Page 3: Overcoming initial obstacles
It is not easy to set up and operate an on-line retailing service because there are many costs and difficulties associated with this method of selling:
- Delivery to individual homes adds to the cost of running a business operation and can eat into profits. In conventional shops the customer travels to buy so the retailer does not have to fund delivery costs that would otherwise erode margins. It is important, therefore, to be able to generate large volumes of sales to make the operationworthwhile. Dixons is well placed to do this because of its scale of operation and its brand reputation.
- Inevitably, some items will be returned because consumers find that they do not fully meet their requirements. Again, this adds to costs of doing business if the on-line seller has to meet the cost of returns. Dixons has the advantage of a national network of retail stores, so it is relatively convenient for customers to return items to their nearest Dixons outlet. When consumers have confidence in the returns facility, they are more likely to make the initial purchase.
Reflecting the in-store experience
Dixons already has four powerful brands in the UK. Indeed, its brands were so strong that it made sense to leverage the "brand equity" in the new on-line stores by ensuring that its on-line facility complemented consumers’ in-store experiences. The Dixons Group already spends millions of pounds each year on advertising through the press, radio and television. Its Internet presence both increases the exposure given to its brands and benefits from the existing advertising promotion.
The web-site provides extensive sales information. Through it, consumers can become far better informed about the range of products offered by the Dixons Group and about what these products can do. Dixons’ web-sites enable the customer to use drop-down menus to learn about the features of products, gadgets that go with them, prices etc.
This approach tries to act as a substitute for the traditional sales assistant. In creating the computer programme, it was essential to anticipate the questions that consumers typically would ask and then to provide the required information in a user-friendly form.
Using a system known as SMART, programmers working for the Group have created a database for each individual product. Internet browsers can access this data from home. Equally important, shoppers in a traditional shop can also use it to complement the information the sales assistant provides.