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A Classification of Internet Retail Stores
                                 Peter Spiller and Gerald L. Lohse
                      Department of Operations and Information Management
                       The Wharton School of the University of Pennsylvania
                               1319 Steinberg Hall - Dietrich Hall
                             Philadelphia, Pennsylvania 19104-6366
                                  office phone: (215) 898-8541
                                 FAX number: (215) 898-3664
                               e-mail: lohse@ wharton.upenn.edu

   Peter Spiller was a visiting scholar at the Wharton School of the University of Pennsylvania,
completing his master of industrial engineering from the Technical University of Berlin, Germany.
He studied the implications of Internet marketing and electronic commerce. After finishing his
thesis in spring 1997, he became a consultant with McKinsey and Co. in Duesseldorf, Germany.
   Gerald L. Lohse is an Assistant Professor of Operations and Information Management at the
Wharton School of the University of Pennsylvania. His research interests include electronic
shopping and on-line information services, cognitive models of decision processes, impact of
decision support systems on decision processes, human-computer interaction, and visualization of
information. He has published over 30 articles, book chapters, and reports on these topics.
Current projects include Internet yellow pages directories, personalized on-line retail catalogs that
dynamically adapt to consumer preferences and basic research on how people perceive and
process information from displays.


   Acknowledgment
   We are grateful to Dr. Vladimir Zwass, Steven O. Kimbrough and two anonymous reviewers
for their helpful comments and suggestions on earlier drafts of this manuscript.
A Classification of Internet Retail Stores


Abstract

   We describe an empirical method for classifying Internet retail sites for electronic commerce.

The technique used 35 observable Internet retail site attributes and features of on-line stores as

the raw data to classify the on-line stores into meaningful groups.          This paper presents a

classification of on-line retail stores based upon an August 1996 convenience sample of 137

Internet retail stores. Descriptive statistics for 44 variables provide a snapshot of key attributes

and features of on-line stores. Subsequent cluster and factor analysis identified five distinct Web

catalog interface categories: super stores, promotional stores, plain sales stores, one page stores

and product listings. On-line stores differ primarily on the three dimensions: size, service

offerings, and interface quality. A preponderance of the stores in the study had limited product

selection, few service features, and poor interfaces.         This categorization provides a better

understanding of the strategies pursued in Internet-based marketing and will be helpful for

Internet retail store designers as well as for researchers to structure and target further analyses in

this domain.

   Keywords: Internet marketing; on-line catalog; electronic store fronts; cyberstore; cybermall;

electronic shopping; classification; cluster analysis; factor analysis




                                                                                                    1
Introduction

   According to Hoffman, Novak, and Chatterjee [15] on-line retail stores ‘offer direct sales

through an electronic channel via an electronic catalog or other more innovative format’ As with
                                                                                        .

the physical store and paper catalogs, on-line stores differ in terms of the variety and types of

products offered, price, advertising and promotional efforts and service. On-line stores also differ

in their catalog or store design and layout. Table 1 summarizes some of the analogies between

retail stores, paper catalogs and on-line catalogs that aided the variable definition.

                                          Insert Table 1 here

   To help understand the different strategies adopted by retail Web sites, this exploratory

research structures and classifies on-line retail stores into meaningful groups. A classification of

retail Web sites will help retail Web site developers understand their design alternatives as well as

the functional requirements of a site. For example, what are potential design alternatives for on-

line stores? Is there a set of factors or dimensions (e.g., size or service) that can characterize a

retail Web site? How do Internet retail sites differentiate their retail store from the competition?

By classifying Internet retail stores, we hope to (1) structure this domain for further systematic

inquiry, (2) provide concepts for developing theories, (3) identify anomalies, and (4) predict future

research directions [19].

   Hoffman, Novak, and Chatterjee [15] and Cappel and Myerscough [7] have suggested broad

classifications of Internet sites for electronic commerce. They classified Internet sites on the

highest possible level that can be summarized as (1) on-line store fronts or catalogs selling

products or establishing marketplace awareness, (2) content sites providing information and

support, and (3) Web traffic control sites, such as malls and search engines. However, both




                                                                                                   2
classification schemes are not based on empirical analysis, but upon a functional analysis of broad

characteristics of commercial Web sites [7, 15].

   Our research builds on the classifications outlined above [7, 15] and concentrates on an

empirically-based classification of retail on-line stores. A great amount of variation in on-line

stores can be observed either on the Internet or on proprietary on-line services. Depending on the

retailer’ intention, on-line catalogs focus on a mixture of pure selling, on increasing marketplace
         s

awareness or providing how-to information, or just on providing some incentives to order a paper

catalog.   Some retailers see their on-line presence as an opportunity for a more personal

communication with the customer, others use it mainly to learn about the medium and to

determine its possibilities (for a discussion of different catalogers’ goals see [30]). A classification

of on-line store interfaces provides a better understanding of how the electronic stores embody

many of the retail store attributes that customers perceive, such as the atmosphere, convenience,

friendliness, tidiness, organization, and product display.

   Some product categories, such as software, financial services or travel, are widely viewed as

being successful on the Internet today [23, 29]. To grow on-line sales, the Internet must attract a

critical mass of mainstream shoppers, not just addicted specialists shopping for particular

products; therefore, we chose to focus on on-line retail stores selling women's apparel. According

to a Simmons survey of almost 200,000 adults, clothing accounts for the greatest proportion of

catalog merchandise purchased in the US (34% in 1995) [40]. Women’ apparel and accessories
                                                                  s

hold the largest share of consumer spending, accounting for 19% of all dollars spent on catalog

purchases. Thus, on-line women's apparel stores are an important segment of retail catalog sales.

   This paper contributes to a growing literature on electronic commerce.               The statistical

summary of on-line store features and attributes support many of the findings of the survey of



                                                                                                      3
consumer reactions to electronic shopping by Jarvenpaa and Todd [16]. Many of the problems

associated with on-line shopping (e.g., finding products in the store and ordering the product) [9]

originate in the retail Web site design.       The statistical methodology provides an objective,

empirical technique for clustering stores into meaningful groups. The technique also provides

developers of commercial Web sites a methodology for eliciting functional requirements for on-

line stores by 1) identifying major store design features, 2) organizing on-line stores into

meaningful clusters that invite comparison of various design alternatives and 3) helping clients

understand the competitor’ store designs.
                          s

   This paper describes an empirical study of 137 Internet stores selling women’ apparel that
                                                                                s

categorized different on-line sales approaches, user interface styles, and services used in on-line

stores. First, the study surveys 44 Internet apparel Web site features.        Descriptive statistics

summarize key features of the Web sites surveyed. We measured interface functionality, the

ordering and payment possibilities, customer service offerings and additional features that attract

customers to the site. Second, we categorized some general approaches for Internet store designs

by analyzing patterns in descriptive attributes of the on-line stores surveyed. Using the survey of

store features and subsequent cluster and factor analysis, we identify five distinct strategies that

characterize Web retail sites.

   The following section defines on-line store variables used in the study. Next, we describe the

sampling method and statistical analyses. After presenting descriptive statistics on characteristics

of the on-line stores in the survey, we discuss the results of our classification of Internet stores.

Finally, we raise a set of future design issues for Internet stores.




                                                                                                   4
Identification of Characteristic On-line Store Attributes

   First, we defined a set of variables that describe and differentiate on-line stores. Analogies from

three domains helped define the variables. The most obvious source for on-line store design

variables is the literature on the design and evaluation of paper-based catalogs. We also measured

attributes shoppers consider when selecting a retail store. Shopping an on-line store is certainly

much more like shopping a paper catalog than shopping a retail outlet because both involve mail

delivery of the purchases and in both cases customers can not touch and smell the items. On the

other hand, on-line shopping can incorporate new interactive features to catalog shopping, such as

email inquiries to sales representatives, discussion forums for customers or voice and video

applications. In this sense, on-line stores are somewhere in between paper catalogs and retail

stores, but also add completely new dimensions to shopping like automated price comparisons,

unlimited “shelf” spaces, and so on. We recorded these “extra” features but did not use them to

describe or categorize the on-line stores because they were too rare in the stores we surveyed. In

addition to these attributes, we examined attributes of human computer interfaces such as the

interface clarity and navigation.

Paper Catalog Design Variables

   Research on paper catalog design and evaluation primarily emphasizes the importance of

layout factors to distinguish selling and not selling catalogs. Several authors suggest guidelines

for design and evaluation [17 (pp. 243-250), 35, 36]. Most of these concentrate on page layout,

typography, copy, art-design and reader involvement of the catalogs. However, we did not try to

operationalize any subjective attributes of the layout quality into descriptive variables. Another

feature is the “look and feel” of the catalog. This includes picture placements, merchandise

grouping, exclamations, and front and back covers [14, 37]. The paper catalog’ cover page
                                                                              s



                                                                                                    5
translates into the on-line catalog’ home page. Both the cover page and the home page aim to
                                    s

excite shoppers about the catalog and to generate interest to flip through the pages. Thus, we

describe home page features, such as the use of images, the home page image size and page

length.

  Page lengths were measured in screen pages. The browser was expanded to fill the full screen.

We defined a screen page as the browser1 screen area on a 1024x768 17” monitor that can be

looked at without scrolling the page2. Pages were scrolled and the number of screen pages fitting

on the Web-page was counted. Image sizes represent the sum of all images on one screen page,

not including graphical buttons. We did not measure the size of image files in bytes because file

sizes largely depend on image resolutions and file formats (gif, jpg, etc.). Further, screen area

allows comparisons between image use in paper media to on-line media. We also measured

whether images in the catalog were used for product display and menu buttons (image overlay),

only for product display, or not at all. We also coded whether the catalog used thumbnail images.

This captures the level of catalog sophistication in terms of the image use.

Attributes Considered by Shoppers in Retail Store Selection

   Electronic shopping incorporates many of the same characteristics as normal shopping, such as

departmental product organization and browsing possibilities. Thus, we measured attributes that

shoppers consider when patronizing a retail store.

   A great amount of research was done on the evaluation of department stores by consumers.

Berry [6] empirically identified a number of attributes using a mail survey.         May [22] and

Lindquist [18] emphasized the importance of the retail stores’ image. Lindquist distinguished

store image components in functional qualities, such as the merchandise selection, price ranges,

credit policy and the store layout, as well as psychological attributes that were associated with the



                                                                                                   6
customer’ feelings about the store. In our research, we only concentrated on functional qualities
         s

because we did not survey actual customers.

   More recent research developed models predicting customer store choice behavior. Several

authors apply consideration set theory to store choice modeling [11, 24, 39].             Others use

hierarchical models [1] or threshold models [20] for predicting customers’ store choice behavior.

Yet, most authors use store attributes described by Lindquist’ summary [18]. His attribute list is
                                                              s

a compilation from 26 researchers in this field. We adopt these store attribute groups from

Lindquist.   Merchandise includes product variety, quality, guarantees, and price.            Service

examines general and sales clerk service, merchandise return, and credit and payment policies.

Promotion explores sales, advertising, and promotion displays. Convenience includes general

convenience in the store, like store organization or store hours. Arnold et al. [2, 3] suggested a

few additional store attributes associated with store convenience: ease of navigating through the

store and a fast checkout. A number of Lindquist’ functional attributes were excluded from our
                                                 s

research (clientele of the store, physical facilities, store atmosphere, institutional factors). They

are either irrelevant in the on-line shopping environment or were not related to our survey of on-

line catalog features.

   Merchandise The overall selection of the merchandise can be characterized by the total

number of products and the number of product categories. The number of product categories is

not easy to define across different stores since stores offering different types of products will have

very different levels of product categories. In one store, men's, women's and children's clothing

might represent three high-level product categories; in the next case, it might be business attire,

casual and sporting goods. Thus, in order to assess the selection, or broadness of the stores, we

used the number of hierarchical store levels as a proxy variable for the number of product



                                                                                                    7
categories. Information about the quality of the goods includes guarantees and order information

such as information on shipping and returns.

   Service Interactive customer services are very important for on-line stores [34]. Service

information included whether the store featured any gift services, a frequently asked questions

section, company information, the information content provided for the average product (this can

be considered as the information that is accessible to the customer when talking to a sales

representative in the store), a sales representative’ phone number or email, and whether the store
                                                     s

featured a feedback section, offered help on the product-size selection or featured extra questions

in the order form to get to know the customer.

   Promotion Different store promotions were observed. Next to frequent buyer schemes, we

considered appetizer information like magazines or lotteries and also links to other sites as

promotion. This strategy of magazine catalogs or “Magalogs” is also increasingly used in paper

catalogs [26]. Another variable recorded the existence of a “What’ new?” section that can either
                                                                  s

be seen as promotion or general service.

   Navigation Stores featuring a deep hierarchy of levels had to provide tools to easily navigate

the store. To shop, consumers navigate from the home page to end product pages containing

images and descriptions of the products. Organization is a prerequisite for navigability [21]. The

interface structure, its different hierarchical levels, and their organization should be apparent to

the user and easy to understand. In on-line stores, navigability can be supported by features such

as search or browse functions. Providing product indices or a site index also greatly enhances the

feeling of “knowing where you are” in an interface. Browsing and navigation capabilities of an

Internet retail store also include the number of modes to shop the store (by brand, price,

department), and convenience during checkout in an on-line store.



                                                                                                  8
User Interface Consistency is considered as one of the most basic usability principles of

computer interfaces [28, 31, 38]. Many authors distinguish three types of consistency: internal

consistency, external consistency with other interfaces familiar to the user, and consistency with

real world features [13]. In our research, we surveyed whether consistent menu bars were in

place on all pages.

