Exam 9: Online Retailing and Services

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There are several reasons for the difficulties experienced by online retailers in achieving profits.The path to success in any form of retail involves having a central location to attract a larger number of shoppers,charging high enough prices to cover the costs of goods and marketing,and developing highly efficient inventory and fulfillment systems so that the company can offer goods at lower costs than competitors and still make a profit.Many online merchants failed to follow these fundamental ideas,lowering prices below the total costs of goods and operations,failing to develop efficient business processes,failing to attract a large enough audience to their websites,and spending far too much on customer acquisition and marketing.Now,however,the lessons of the past have been learned,and far fewer online merchants are selling below cost,especially if they are start-up companies.There's also been a change in consumer culture and attitudes.Whereas in the past consumers looked to the Web for cheap prices,they now look to online purchasing for convenience,time savings,and time shifting (buying retail goods at night from the sofa).Consumers have been willing to accept higher prices in return for the convenience of shopping online and avoiding the inconvenience of shopping at stores and malls.This allows online merchants more pricing freedom.