How e-business savvy are you?

Amazon, iTunes and even Tesco – shopping online is now a useful way for consumers to get what they want quickly. Is it time that laboratory equipment suppliers caught on? Maria Anguita has some answers

BIG name brands which sell online could act as e-commerce role models of other internet shops hoping to improve their sales figures, according to research published in the Journal of Electronic Business.

Online shopping is big business. Websites selling everything from mp3 players and music to books and budget flights continue to thrive. Now, an international research team have devised a simple method for assessing the success of internet shops and e-commerce. Paul Alpar of the School of Business Administration and Economics, at the Phillips University of Marburg, Germany, and Naveen Donthu of the Robinson College of Business at Georgia State University, Atlanta, USA, explain that there are several ways to assess the success of an internet shop. However, the most obvious approach is simply to measure how well the respective websites transform their inputs into outputs and compare them. In other words, they ask: “does the site get as much back from its investments as its competitors?”

A shopping website is both a computer information system and a sales channel, Alpar explains. He and Donthu have used the Data Envelopment Analysis (DEA) to obtain a performance benchmark for a range of internet shops. The data sources they analysed include results from a web crawler, website visitor statistics collected by a market research form, and measurement of visitors’ perceptions of the sites. According to Alpar and Donthu, the proprietor of e-shops desperately need measures of whether they are succeeding or not. Early measurements focused only in the number of visitors to an e-shop, click-through or conversion rates. This can help provide insight into whether an advertising campaign is working, but it does not take into account the efforts associated with creating and running the site and says little about the economic success of the site.
The team suggests that the two areas of measures success - the technical variables, information content and site usage, and the marketing variables, perceived website quality and intention to purchase - have to be brought together in a definitive analysis.
One of the main findings from their research is that offering too wide a variety of products leads to lower efficiency. “One of the advantages of department stores in the physical world is their offering of everything under one roof,” says Alpar. “This advantage does not count online since moving from one specialty shop to another does not take more time than moving from one department to another of the same store.” He adds that: “On the internet, most consumers enter a store via a search engine or even a price comparison site because this leads them quickly and directly to the products they are looking for.”

Non-efficient websites can learn how to become efficient by reducing specific inputs or by increasing specific outputs.

So how does this relate to the laboratory equipment market? Some businesses know already that they are not going to get many internet sales. They will not obtain any revenue by a person clicking on their “buy” menu. And this is just how they like it, because some business websites are not there to allow purchase. Instead their websites rely on consumer traffic. A person who has visited their website is a potential buyer.

For example, the Eppendorf website. A company which turns over millions of US dollars a year, yet you would be hard pressed to find a single price tag on their site.
Specialist business-to-business e-commerce websites, such as those for the laboratory industry, do not rely on internet sales. They rely on people going to their website to find out about their products, and then they expect that person to come back to them to place an order. These sites do not compete on price, they compete on company reputation, presentation, customer loyalty, depth of technical information, ease of navigation, and by keeping their website updated with the latest devices, and rely on the more traditional method of face-to-face representation, advertising, and direct sales at technology exhibitions and shows.

Websites for these companies are there to provide a presence and to provide technical data, rather than direct selling, and they rely on the robustness of their website for generating sales and on their hold of their market. A lot of the laboratory equipment companies are intrinsically linked to a certain product. For example, Anachem has built a reputation and is best known for their production of pipettes and liquid handling equipment.

However, are these “big brand companies” losing sight, and should they be reading up Alpar and Danthu’s paper? No doubt that the large established multinational companies have done well and are very successful, but despite forecasts to the contrary laboratory equipment is still a thriving industry and competition is fierce. Large multinationals buying out smaller companies are squeezing out small independent firms and this has prompted laboratory distributor companies to find a gap in the e-commerce market.

For example, Projen Scientific Direct sell all sorts of small laboratory equipment (pipettes, stirrers, hotplates, microscopes, etc) directly over the internet. They feature a range of suppliers and offer technical information and support for their products too. Is this better value for money?

Another company, MIC Global, describe themselves as an online laboratory equipment supplier of pharmaceuticals, centrifuges, pipetting equipment, etc. However their website is patchy in terms of availability of pricing information. Some sections have got prices, some don’t, and all products have got technical specifications.

Lab managers could soon be doing their equipment shopping online. Laboratory equipment websites are no exception: they have to keep up with the trends in order to stay afloat. Why would you waste time picking up the phone and calling a call centre to ask the price of a particular piece of equipment where you can simply “click” for a very similar product in a website?

Purchase managers are also making use of the available information and are behaving just a typical internet shopper. There are bargains to be found out there, and with budgets getting smaller and smaller, the hunt for the cheapest solution is on.

The story of e-commerce is one of love and hate. We have become accustomed to instantaneous solutions and quick fixes, fast data and speedy response. The internet has shown us that it is possible to have the world at our fingertips and we want it now, not later, so woe betide if the a website happens to crash or download a bit more slowly than usual.

E-commerce is not just for the benefit of the companies. Consumers too have hopped on to the internet carrousel and are being more demanding. Consumers now was to the internet to work from them not the other way round, hence the success of price comparison websites. Who needs to spend hours trawling through websites or search engines when all the information they need is merely a click away?

Research funded by the Economic and Social Research Council (ESRC) has shown that consumers too can heap big benefits from shopping online as Internet retailers change their prices more frequently than traditional stores, and are more likely to cut them rather than increasing them. The flip side? While fierce competition amongst internet retailers can lead to price wars, online price comparisons can also tempt retailers to collude to raise prices.

Research carried out by the University of Cambridge has identified a number of money-saving strategies for online shoppers:

1. Do not start from the top
Seventeen percent of consumers using price comparison sites fall into the trap of simply clicking on the seller that appears at the top of the screen – even when that seller doesn’t offer the best price or have the best reputation. Instead, resort to the ‘sort by price feature’ that most comparison sites offer.

2. More listings equals better deals
Firms are more likely to offer better deals on products sold by many competitors than only a few. A firm that offers the lowest price gets 60% more business that a firm charging a higher price. The more firms selling a product, the more likely a firm will succumb to the pressure to ‘race to the bottom’ and offer a bargain price.

3. Exploit targets of opportunity
For consumers, the fast-moving nature of online markets means there are benefits to continuing to monitor prices over time, and to grab good deals when they are available – rather than expecting the offer to last for too long.

By Maria Anguita. Maria is a freelance science and health writer. She has previously edited several science and health magazines. She holds a degree in biochemistry with medical biochemistry from Bristol University and an MA in international journalism from City University, London.