   The use of different colors to guide users of a computer interface has received a lot of attention

(for color in HCI see [21, 27]; for color in on-line marketing see [10]). We surveyed the

background color, texture, or pattern of the home page. Texture and color have been shown to

influence consumer choice behavior3.

   Help functions are most often related to helping users recover from errors or find a particular

function in the documentation [28, p. 148]. We analyzed whether stores offered any initial help

for customers to shop their store. This included help information about the store’ navigation or
                                                                                  s

the use of ordering features like a shopping cart function.

   Altogether, 44 attributes were used to evaluate each on-line stores. Appendix A contains the

checklist that describes all 35 variables used in the cluster and factor analyses. Nine additional

variables were collected for descriptive statistics only.

Methods

   We used a convenience sample of on-line stores in our survey. Internet search engines such as

Yahoo, Alta Vista and Infoseek were used to find single stores or comprehensive lists of stores.

Two thousand stores were screened by looking either at the description provided by the search

engine or at the store itself. All stores selling more than five items of any kind of clothing were

bookmarked for further consideration. Stores selling just one product in different variations (e.g.,

T shirt stores) were not considered. Finally, 137 stores offering women’ apparel for sale were
                                                                        s



                                                                                                   9
selected for comparison. This convenience sample certainly does not claim to cover all Internet

apparel stores, though it should be quite representative for the type of apparel stores currently on-

line. The on-line stores were selected from July 15th to July 28th, 19964.

   The first author coded all store variables using a standardized checklist. Given the rapidly

changing nature of the sites, the reliability of the coding was tested post hoc using a random

sample of 42 of the Web sites 137 sites. The first author and a research assistant recoded all

measures for each of these 42 Web sites. Using Cronbach alpha, inter-rater reliability over this

subsample was 0.818.

   Due to resource limitations, we did not count individual words associated with each interface

feature. Instead, we counted the total number of screen pages and full text lines that contained

related information. Full text lines were adjusted to reflect different font sizes and frames. A post

hoc analysis of a random sample of 14 of the 137 Web sites surveyed found a high correlation (r =

0.98) between line count and word count. Thus, line count is a reasonable approximation for

word count.

   Data analysis for the survey is twofold. The first analyses provide descriptive statistics on the

data collected. The second analyses classify and group the surveyed on-line stores using cluster

and factor analysis.    Principal factor analysis was used to reduce the number of variables

describing the on-line stores to a few components. This analysis identified three factors that

characterize the on-line stores in the survey.

   The cluster and factor analysis excluded descriptive variables not considered useful to

characterize an on-line store.        These excluded variables are those coding membership

requirements, store locators, payment methods, price policies, and whether an order form for print

catalogs was available. This data was only recorded for descriptive reasons, not to classify the



                                                                                                  10
on-line stores. The four variables coding different links of the on-line stores were summarized in

a single variable (LINKS). Product and non-product related appetizers were summarized in the

variable APPETS.

Results

Descriptive features of on-line apparel stores

   Store size may influence consumer satisfaction of the on-line shopping experience. Most on-

line stores surveyed were reasonably small. 62% have less than 50 products for sale. Only 5%

had more than 500 products, including L.L. Bean with approximately 1,600 and Shoppers

Advantage with nearly 250,000 products offered in the on-line store.

   78% of the on-line stores offered goods at prices on par with paper catalogs or store prices; no

on-line stores appeared to charge a premium for on-line sales. The remaining 22% sold at a

discount on the Internet. These mostly included firms relying solely on the Internet for generating

sales.

   Company information presented in the on-line stores varied greatly. 15% of the on-line stores

provided a “store locator” to find the company’ retail stores. 22% offered an order form to
                                               s

request a printed version of the catalog. Almost one third did not provide any information on the

company’ history, policies or background; 80% had less than 10 lines of information. This is a
        s

surprising number since customers want to know who they are dealing with and sending the credit

card information to [12]. For companies with an established reputation, this is not an issue.

However, for new “virtual companies” solely operating on the Internet, this is one important way

to establish credibility of the business.

   Only a few of the on-line stores did not make use of images. About half of the on-line stores

not only used images for product display, but also used them for navigation with image overlay



                                                                                                11
links. This is especially true for home pages and menu bars. Image size averaged about 60 cm2

on home and end product pages each which is equivalent to 11% of screen area. The median

image size lies between 5 and 8% of total screen area. While we measured the quantity of the

images, we did not assess the quality of the images. For example, Ridgon’ description in the Wall
                                                                         s

Street Journal [33] emphasizes the problem of image quality, “. . . after waiting 5 minutes for

some fuzzy pictures to appear, I soon realized that the technology has not caught up with my

imagination.” Thus, there are tradeoffs among image size, image quality, and downloading time.

   Page length, measured in multiples of a normal screen size, was one screen page in most cases.

Lists of products on end product pages or lists of product indices on navigation pages were

longer than one screen page. More sophisticated on-line stores tended to fit pages on single

screens. Most retailers also tried to display only single products on end product pages. In

contrast, mail-order catalogs often group clothing outfits on the same page, making it easier to

coordinate a multi-item purchase. While most on-line stores displayed only one product per

image, some on-line stores displayed sets of products on one picture.            Text information

accompanying the product images varied depending on the product type and on-line store. While

some products such as trekking goods or clothing that claimed to be made of special fibers had a

lot more text information, 50% of the on-line stores surveyed averaged less than three lines of text

per product. This small amount is surprising given the ability of an on-line Web site to make a lot

of product information easily available to consumers.

   Due to the limited product range of most on-line stores, the number of hierarchies was three or

less for 75% of the on-line stores. Few sites made use of thumbnail images. Thumbnails can be

found in on-line stores where customers can be characterized as not being very sure about the




                                                                                                 12
actual good which they intend to buy (e.g., gift or lingerie catalogs). Background color was white

or gray for 42% of the sites. 42% used patterns or texture.

   Interface navigation is supported by consistent menu bars, search functions and indices.

However, only a few stores had product search functions, site or product indices. This is certainly

due to the small size of most stores. Additionally, 24% of the sites surveyed did not have

consistent menus to navigate through the pages.

   Ordering is done using a shopping cart metaphor in 30% of cases; only one third accepted off-

line orders. Five of all 137 on-line stores required a membership to shop. Already, 29% offered

on-line ordering with credit card data submission as the only way to pay. 59% offered this as an

option. The next most popular payment method was phone ordering, with 12% of the on-line

stores relying solely on this alternative. Very few sites offered frequent buyer incentives or used

additional personal questions in their order form to learn more about their customers. This

information is readily available to on-line service providers such as America Online and

CompuServe. It is also becoming available on the Internet as the use of cookie technology

becomes more widespread.

   Additional customer service information includes help on the interface usage or product size

selection, FAQ- and “What’ new” - sections. A great number of sites do not provide any of these
                          s

services. These results are very similar to those for interactive service offerings like contact

phone numbers or email addresses of sales representatives or feedback sections. 47% of the sites

do not offer an email address for interactive service.

   Customers will probably return to an on-line store site if it offers incentives. These appetizers,

which attract customers to come back to the site, consist of built in features like magazines,

lotteries and links to other interesting sites. 76% of the sites do not offer any appetizers. Those



                                                                                                  13
found most often include magazines with product related articles, glossaries, travel or other

product related tips, and lottery games.

   Interestingly, very few stores made use of links between appetizer and product pages or among

different product pages. By not displaying multiple products on the same screen, Internet stores

restrict the comparison of products or the purchase of associated items [5]. Links in Internet

stores can overcome this problem by directing the customer to related products. For example, the

Spiegel site (www.spiegel.com) features some very elaborate magazine pages with many links to

associated products elsewhere in the store.

   55% of the stores do not have any links to other areas and only 8% provide links to more than

two of the following areas: product related sites, affiliates, regional sites and Internet sources. A

few sites had links to competitors (malls, related Internet shops) but they were not comprehensive

enough to be useful for product and price comparisons. Of the 20% of the sites having some

links, most had links to search engines, Netscape or MS Explorer, or to the consulting company

that designed the Web site.

Cluster analysis of store attributes

   Prior studies by Day and Heeler [8] and Finn and Louviere [11] used cluster analysis to

segment stores or shopping centers. Day and Heeler used variables like the number of employees,

the number of store checkouts, customer demographics, in-store promotions, individual product

sales and total store sales to cluster regional retail stores. They also used subsequent principal

factor analysis to reduce the number of variables to a few dimensions.          Finn and Louviere

considered the variables proposed in Arnold et al. [3] to arrive at a segmentation of local

shopping centers. Two important store attributes identified by Finn and Louviere were the quality

of service and a wide selection of products. Cluster analysis is a purely empirical method of



                                                                                                  14
classification but it is widely employed in marketing for market, product, and customer

segmentation. Guidelines for the application of cluster analysis in marketing can be found in Punj

and Steward [32].

   Before computing the cluster analysis with the SYSTAT Software Package [41], all interval

and ordinal level data were standardized to an interval from zero to one. Standardization makes

overall level and variation comparable across variables [41]. The standardized variables were

transformed into normalized Euclidean distances. Hierarchical clusters were generated using the

combined set of Euclidean distances. In the calculation, we first used the single linkage method

that adds extreme cases only at the end. However, this procedure did not identify any extreme

cases for deletion from the data set.

   It is essential to realize that each clustering technique is biased towards finding clusters

possessing certain characteristics related to cluster size or dispersion (variance). Ward’ minimum
                                                                                          s

variance technique (as well as the k-means method) tends to find clusters with roughly the same

number of observations per cluster. Average linkage tends to find clusters of equal variance.

Single linkage is notorious for creating groups with many singletons or outliers. Milligan’ (1981)
                                                                                           s

review of clustering methods found that the Ward method had the best overall performance. It

tends to produce groups of similar size and usually provides very good results [4, p. 298]. Thus,

the actual clustering was conducted using Ward's method.

   A tree diagram of the cluster data shows five distinct clusters with sizes ranging from 20 to 34

cases. These initial major branches of the tree are the focus of our discussion. We did not

describe distinct subgroups within these five major clusters. For each of the five clusters, Table 2

shows the means for each of the 35 variables used in the clustering. We make no claim that there

are only five categories of on-line storefronts or that they are optimal in any sense. We merely



                                                                                                   15
state that the five categories we have identified are meaningful groups with similar

characteristics5. Next, we describe each of the five clusters in more detail and give some specific

examples from each cluster.

                                        Insert Table 2 here

   Super Stores The first cluster contains most of the largest stores in terms of total product

number and number of pages. The score for the average store size is 54% higher than that of the

second ranked cluster. This is also reflected in the number of levels between home page and

product pages, where the score is 70% higher. Average information for the customer is most

extensive, including information about the company, about ordering, gift services and “What’s

new?” - sections. The number of extra appetizers and customer-care features such as feedback or

access to sales representatives are also more extensive.

   Most stores in this cluster have a product index or a search function.          This is certainly

correlated with the stores’ size. Small sites selling only a few products would not need a search

function or a product index. Super Stores also provide the most text information for each

product. Number of products on product pages is small with most sites displaying only one

product per page. The corresponding page length is one screen page in most cases.

   The L.L. Bean on-line store, Land’ End, Spiegel, Online Sports, J.C. Penney, Shoppers
                                     s

Advantage and Service Merchandise can be found in this cluster. They all try to attract customers

with a broad supply of extra information and offer a sophisticated interface with many short pages

and navigation tools.

   Promotional Store Front Stores in this cluster also score high on customer information and

appetizer variables. Most provide information pages about the products, as well as on unrelated




                                                                                                  16
topics like the environment (AWEAR) or lifestyle issues (Tara Thralls). The numbers of products

are small. There are no striking features that characterize the user interface.

   The cluster includes AWEAR, Tara Thralls, Madeleine Vionnet’ Scarves, Wickers, Cheyenne
                                                               s

Outfitters, Real Bodies, Utilities Design Match and The Old Hide House. Most sell very few

products, but offer a lot of information on the company or other issues. The focus of the store is

more on promoting general company awareness than on generating on-line sales.

   Plain Sales Stores The third cluster comprises a number of relatively large stores with no or

little extra product information. While company information content is still average, most stores

of this cluster offer no appetizers, links or additional customer services.

   On the other hand, interface navigation is quite elaborate for most “Plain Sales” stores. They

all use thumbnail images. Average size of a product image is largest in this category. Many stores

feature a product index or a browse function. Each product page tends to be long and shows

more than one product in most cases.

   Stores in this cluster make abundant use of graphics for product display. Products do not

require explanations, extra information on usage or other additional information. Special WWW

features like links are hardly used. This cluster includes many boutiques like Milano, Rhondi,

First Lady, Dock of the Bay, Clothes Horse and Leather & Gift Outlet, as well as other stores that

emphasize a product image in their marketing. The latter group includes for example swimwear

and lingerie sites, such as Skinzwear or Sophie la Nuit.

   One Page Stores The two variables distinguishing this cluster from others are the number of

levels between home page and product pages, and the home page length. The number of levels is

very small across most sites in this cluster. Home page length is very large for half of the on-line




                                                                                                 17
stores. The on-line stores are all relatively small and feature little extra information, links or

appetizers.

