In essence, e-retailing is proving to be more difficult than most retailers initially imagined. And retailing is proving to be more difficult than virtually all e-retailers initially imagined. For e-retailing to become a mainstream retail channel, it must overcome a number of strategic challenges and operational as well as organizational hurdles. Over half of retailers surveyed cited increased customer penetration and willingness to purchase online as the most important hurdles to overcome to achieve e-retail sales projections. Nearly 30 percent feel their merchandise doesn t sell well online and only one in four reported that their online business is profitable, down significantly from the 40 percent who reported profitability last year.
Systems integration presents another hurdle for retail CIO s.
Within the next two years, over half of survey respondents plan to achieve full integration of their online and back-office systems. While retailers are spending more on information technology than previous estimates, the retail industry continues to significantly trail the IT budgets of other industries such as banking, finance and telecommunication. Although some retailers are becoming more aggressive with their IT investments, many still consider IT an expense and do not focus on the value created. To maintain technological viability and provide an environment that attracts and retains the best talent it won t be enough to judge IT expenditures on ROI alone. Now that Y2K is over, CIO s are directing their efforts on developing ebusiness strategies.