Competition Blog Archives
Competition Blog posts insightful comments on the latest international news that render us taken-aback in the domain of the competition facet of life. Competition Blog: Pure Competition News 1 Web 2.0 E-Commerce: A New Era of Competition: August 6, 2007 by David Fry, E-Commerce Times
The online retail game has changed -- again. Your customers' expectations are increasing. Will you meet them? Or will you miss them? A revolution is taking place online. New Web technologies are providing a better, more interactive shopping experience and putting the power of shared community in your customers' hands. A new era of competition has begun in which a rising tide will no longer lift all boats. Web 2.0, thought of mainly for its technological advancements, may be best remembered by retailers for the e-commerce ultimatum it provokes: Meet customers' growing expectations or lose them to another site. Web 2.0 technologies provide for heightened levels of interaction on Web sites, and consumers expect that same level of interaction when shopping online. These new and better experiences encompass online collaboration, social networking and a closer simulation of an in-store shopping experience. Competition Blog: Pure Competition News 1 (Continued) Fundamental Change in Measuring This shift is already being seen in measurement tactics, as metrics trackers start to take into account time spent on a Web site rather than just the traditional count of page views. Recently, Nielsen//NetRatings added both "total minutes" and "total sessions" metrics to its service because Web pages that rely on Ajax technology or present streaming media can serve new content without reloading individual pages. This fundamental change in measuring Web sites signals that new technologies are not just a fad for Web sites to experiment with, but that they are behind a lasting transformation that is altering the way people shop online. Competition Blog: Pure Competition News 1 (Continued) As-It-Happens Responsiveness Today's shoppers are too impatient to use a site where you click and wait for the next page to load. Ajax (which stands for Asynchronous JavaScript and XML) allows single-page browsing and checkout processes, which save time and reduce shopper frustration and shopping cart abandonment. Ajax technology pulls relevant data forward seamlessly, providing shoppers with a smooth, consistent view and sense of interaction, rather than the experience of clicking on or through multiple pages to accomplish a task. It can be used for the basic shopping components of a site such as product pages, as well as for more engaging features of shopping online like recommended or recently viewed products, user-generated reviews, product demonstrations, assembling outfits and tagging products with additional keywords. Competition Blog: Pure Competition News 1 (Continued) Pairing Shoes With Handbags Shoppers can now look for ways to pair up similar items, even those that are from different brands or sites. Mashups, one of the newest incarnations of Web 2.0 technology, are created using an application programming interface (API) to access the functionality of one Web site to integrate it into the structure of another Web site while a customer is browsing. For example, 6pm.com, which Zappos recently acquired, uses a mashup to pair shoes with handbags, providing consumers with the option to accessorize. Customer reviews and comments on the pairings appeal to the very human need to know "what everybody else is doing." Reviews can move your shoppers from consideration to purchase. Competition Blog: Pure Competition News 1 (Continued) Just Looking While mashups can pair similar items from different sites, smart retailers make it easy for consumers to compare and save items they are interested in while shopping on a single site. Shopping carts are often used to store items for later consideration, but it's not always possible to retrieve the contents of a shopping cart on a follow up shopping visit, or to compare items being considered in a single visit. People shopping in a brick-and-mortar store, for example, wouldn't take each item they are considering to the counter one at a time and then go back for more merchandise, but rather would gather items together as they browse through the store. Competition Blog: Pure Competition News 1 (Continued) By offering an online "thinking about" function, shoppers are able to consider products side by side just as they do in-store. With the contents of the "thinking about" area in plain view, shoppers can make an informed decision about which items make the final cut for purchase. Because the shopper doesn't leave the page, the items they're thinking about stay in clear view and top of mind. If the shopper leaves the site and returns at another time, any items that remain in the "thinking about" section will be there on the next visit. Similarly, an "add to cart" function can be made available so that when shoppers are ready to purchase, they go to the shopping cart (or bag) and drag items into it from "thinking about." Then, the shopping cart can offer more detailed images of products, provide more product information, even stock and inventory details and let shoppers easily edit their order. Competition Blog: Pure Competition News 1 (Continued) Listen Up For years, retailers have ignored data that say user reviews are valuable because the content was difficult to manage and they feared the impact of unfavorable customer comments. Part of the Web 2.0 creed of meeting consumers' growing expectations is allowing their actions to have an impact on your site. By granting some control to your customers through reviews and tagging, you're actually creating a focus group that shows what they care about and what features or products you may want to showcase to drive sales . While only about 1 percent of online shoppers create this original content, 90 percent of them read it. What