Over the past decades, innovations in information technologies, such as the Internet, have radically reduced the time and cost of processing and communicating information. In this blog we will discuss how these advances are affecting electronic market structures and firms and discuss the business models of Bol.com and Coolblue and the predictions for the market.
The electronic market industry is very competitive, as it involves a large number of firms. The threat of new entrants used to be moderate because of the high cost of capital required to acquire the needed platforms/products. However, nowadays firms tend to reach a lot of their customers through Social Media, which sets the entry barrier extremely low. Also, creating a webshop requires less effort, coordination and money than it just to. All of this intensifies the competition, making the switching costs for customers low.
BOL.COM
Bol.com was founded in 1999 and is the biggest web shop of the Benelux Union. Initially Bol.com started as an online bookstore.
The business model of Bol.com is growing through market penetration, this by making the site a platform where the consumer is able to find everything they want. Over the last couple of years Bol.com opened a marketplace and expanded to Belgium.
COOLBLUE
Coolblue was founded in 1999 in The Netherlands. In 2000 they launched their first webshop, selling MP3 players. In 2001 they expanded to Belgium. Coolblue is known for being one of the best employers on the market and they are well on their way to becoming the biggest (online) retail company of the Netherlands. The business model Coolblue uses is differentiating through different niche markets, offering excellent service.
By offering a good service, they innovated by:
- Being the first large webshop to adopt iDeal
- Introduced a next day delivery service ‘if ordered before 23.59’ and same day delivery service if ordered before 15.00
Now that we have analyzed the business models, we were able to make the following SWOT analysis for both companies.
Predictions for the market
Looking at current developments in information technology, the spread of some popular developments could affect electronic markets:
First of all, the delivery of sold items. The trend nowadays is that of the sharing economy where people share all sorts of items. Extending this trend could lead to people sharing their trunk to deliver packages people buy at webshops.
Second, when all companies are aligning prices, differentiating on the market will be done through value added services such as computer installation or personalized workshops for free.
Third, when looking at the trend of big data analytics, it is only a matter of time before electronic markets and webshops can offer a customer a personalized shopping experience, by predicting the items a customer will buy.
And last, with the trend of webshops increasing their product categories and assortments, webshop specialization will be a thing of the future. Customers with specific requests will go to specific webshops instead of the big players.
