Management Challenges in Online Retailing

As consumers turn to the Internet for their daily shopping needs, the role of price comparison is changing. Technology can reduce the cost of search and make prices unstable, but this also creates management challenges. Much research has focused on price comparison by attribute, but these challenges are even more prevalent in online retailing. For example, consumers are uncomfortable viewing merchandise on a computer screen, so retailers must consider different incentive strategies to motivate their employees. And when consumers do purchase a product from a website, they tend to view it as a ‘discount’ rather than a “deal’.

However, retailers are addressing this issue by attacking the “access charge” model. By offering two sources of entry, retailers can pick up these access costs. While technology can create new business opportunities, it is still necessary to have managerial vision and insight to implement a successful online retailing strategy. No one really knows how to build a mass-market online mall. Retail management must learn how to design a consumer interface that delivers a satisfying shopping experience, including graphics and text. It must also consider the potential for simulated three-dimensional and virtual reality.

Consumer behavior has changed, and traditional retail business models are under more pressure than ever. Consumers have less time and more money to spend, so retailers need to focus on providing value and bundling recreational and entertainment activities with their products. By offering a broad range of products from a variety of producers at deep discounts, retailers can help their customers find something they need and save time. But the challenges are still many. In the meantime, it is important to recognize that consumers’ preferences and needs are ever-changing and constantly changing.