Dec 16th 1999
In the scramble for market
share during the Christmas season, many online retailers will be exposed
as poorly constructed businesses. Few will survive.
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The industry has done everything in its power to raise their
expectations. The airwaves are echoing with jingles promising perfect
online shopping. Yet most online retailers are merely pretty facades.
Their priority is to create a buzz (what web retailers dignify as “brand
building”) so as to attract traffic. Meanwhile, only 5-20% of their
investment goes on merchandising, logistics and fulfilment, estimates
Keng Lim, boss of Escalate, which provides back-office systems for
Internet companies.
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PricewaterhouseCoopers, an accounting firm and consultancy, has devised a
measure of quality, called BetterWeb, which analyses such things as
orders, returns and complaints. None of the 300 e-merchants it has
surveyed passes muster.
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To succeed, online retailers need to construct more than just bright
websites made alluring by huge amounts of advertising. The solution is
to build top-notch distribution centres and warehouses. But, as
Amazon—probably the best online retailer—is discovering, that is very
expensive indeed.
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