Week 6 questions - Digital Markets

Question 1

a) What experiences have you had with shopping online?
I go through phases when using online shopping. I think it is great when using sites like ebay, where you can buy something that may not be available in your local community or it might be at a cheaper price. I have used online shopping for all types of purchases. Some of these include

- Ebay – concert/football tickets, surround sound system, DVDs, car parts.

- Dell – laptop computer

- Skate America – T-shirts

- Ticketek/Ticketmaster - tickets

b) Describe a good experience.

(www.dell.com.au). I purchased a laptop through there online store. The main reason was because I wanted to go through the process of choosing the specifications I wanted in my laptop. It was a quick and easy process. Dell is a very professional online seller who understands what there customers want. There products may not be the best on the market but they are reliable and you know exactly what you will be getting. Dell offers a service which allows you to buy direct, which normally means a cheaper price. Discounts, free upgrades, free post, continued support after purchase, quick delivery and a great product is what would make me use Dell again.

c) What did you like about the online store you used?

It was just so easy to navigate around the site. All the products were displayed with the specifications which made it easy to compare. There were no hidden costs. You can add or cancel almost anything about the product before you commit, this feature is great for pretty choosing how much you want to pay. Discounts, free upgrades, free post, continued support after purchase, quick delivery and a great product is what would make me use Dell again.

d) Describe a bad experience.

(www.skateamerica.com). I used this website about 6 years ago to purchase 3 band t-shirts. The reason for using an international site was because I couldn’t find the product I was after from an Australia website. I was also a lot younger at the time and pretty much had no idea what I was doing. The site is a major seller, describing themselves as ‘The number one skateboard mail-order dealer in the World’. They also have a huge catalogue of street wear. The site was highly rated though Google.

e) What problems did you have with the online store?

The website itself was easy to use, everything displayed with photos and descriptions. The problems I encountered was the total cost was displayed in USD, which at the time because I was a lot younger, I had no idea that the total price would actually end up being almost double in AUS dollars to what was displayed on the receipt. Although this was my mistake, there was no indication anywhere through the checkout process that it was going to be charged in USD. We are just supposed to assume this. The main problem I had with this online seller is that from the date of purchase it took 3 months for the product to arrive. After many emails back and forth with the website helpdesk I finally received my 3 t-shirts. I haven’t used this site since and will probably stick with local sellers in the future.

f) What features make an online store more appealing?

Having the ability to look at and compare endless amounts of products all at the click of a mouse. It allows you to research what you are purchasing. Compare price, brands, models, features and reviews all without leaving your computer and without going anywhere near a retail store.

g) What features make an online store less appealing?

The features that make an online store less appealing are that you are unable to touch or see the product for what it really is. I think the biggest example of this is clothing. You will never know exactly what you are buying from an online seller even if you tried the same piece of clothing on in a retail store.

h) Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
We should expect the prices of goods and services fall due to the online migration of consumers. Although no one can make an accurate prediction at this stage, it can be said that due to the cheaper costs of running an online store compared with physical retail stores the prices should drop with more and more consumer online spending.

Question 2

a) The dispersion of prices (that is, the spread between the lowest and highest price for a particular product) will narrow.

I think that there will always be dispersion of prices for products in the digital market. It is hard to predict to what extent this will be, but when there are different companies producing, distributing and selling all types of brands and qualities of each individual product then there will always be competition. There is substantial price dispersion in the online market averaging up to 20% (Clemons, Hann and Hitt, 1998).

b) The importance of brand names will decrease.

I do not believe that the importance of brand names will decrease. It may mean that because there are more brands to choose from that people will just buy the first brand they come across and not necessarily look for the brand they would normally see in a retail shop. Meaning the sales would decrease for the more major brands. But across the board most people tend to stick with the brands they know and trust. More competition will always affect competing brands.

c) Price competition will make all products cheaper.

I think that this could go either way. It makes sense that the more brands and competition there is in the market, it will help in driving the price down as sellers compete for consumer business. But competition can sometimes have no effect on some products, like we have seen with apple ipod. Every year there is more and more competition on the market and this has had no effect on the ipods dominance, so there is no need to lower the price.

d) Digital markets will become dominated by a handful of mega-sites, like Amazon.com.

I think that people like to stick with the ‘mega-sites’ because they know what they are getting every time they use the service. But in saying that I think that there is plenty of room in the market for smaller sites who offer products to a niche market. Sometimes you can’t find that one particular product you are looking for through sites like Amazon.

In saying all that, I think that the digital market is already being dominated by the ‘mega-sites’ and this will only get worse as competition gets tighter for those untouched consumers.

e) How do you think the balance of power between buyer’s and seller’s will change?

Today with the economic climate the way it is, we are being told all the time that it is currently a buyers market. With more and more people using the digital market, consumers are given the power to pick and choose which seller they will use. With more and more sellers joining the digital market every day the power of the buyer will only get stronger.

f) Prices are clustered online.

I do not think that prices are clustered online.

g) Online prices are elastic. (I.e. immune to change up and down with demand)

In the short term I think online prices are definitely elastic, this is due to the massive market size of online trading. But in the long term eventually things have to change if there is a shift in demand.

h) Online prices are generally transparent (the extent to which prices for a given product or service are known by buyers in the marketplace.).

I agree that online prices are generally transparent. Most people when they are shopping for a product (whether online or in the physical market) have some understanding of what the price should be. This comes from shopping around with different sellers. Having said that I think that many buyers are very venerable and gullible when it comes to purchasing certain products they do not understand, the greatest example of this would be with advances in technology (i.e. computers).

Question 3

a) What types of m-commerce services does your cell phone provider offer?

At the moment my phone only gives me the option of using the internet. As Motorola used to sponsor the Aria charts, there used to be an application to download music straight to my phone. This sponsorship has now expired although I am still able to download music from what is called the ‘moto lounge’ to my phone. The charges will then be added onto my bill at the end of the month.

b) Which of these services do you use?

I do not use any of these services. As I have no free internet time or downloads available in my plan, I stay clear of these features, as they can get expensive.

c) What types of transactions do you perform through your cell phone or other wireless device?

I do not perform any transactions through my mobile phone or wireless device.

d) What types of transactions would you like to perform, but are currently unable to?

I would like to be able to use internet banking on my mobile phone. It would be really convenient in those times when you need to transfer money between accounts and there is no bank and computer in sight. Although I think I would be a little bit hesitant in using internet banking through my mobile phone, as it is still a very new feature and security is still yet to be fully tested.

e) What is your opinion of wireless advertising/mobile marketing?
I think that mobile advertising is something that everyone will be outraged with at first, but like all methods of advertising before it (T.V, radio, email) we will gets used to it as time goes by and it will become apart of our lives as much as the other forms of advertising have become. Personally I find it annoying when advertising messages come through, because in the past when you get a message you know it is either going to be friends or family. Now it can be a sale at a clothing store.