Price and Relationships in E-Business

Relationship Selling on the web gets a great deal of print. According to theory, an online retailer must build relationships with its buyers in order to differentiate itself from the many other readily available retailers. CompUSA, which has been struggling to survive in the vicious computer retail market, recently announced that its new Web storefront will rely less on cut rate discounts and more on one to one relationships. Yet for some unknown reason, these same relationship proponents have decided to build a wall between the Web buyer and the CompUSA retail outlets.

Smart money says that this is being done so that CompUSA can spin off its Web business. Common sense says that by building this wall, the folks at CompUSA have eliminated one of their competitive advantages the combination of physical and virtual service. Why will a stand-alone be any better or even as good as the multitude of already existing purchasing points?

We know that Egghead resurrected a dying business by getting into the auction market early. They leveraged their name. Then they leveraged their relationships through a reasonably non-intrusive e-mail campaign. However, Egghead had an added advantage. They were in the market early and certainly were more than just another e-biz site.

CompUSA has selected IBM and CGN to provide technology and design, respectively. Clearly, IBM can provide working global architecture, but is a pretty face good enough? With all of the e-biz hoopla, there is very little data to help us determine how we can measure the value of the relationship. This means that there is little quantitative guidance in building relationships.

A great deal of data indicate that price is a factor in Web buying decisions, while other results show that ease of access increases Web buying. It is obvious that when you remove the price benefit on a commodity you remove an important purchasing stimulus. When you tell your Web customers that you value them as customers, but they better not try to talk with, or make returns at, your retail outlets, you have a problem. With no price advantage and no connection with the physical stores, CompUSA jumps in with just another pretty site. How can they build a relationship?

Many industry analysts are not predicting that the major commerce players will be entirely Web based. Rather, they expect to see the ultimate success coming to those who have a strong Web business presence combined with conventional distribution and service outlets to optimize customer satisfaction.


Click if you agree
The dot-com world is over.
Linux will survive
Technology is getting to be too complex
Employees should own stock
Venture capital firms help entrepreneurs