NEW YORK -- Electronic commerce is entering a new stage, with retailers in some industries already reporting huge spikes in consumer sales and success in implementing valuable business-to-business programs over the Internet.
A number of supermarket retailers have established an Internet presence, and a few report sales successes offering a limited number of items. Orders for brownies, hams and stemware, the products currently sold via the web site for Dorothy Lane Market, Dayton, Ohio, "increased dramatically" during the recent holiday season, said Jack Gridley, meat and seafood director and Internet resource manager at Dorothy Lane.
Still, Internet sales represent a "very small" percentage of the retailer's total sales, he said.
While some supermarkets use their web sites as vehicles for consumer-direct orders, most are still providing information rather than products over the Internet. Genuardi's Family Markets, Norristown, Pa., launched its web site last fall. "We're not set up for electronic commerce yet, but the potential to sell, both for Genuardi's and the supermarket industry," is definitely there, said Alan Tempest, director of marketing for Genuardi's.
But taking the leap from information-based "browser-ware" sites to harnessing the full potential of Internet technology for generating profits and streamlining supply chain costs will not be easy.
Retailers must first take a much more collaborative approach and involve all aspects of the company, from the marketing and strategic planning sides of the business to the information systems and creative design staffs.
That was the message delivered by Jim Roots, interactive marketing manager for Sears, Roebuck & Co., Hoffman Estates, Ill., and a panel of experts, who spoke at a workshop titled "Examining the State of Electronic Commerce for the Retail Industry" at the Washington-based National Retail Federation's annual convention here, held Jan. 17 to 21. Roots, who is also chairman of the Chicago Interactive Marketing Association, pointed to the enormous surge in Internet sales in just the past year among a select group of retailers as evidence of the growing viability and future importance of the medium.
J. Crew, for example, experienced a 10-fold jump in holiday sales of its trendy clothing lines over the Internet vs. a year ago. Similarly, Disney's on-line holiday sales grossed the equivalent of five stores, he said.
In all, 7 million households have now purchased goods and services via the World Wide Web, Roots told an overflow audience during the session.
Even more indicative of the trend toward electronic commerce, he said, are statistics showing that 18% of households now have more than one personal computer, and theoretically could set up networks in their homes.
A number of business issues are also propelling the move toward electronic commerce's viability, noted Markus Stamm, large retail market segment manager for Open Market, Cambridge, Mass., an Internet commerce firm.
Businesses, he said, are looking for new solutions to cut costs and save consumers money. One key factor in leveraging the Internet, Stamm said, is that labor shortages and related expenses are prompting organizations to "satisfy" more transactions electronically. Dorothy Lane's Gridley noted its web site had the potential to "streamline the order-taking process," when consumers placed orders via electronic mail rather than by telephone or fax. The retailer plans to be able to electronically transfer e-mail orders to the appropriate department by the 1998 holiday season, he said.
While the opportunity to boost sales and cut costs is considerable, however, retailers in the best position to prosper in the emerging world of electronic commerce are those with an exceptionally strong consumer brand image and a well-thought-out business strategy, Roots emphasized.
Sears' success in selling its Craftsman line of tools over the Internet is the direct result of conducting exhaustive consumer focus groups before offering the products for sale, quietly testing the site and making necessary changes before going public in December, involving all segments of the company from top management to customer service personnel in the decision-making process, and having a strong brand with considerable name recognition, he said.