you learn from the reviews, while sometimes painful, can be good for business in the long run. Two of retail's biggest players -- Staples (Nasdaq: SPLS) and Wal-Mart (NYSE: WMT) -- recently announced they'll use customer reviews on their sites, validating the trend. Competition Blog: Pure Competition News 1 (Continued) This growing social aspect of Web 2.0 will continue to influence the way people perceive your site. When walking down a busy city street looking for a place to eat, most people will gravitate to a location with customers already inside, rather than an empty restaurant. Again, "what is everyone else doing?" Similarly, Web sites with an absence of customer community activity may soon feel "empty" compared to those that feel "alive" with activity and communication. Online retailers must continue to assess Web 2.0 technologies and incorporate the functionality that helps them deliver the experience sought by their customer base. These new technologies help create online brand immersion, increase customer loyalty and drive repeat sales. In the calmer waters of today's e-commerce marketplace, it will take effective use of these new technologies to stay afloat. Competition Blog: Pure Competition News 2 When Competition Increases Sales: Aug 7 2007 You're in a market and a competitor arrives. Should you be worried? Not always. Record labels were petrified of radio, when it arrived, but it only drove their sales upwards. Small coffee shops generally see their sales rise, not fall, when a Starbucks opens up nearby. And in the blog world, a new blog in your space is all but certain to increase your own traffic. The same thing can happen even when the competitor is yourself. Most big newspapers today put all of their content online for free. What does that do to sales of the print product? Publishers have been generally reluctant to embrace the internet, and have often done so only because they have to, and not because they want to. It seems obvious that if your newspaper's content is available for free online, then people are less likely to pay money for it in paper form. But the obvious is not always true, and so Matthew Gentskow, of the University of Chicago's business school, actually bothered to run the numbers, using the Washington Post as his object of study. Competition Blog: Pure Competition News 2 (Continued) Both reduced-form OLS regressions and a structural model without heterogeneity suggest that the print and online editions of the Post are strong complements, with the addition of the post.com to the market increasing profits from the Post print edition by $10.5 million per year. In contrast, when I estimate the full model with both observed and unobserved heterogeneity, I find that the print and online editions are significant substitutes. I estimate that raising the price of the Post by $.10 would increase post.com readership by about 2 percent, and that removing the post.com from the market entirely would increase readership of the Post by 27,000 readers per day, or 1.5 percent. The estimated $33.2 million of revenue generated by the post.com comes at a cost of about $5.5 million in lost Post readership. For consumers, the online edition generated a per-reader surplus of $.30 per day, implying a total welfare gain of $45 million per year. Competition Blog: Pure Competition News 2 (Continued) In English, this means that the publishers' intuition is true, in a narrow sense. Without the website, the readership of the paper would go up. But it wouldn't go up very much: just 1.5%. And of course the website reaches many more readers than the print edition ever will, quite aside from making money itself. Elsewhere, I'm quite sure that the readership of the print version of the Onion increases with the popularity of the website: if the website had never been launched, the print version would be nowhere today, or at least certainly not in New York. Similarly, smart magazines like Wired and Portfolio put all of their content online for free because they know (or at least suspect) that it drives print sales, rather than cannibalizing them. Whether the entertainment industry is going to wake up to this paradigm, however, remains very doubtful. Competition Blog Comment: Perfect competition is ideal competition - a pure competition - where no foul means are being used to get ahead of the other. Your quality decides your worth and your demand; and reserves a niche for you in the market to which you supply. But there is many a slip between the cup and the lip. There are other forces also playing their role. They won't let you sit at ease. They won't let you work in peace. The problem with you is that you aspire for reaching the top. The problem with me too is that I too aspire for reaching the top. The top cannot accommodate the two of us. It doesn't have enough space over there. But then, why not I be that if only one has to rule the world? The spirit of pure competition, wow! I invite you to subscribe to my E-zine titled Life Coach, free of charge. This E-zine publishes insightful comments on the latest international news that render us taken-aback in the domains of various facets of life. A not-to-be-missed opportunity! Subscribe to it here: I also invite you to subscribe to my Life Blog - no need to provide your e-mail address here. This RSS feed keeps you informed about new developments taking place on this site. It also harbors 25 journal bloglets posting insightful comments on the latest international news that render us taken-aback in the domains of various facets of life. In order to subscribe to the blog, right-click on the orange RSS button (see buttons up to the left) and then paste the URL into your RSS reader. Or click on add to My Yahoo! button or My MSN or Add To Google button if you keep a personalized home page there. If you are not sure what RSS or blogging is all about, click on What's an RSS Feed? here:
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