon
needed to purchase movie tickets Sony is planning a kiosk in music 24 3 7 ordering of information for
for a popular show. The queues stores to allow the customers to scheduled pickup or delivery
were very long. I was able to avoid download and create compact disks Status of order information (e.g.,
the queues at the theatre by em- for any of the Sony titles. This will photographs, back ordered goods,
ploying a kiosk at their location. I give customers access to Sony music and layaway items)
inserted my credit card, selected the that is not economical to physically Parts ordering
movie and time of choice, and the stock in stores. By doing this, Sony Physical sample dispensers for spe- 6
cial order items (e.g., perfume sam- kiosk implementation and operational Electronic Commerce: A Manager's
ple on a card dispensed from kiosk) costs are always a concern. Further- Guide, Reading, MA: Addison
Instant coupons more, retailers must also determine if Wesley.
Lifestyle suggestions (e.g., recipes) customers will use the terminals in Kruger, R. (1999) `Where Retail Meets
Specials of the day sufficient numbers and often enough E-Tail', Discount Merchandiser
Store hours, phone numbers, email to provide a valuable benefit to con- 39(4), 579.
addresses, etc. sumers. Retailers must also address Mathews, R. (1999) `Virtual Retailing:
Frequent shopper points competitive information issues by Beantown's Battle of the Boxes',
allowing broader access to product Progressive Grocer 76(4), 3740.
A handful of the ideas outlined
related databases. McMurchie, L. (1999) `NCR Seeks
above are already being implemented
We have presented a concept and Support for Kiosks', Computer
by retailers, and we believe more of
framework for integrating some of the Dealer News 15(13), 41.
them will become realities (in addi-
techniques used by Internet retailers Messmer, E. (1999) `Credit Crunch for
tion to the previously mentioned ex-
with the traditional retail store. By Electronic-Commerce Wannabes',
amples). A few cases in point: Under
leveraging e-commerce technologies Network World 31 May, 13.
a pilot project, SHL Systemhouse is
to enhance the traditional shopping Nashand, K. and Harrison, A. (1999)
placing kiosks in shopping malls to
experience, while leveraging their `Credit-Card Fraud Plagues E-
sell a variety of products including
natural competitive advantages, tradi- Commerce', Computerworld 10 May,
clothes and toys (Schick 1999). Kmart
tional retailers may be able to increase 12.
is conducting a test of in-store kiosks
the value of the services they provide Nelson, E. (1999) `Retailing: as Web
to sell products in some of its stores.
their customers and more effectively Retailing Surges, Where's Wal-
Kmart offers four guidelines to decide
compete with cyber retailers. Mart?', Wall Street Journal 17 May,
what products to offer in its kiosks;
13.
recognized brands, information inten-
O'Connell, B. (1999) `Hands Off on
sive products that can provide a large
Internet Tax Laws: Government
amount of descriptive information,
Activity', ENT 24 March, 30.
hard-to-find items, and replenishment References
Rayport, J.F. and Sviokla, J.J. (1995)
items such as nappies (Heller 1999). Dell Computer Corporation (2000)
`Exploiting the Virtual Value Chain',
NCR is selling kiosks that allow cus- `Dell Home Page', http://
Harvard Business Review 73(6),
tomers to get product prices, product www.dell.com/us/en/gen/
7585.
locations in the store, product avail- [accessed 10 January 2000].
Schick, S. (1999) `The Touchscreen
ability, specifications, and current eMarketer (1998) `Dollar Projections',
Treatment', Computer Dealer News
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Shaw, M.J. (1999) `Electronic
are also providing some of these same 1998].
Commerce: Review of Critical
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Research Issues', Information Systems
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`Characteristics of Electronic
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Terhune, A. and Ferrara, C. (1999)
There are a number of real world Hong, F. (1999) `Virtual Shopping
`Retailing FAQs: Comparing Real
issues that must be considered when Puts Many Retailers in the Red',
and Virtual', Gartner Group Research
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