Cost Structure of Retailers; The Internet; Operating Leverage Today’s retailers are findingthat online sales and service are a necessary ingredient of their overall marketing and selling strategybecause of increased competition. In certain retail sectors, consumers are moving to the Internet inlarge numbers for convenience and selection. Unfortunately, the investment in resources, both equipment and labor, can be huge. Some studies show that less than a third of online retailers are profitableon internet sales. As a result, some new consulting firms, software firms, and service providers havebegun to provide e-commerce solutions for retailers.Required1. How does a consulting firm, service provider, or software firm help a retailer reduce costs and becomemore competitive for internet sales? What is the role of operating leverage in the retailer’s decision tooutsource online sales and service?2. Cost structure is not the only thing management should be concerned about when moving in to onlinesales. What role, if any, does globalization play in a retailer’s efforts to compete for internet sales?
Cost Structure of Retailers; The Internet; Operating Leverage Today’s retailers are finding
that online sales and service are a necessary ingredient of their overall marketing and selling strategy
because of increased competition. In certain retail sectors, consumers are moving to the Internet in
large numbers for convenience and selection. Unfortunately, the investment in resources, both equipment and labor, can be huge. Some studies show that less than a third of online retailers are profitable
on internet sales. As a result, some new consulting firms, software firms, and service providers have
begun to provide e-commerce solutions for retailers.
Required
1. How does a consulting firm, service provider, or software firm help a retailer reduce costs and become
more competitive for internet sales? What is the role of operating leverage in the retailer’s decision to
outsource online sales and service?
2. Cost structure is not the only thing management should be concerned about when moving in to online
sales. What role, if any, does globalization play in a retailer’s efforts to compete for internet sales?
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