Small and incumbent businesses seek to make their
way online and into the global marketplace. Like new sprouts they try and break
ground into a profitable entity. According to research by Howard Rasheed those
businesses that embrace online product distribution create significantly higher
international sales growth (2009). They studied 240 small businesses who engage
in Internet based consumer marketing to find which types of businesses are
likely to succeed.
In the contemporary market, some owners may decide
to create truly Internet based businesses that capitalize on the movement of
information. Existing businesses may attempt to strengthen their approaches by
developing their brick-n-mortar models into brick-n-click businesses that develop
a hybrid approach to marketing. In today’s world, few truly brick-n-mortar companies exist
in the international market.
E-commerce businesses often fail due to lacking strong
market knowledge, sound business ideas, balanced approaches to development, and
failure in long-term planning, poor external relationships, and the improper
thinking of management (Martinson, 2006). The internet based businesses are
quick and fast paced in the market but often do not think strategically enough
to obtain a sustainable threshold.
Four different types of companies will use the
internet for their business: e-commerce companies that market goods with the
Internet; content experts who gather and display information from multiple sources;
market makers who develop places to sell products; and those that provide
Internet services (Afuah & Tucci, 2000). Ultimately each type will have a
strategy that fits uniquely to their product and service goals but is inherent
to their model.
When companies do fail it is because they have not
developed brand equity. Brand equity is the value of the brand in terms of
customer perceptions of loyalty, quality, association, image and awareness (Yoo,
et. al., 2000). The businesses simply
weren’t able to create a strong enough following through the murky and often
saturated information game. They were unknown and would need to expend greater
effort in creating public awareness.
Online success is due to the high speed travel of
information that allows companies to integrate into the various aspects of the
market. The Internet provides cheaper transaction costs that help to coordinate
activities (Clemmons et. al. 1993). The
author found that purely Internet base firms are more likely to succeed than
other businesses but when they do fail it is because of their internal decision
making processes. Product sales and distribution in the online environment
appear to have advantages but small organizations may have a hard time achieving
appropriate pricing against more established businesses. Those services that
can digitized, and therefore lower transaction costs across multiple perspectives,
appear to have the highest success rates.
Afuah,
A and CL Tucci (2000).Internet Business Models and Strategies. NewYork, NewYork: McGraw-Hill
Irwin.
Clemmons,
E., et. al. (1993). The impact of
information technology on the organization of economic activity: The move to
the middle hypothesis. Journal of Management Information Systems, 10(2), 9–35.
Martinsons,
M (2006). Strategic management lessons from e-commerce.Handbook of Business
Strategy, 7(1), 337–340.
Rasheed,
H. (2009). Contrasting e-commerce business models: performance implications for
small enterprises. Journal of
Developmental Entrepreneurship, 14 (1).
Yoo,
B., et. al. (2000). An examination of
selected marketing mix elements and brand
equity.Academy
of Marketing Science Journal, 28, 195–211