   The cluster actually consists of two different subgroups. The first one is stores relying heavily

on browse functions to navigate among products. For this reason, numbers of hierarchical levels

are low. This group includes boutiques such as Mariam Apparel, Lims or KHLA. The second

group contains stores only consisting of one long home page, displaying a list of products below

an introductory statement. Examples for this group are Alaska Mountaineering, Australian Coat,

Al’ Texas Jeans and Close To You. However, the cluster also contains a few stores, such as
   s

Marissa Fabiani, that are very extensive and have several levels.

   Product Listings The number of levels is below average for most stores in this cluster. Little

additional information and few appetizers are available. Store size is average in comparison to

other categories. Product listings have large numbers of products on end product pages and a

greater page length. Average product image size is smaller than in any other cluster. Almost none

of the stores feature navigation tools like indices or a search function. Products are found in lists

on product pages.

   The average store in this cluster contains only the home page with links to certain product

categories and additionally one long page for each category, displaying a list or directory of small

product images and their description. Images are not enlargeable. The page also contains

ordering information.    Stores in this cluster include Rocky Mountain Outfitters, Seabury’s

Women’ Golf, The Dress Connection, Dance Supplies, Full Swing Golf of Alaska and Fisher
      s

Henney Naturals.

   The example stores mentioned above represent their groups fairly well. Of course, any cluster

includes some cases that might appear to fit better into a different category. Thus, our results



                                                                                                  18
require a few caveats as noted above. Table 3 summarizes the main features of the five apparel

store groups identified by our analysis.

                                           Insert Table 3 here

Store dimensions from principal factor analysis

   While cluster analysis identified five broad categories of apparel on-line stores, principal factor

analysis identified a few high level dimensions characterizing the stores. The goal of this analysis

is to summarize the data set from the survey as accurately as possible using a few factors. In

addition to the variables used in the cluster analysis, aggregate variables have been defined by

adding the values of binary variables describing a similar category. For example, the three

variables coding the different navigation tools (PRODIDX, SITEIDX, BROWSE) were grouped

into one variable reflecting the stores’ navigation capabilities. The advantage of this procedure is

that it reduces variance in the data, thereby yielding clearer identifiable factors. Not all variables

collected in the survey were used in the factor analysis because variables that do not contribute to

basic factors tend to deteriorate results. For this reason, the variables describing page lengths and

picture sizes were excluded. Table 4 lists the basic variables and all aggregate variables used in the

principal factor analysis. The factors were rotated automatically using the varimax algorithm. The

Scree Test suggests three factors. Results for the three factor model is shown in Table 5.

                                           Insert Table 4 here




                                           Insert Table 5 here

   Seven variables load particularly high on the first factor. They describe the total number of

products, the number of levels, the amount of company information presented, the amount of

information regarding ordering and using the interface, whether there is a search function or


                                                                                                   19
different modes to shop in and the number of customer care features like gift services, access to

sales representatives and feedback possibilities. The first six variables are related to the store’s

size. Customer care is related to store size. Larger stores provide more customer care features.

We refer to the first factor as Store Size. This factor explains 20.4% of the total variance.

   The second factor, Service, includes the variables LINKS, APPETS, PRINFO and

TEXTLENGTH. LINKS counts the number of hyperlinks to related information.                   APPETS

measures appetizers such as magazines, travel information, sale items and games. TEXTLENG

describes the information content available for individual products, PRINFO stands for general

product information and services such as help on the product’ size selection. In a retail world
                                                             s

store, this information is available from the sales clerk. They are all associated with appetizers

and information supplied for the customers’convenience and attraction.

   The third factor comprises variables reflecting the interface design. The variable MENUBARS

describes whether the store has consistent text or image menu bars on all pages while

IMAGEUSE scores higher if images are not only used for product display but also as navigation

and orientation tools in the store. IDXBROW reflects the availability of site and product indices

as well as browsing functions to locate products and information in the store. A “What’ new” or
                                                                                       s

a FAQ section, summarized in the variable CUSTINFO, also provide the customer with

information about the store and its features. These variables measure interface quality and

consistency, hence we call the factor Interface Quality.

   In effect, the three factors Store Size, Customer Services and Interface Quality capture a great

share of the variance in the data explaining 46.2% of total variance. As there are only three

components, we plot the stores in the three dimensional space spanned by the factors (Figure 1).

                                         Insert Table 6 here



                                                                                                 20
Insert Figure 1 here

   The five categories found in the cluster analysis can be roughly identified. The Super Stores

are clearly segregated from the other stores by their size. The stores within this cluster still differ

in terms of services and interface appearance. Shoppers Advantage for example is weak on the

Services scale as it does not offer many additional features which are not product related. Land’s

End and Spiegel with their extensive magazines score high on this dimension. L.L. Bean and J.C.

Penney have the highest interface quality due to very good menu bars and navigation capabilities.

The Service Merchandise Store is quite far away from this group, mainly due to its smaller size

with only 31 products.

   We described Promotional Stores as having few products and lots of additional information.

Thus, this cluster can be best identified in the Size versus Services projection. Tara Thralls and

AWEAR score especially high on the Services dimension while all stores in this cluster have less

than the average size. Plain Sales Stores can be found below average on the Services dimension.

They also score medium to low on the Size dimension as they are still small in comparison to the

Super Stores cluster. The interface is better than average.

   The One Page Store cluster can be found on the negative axis of all three dimensions.

Services, Size and Interface Quality are below average for most stores. Product Listings are

bigger in size and offer more services than One Page Stores. Still, the Interface Quality is also

below average as can be seen from the graph.

Discussion and Summary

   The Internet and the WWW are changing rapidly. Stores will become more sophisticated and

incorporate additional features in the future. Today, video, audio and instant access to high

quality images are limited basically by low bandwidths. Future on-line stores can become much



                                                                                                    21
more interactive, involving, for example, voice mail inquiries to sales representatives. Intelligent

on-line stores might direct consumers automatically to products complementary to a specific

person’ purchase history (for example, see http://www.firefly.net/places.fly). Despite all these
       s

possible changes, retailers will still have different intentions. There is no simple on-line store

design to accommodate everyone and each retailer will follow a different marketing strategy.

   This research identified five different on-line store design strategies: Super Stores, Promotional

Stores, Plain Sales Stores, One Page Stores and Product Listings. They differ mainly in terms of

the store’ size, the quantity of extra information and appetizers, and the interface design
          s

including consistency, page lengths, image sizes and navigation capabilities. We concentrated on a

subset of Internet stores for women’ apparel and did not study non-apparel stores to generalize
                                    s

our findings. We assume that the basic approaches concerning the stores’ design will not differ

very much for other types of stores. Further research is needed to justify any generalizations

empirically. We also did not determine the percentage of on-line retail stores for women’ apparel
                                                                                         s

that would be classified as super stores, promotional stores, plain sales stores, one page stores and

product listings. Additional research is needed to estimate those values.

   This research makes several contributions. First, it provides an interesting snapshot (July

1996) of Internet store features.     The descriptive statistics of these on-line store attributes

suggests many opportunities to improve the experience for consumers. As noted in Table 6, many

of the descriptive statistics of on-line store attributes resonate with the findings by Jarvenpaa and

Todd [16] in their survey of consumer reactions to electronic shopping on the World Wide Web.

We also found few products in a typical store, a low overall quality of the pictures in the on-line

store, a dearth of product information in the on-line stores as compared to traditional paper




                                                                                                  22
catalogs, only a small amount of store policy information available from an on-line store, and few

interface features to help find goods and services during goal directed shopping.

   Second, the paper documents a useful statistical methodology for clustering on-line stores into

meaningful groups. This exploratory data analysis structured the on-line stores into meaningful

groups using observable attributes and features of on-line stores as the raw data. While different

clustering techniques for analyzing data can and do produce different taxonomies, the goal is to

identify groups that are more similar within a cluster than between clusters. We believe that

clustering provides an objective, empirical basis for classification of Internet sites for electronic

commerce.

   Third, the technique provides developers of Web sites a methodology for eliciting functional

requirements from their clients. Our technique will help developers characterize attributes and

features of alternative Web sites to 1) facilitate the definition of requirements, 2) identify major

design features, 3) structure the design space into meaningful clusters to facilitate the

consideration of various design alternatives, and 4) help clients position their Web site

strategically by understanding the competing on-line store designs.

   The classification has important implications for on-line store designers. Retailers can compare

their own catalogs with those in the survey. Measures for each of the 35 variables shown in

Appendix A can be added to a data file containing the means shown in Table 2. Using a statistical

package like Systat [41], a matrix of Euclidean distances can be computed and the data can be

clustered for comparison.     Retailers then could compare their catalog to the categories we

identified and determine whether it has key features associated with particular categories.

   Our list of features and attributes in Table 2 and Appendix A also serves as a check-list for

Internet store designers. The check-list can be used to survey peer group on-line stores. Do

                                                                                                  23
these on-line stores incorporate new features that appear useful for the consumer?                      Do

competitors emphasize particular features like special services or high quality images? Comparing

the on-line store with similar competitors’ on-line stores generates ideas about how to improve

the store’ design.
          s

   The classification provides a better understanding of the design space in which the stores

operate. It reveals promising Internet store models that are not yet existent. Retailers might not

want to follow one of the standard strategies, but may want to differentiate themselves from the

competition. The classification can help envision new strategies that combine elements of known

approaches to uniquely position their on-line store’ marketing strategy. For example, the
                                                    s

classification did not find any One Page Stores that provided high service levels or a high quality

interface. This is an anomaly given the large number of niche women’ clothing boutiques in a
                                                                    s

typical shopping mall. Why don’ such stores exist on the Internet? Is it because small retail
                               t

stores lack the expertise needed to develop high quality on-line stores with good service? Or are

the costs of developing such a Web site prohibitive to small retail stores?

   Such questions lead to a larger research agenda exploring the effectiveness of different types of

stores identified in our classification. This might involve measuring effectiveness as a function of

sales per unit of traffic, total units of traffic, and total sales for the various types of stores. In their

survey of consumer reactions to electronic shopping, Jarvenpaa and Todd [16] did not examine

reactions to different types of store separately. It is not clear whether consumers prefer to shop at

large stores or small stores; at discount stores or department stores or how the type of on-line

store impacts consumer behavior. According to surveys of retail stores [17], large stores should

attract more customers than small stores. From the perspective of an on-line retailer, it would be

important to know whether large stores are more effective than small stores in converting store



                                                                                                         24
traffic into sales. More generally, this raises the question about the relationship between

effectiveness and the categories of stores identified in the research (Super Stores, Promotional

Storefronts, Plain Sales Stores, One Page Stores and Product Listings). By structuring this

domain of inquiry, the classification delineates on-line stores into similar groups. Effectiveness

can be examined within and between groups. For example, are Super Stores more effective than

Plain Sales Stores? Within stores identified as Super Stores, what determines the effectiveness of

a particular Super Store compared to other Super Stores? In Super Stores, a search feature may

improve sales. It is not at all clear that a search feature would impact sales in One Page Stores.

The store categories permit a more detailed comparison of effectiveness measures among stores.

Thus, the classification will aid future research in this domain.

   Analyzing the evolution of Web stores can lead to insights about what makes a successful on-

line store. The three store dimensions we identified raise some questions for future research.

   Service In electronic commerce, the physical store is replaced by an on-line store. The sales

clerk is now a help button or a product index on the screen display. What services can increase

customer loyalty to an on-line store? Are consumers more likely to make a purchase from an on-

line store if it offers more than one mode of shopping? What type of product information attracts

consumers? Table 6 suggests a general lack of attention to customer service in existing on-line

stores. Better presentation of customer service information will be essential in the redesign and

revisions of existing on-line stores.

   Size How important is product variety? Are niche boutiques better than Super Stores? Many

of the stores surveyed were small, but it is not clear whether this is a good or bad characteristic.

Consumers are more likely to find specific products in a small on-line store. In large on-line

stores, it is not clear how best to facilitate browsing and navigation. More importantly, a better


                                                                                                 25
use of links among products in a on-line store may enhance the shopping experience. Consumers

might be more likely to make a purchase when a related product is linked.

   Interface The user interface design is essential for conducting business online. How easy is it

for the consumer to find what they want in the store? Is there an optimal number of screen levels

consumers are willing to navigate before giving up and leaving? If they find a product, how easy is

it to buy the product online? Clearly there are interface problems associated with navigation,

search, and the ordering process in many existing on-line stores.

   Since sales can be adversely influenced by poor on-line store design, it is essential to quantify

the effects of different layout, organizational, browsing and navigation features on Internet store

traffic and sales. Managers, production staff and merchant partners should not assume customers

do not want an item if it is not selling. Nor should they conclude that a poor response to a given

store design is because of the merchandising mix. It is important to take a harder look at the

possible relationship between poor selling items and store design and layout. This is especially

important given the replacement of retail store personnel by various user interface features in on-

line stores. Could customers be having a tough time wading through the screens? Can customers

find what they want in the stores? Are customers aware of what products are in the stores? After

all, diligence in browsing a store is not a virtue on-line retailers should expect from their

customers. Because of the cost involved with launching a new store or changing an existing store

design, it is important to allocate product development resources to on-line store features that

improve store traffic and sales. In our future research, we hope to prioritize store redesign efforts

to those features with the greatest impact on Internet store traffic and sales by quantifying the

benefits of specific design features.




