Online Firms Research Articles

Customer service on the Web: A cross-industry investigation

In this paper, the authors examine how the extent and quality of customer service varies between online companies in industries that are more or less customer-oriented. Specifically, they explore how the customer service provided by online firms in the more customer-oriented industries of travel and retailing compares to the service provided by online firms in the less customer-oriented industries of manufacturing and technology. In addition, they examine how the amount of firm's Web experience relates to the quality of customer service. Although they find that the quality of customer service available from online firms seems to be consistently poor, there is plenty of room for newer, smaller firms to compete on the service dimension. Specific implications and recommendations are discussed.

When Shopbots Meet Emails: Implications for Price Competition on the Internet

When Shopbots Meet Emails: Implications for Price Competition on the Internet

Market microstructure in a global B2B network

AbstractOn‐line marketplaces raise several interesting issues, among them the relevance of location when content is digitized, and the assessment of a supplier's capabilities when buyers worldwide only have electronic contact with sellers. In global B2B on‐line marketplaces, market microstructures, i.e. which firms compete for the same customers, are thus likely to be influenced by how customers value location and firm capabilities in their decisions to do business with different suppliers on‐line. We suggest that both these sets of attributes will continue to matter on‐line—firms possessing similar capabilities, as well as firms that are similar in location by country, time zones or clusters, will compete for business from the same customers. We model the similarity in competitive positions between pairs of firms based on the overlap in their customer networks, using data on actual interactions between supplier and customer banks on an electronic trading system. Using QAP network regression techniques on the 100 largest banks in this industry, we find that similarity in capabilities influences who competes with whom, and that location still matters in a global B2B exchange. Interestingly, location influences who a firm's competitors are, but not where its customers are from. Copyright © 2001 John Wiley & Sons, Ltd.

Pricing on the Internet

It is often claimed that e‐commerce has created a more competitive environment by encouraging the entry of new online firms and by enabling buyers to search easily for the lowest prices. The limited evidence that exists paints a mixed picture. Many online markets are advertising‐ and technology‐intensive, creating a tendency towards growing concentration. Price search is imperfect and firms can dampen price competition by increasing product heterogeneity and switching costs. In many sectors, online firms may come to acquire some market power. We look at the forms of pricing that are likely to emerge in such markets, including the greater use of price discrimination and auction‐like trading arrangements.

When Shopbots Meet Emails: Implications for Price Competition on the Internet

When Shopbots Meet Emails: Implications for Price Competition on the Internet

Internet Recommendation Systems

Several online firms, including Yahoo!, Amazon.com , and Movie Critic, recommend documents and products to consumers. Typically, the recommendations are based on content and/or collaborative filtering methods. The authors examine the merits of these methods, suggest that preference models used in marketing offer good alternatives, and describe a Bayesian preference model that allows statistical integration of five types of information useful for making recommendations: a person's expressed preferences, preferences of other consumers, expert evaluations, item characteristics, and individual characteristics. The proposed method accounts for not only preference heterogeneity across users but also unobserved product heterogeneity by introducing the interaction of unobserved product attributes with customer characteristics. The authors describe estimation by means of Markov chain Monte Carlo methods and use the model with a large data set to recommend movies either when collaborative filtering methods are viable alternatives or when no recommendations can be made by these methods.

The Rise of Neo-Intermediation: The Transformation of the Brokerage Industry

Developments in information technology and increased competition both within and outside the industry have led to the unbundling and desegregation of brokerage functions. Nimble on-line institutions like EaTrade and Microsoft Investor are usurping the roles traditionally played by full-service and discount brokerages, forcing some powerful firms to narrow their focus and others to broaden their product offerings. These changes raise the question: will full-service and discount brokerages continue to exist as we know them in the twenty-first century? To answer this question, the authors provide a new market transformation framework called Neo-Intermediation that helps explain how leading on-line firms are desegregating and reagregating functionality in order to create value in innovative ways. The pattern of change for brokerages is: Unbundling of traditional services—market players examine the elements of the buyer and seller relationship; Reallocation of authorities as the “customer” determines what they will do and what they will pay for in the market; Creation of strategic alliances with complementors—sites/products whose products complement yours. This means that if a customer has their product, they would also want yours; and Repackaging and emergence of both commodity and differentiated service providers that serve the needs of the “new” customer. The authors believe that these patterns are evident in all forms of financial services and form the basis of market interventions in most service industries. This paper addresses the transformation of the brokerage services marketplace. With new patterns of intermediation emerging, the winners of the future will be those who most successfully create new context bundles that meet customers’ needs.

Competing in Online Markets: Financial Services as a Case in Point

Online markets have evolved to harbour not only pure online firms, but are increasingly viewed as another trading avenue for traditional companies. Competition in this domain has revolutionized traditional business models. Using financial services as a case in point, this paper proposes five strategic issues and their broad managerial implications. These include the realization of the online market, adopting pricing strategies, expanding and improving services, marketing, and strategic alliances and acquisitions. More importantly, this paper acknowledges that cutting-edge technology might not be the key to success in online markets – managers must recognize that corporate culture, organization adaptation, and product and service innovations are crucial to survival and growth.

Do Traditional Strategic Concepts Apply In The E-Marketing Context?

This paper explores generic marketing strategies and competitive marketpositioning in the context of the Australian online book industry. The key researchquestion is the extent to which traditional strategic concepts, like competitivemarket position and sustainable competitive advantage (SCA), apply inthe new world of e-marketing. The most important issue that emerges from thestudy is that the tools and concepts that are relevant for offline firms are equallyapplicable for online firms. Different generic strategies call for a differentmarket position and this is borne out in our case study. Special attention is givento the importance of a channel management generic strategy in the e-marketingcontext. Firms contemplating this option need to have a high level of competencyin relationship marketing skills.