Ed Trapasso
New York
+1 (917) 452 3555

June 22, 2000
eCommerce Web Sites that Offer Only One Selling Method Are Competitively Disadvantaged, According to New Research

The Dominant Model for Internet Transactions will be "All-in-One Markets" Says Accenture

The Good News: Two-thirds of Leading eCommerce Sites Already Offering Multiple Selling Points

NEW YORK, June 22, 2000 - New Accenture research finds that electronic commerce web sites that offer customers only one way to buy a product are missing an opportunity to expand their business and are putting their companies at a disadvantage with competitors who offer customers a selection of market mechanisms.

The findings from Accenture’s Institute for Strategic Change - highlighted in the current issue of Harvard Business Review and a special edition of Accenture’s thought-leadership journal, Outlook -- point to the emergence of the "all-in-one-markets," a phenomenon that is revolutionizing the interaction between buyer and seller.

In fact, the study concludes that the Internet’s biggest impact on commerce is the all-in-one market, yet many companies are slow to embrace its opportunities and tackle its challenges. "As a result, those companies are at risk of falling behind competitors that are already harnessing the phenomenon with profitable results," said Paul Nunes of Accenture’s Institute for Strategic Change and one of the study’s authors.

Endless Shelf Space

The study - The Future of Commerce: The All in One Market - concludes that the Internet has made it possible for a variety of selling methods to be aggregated on a single web site, creating the electronic equivalent of "endless shelf space." The aggregation has resolved the debate over which form of selling will be dominant on the Internet: all goods and services being sold in an open-market setting versus buyers striking cozy relationships with few trusted suppliers or partners. The answer, according to Ajit Kambil, another of the study’s three authors, is both.

"The Internet is making it infinitely easier for buyers to choose either of the two mechanisms - open markets or partnerships - or indeed any approach to exchange along the spectrum between them," said Diane Wilson, the third author, noting that the study was based on a review of 15 online exchange mechanisms, ranging from catalogs to reverse markets.

She noted that the study revealed that nearly 67 percent of all leading commercial Internet sites provide multiple approaches to exchange for their customers, with some sites providing as many as seven distinct approaches

Other findings, based on probing 320 leading US commercial web sites across 15 industry categories, were surprising and counterintuitive:

There is no dominant selling mechanism across industries:
The most frequently used mechanism by far, the catalog, made up only 29 percent of all mechanisms observed and was present on only 61 percent of the sites surveyed.

With one exception, no industry category is dominated by any particular selling mechanisms:
The average number of mechanism types in use in any particular industry category was seven. The industry with the highest number of mechanism types present was Financial Services/Banking, with 12. The industry with the lowest number of mechanism types present was Automotive, with three.

The dominant approach to commercial exchange on the Internet is not a single mechanism but the combination of mechanisms:
Of the 320 commercial sites evaluated, 212 support commercial exchange through more than one mechanism, a whopping 66 percent. Roughly 30 percent - some 94 sites -- support three or more mechanisms. Thirty-one sites, roughly 9 percent, support four or more mechanisms. The highest number of mechanisms employed by a single site was seven, by a company in the Financial Services/Banking category. The total number of exchange mechanisms available to customers across these sites was 665.

The phenomenon of multiple mechanisms is pervasive within and across industry categories:
More than 90 percent of sites in the leading industry category, Travel Services, support multiple exchange mechanisms. In 12 of the 15 industry categories, more than 60 percent of sites support multiple exchange mechanisms.

The relative strength of the phenomenon has been dispersed fairly evenly across industry categories:
The average number of mechanisms per site across the entire sample was slightly more than two (the highest average for any individual category was 2.7; the lowest, 1.5).

The findings are almost identical when separated for business-to-business and business-to-consumer:
Though there are changes in the mix of mechanisms offered, there is still a wide range of mechanism choices and no dominant mechanism in either segment.

The study can be downloaded from the Accenture web site at http://www.accenture.com. Or you obtain the special edition of Outlook containing the study by contacting Ed Trapasso of Accenture at 917-452-3555.