Page 5: Evaluating the success of on-line business
Three measures are commonly used to provide a useful guide to the success of a new on-line business:
- traffic: the number of people who look at the site and the proportion of these that convert into sales.
- sales by value.
These measures broadly indicatehow attractive the business is, how efficient it is in making sales, and how profitable it is. Growing profits depend on moving on the customer from buying basic or standard items to more sophisticated products with a wider range of features which may command a premium price and yield a higher profit margin. In addition, selling 'add-on' or peripheral items that complement the main product may add to the profit margin made on the sale, for example blank video tapes to go with video recorders, mini discs for mini disc players or films and batteries. The web-site can provide prompts to on-line buyers of core products to remind them to buy any add-on products too.
Whilst still representing only a small proportion of Dixons’ overall sales, the web-site is growing rapidly in terms of these three key areas of traffic, sales and profitability. The impact that the Internet presence is having in terms of expanded sales for the whole business is far harder to measure, as is the contribution of the site towards increasing levels of brand awareness. There are other benefits to Dixons that arise from developing e-commerce. One is that it provides career opportunitiesfor existing employees who may have an interest in personal development through moving into Dixons’ on-line activities.