                                                                                                  26
Endnotes
1 The browser Netscape Explorer 2.02 showed both Toolbar and Location in the window.

2 In the USA, 23.8% of the monitors are 17 inch; 33.4% are 14 inch; 39.9% are 15 inch; and 2.8% are 19 inches
  or larger (June 24, 1997 PC Magazine; p. 173). The long term trend is towards larger monitors.
3 [Mandel and Johnson 1997 http://www-marketing.wharton.upenn.edu/ec/project.html]

4 A complete list of all the catalogs used in the study is available from the authors.

5 To address concerns about the distance measure, we re-examined the data using two other distance measures.
  Gamma distances were computed using 1 minus the Goodman-Kruskal gamma correlation coefficient. This is
  used typically for rank order or ordinal scales. Pearson distances were computed using 1 minus the Pearson
  product-moment correlation coefficient.       This is used typically for any quantitative data. As a basis for
  comparison we specified 5 clusters (using this option in Systat) and saved the cluster number in a Systat file. We
  compared the cluster of each on-line store using each new distance metric to the clusters produced using
  Euclidean distances. Using the Gamma distance measure, 93 stores out of 137 (68%) were in the same cluster
  as those found using Euclidean distances. Using the Pearson distance measure, 95 stores out of 137 (69%) were
  in the same cluster as those found using Euclidean distances. More importantly, the interpretation and nature of
  each cluster (on-line store category) remains substantively intact.

6 The browser Netscape Explorer 2.02 showed toolbar and location at a resolution of 1024x768.


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                                                                                                   29
Retail Store                    Paper Catalog                               On-line Catalog
Sales clerk service            Product descriptions, sales clerk   Product descriptions, information pages, gift
                               on the phone, information pages     services, special search functions
Store promotion                Special offers, lotteries, sale     Special offers, on-line games and lotteries,
                               catalogs                            links to other sites of interest, appetizers
Store window displays          Front and back cover                Catalog home page
Store atmosphere               Copy quality, graphics, product     Interface consistency, catalog organization,
                               arrangement, perceived image        interface and graphics quality
Aisle products                 Products on first 2-4 spreads and   Featured products on each hierarchical level of
                               the middle spread                   the catalog
Store layout                   Page and product arrangement        Screen depth, browse and search functions,
                                                                   indices, image maps
Number of floors in the        Catalog organization                Hierarchical levels of the catalog
store
Number of store entrances      Frequency of mailings, number of    Number of links to a particular catalog
and store outlets / branches   unique catalogs mailed
Checkout cashier               Order form, 1-800 phone number      On-line shopping basket or order form
See and touch of the           Limited to image quality and        Limited to image quality and description,
merchandise                    description                         future potential for sound and video
                  Table 1 Analogies between retail stores, paper catalogs and on-line catalogs




                                                                                                               30
Plain   One
                                        Super Promotional    Sales  Page Product
No.           Variable* Min Max         Stores    Stores    Stores Stores Listings
       Number Stores                        20         30       34     30       23
  1 CATSIZE                  1      5     3.35       2.07     2.53   2.10    2.22
  2 HIERARCH                 0      6     4.08       2.80     2.78   2.45    2.54
  3 ORDERINF                 0      4     1.75       1.00     0.32   0.57    0.17
  4 GIFTSERV                 0      1     0.35       0.00     0.00   0.03    0.04
  5 FAQ                      0      1     0.15       0.07     0.15   0.03    0.04
  6 COMPINFO                 0      4     2.85       2.07     1.32   1.37    1.39
  7 TEXTLENG                 0     20     5.10       4.10     3.26   2.92    2.98
  8 SALEREP                  0      1     0.65       0.43     0.53   0.00    1.00
  9 FEEDBACK                 0      1     0.90       0.77     0.06   0.00    0.00
 10 GETKNOW                  0      1     0.15       0.03     0.03   0.03    0.00
 11 XTRAINF                  0      1     0.30       0.53     0.00   0.07    0.09
 12 SIZESELE                 0      1     0.55       0.17     0.26   0.13    0.17
 13 FREQBUY                  0      1     0.30       0.00     0.03   0.03    0.04
 14 LINKS                    0      8     1.30       1.33     0.82   0.60    0.87
 15 BANNER                   0      1     0.25       0.00     0.12   0.10    0.04
 16 APPETS                   0      4     1.50       0.73     0.29   0.60    0.35
 17 WHATNEW                  0      1     0.30       0.00     0.06   0.00    0.04
 18 SHOPMOD                  0      1     0.35       0.03     0.00   0.03    0.00
 19 SITEIDX                  0      1     0.10       0.00     0.03   0.10    0.00
 20 PRODIDX                  0      2     1.20       0.40     0.85   0.10    0.04
 21 PRODSEAR                 0      1     0.20       0.03     0.03   0.00    0.04
 22 BROWSE                   0      1     0.20       0.17     0.29   0.30    0.04
 23 PRODLINK                 0      1     0.15       0.10     0.03   0.03    0.00
 24 PRODSELE                 0      3     1.85       1.23     1.18   1.27    1.17
 25 PRODNUMB                 1     25     3.18       3.15     4.43   3.52    5.37
 26 MENUBARS                 0      2     1.55       1.27     1.00   0.90    1.04
 27 BACKGRO                  0      3     1.55       1.03     1.15   1.27    0.70
 28 HELPINTF                 0      4     1.45       0.20     0.12   0.00    0.13
 29 HPLENGTH                 0     11     1.34       1.33     1.83   2.55    1.72
 30 NAVILENG                 0      8     1.84       1.44     1.04   0.51    0.72
 31 EPROPLEN                 0     12     1.64       1.94     2.14   1.70    2.63
 32 HPIMAG                   0      1     0.15       0.12     0.11   0.11    0.09
 33 PRODIMAG                 0      1     0.11       0.08     0.16   0.10    0.07
 34 IMAGEUSE                 0      2     1.95       1.47     1.50   1.30    1.17
 35 THUMBS                   0      1     0.85       0.43     1.00   0.00    0.00
   *
       See Appendix A for a complete variable description

Table 2: Means for each of the five on-line store categories for all 35 variables used in the
cluster analysis


                                                                                          31
Strategy                     Main Features                        Examples
1. Super Store               •large catalog size                  L.L.Bean, Land’ End, Spiegel, Online
                                                                                   s
(20 stores)                  •ample extra information and         Sports, J.C. Penney, Shoppers Advantage,
                              appetizers (magazines)              Service Merchandise
                             •navigation tools
                             •pages fit on one screen page
2. Promotional Store         •limited product range               AWEAR, Tara Thralls, Madeleine Vionnet’     s,
(30 stores)                  •extensive company information       Cheyenne Outfitters, Real Bodies, Utilities
                             •ample appetizers and links          Design Match, The Old Hide House
3. Plain Sales Catalog       •medium or large catalog size        Milano, Rhondi, First Lady, Dock of the Bay,
(34 stores)                  •large images, use of thumbnails     Clothes Horse, Leather & Gift Outlet,
                             • appetizers or links
                              no                                  Skinzwear, Sophie la Nuit
4. One Page Catalog          •limited catalog size                Mariam Apparel, Lims, KHLA; Alaska
(30 stores)                  •few hierarchical levels             Mountaineering, Australian Coat, Al’ Texas
                                                                                                       s
                             •product browse function             Jeans, Close To You
                             • page catalog
                              one
5. Product Listing           •medium catalog size                 Rocky Mountain Outfitters, Seabury’ The
                                                                                                     s,
(23 stores)                  •long product pages / lists          Dress Connection, Dance Supplies, Full
                             •small product images                Swing Golf of Alaska, Fisher Henney
                             •few hierarchical levels             Naturals

                         Table 3 Classification of five major on-line catalog strategies




                                                                                                               32
Aggregate Variable                     Consists of Variables (simple unweighted sum)
Interface Navigation                   SITEIDX, PRODIDX, BROWSE
[IDXBROW]                              site-index, product-index, browse function
Search Tool and Shopping Modes         PRODSEAR, SHOPMOD
[PSEASHMO]                             product search function, shopping in more than one mode?
Customer Information                   WHATNEW, FAQ
[CUSTINFO]                             what’ new section, FAQ section
                                              s
Customer Care                          GETKNOW, SALEREP, FEEDBACK, GIFTSERV
[CUSTCARE]                             get to know the customer questions, access to sales rep, feedback
                                       section, gift services
Appetizers                             APPET1, APPET2
[APPETS]                               product related appetizers, not product related appetizers
All Links to Other Areas               PRODLKS, COMPLKS, REGIOLKS, INTERLKS
[LINKS]                                product, competitor, geographical region or Internet links
Additional Product Information         XTRAINFO, SIZESELE
[PRINFO]                               extra product information, help on product size selection
Basic Variables used in Principal Factor Analysis
CATSIZE                  COMPINFO                 IMAGEUSE                  TEXTLENG
HIERARCH                 MENUBARS                 HELPINTF                  ORDERINF
                       Table 4 Fifteen variables used in the principal factor analysis




                                                                                                           33
Factor 1         Factor 2         Factor 3
Size             Services         Interface
                                  Quality
CATSIZE          LINKS            MENUBARS
HIERARCH         APPETS           IMAGEUSE
COMPINFO         PRINFO           CUSTINFO
ORDERINFO        TEXTLENG         IDXBROW
HELPINTF
PSEASHMO
CUSTCARE
   20.4%             14.0%            11.8%
Table 5 Results of the factor analysis (percentages denote explained variances)




                                                                                  34
Catalog Attribute                 Descriptive Statistics                           Consumer Reaction from
                                                                                   Jarvenpaa & Todd (1997)
                                                    Merchandise
Catalog size: number of           •62%   have less than 50 products                •31%  were disappointed with
different products                •Only 5% had more than 500 products               product variety
Price                             •78% had prices comparable with paper            •18% felt that prices seem to be
                                   catalogs or store prices                         higher on the Web
                                  •22% sold at a discount
Quality                           •33% did not provide any company policy          •Absence   of familiar brand
                                   information (returns, guarantees, etc).          name merchandise
Product descriptions, use of      •50% had less than 3 lines of text per           •Need better descriptions and
images, text length                product                                          pictures of the products
                                                       Service
General service, gift services,   •Only 19% offered extra product information      •80%   had at least one negative
FAQ on product related            •80% had less than 10 lines of text about the     comment about customer
questions, and information         company’ history, reputation, policies, etc.
                                             s                                      service on the Web
about the company                 •Only 9% had a FAQ section                       •Hidden shipping costs
Sales clerk service, phone        •47% did not offer email for interactive         •Merchants did not anticipate
number, email of sales reps,       service                                          consumer queries and requests
feedback section, get to know     •95% did not have links on end product            for policy information
the customer questions, help       pages to related products                       •Responsiveness determined if
on product-size selection         •Only 25% had help for size selection             it was a good or bad site
Order information,                •Only 30% used a shopping cart metaphor          •41% noted a lack of
merchandise return, credit,       •Most required manual re-entry of product         information on returns,
and payment policies               information onto an order form                   delivery time, guarantees, etc.
Fast checkout                     •41% did not offer on-line ordering with a       •Some sites had hard to follow
                                   credit card                                      ordering directions
                                                     Promotion
Advertising links to other        •76% did not offer incentives or appetizers to   •“You never get a sale”
sites, use of banner ads,          attract and retain customers                    •“You never get to see head-to-
appetizers to attract             •Only 6% offered a “What’ New” section
                                                               s                    head competition that you see
customers, sales promotion                                                          in a mall”
                                                Interface Quality
Navigation indices and            •4% had a site index                             •44%    felt goal directed
browsing, ease to find items,     •6% had a product search function                 shopping and product
number of shopping modes,         •Only 6% allowed multiple shopping modes          comparisons are difficult on
convenience                       •Only 22% had a product browsing function         the Web
Consistency of the interface      •24% did not have consistent menu bars           •“This is not for computer
                                                                                    illiterate people.”
Providing help                    •12%    had on-line help for interface usage     •“I had places I wanted to go
                                                                                    and couldn’ understand how”
                                                                                                  t
Use of images for navigation,     •Less than 8% of the total screen area           •Inability to adequately
size of images, enlargeable        contained images or graphics                     visualize the products
thumbnail pictures                •Over 50% used images for navigation

  Table 6 Comparison of attributes of on-line catalogs with a survey of consumer reactions to electronic
                                  shopping from Jarvenpaa and Todd (1997)




                                                                                                                35
Super Stores




                   Promotional Stores



              Product
              Listings                                         Plain Sales Stores



                                    One Page Stores




Figure 1 Apparel Internet catalogs classified by Size, Services and Interface

    (To accommodate store names, only a subset of the 137 stores are displayed)




                                                                                    36
Appendix A Variables used in the Internet survey

                                   Data Coding and examples        Data Collection / Comments
Merchandise
1. size, number of different       1: 6 - 10 products              The number was counted and summed
   products [CATSIZE]              2: 11-50 products               for all product categories in the on-line
                                   3: 51 - 100 products            store.
                                   4: 101 - 500 products
                                   5: 501 - products
2.  number of hierarchies          average number                  The straightest path through the general
    between home page and                                          transition network of the catalog was
    end product page                                               evaluated for 6 different products.
    [HIERARCH]
3. order information -             0: less than 4 lines            The total number of lines providing
shipping / ordering / product      1: 5-20 lines                   information about guarantees and the
    quality / return information   2: 21 - 40 lines                ordering process was counted.
[ORDERINF]                         3: 41 - 60 lines
                                   4: 61 lines & greater
Service
4. gift services                   0: no                           Wrapping, gift certificates
[GIFTSERV]                         1: yes
5. FAQ on product related          0: no                           Did the store provide an frequently
    questions [FAQ]                1: yes                          asked questions section on product
                                                                   related questions or the company?
6. company information             0: 0 - 11 lines                 The total number of lines providing
mission statement, history,        1: 11 - 20 lines                company information was counted.
    policies                       2: 21 - 40 lines
                                   3: 41 - 80 lines
[COMPINFO]                         4: 81 lines & greater
7. text length on “end product     average number of lines for 6   Any full line on the screen was counted
   pages”                          end product pages               as one line, single items of information
[TEXTLENG]                                                         (e.g. “waterproofed”) were counted as
                                                                   0.5 lines.
8. phone number / email of         0: none                         Did the on-line store offer any way to
   sales reps                      1: yes                          contact a sales representative, by email,
[SALEREP]                                                          phone or fax?
9. feedback section                0: no                           Did the retailer ask for feedback (email
[FEEDBACK]                         1: yes                          comments (mailto), blank email form,
                                                                   email questionnaire, phone)?
10. extra get-to-know-the-         0: no                           Any personal questions about the buyer
    customer questions             1: yes                          on the order form were rated 1.
    [GETKNOW]
11. extra product information      0: no                           Any information on care, maintenance,
[XTRAINF]                          1: yes                          use of products etc. was rated 1.
12. help on product-size           0: no                           Stores presenting tables, figures, etc.
    selection [SIZESELE]           1: yes                          with product sizes were rated 1.




