Monday, November 26, 2012

Trend in online shopping - Discussion Topic 11/25/2012

http://finance.yahoo.com/news/black-friday-sales-online-top-165326302.html
What do you think about the new trend of online sales? Is it a good thing or bad thing for retailer? 

6 comments:

  1. Tim Shoji
    As noted in the article, online retail drives an incredible amount of price pressure on sellers, as consumers are able to compare products and prices easily. Sellers face fierce competition in terms of offering the lowest prices, so profit margin will get thinner and thinner. While this can certainly be bad for most retailers, I actually think such pressure can benefit online-retail giants such as Amazon. I would imagine that they can take advantage of economies of scale, and cut prices lower than most of their competition. What they lose in profit margin, they make up in volume.

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  2. Xiao Zhong
    I totally agree with Tim that price pressure is not the whole picture—retailers can make up through larger sales volume. And actually, this is Amazon’s strategy ever since its inception—low price/profit margin and high volume. So they are actually comfortable with the low margin.

    Besides the effect of holiday shopping, there are many other factors driving businesses to online retailing: the economic recession forced a lot of business to transfer from Brick-and-mortar to online sales to cut costs; consumers have a desire for faster and more convenient shopping experience; and technological innovations such as mobile shopping make it possible for business to reach a larger consumer base. In this sense, retailers have to embrace the new opportunity if they want to either catch up with competitors or further penatrate the market. Whether it is a blessing or a curse for business, it is upon their own capability to take advantage of the new trend.

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  3. Pian Li
    It's true that consumers will compare prices between online products and products in stores. At least, I won't buy products online if there is not too much discount. However, this wont become the obstacle for the further development of online retailers.

    Retailer cost of online retailers is lower. If online retailer has a good reputation, their sales will increase. Especially if a certain product has good comments, its reputation will rise and lead to high sales. Amazon also promotes free shipping. All these will attract more sales. Additionally, consumers are more and more relied on online shopping because of the busy work. These advantages outweigh the disadvantage like thinner profit margin.

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  4. Amine Bensaid
    I think holiday sales are always a good thing for retailers and especially those mentioned in the article. Amazon, Ebay and Walmart are volume driven businesses like Tim and Xia mentioned, so sales events like black Friday and Cyber Monday have been very positive for those companies in the past. That said, I think that online shopping is still not the preferred shopping method for the majority of the consumers, so those retailers still have a long way to go before acquiring more consumers.

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  5. Zhishuo Zhang
    The online retailing will definitely be expanding as it already has been. From a consumer perspective, the information is faster and more comprehensive online. However, it is still not the same to shop when you can see and feel the products. In addition, it is not that convenient to compare the prices. I don't think it is good for the retailers, since the profit margin will be thiner and the overall volume is not necessarily larger. I think the volume is simply transferred from offline to online. In addtion, more retail store will set up online store to keep the customers, which means more competition.
    On the other hand, this trend could benefit the websites that list the best deal from these online stores. They also standardize the description of the products, which make life eaier for customers as more and more online stores are available.

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  6. Tian Tan
    1. online shopping lowers entry barriers. Many small retailers or even manufacturers can get into market easily. They may cannibalize the share of the existing market leaders.
    2. retailers have to differentiate themselves to succeed through competition. There is no advantage of location for online shopping.
    3. online shopping cannot replace on-site shopping. It's only a supplementary. Consumers can never get the beautiful shopping experience online.

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