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A further disadvantage is that e-selling is less powerful than face-to-face selling (it is easier to say 'no' to a computer). This viewpoint is linked to a concern of traditional high street retailers that e-retailing offers a diminished role for their expertise. For example, there are obvious difficulties with products sold by 'atmosphere' - touch, feel, smell- and impulse purchases. In addition, consumers have a perception of lower prices online. This puts pressure on margins for e-retailing, and can lead to shoppers expecting consistent low prices in-store. Finally, aftercare can be difficult, especially if the shopper is overseas.

The business of e-retail has been defined as the sale of goods and services via Internet or other electronic channels, for personal or household use by consumers (Harris and Dennis, 2002). This definition includes all e-commerce activities that result in transactions with end consumers (rather than business customers), Le. B2C rather than B2B. Some e-marketing activities that do not directly involve transactions, such as providing (free) information or promoting brands and image, are considered to be part of B2C but are not normally considered as being within the scope of e-retail. Despite the dot. com crash of 2000, e-retailing has been growing, particularly for the 'top eight' categories that account for three-quarters of all European sales. These major growth areas comprise: books, music and DVD movies, groceries, sex products, games and software, electronic and computer equipment, travel, and clothes.

Box 1.1:

DISADVANTAGES
May lack know-how Substantial e-Selling Complex logistics by taste or smell Fewer impulse purchases Legal problems Lesser role for traditional After-sales care difficulties

OF E-R.ETAILING
,

FOR RETAILERS

and technology

set-up, investment and ongoing costs of fulfilment than face-to-face - uptake slow for goods selected

less powerful

high street retail expertise

Pressure on margins and prices in-store

Retailers have been slow to take up e-retailing. This is to some extent understandable in the light of many disadvantagesand problems. Retailers, for example, may lack the technical know-how, the substantial investment required or the order fulfilment capabilities. Set-up costs start from around 20,000 for a small site and up to 500,000 for a large operation ($A53,000 to $A1.4 million). And set-up costs are only the start - Datamonitor estimates that high street retailers are spending more on ongoing costs than on setting up new sites. A continuous cost will be fulfilment and logistics. Successful e-retailers such as Next (www. next.co.uk) and Land's End (www.landsend.com) have had the advantage of already operating profitable mail-order catalogues. There can be legal problems. For example, if purchaser and supplier are in different countries, there may be conflict between the laws and taxation of the two countries. In Europe, the VAT (Value Added Tax) position is still unclear, but Richard Branson's Virgin group's e-retail operation (www.virgin.co.uk) is registered in Madeira, the country with the lowest VAT rate in the European Union
(EU).

On the other hand, there are a number of advantages for retailers. First, location is unimportant. According to some textbooks, adapting an old saying, the three most important elements in retail are 'location, location and location'. The best high street locations are therefore expensive. The e-retailer, though, can sell equally well to anywhere in the country and even overseas. Second, size does not matter - small e-retailers can compete on equal terms to large ones, can reach a larger audience than the high street and can be open 24 hours a day. For example, the independent, northem UK-based Botham's of Whitby has been a pioneer of e-retailing. There are many other advantages. The socio-demographic profile of e-shoppers is attractive to many retailers, with higher-than-average education, employment and disposable income levels. In theory at least, online selling saves on the wages costs of face-to-face sales people and the costs of premises. The savings may be