                                                                                                               37
Promotion
13. frequent buyer incentives     0: no                              Any discounts or gifts associated with
[FREQBUY]                         1: yes                             higher sales per customer.
14. links to product related      Four variables, one for each of    Some sites offered a large number of
    information sites,            the link categories (see left),    links in one of the categories (e.g., to
    competitors, regional         were defined as follows:           general Internet sites like search
    sources or general Internet   0: no links                        engines). This was considered less
    sites                         1: 1 - 5 links                     useful than offering links in different
[LINKS]                           2: 6 or more links                 categories which was reflected in the
                                  The variables were summed to       coding scheme. The variable LINKS
                                  form one LINKS variable.           eventually took values from 0 to 8.
15. extra banner ads on the       0: no                              Ads for other companies or the store
    pages [BANNER]                1: yes                             itself were rated 1.
16. product-related and non-      Two variables, one for product-    Examples for product-related appetizers
    product related appetizers    related and one for non-product-   are: hot product of the day, mailing list,
                                  related appetizers were coded:     sale items.
[APPETS]                          0: none                            Examples for non-product-related
                                  1: one closely product related     appetizers are: magazines, travel
                                  item                               information, guest books, games.
                                  2: more than one item or total
                                  content more than 10 pages
                                  The variables were summed to
                                  form one APPETS variable.
17. “What’ new” section
           s                      0: no                              A section introducing new products,
[WHATNEW]                         1: yes                             catalog features or news was rated 1.
Other Store Variables
18. shopping in different         0: no                              Were there different strategies the
    modes                         1: yes                             customer can use to find a product (store
[SHOPMOD]                                                            organization by product category,
                                                                     gender, price level, etc.)?
19. site index                    0: no                              A site index gives an overview of the
[SITEIDX]                         1: yes                             structure and hierarchies of all pages.
20. product index                 0: no                              Stores providing comprehensive lists of
                                  1: yes, text                       all their products, in addition to the
[PRODIDX]                         2: yes, with thumbnails            departmental product organization, were
                                                                     rated 1 or 2.
21. product search function       0: no                              Any inter-catalog search function was
[PRODSEAR]                        1: yes                             rated 1.
22. product image browse          0: no                              A browse function that enables shoppers
    function [BROWSE]             1: yes                             to navigate directly between products,
                                                                     without changing store levels.
23. links between related         0: no                              Links between related products or links
    product pages                 1: yes                             between products and additional
[PRODLINK]                                                           information (magazine pages, games,
                                                                     etc.) was rated 1
24. product selection             0: off-line                        1 refers to an on-line form which has to
                                  1: on-line form to fill manually   be filled out manually; 2 was a form
[PRODSELE]                        2: on-line clickable form          consisting of pull-down menus listing
                                  3: shopping cart                   all product options. An on-line
                                                                     shopping cart only requires the shopper
                                                                     to hit an order button on end product
                                                                     pages.


                                                                                                                  38
Interface Variables
25. number of products on end    average number                      The number was counted on 6 different
    product page                                                     end product pages.
    [PRODNUMB]
26. menu bars on all pages       0: no                               Menu bars had a home page button and
                                 1: yes, text                        at least one further navigation button.
[MENUBARS]                       2: yes, image overlays              The buttons had to be placed
                                                                     consistently on all pages of one level.
                                                                     Buttons using image overlays were
                                                                     considered more sophisticated.
27. background color or          0: no color, white /gray            In case of changing background colors
    pattern                      1: one color                        on different pages, the modal level was
                                 2: pattern                          recorded.
[BACKGRO]                        3: texture
28. help on interface usage      0: no                               Any full line of text on the screen was
                                 1: 1 - 11 lines                     counted as one line.
[HELPINTF]                       2: 11 - 20 lines
                                 3: 21 - 40 lines
                                 4: 41 - lines
29. page length of home page     length in screen pages              Taking the normal screen size as
                                                                     reference6, total page length was
[HPLENGTH]                                                           estimated as a multiple of this size by
                                                                     scrolling the page down. If the interface
                                                                     used inter-page links, page length was
                                                                     only measured down to the line where
                                                                     the first link pointed to.
30. page length of navigation    average length in screen pages      average length in screen pages
    page [NAVILENG]
31. page length of end product   average length in screen pages      average length in screen pages
    page [EPROPLEN]
32. image size on the home       measured as a percentage of the     Image size was determined by
    page                         total visible screen area (549      measuring width and height of all home
                                 square cm)                          page images, excluding buttons.
[HPIMAG]
33. image size on “end product   mean of 6 pictures; measured as     Image size was determined by
    pages”                       a percentage of the total visible   measuring width and height of an
[PRODIMAG]                       screen area                         average end product image.
34. use of images                0: none                             Did the catalog use images for product
                                 1: to show products only            display only, or for graphical buttons,
[IMAGEUSE]                       2: image overlay and product        too?
                                 display
35. use of enlargeable thumb-    0: no                               The use of any enlargeable image was
    nail pictures [THUMBS]       1: yes                              rated 1.




