While off-line retailing is a mature, slow-growing business, the on-line market is expanding at double-digit rates. Moreover, customers increasingly demand an on-line presence from retailers. The search for ways to make the Web profitable is therefore on. It is a considerable challenge, calling for skills that go well beyond those required to run an off-line business successfully.
Too often, retailers offer a wide product range to increase their share of overall customer spending without knowing enough about the non-core categories they stock. General retailers tend to be masters at managing only three to five core categories. When a general retailer has established a loyal base of customers for those core products, it must determine which additional categories will make the most of its valuable shelf space, a decision that calls for sophisticated brand analysis and focus-group research. This is the opening for category managers: wholesalers that develop specific expertise in managing stocks of a given type of product for the stores they serve.
Moderator Comment: Will the outsourcing of category management functions for e-tail become the norm for traditional retailers with online sales operations?
This service seems tailor made for wholesalers. How long major chains such as Wal-Mart will go with it before deciding they can do it themselves is another question. [George Anderson - Moderator]