Reality Check – The Future of Electronic Shopping
You've heard the hype. We asked the experts. Here's the real timetable.
Electronic shopping is hyped as the inevitable commercializer of the Internet and the killer app that will bring interactive television into our living rooms. But overzealous proponents should bear in mind that consumer habits are hard to break. While we may complain about having to hop in the car for milk-and-toilet-paper runs, we like choosing our own tomatoes and stroking the fabrics hanging on the rack. Will conveniences like home delivery sell us on the new way to shop? That depends on how much we're willing to pay to avoid a trip to Wal-Mart. Wired asked five experts about the future of electronic shopping.
Will a Sears-caliber mass retailer dominate online shopping by making any product – down to the kitchen sink – just a mouse click away? Not according to Johnson and Schneider of Andersen Consulting, who predict that low entry costs into the online shopping business will create a competitive and fragmented marketplace that doesn't support giant one-stop shops. Spiegel agrees that "the quintessential online merchant will not be a general merchant but a mega-niche retailer whose influence transcends its volume potential." However, Clemons believes that 10 years from now, an electronic shopping mall, home to a range of online merchants (each offering speedy access to specialty goods), will reach the sales and market power of Sears.
Our experts agree that shoveling home-shopping catalogs onto CD-ROMs is not a future-minded approach to retailing. "The CD-ROM doesn't give me speed of delivery, current prices, or timely access to stock information for catalog sales," Clemons says. Spiegel is convinced that CD-ROM catalogs peaked in 1994 and are already history. However, the experts at Andersen believe consumers who have purchased multimedia computers will give disc-based catalogs a few more years of growth. "CD-ROM offers a viable means of distributing catalog content, particularly in light of recent increases in paper, printing, and mailing costs," Johnson says. But as Benjamin points out, the bottom line is that "the Internet will replace CD-ROM shopping."
Online mass retailer as big as Sears CD-ROM catalog peak 20 percent of groceries bought electronically E-cash gets real
Andersen Consulting | unlikely | 1999 | 2005 | 1998
Benjamin | 1998 | 1996 | 2000 | 1996
Clemons | 2005 | 1996 | 2005 | 1996
Fernandes | 2010 | 1998 | 2015 | unlikely
Spiegel | unlikely | 1994 | 2015 | 1999
Bottom Line | 2007 | 1997 | 2008 | 1998
In the future, grocery shopping may be a simple matter of using a personal barcode scanner to order groceries from your home. Several experts note that the Peapod grocery shopping and delivery service – an online shopping system in use by Safeway in San Francisco and Jewel in Chicago – is already up and running. "Electronic grocery shopping is all about time-squeezed, two-income families," Benjamin says. Spiegel believes "the convenience of home delivery" will spur the growth of electronic shopping. Once that 20 percent mark is reached, Clemons says, "online grocery shopping becomes a real alternative to the supermarket in the suburbs, and not just a cost-insensitive yuppie phenomenon."
One key component for the growth of online shopping – the popularization of a viable and secure electronic cash system – may be just a few years away. Clemons points out that electronic cash has already taken off in the UK and France in the form of debit cards. "The banks have mismarketed it in the US," he says. "But when online shopping needs it, MasterCard and Visa will provide electronic payment systems." Schneider adds that "anonymity in conducting transactions will be a big benefit of electronic cash, but loss of credit float for current credit card users will be a barrier." Still, Fernandes thinks that e-cash is a white elephant – that consumers will become "comfortable with security and will use traditional payment vehicles like credit cards," negating the e-cash demand.
Andersen Consulting
Steven J. Johnson, managing partner, consumer products; Fred Schneider, executive director of Smart Store, Andersen's R&D center for the food and packaged goods industry
John D. Benjamin
Professor, Department of Finance and Real Estate, Kogod College of Business Administration, The American University
Eric K. Clemons
Professor of operations and information management, The Wharton School, University of Pennsylvania
Richard Fernandes
Executive vice president of interactive services, CUC International
Stuart Spiegel
Vice president and general manager of interactive shopping at QVC