                                                                                                                 39

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  • 1. A Classification of Internet Retail Stores Peter Spiller and Gerald L. Lohse Department of Operations and Information Management The Wharton School of the University of Pennsylvania 1319 Steinberg Hall - Dietrich Hall Philadelphia, Pennsylvania 19104-6366 office phone: (215) 898-8541 FAX number: (215) 898-3664 e-mail: lohse@ wharton.upenn.edu Peter Spiller was a visiting scholar at the Wharton School of the University of Pennsylvania, completing his master of industrial engineering from the Technical University of Berlin, Germany. He studied the implications of Internet marketing and electronic commerce. After finishing his thesis in spring 1997, he became a consultant with McKinsey and Co. in Duesseldorf, Germany. Gerald L. Lohse is an Assistant Professor of Operations and Information Management at the Wharton School of the University of Pennsylvania. His research interests include electronic shopping and on-line information services, cognitive models of decision processes, impact of decision support systems on decision processes, human-computer interaction, and visualization of information. He has published over 30 articles, book chapters, and reports on these topics. Current projects include Internet yellow pages directories, personalized on-line retail catalogs that dynamically adapt to consumer preferences and basic research on how people perceive and process information from displays. Acknowledgment We are grateful to Dr. Vladimir Zwass, Steven O. Kimbrough and two anonymous reviewers for their helpful comments and suggestions on earlier drafts of this manuscript.
  • 2. A Classification of Internet Retail Stores Abstract We describe an empirical method for classifying Internet retail sites for electronic commerce. The technique used 35 observable Internet retail site attributes and features of on-line stores as the raw data to classify the on-line stores into meaningful groups. This paper presents a classification of on-line retail stores based upon an August 1996 convenience sample of 137 Internet retail stores. Descriptive statistics for 44 variables provide a snapshot of key attributes and features of on-line stores. Subsequent cluster and factor analysis identified five distinct Web catalog interface categories: super stores, promotional stores, plain sales stores, one page stores and product listings. On-line stores differ primarily on the three dimensions: size, service offerings, and interface quality. A preponderance of the stores in the study had limited product selection, few service features, and poor interfaces. This categorization provides a better understanding of the strategies pursued in Internet-based marketing and will be helpful for Internet retail store designers as well as for researchers to structure and target further analyses in this domain. Keywords: Internet marketing; on-line catalog; electronic store fronts; cyberstore; cybermall; electronic shopping; classification; cluster analysis; factor analysis 1
  • 3. Introduction According to Hoffman, Novak, and Chatterjee [15] on-line retail stores ‘offer direct sales through an electronic channel via an electronic catalog or other more innovative format’ As with . the physical store and paper catalogs, on-line stores differ in terms of the variety and types of products offered, price, advertising and promotional efforts and service. On-line stores also differ in their catalog or store design and layout. Table 1 summarizes some of the analogies between retail stores, paper catalogs and on-line catalogs that aided the variable definition. Insert Table 1 here To help understand the different strategies adopted by retail Web sites, this exploratory research structures and classifies on-line retail stores into meaningful groups. A classification of retail Web sites will help retail Web site developers understand their design alternatives as well as the functional requirements of a site. For example, what are potential design alternatives for on- line stores? Is there a set of factors or dimensions (e.g., size or service) that can characterize a retail Web site? How do Internet retail sites differentiate their retail store from the competition? By classifying Internet retail stores, we hope to (1) structure this domain for further systematic inquiry, (2) provide concepts for developing theories, (3) identify anomalies, and (4) predict future research directions [19]. Hoffman, Novak, and Chatterjee [15] and Cappel and Myerscough [7] have suggested broad classifications of Internet sites for electronic commerce. They classified Internet sites on the highest possible level that can be summarized as (1) on-line store fronts or catalogs selling products or establishing marketplace awareness, (2) content sites providing information and support, and (3) Web traffic control sites, such as malls and search engines. However, both 2
  • 4. classification schemes are not based on empirical analysis, but upon a functional analysis of broad characteristics of commercial Web sites [7, 15]. Our research builds on the classifications outlined above [7, 15] and concentrates on an empirically-based classification of retail on-line stores. A great amount of variation in on-line stores can be observed either on the Internet or on proprietary on-line services. Depending on the retailer’ intention, on-line catalogs focus on a mixture of pure selling, on increasing marketplace s awareness or providing how-to information, or just on providing some incentives to order a paper catalog. Some retailers see their on-line presence as an opportunity for a more personal communication with the customer, others use it mainly to learn about the medium and to determine its possibilities (for a discussion of different catalogers’ goals see [30]). A classification of on-line store interfaces provides a better understanding of how the electronic stores embody many of the retail store attributes that customers perceive, such as the atmosphere, convenience, friendliness, tidiness, organization, and product display. Some product categories, such as software, financial services or travel, are widely viewed as being successful on the Internet today [23, 29]. To grow on-line sales, the Internet must attract a critical mass of mainstream shoppers, not just addicted specialists shopping for particular products; therefore, we chose to focus on on-line retail stores selling women's apparel. According to a Simmons survey of almost 200,000 adults, clothing accounts for the greatest proportion of catalog merchandise purchased in the US (34% in 1995) [40]. Women’ apparel and accessories s hold the largest share of consumer spending, accounting for 19% of all dollars spent on catalog purchases. Thus, on-line women's apparel stores are an important segment of retail catalog sales. This paper contributes to a growing literature on electronic commerce. The statistical summary of on-line store features and attributes support many of the findings of the survey of 3
  • 5. consumer reactions to electronic shopping by Jarvenpaa and Todd [16]. Many of the problems associated with on-line shopping (e.g., finding products in the store and ordering the product) [9] originate in the retail Web site design. The statistical methodology provides an objective, empirical technique for clustering stores into meaningful groups. The technique also provides developers of commercial Web sites a methodology for eliciting functional requirements for on- line stores by 1) identifying major store design features, 2) organizing on-line stores into meaningful clusters that invite comparison of various design alternatives and 3) helping clients understand the competitor’ store designs. s This paper describes an empirical study of 137 Internet stores selling women’ apparel that s categorized different on-line sales approaches, user interface styles, and services used in on-line stores. First, the study surveys 44 Internet apparel Web site features. Descriptive statistics summarize key features of the Web sites surveyed. We measured interface functionality, the ordering and payment possibilities, customer service offerings and additional features that attract customers to the site. Second, we categorized some general approaches for Internet store designs by analyzing patterns in descriptive attributes of the on-line stores surveyed. Using the survey of store features and subsequent cluster and factor analysis, we identify five distinct strategies that characterize Web retail sites. The following section defines on-line store variables used in the study. Next, we describe the sampling method and statistical analyses. After presenting descriptive statistics on characteristics of the on-line stores in the survey, we discuss the results of our classification of Internet stores. Finally, we raise a set of future design issues for Internet stores. 4
  • 6. Identification of Characteristic On-line Store Attributes First, we defined a set of variables that describe and differentiate on-line stores. Analogies from three domains helped define the variables. The most obvious source for on-line store design variables is the literature on the design and evaluation of paper-based catalogs. We also measured attributes shoppers consider when selecting a retail store. Shopping an on-line store is certainly much more like shopping a paper catalog than shopping a retail outlet because both involve mail delivery of the purchases and in both cases customers can not touch and smell the items. On the other hand, on-line shopping can incorporate new interactive features to catalog shopping, such as email inquiries to sales representatives, discussion forums for customers or voice and video applications. In this sense, on-line stores are somewhere in between paper catalogs and retail stores, but also add completely new dimensions to shopping like automated price comparisons, unlimited “shelf” spaces, and so on. We recorded these “extra” features but did not use them to describe or categorize the on-line stores because they were too rare in the stores we surveyed. In addition to these attributes, we examined attributes of human computer interfaces such as the interface clarity and navigation. Paper Catalog Design Variables Research on paper catalog design and evaluation primarily emphasizes the importance of layout factors to distinguish selling and not selling catalogs. Several authors suggest guidelines for design and evaluation [17 (pp. 243-250), 35, 36]. Most of these concentrate on page layout, typography, copy, art-design and reader involvement of the catalogs. However, we did not try to operationalize any subjective attributes of the layout quality into descriptive variables. Another feature is the “look and feel” of the catalog. This includes picture placements, merchandise grouping, exclamations, and front and back covers [14, 37]. The paper catalog’ cover page s 5
  • 7. translates into the on-line catalog’ home page. Both the cover page and the home page aim to s excite shoppers about the catalog and to generate interest to flip through the pages. Thus, we describe home page features, such as the use of images, the home page image size and page length. Page lengths were measured in screen pages. The browser was expanded to fill the full screen. We defined a screen page as the browser1 screen area on a 1024x768 17” monitor that can be looked at without scrolling the page2. Pages were scrolled and the number of screen pages fitting on the Web-page was counted. Image sizes represent the sum of all images on one screen page, not including graphical buttons. We did not measure the size of image files in bytes because file sizes largely depend on image resolutions and file formats (gif, jpg, etc.). Further, screen area allows comparisons between image use in paper media to on-line media. We also measured whether images in the catalog were used for product display and menu buttons (image overlay), only for product display, or not at all. We also coded whether the catalog used thumbnail images. This captures the level of catalog sophistication in terms of the image use. Attributes Considered by Shoppers in Retail Store Selection Electronic shopping incorporates many of the same characteristics as normal shopping, such as departmental product organization and browsing possibilities. Thus, we measured attributes that shoppers consider when patronizing a retail store. A great amount of research was done on the evaluation of department stores by consumers. Berry [6] empirically identified a number of attributes using a mail survey. May [22] and Lindquist [18] emphasized the importance of the retail stores’ image. Lindquist distinguished store image components in functional qualities, such as the merchandise selection, price ranges, credit policy and the store layout, as well as psychological attributes that were associated with the 6
  • 8. customer’ feelings about the store. In our research, we only concentrated on functional qualities s because we did not survey actual customers. More recent research developed models predicting customer store choice behavior. Several authors apply consideration set theory to store choice modeling [11, 24, 39]. Others use hierarchical models [1] or threshold models [20] for predicting customers’ store choice behavior. Yet, most authors use store attributes described by Lindquist’ summary [18]. His attribute list is s a compilation from 26 researchers in this field. We adopt these store attribute groups from Lindquist. Merchandise includes product variety, quality, guarantees, and price. Service examines general and sales clerk service, merchandise return, and credit and payment policies. Promotion explores sales, advertising, and promotion displays. Convenience includes general convenience in the store, like store organization or store hours. Arnold et al. [2, 3] suggested a few additional store attributes associated with store convenience: ease of navigating through the store and a fast checkout. A number of Lindquist’ functional attributes were excluded from our s research (clientele of the store, physical facilities, store atmosphere, institutional factors). They are either irrelevant in the on-line shopping environment or were not related to our survey of on- line catalog features. Merchandise The overall selection of the merchandise can be characterized by the total number of products and the number of product categories. The number of product categories is not easy to define across different stores since stores offering different types of products will have very different levels of product categories. In one store, men's, women's and children's clothing might represent three high-level product categories; in the next case, it might be business attire, casual and sporting goods. Thus, in order to assess the selection, or broadness of the stores, we used the number of hierarchical store levels as a proxy variable for the number of product 7
  • 9. categories. Information about the quality of the goods includes guarantees and order information such as information on shipping and returns. Service Interactive customer services are very important for on-line stores [34]. Service information included whether the store featured any gift services, a frequently asked questions section, company information, the information content provided for the average product (this can be considered as the information that is accessible to the customer when talking to a sales representative in the store), a sales representative’ phone number or email, and whether the store s featured a feedback section, offered help on the product-size selection or featured extra questions in the order form to get to know the customer. Promotion Different store promotions were observed. Next to frequent buyer schemes, we considered appetizer information like magazines or lotteries and also links to other sites as promotion. This strategy of magazine catalogs or “Magalogs” is also increasingly used in paper catalogs [26]. Another variable recorded the existence of a “What’ new?” section that can either s be seen as promotion or general service. Navigation Stores featuring a deep hierarchy of levels had to provide tools to easily navigate the store. To shop, consumers navigate from the home page to end product pages containing images and descriptions of the products. Organization is a prerequisite for navigability [21]. The interface structure, its different hierarchical levels, and their organization should be apparent to the user and easy to understand. In on-line stores, navigability can be supported by features such as search or browse functions. Providing product indices or a site index also greatly enhances the feeling of “knowing where you are” in an interface. Browsing and navigation capabilities of an Internet retail store also include the number of modes to shop the store (by brand, price, department), and convenience during checkout in an on-line store. 8
  • 10. User Interface Consistency is considered as one of the most basic usability principles of computer interfaces [28, 31, 38]. Many authors distinguish three types of consistency: internal consistency, external consistency with other interfaces familiar to the user, and consistency with real world features [13]. In our research, we surveyed whether consistent menu bars were in place on all pages. The use of different colors to guide users of a computer interface has received a lot of attention (for color in HCI see [21, 27]; for color in on-line marketing see [10]). We surveyed the background color, texture, or pattern of the home page. Texture and color have been shown to influence consumer choice behavior3. Help functions are most often related to helping users recover from errors or find a particular function in the documentation [28, p. 148]. We analyzed whether stores offered any initial help for customers to shop their store. This included help information about the store’ navigation or s the use of ordering features like a shopping cart function. Altogether, 44 attributes were used to evaluate each on-line stores. Appendix A contains the checklist that describes all 35 variables used in the cluster and factor analyses. Nine additional variables were collected for descriptive statistics only. Methods We used a convenience sample of on-line stores in our survey. Internet search engines such as Yahoo, Alta Vista and Infoseek were used to find single stores or comprehensive lists of stores. Two thousand stores were screened by looking either at the description provided by the search engine or at the store itself. All stores selling more than five items of any kind of clothing were bookmarked for further consideration. Stores selling just one product in different variations (e.g., T shirt stores) were not considered. Finally, 137 stores offering women’ apparel for sale were s 9
  • 11. selected for comparison. This convenience sample certainly does not claim to cover all Internet apparel stores, though it should be quite representative for the type of apparel stores currently on- line. The on-line stores were selected from July 15th to July 28th, 19964. The first author coded all store variables using a standardized checklist. Given the rapidly changing nature of the sites, the reliability of the coding was tested post hoc using a random sample of 42 of the Web sites 137 sites. The first author and a research assistant recoded all measures for each of these 42 Web sites. Using Cronbach alpha, inter-rater reliability over this subsample was 0.818. Due to resource limitations, we did not count individual words associated with each interface feature. Instead, we counted the total number of screen pages and full text lines that contained related information. Full text lines were adjusted to reflect different font sizes and frames. A post hoc analysis of a random sample of 14 of the 137 Web sites surveyed found a high correlation (r = 0.98) between line count and word count. Thus, line count is a reasonable approximation for word count. Data analysis for the survey is twofold. The first analyses provide descriptive statistics on the data collected. The second analyses classify and group the surveyed on-line stores using cluster and factor analysis. Principal factor analysis was used to reduce the number of variables describing the on-line stores to a few components. This analysis identified three factors that characterize the on-line stores in the survey. The cluster and factor analysis excluded descriptive variables not considered useful to characterize an on-line store. These excluded variables are those coding membership requirements, store locators, payment methods, price policies, and whether an order form for print catalogs was available. This data was only recorded for descriptive reasons, not to classify the 10
  • 12. on-line stores. The four variables coding different links of the on-line stores were summarized in a single variable (LINKS). Product and non-product related appetizers were summarized in the variable APPETS. Results Descriptive features of on-line apparel stores Store size may influence consumer satisfaction of the on-line shopping experience. Most on- line stores surveyed were reasonably small. 62% have less than 50 products for sale. Only 5% had more than 500 products, including L.L. Bean with approximately 1,600 and Shoppers Advantage with nearly 250,000 products offered in the on-line store. 78% of the on-line stores offered goods at prices on par with paper catalogs or store prices; no on-line stores appeared to charge a premium for on-line sales. The remaining 22% sold at a discount on the Internet. These mostly included firms relying solely on the Internet for generating sales. Company information presented in the on-line stores varied greatly. 15% of the on-line stores provided a “store locator” to find the company’ retail stores. 22% offered an order form to s request a printed version of the catalog. Almost one third did not provide any information on the company’ history, policies or background; 80% had less than 10 lines of information. This is a s surprising number since customers want to know who they are dealing with and sending the credit card information to [12]. For companies with an established reputation, this is not an issue. However, for new “virtual companies” solely operating on the Internet, this is one important way to establish credibility of the business. Only a few of the on-line stores did not make use of images. About half of the on-line stores not only used images for product display, but also used them for navigation with image overlay 11
  • 13. links. This is especially true for home pages and menu bars. Image size averaged about 60 cm2 on home and end product pages each which is equivalent to 11% of screen area. The median image size lies between 5 and 8% of total screen area. While we measured the quantity of the images, we did not assess the quality of the images. For example, Ridgon’ description in the Wall s Street Journal [33] emphasizes the problem of image quality, “. . . after waiting 5 minutes for some fuzzy pictures to appear, I soon realized that the technology has not caught up with my imagination.” Thus, there are tradeoffs among image size, image quality, and downloading time. Page length, measured in multiples of a normal screen size, was one screen page in most cases. Lists of products on end product pages or lists of product indices on navigation pages were longer than one screen page. More sophisticated on-line stores tended to fit pages on single screens. Most retailers also tried to display only single products on end product pages. In contrast, mail-order catalogs often group clothing outfits on the same page, making it easier to coordinate a multi-item purchase. While most on-line stores displayed only one product per image, some on-line stores displayed sets of products on one picture. Text information accompanying the product images varied depending on the product type and on-line store. While some products such as trekking goods or clothing that claimed to be made of special fibers had a lot more text information, 50% of the on-line stores surveyed averaged less than three lines of text per product. This small amount is surprising given the ability of an on-line Web site to make a lot of product information easily available to consumers. Due to the limited product range of most on-line stores, the number of hierarchies was three or less for 75% of the on-line stores. Few sites made use of thumbnail images. Thumbnails can be found in on-line stores where customers can be characterized as not being very sure about the 12
  • 14. actual good which they intend to buy (e.g., gift or lingerie catalogs). Background color was white or gray for 42% of the sites. 42% used patterns or texture. Interface navigation is supported by consistent menu bars, search functions and indices. However, only a few stores had product search functions, site or product indices. This is certainly due to the small size of most stores. Additionally, 24% of the sites surveyed did not have consistent menus to navigate through the pages. Ordering is done using a shopping cart metaphor in 30% of cases; only one third accepted off- line orders. Five of all 137 on-line stores required a membership to shop. Already, 29% offered on-line ordering with credit card data submission as the only way to pay. 59% offered this as an option. The next most popular payment method was phone ordering, with 12% of the on-line stores relying solely on this alternative. Very few sites offered frequent buyer incentives or used additional personal questions in their order form to learn more about their customers. This information is readily available to on-line service providers such as America Online and CompuServe. It is also becoming available on the Internet as the use of cookie technology becomes more widespread. Additional customer service information includes help on the interface usage or product size selection, FAQ- and “What’ new” - sections. A great number of sites do not provide any of these s services. These results are very similar to those for interactive service offerings like contact phone numbers or email addresses of sales representatives or feedback sections. 47% of the sites do not offer an email address for interactive service. Customers will probably return to an on-line store site if it offers incentives. These appetizers, which attract customers to come back to the site, consist of built in features like magazines, lotteries and links to other interesting sites. 76% of the sites do not offer any appetizers. Those 13
  • 15. found most often include magazines with product related articles, glossaries, travel or other product related tips, and lottery games. Interestingly, very few stores made use of links between appetizer and product pages or among different product pages. By not displaying multiple products on the same screen, Internet stores restrict the comparison of products or the purchase of associated items [5]. Links in Internet stores can overcome this problem by directing the customer to related products. For example, the Spiegel site (www.spiegel.com) features some very elaborate magazine pages with many links to associated products elsewhere in the store. 55% of the stores do not have any links to other areas and only 8% provide links to more than two of the following areas: product related sites, affiliates, regional sites and Internet sources. A few sites had links to competitors (malls, related Internet shops) but they were not comprehensive enough to be useful for product and price comparisons. Of the 20% of the sites having some links, most had links to search engines, Netscape or MS Explorer, or to the consulting company that designed the Web site. Cluster analysis of store attributes Prior studies by Day and Heeler [8] and Finn and Louviere [11] used cluster analysis to segment stores or shopping centers. Day and Heeler used variables like the number of employees, the number of store checkouts, customer demographics, in-store promotions, individual product sales and total store sales to cluster regional retail stores. They also used subsequent principal factor analysis to reduce the number of variables to a few dimensions. Finn and Louviere considered the variables proposed in Arnold et al. [3] to arrive at a segmentation of local shopping centers. Two important store attributes identified by Finn and Louviere were the quality of service and a wide selection of products. Cluster analysis is a purely empirical method of 14
  • 16. classification but it is widely employed in marketing for market, product, and customer segmentation. Guidelines for the application of cluster analysis in marketing can be found in Punj and Steward [32]. Before computing the cluster analysis with the SYSTAT Software Package [41], all interval and ordinal level data were standardized to an interval from zero to one. Standardization makes overall level and variation comparable across variables [41]. The standardized variables were transformed into normalized Euclidean distances. Hierarchical clusters were generated using the combined set of Euclidean distances. In the calculation, we first used the single linkage method that adds extreme cases only at the end. However, this procedure did not identify any extreme cases for deletion from the data set. It is essential to realize that each clustering technique is biased towards finding clusters possessing certain characteristics related to cluster size or dispersion (variance). Ward’ minimum s variance technique (as well as the k-means method) tends to find clusters with roughly the same number of observations per cluster. Average linkage tends to find clusters of equal variance. Single linkage is notorious for creating groups with many singletons or outliers. Milligan’ (1981) s review of clustering methods found that the Ward method had the best overall performance. It tends to produce groups of similar size and usually provides very good results [4, p. 298]. Thus, the actual clustering was conducted using Ward's method. A tree diagram of the cluster data shows five distinct clusters with sizes ranging from 20 to 34 cases. These initial major branches of the tree are the focus of our discussion. We did not describe distinct subgroups within these five major clusters. For each of the five clusters, Table 2 shows the means for each of the 35 variables used in the clustering. We make no claim that there are only five categories of on-line storefronts or that they are optimal in any sense. We merely 15
  • 17. state that the five categories we have identified are meaningful groups with similar characteristics5. Next, we describe each of the five clusters in more detail and give some specific examples from each cluster. Insert Table 2 here Super Stores The first cluster contains most of the largest stores in terms of total product number and number of pages. The score for the average store size is 54% higher than that of the second ranked cluster. This is also reflected in the number of levels between home page and product pages, where the score is 70% higher. Average information for the customer is most extensive, including information about the company, about ordering, gift services and “What’s new?” - sections. The number of extra appetizers and customer-care features such as feedback or access to sales representatives are also more extensive. Most stores in this cluster have a product index or a search function. This is certainly correlated with the stores’ size. Small sites selling only a few products would not need a search function or a product index. Super Stores also provide the most text information for each product. Number of products on product pages is small with most sites displaying only one product per page. The corresponding page length is one screen page in most cases. The L.L. Bean on-line store, Land’ End, Spiegel, Online Sports, J.C. Penney, Shoppers s Advantage and Service Merchandise can be found in this cluster. They all try to attract customers with a broad supply of extra information and offer a sophisticated interface with many short pages and navigation tools. Promotional Store Front Stores in this cluster also score high on customer information and appetizer variables. Most provide information pages about the products, as well as on unrelated 16
  • 18. topics like the environment (AWEAR) or lifestyle issues (Tara Thralls). The numbers of products are small. There are no striking features that characterize the user interface. The cluster includes AWEAR, Tara Thralls, Madeleine Vionnet’ Scarves, Wickers, Cheyenne s Outfitters, Real Bodies, Utilities Design Match and The Old Hide House. Most sell very few products, but offer a lot of information on the company or other issues. The focus of the store is more on promoting general company awareness than on generating on-line sales. Plain Sales Stores The third cluster comprises a number of relatively large stores with no or little extra product information. While company information content is still average, most stores of this cluster offer no appetizers, links or additional customer services. On the other hand, interface navigation is quite elaborate for most “Plain Sales” stores. They all use thumbnail images. Average size of a product image is largest in this category. Many stores feature a product index or a browse function. Each product page tends to be long and shows more than one product in most cases. Stores in this cluster make abundant use of graphics for product display. Products do not require explanations, extra information on usage or other additional information. Special WWW features like links are hardly used. This cluster includes many boutiques like Milano, Rhondi, First Lady, Dock of the Bay, Clothes Horse and Leather & Gift Outlet, as well as other stores that emphasize a product image in their marketing. The latter group includes for example swimwear and lingerie sites, such as Skinzwear or Sophie la Nuit. One Page Stores The two variables distinguishing this cluster from others are the number of levels between home page and product pages, and the home page length. The number of levels is very small across most sites in this cluster. Home page length is very large for half of the on-line 17
  • 19. stores. The on-line stores are all relatively small and feature little extra information, links or appetizers. The cluster actually consists of two different subgroups. The first one is stores relying heavily on browse functions to navigate among products. For this reason, numbers of hierarchical levels are low. This group includes boutiques such as Mariam Apparel, Lims or KHLA. The second group contains stores only consisting of one long home page, displaying a list of products below an introductory statement. Examples for this group are Alaska Mountaineering, Australian Coat, Al’ Texas Jeans and Close To You. However, the cluster also contains a few stores, such as s Marissa Fabiani, that are very extensive and have several levels. Product Listings The number of levels is below average for most stores in this cluster. Little additional information and few appetizers are available. Store size is average in comparison to other categories. Product listings have large numbers of products on end product pages and a greater page length. Average product image size is smaller than in any other cluster. Almost none of the stores feature navigation tools like indices or a search function. Products are found in lists on product pages. The average store in this cluster contains only the home page with links to certain product categories and additionally one long page for each category, displaying a list or directory of small product images and their description. Images are not enlargeable. The page also contains ordering information. Stores in this cluster include Rocky Mountain Outfitters, Seabury’s Women’ Golf, The Dress Connection, Dance Supplies, Full Swing Golf of Alaska and Fisher s Henney Naturals. The example stores mentioned above represent their groups fairly well. Of course, any cluster includes some cases that might appear to fit better into a different category. Thus, our results 18
  • 20. require a few caveats as noted above. Table 3 summarizes the main features of the five apparel store groups identified by our analysis. Insert Table 3 here Store dimensions from principal factor analysis While cluster analysis identified five broad categories of apparel on-line stores, principal factor analysis identified a few high level dimensions characterizing the stores. The goal of this analysis is to summarize the data set from the survey as accurately as possible using a few factors. In addition to the variables used in the cluster analysis, aggregate variables have been defined by adding the values of binary variables describing a similar category. For example, the three variables coding the different navigation tools (PRODIDX, SITEIDX, BROWSE) were grouped into one variable reflecting the stores’ navigation capabilities. The advantage of this procedure is that it reduces variance in the data, thereby yielding clearer identifiable factors. Not all variables collected in the survey were used in the factor analysis because variables that do not contribute to basic factors tend to deteriorate results. For this reason, the variables describing page lengths and picture sizes were excluded. Table 4 lists the basic variables and all aggregate variables used in the principal factor analysis. The factors were rotated automatically using the varimax algorithm. The Scree Test suggests three factors. Results for the three factor model is shown in Table 5. Insert Table 4 here Insert Table 5 here Seven variables load particularly high on the first factor. They describe the total number of products, the number of levels, the amount of company information presented, the amount of information regarding ordering and using the interface, whether there is a search function or 19
  • 21. different modes to shop in and the number of customer care features like gift services, access to sales representatives and feedback possibilities. The first six variables are related to the store’s size. Customer care is related to store size. Larger stores provide more customer care features. We refer to the first factor as Store Size. This factor explains 20.4% of the total variance. The second factor, Service, includes the variables LINKS, APPETS, PRINFO and TEXTLENGTH. LINKS counts the number of hyperlinks to related information. APPETS measures appetizers such as magazines, travel information, sale items and games. TEXTLENG describes the information content available for individual products, PRINFO stands for general product information and services such as help on the product’ size selection. In a retail world s store, this information is available from the sales clerk. They are all associated with appetizers and information supplied for the customers’convenience and attraction. The third factor comprises variables reflecting the interface design. The variable MENUBARS describes whether the store has consistent text or image menu bars on all pages while IMAGEUSE scores higher if images are not only used for product display but also as navigation and orientation tools in the store. IDXBROW reflects the availability of site and product indices as well as browsing functions to locate products and information in the store. A “What’ new” or s a FAQ section, summarized in the variable CUSTINFO, also provide the customer with information about the store and its features. These variables measure interface quality and consistency, hence we call the factor Interface Quality. In effect, the three factors Store Size, Customer Services and Interface Quality capture a great share of the variance in the data explaining 46.2% of total variance. As there are only three components, we plot the stores in the three dimensional space spanned by the factors (Figure 1). Insert Table 6 here 20
  • 22. Insert Figure 1 here The five categories found in the cluster analysis can be roughly identified. The Super Stores are clearly segregated from the other stores by their size. The stores within this cluster still differ in terms of services and interface appearance. Shoppers Advantage for example is weak on the Services scale as it does not offer many additional features which are not product related. Land’s End and Spiegel with their extensive magazines score high on this dimension. L.L. Bean and J.C. Penney have the highest interface quality due to very good menu bars and navigation capabilities. The Service Merchandise Store is quite far away from this group, mainly due to its smaller size with only 31 products. We described Promotional Stores as having few products and lots of additional information. Thus, this cluster can be best identified in the Size versus Services projection. Tara Thralls and AWEAR score especially high on the Services dimension while all stores in this cluster have less than the average size. Plain Sales Stores can be found below average on the Services dimension. They also score medium to low on the Size dimension as they are still small in comparison to the Super Stores cluster. The interface is better than average. The One Page Store cluster can be found on the negative axis of all three dimensions. Services, Size and Interface Quality are below average for most stores. Product Listings are bigger in size and offer more services than One Page Stores. Still, the Interface Quality is also below average as can be seen from the graph. Discussion and Summary The Internet and the WWW are changing rapidly. Stores will become more sophisticated and incorporate additional features in the future. Today, video, audio and instant access to high quality images are limited basically by low bandwidths. Future on-line stores can become much 21
  • 23. more interactive, involving, for example, voice mail inquiries to sales representatives. Intelligent on-line stores might direct consumers automatically to products complementary to a specific person’ purchase history (for example, see http://www.firefly.net/places.fly). Despite all these s possible changes, retailers will still have different intentions. There is no simple on-line store design to accommodate everyone and each retailer will follow a different marketing strategy. This research identified five different on-line store design strategies: Super Stores, Promotional Stores, Plain Sales Stores, One Page Stores and Product Listings. They differ mainly in terms of the store’ size, the quantity of extra information and appetizers, and the interface design s including consistency, page lengths, image sizes and navigation capabilities. We concentrated on a subset of Internet stores for women’ apparel and did not study non-apparel stores to generalize s our findings. We assume that the basic approaches concerning the stores’ design will not differ very much for other types of stores. Further research is needed to justify any generalizations empirically. We also did not determine the percentage of on-line retail stores for women’ apparel s that would be classified as super stores, promotional stores, plain sales stores, one page stores and product listings. Additional research is needed to estimate those values. This research makes several contributions. First, it provides an interesting snapshot (July 1996) of Internet store features. The descriptive statistics of these on-line store attributes suggests many opportunities to improve the experience for consumers. As noted in Table 6, many of the descriptive statistics of on-line store attributes resonate with the findings by Jarvenpaa and Todd [16] in their survey of consumer reactions to electronic shopping on the World Wide Web. We also found few products in a typical store, a low overall quality of the pictures in the on-line store, a dearth of product information in the on-line stores as compared to traditional paper 22
  • 24. catalogs, only a small amount of store policy information available from an on-line store, and few interface features to help find goods and services during goal directed shopping. Second, the paper documents a useful statistical methodology for clustering on-line stores into meaningful groups. This exploratory data analysis structured the on-line stores into meaningful groups using observable attributes and features of on-line stores as the raw data. While different clustering techniques for analyzing data can and do produce different taxonomies, the goal is to identify groups that are more similar within a cluster than between clusters. We believe that clustering provides an objective, empirical basis for classification of Internet sites for electronic commerce. Third, the technique provides developers of Web sites a methodology for eliciting functional requirements from their clients. Our technique will help developers characterize attributes and features of alternative Web sites to 1) facilitate the definition of requirements, 2) identify major design features, 3) structure the design space into meaningful clusters to facilitate the consideration of various design alternatives, and 4) help clients position their Web site strategically by understanding the competing on-line store designs. The classification has important implications for on-line store designers. Retailers can compare their own catalogs with those in the survey. Measures for each of the 35 variables shown in Appendix A can be added to a data file containing the means shown in Table 2. Using a statistical package like Systat [41], a matrix of Euclidean distances can be computed and the data can be clustered for comparison. Retailers then could compare their catalog to the categories we identified and determine whether it has key features associated with particular categories. Our list of features and attributes in Table 2 and Appendix A also serves as a check-list for Internet store designers. The check-list can be used to survey peer group on-line stores. Do 23
  • 25. these on-line stores incorporate new features that appear useful for the consumer? Do competitors emphasize particular features like special services or high quality images? Comparing the on-line store with similar competitors’ on-line stores generates ideas about how to improve the store’ design. s The classification provides a better understanding of the design space in which the stores operate. It reveals promising Internet store models that are not yet existent. Retailers might not want to follow one of the standard strategies, but may want to differentiate themselves from the competition. The classification can help envision new strategies that combine elements of known approaches to uniquely position their on-line store’ marketing strategy. For example, the s classification did not find any One Page Stores that provided high service levels or a high quality interface. This is an anomaly given the large number of niche women’ clothing boutiques in a s typical shopping mall. Why don’ such stores exist on the Internet? Is it because small retail t stores lack the expertise needed to develop high quality on-line stores with good service? Or are the costs of developing such a Web site prohibitive to small retail stores? Such questions lead to a larger research agenda exploring the effectiveness of different types of stores identified in our classification. This might involve measuring effectiveness as a function of sales per unit of traffic, total units of traffic, and total sales for the various types of stores. In their survey of consumer reactions to electronic shopping, Jarvenpaa and Todd [16] did not examine reactions to different types of store separately. It is not clear whether consumers prefer to shop at large stores or small stores; at discount stores or department stores or how the type of on-line store impacts consumer behavior. According to surveys of retail stores [17], large stores should attract more customers than small stores. From the perspective of an on-line retailer, it would be important to know whether large stores are more effective than small stores in converting store 24
  • 26. traffic into sales. More generally, this raises the question about the relationship between effectiveness and the categories of stores identified in the research (Super Stores, Promotional Storefronts, Plain Sales Stores, One Page Stores and Product Listings). By structuring this domain of inquiry, the classification delineates on-line stores into similar groups. Effectiveness can be examined within and between groups. For example, are Super Stores more effective than Plain Sales Stores? Within stores identified as Super Stores, what determines the effectiveness of a particular Super Store compared to other Super Stores? In Super Stores, a search feature may improve sales. It is not at all clear that a search feature would impact sales in One Page Stores. The store categories permit a more detailed comparison of effectiveness measures among stores. Thus, the classification will aid future research in this domain. Analyzing the evolution of Web stores can lead to insights about what makes a successful on- line store. The three store dimensions we identified raise some questions for future research. Service In electronic commerce, the physical store is replaced by an on-line store. The sales clerk is now a help button or a product index on the screen display. What services can increase customer loyalty to an on-line store? Are consumers more likely to make a purchase from an on- line store if it offers more than one mode of shopping? What type of product information attracts consumers? Table 6 suggests a general lack of attention to customer service in existing on-line stores. Better presentation of customer service information will be essential in the redesign and revisions of existing on-line stores. Size How important is product variety? Are niche boutiques better than Super Stores? Many of the stores surveyed were small, but it is not clear whether this is a good or bad characteristic. Consumers are more likely to find specific products in a small on-line store. In large on-line stores, it is not clear how best to facilitate browsing and navigation. More importantly, a better 25
  • 27. use of links among products in a on-line store may enhance the shopping experience. Consumers might be more likely to make a purchase when a related product is linked. Interface The user interface design is essential for conducting business online. How easy is it for the consumer to find what they want in the store? Is there an optimal number of screen levels consumers are willing to navigate before giving up and leaving? If they find a product, how easy is it to buy the product online? Clearly there are interface problems associated with navigation, search, and the ordering process in many existing on-line stores. Since sales can be adversely influenced by poor on-line store design, it is essential to quantify the effects of different layout, organizational, browsing and navigation features on Internet store traffic and sales. Managers, production staff and merchant partners should not assume customers do not want an item if it is not selling. Nor should they conclude that a poor response to a given store design is because of the merchandising mix. It is important to take a harder look at the possible relationship between poor selling items and store design and layout. This is especially important given the replacement of retail store personnel by various user interface features in on- line stores. Could customers be having a tough time wading through the screens? Can customers find what they want in the stores? Are customers aware of what products are in the stores? After all, diligence in browsing a store is not a virtue on-line retailers should expect from their customers. Because of the cost involved with launching a new store or changing an existing store design, it is important to allocate product development resources to on-line store features that improve store traffic and sales. In our future research, we hope to prioritize store redesign efforts to those features with the greatest impact on Internet store traffic and sales by quantifying the benefits of specific design features. 26
  • 28. Endnotes 1 The browser Netscape Explorer 2.02 showed both Toolbar and Location in the window. 2 In the USA, 23.8% of the monitors are 17 inch; 33.4% are 14 inch; 39.9% are 15 inch; and 2.8% are 19 inches or larger (June 24, 1997 PC Magazine; p. 173). The long term trend is towards larger monitors. 3 [Mandel and Johnson 1997 http://www-marketing.wharton.upenn.edu/ec/project.html] 4 A complete list of all the catalogs used in the study is available from the authors. 5 To address concerns about the distance measure, we re-examined the data using two other distance measures. Gamma distances were computed using 1 minus the Goodman-Kruskal gamma correlation coefficient. This is used typically for rank order or ordinal scales. Pearson distances were computed using 1 minus the Pearson product-moment correlation coefficient. This is used typically for any quantitative data. As a basis for comparison we specified 5 clusters (using this option in Systat) and saved the cluster number in a Systat file. We compared the cluster of each on-line store using each new distance metric to the clusters produced using Euclidean distances. Using the Gamma distance measure, 93 stores out of 137 (68%) were in the same cluster as those found using Euclidean distances. Using the Pearson distance measure, 95 stores out of 137 (69%) were in the same cluster as those found using Euclidean distances. More importantly, the interpretation and nature of each cluster (on-line store category) remains substantively intact. 6 The browser Netscape Explorer 2.02 showed toolbar and location at a resolution of 1024x768. References 1. Ahn, K. H., and Ghosh, A. Hierarchical models of store choice. International Journal of Retailing, 4, 5 (1989), 39-52. 2. Arnold, S. J.; Ma, S.; Tigert, D. J. A comparative analysis of determinant attributes in retail store selection. Advances in Consumer Research, Association for Consumer Research, 5 (1977), 663-667. 3. Arnold, S. J.; Tae, H. O.; Tigert, D. J. Determinant attributes in retail patronage: seasonal, temporal, regional, and international comparisons. Journal of Marketing Research, 20, 2 (May 1983), 149-157. 4. Backhaus, K.; E. Bernd; P. Wulff; W. Rolf. Multivariate Analysemethoden. Berlin: Springer, 8th edition, 1996. 5. Baty, J. B. II and Lee, R. M. Intershop: Enhancing the vendor/customer dialectic in electronic shopping. Journal of Management Information Systems, 11(4), (1995), 9-31. 6. Berry, L. J. The components of department store image: A theoretical and empirical analysis. Journal of Retailing, 45, 1 (Spring 1969), 3-20. 7. Cappel, J. J. and Myerscough, M. A. World Wide Web uses for electronic commerce: Toward a classification scheme. [URL: http://hsb.baylor.edu/html/ramsower/ais.ac.96 /papers/aisor1- 3.htm]. 27
  • 29. 8. Day, G. S. and Heeler, R. M. Using cluster analysis to improve marketing experiments. Journal of Marketing Research, 8, 3 (August 1971), 340-347. 9. Editor. Shopping on the Internet: And a wary Christmas to you. The Economist, December 21, 1996, 33-34, 38. 10. English-Zemke, P. Using color in on-line marketing tools. IEEE Transactions on Professional Communication, 31, 2 (June 1988), 70-74. 11. Finn, A. and Louviere, J. Shopping-center patronage models: Fashioning a consideration set segmentation solution. Journal of Business Research, 21, 3 (November 1990), 259-275. 12. Fram, E. H. and Grady, D. B. Internet buyers - Will the surfers become buyers. Direct Marketing, 58, 6 (October 1995), 63-65. 13. Grudin, J. The case against user interface consistency. Communications of the ACM, 32, 10 (October 1989), 1164-1173. 14. Hayes, L. Barrie Pace is in the business of style. Catalog Age, 10, 9 (September 1993), 134, 136. 15. Hoffman, D. L., Novak, T. P., and Chatterjee, P. Commercial scenarios for the Web: Opportunities and challenges. Journal of Computer-Mediated Communication, Special Issue on Electronic Commerce, 1, 3 (1996) [http://www.usc.edu/dept/annenberg/journal.html]. 16. Jarvenpaa, S. L. and Todd, P. A. Consumer reactions to electronic shopping on the World Wide Web. International Journal of Electronic Commerce, (1997), 1, 2, 59-88. 17. Lewis, H. G. Direct marketing strategies and tactics. Chicago, IL: The Dartnell Corporation, 1992. 18. Lindquist, J. D. Meaning of image. Journal of Retailing, 50, 4 (Winter 1974-1975), 29-38. 19. Lohse, G. L.; Biolsi, K.; Walker, N.; Rueter, H. H. A classification of visual representations. Communications of the ACM, 37, 12 (December 1994), 36-49. 20. Malhotra, N. K. A threshold model of store choice. Journal of Retailing, 59, 2 (Summer 1983), 3-21. 21. Marcus, A. Principles of effective visual communication for graphical user interface design, in: Baecker, Ronald M. et al. (ed.). Human-Computer Interaction: Toward the Year 2000. San Francisco, CA: Morgan Kaufmann Publishers, Inc, 1995, 425-441. 22. May, E. G. Practical applications of recent retail image research. Journal of Retailing, 50, 4 (Winter 1974-1975), 15-20. 23. McCartney, S. Poised for takeoff. Wall Street Journal, New York, (June 17, 1996), R6. 24. Miller, H. J. Consumer search and retail analysis. Journal of Retailing, 69, 2 (Summer 1993), 160-192. 25. Milligan, G.W. (1981). A review of monte carlo tests of cluster analysis, Multivariate Behavioral Research, 16, 379-407. 26. Morris-Lee, J. Push-pull marketing with magalogs. Direct Marketing, 56, 2 (June 1993), 23- 26, 47. 28
  • 30. 27. Murch, G. Color graphics - blessing or ballyhoo. Excerpt in: Baecker, Ronald M. et al. (ed.). Human-Computer Interaction: Toward the Year 2000. San Francisco, CA: Morgan Kaufmann, (1995), 442-443. 28. Nielsen, J. Usability Engineering. Cambridge, MA: Academic Press, 1993. 29. O’Connell, V. Stock answer. Wall Street Journal, New York, (June 17, 1996), R8. 30. Pellet, J. The future of electronic retail. Direct Marketing, 59, 7 (January 1996), 36-46. 31. Polson, P. G. The consequences of consistent and inconsistent user interfaces, in: Guindon, R. (ed.). Cognitive Science and its Application for Human-Computer Interaction. Hillsdale, NJ: Lawrence Erlbaum, (1988), 59-108. 32. Punj, G. and Steward, D. W. Cluster analysis in marketing research: Review and suggestions for application. Journal of Marketing Research, 20, 2 (May 1983), 134-148. 33. Ridgon, J. Caught in the Web. Wall Street Journal, (June 17, 1996) R14. 34. Sandberg, J. Making the sale. Wall Street Journal, (June 17, 1996) R6. 35. Schmid, J. Did you like your last catalog?. Catalog Age, 10, 4 (May 1996), 101-104. 36. Schmid, J. Good catalog design drives response. Target Marketing, 16, 11 (November 1993), 10-11. 37. Shasho-Jones, G. Cover story: A step-by-step guide to designing effective catalog covers. Catalog Age, 8, 11 (November 1991), 107-108. 38. Shneiderman, B. Designing the User Interface. Reading, MA: Addison Wesley, 1987. 39. Spiggle, S. and Sewall, M. A. A choice sets model of retail selection. Journal of Marketing, 51, 2 (April 1987), 97-111. 40. Direct Marketing Association 1995-96 Statistical fact book. New York, NY: Direct Marketing Association, 1997. 41. Wilkinson, L. SYSTAT: The System for Statistics. Evanston, IL: SYSTAT, Inc., 1990. 29
  • 31. Retail Store Paper Catalog On-line Catalog Sales clerk service Product descriptions, sales clerk Product descriptions, information pages, gift on the phone, information pages services, special search functions Store promotion Special offers, lotteries, sale Special offers, on-line games and lotteries, catalogs links to other sites of interest, appetizers Store window displays Front and back cover Catalog home page Store atmosphere Copy quality, graphics, product Interface consistency, catalog organization, arrangement, perceived image interface and graphics quality Aisle products Products on first 2-4 spreads and Featured products on each hierarchical level of the middle spread the catalog Store layout Page and product arrangement Screen depth, browse and search functions, indices, image maps Number of floors in the Catalog organization Hierarchical levels of the catalog store Number of store entrances Frequency of mailings, number of Number of links to a particular catalog and store outlets / branches unique catalogs mailed Checkout cashier Order form, 1-800 phone number On-line shopping basket or order form See and touch of the Limited to image quality and Limited to image quality and description, merchandise description future potential for sound and video Table 1 Analogies between retail stores, paper catalogs and on-line catalogs 30
  • 32. Plain One Super Promotional Sales Page Product No. Variable* Min Max Stores Stores Stores Stores Listings Number Stores 20 30 34 30 23 1 CATSIZE 1 5 3.35 2.07 2.53 2.10 2.22 2 HIERARCH 0 6 4.08 2.80 2.78 2.45 2.54 3 ORDERINF 0 4 1.75 1.00 0.32 0.57 0.17 4 GIFTSERV 0 1 0.35 0.00 0.00 0.03 0.04 5 FAQ 0 1 0.15 0.07 0.15 0.03 0.04 6 COMPINFO 0 4 2.85 2.07 1.32 1.37 1.39 7 TEXTLENG 0 20 5.10 4.10 3.26 2.92 2.98 8 SALEREP 0 1 0.65 0.43 0.53 0.00 1.00 9 FEEDBACK 0 1 0.90 0.77 0.06 0.00 0.00 10 GETKNOW 0 1 0.15 0.03 0.03 0.03 0.00 11 XTRAINF 0 1 0.30 0.53 0.00 0.07 0.09 12 SIZESELE 0 1 0.55 0.17 0.26 0.13 0.17 13 FREQBUY 0 1 0.30 0.00 0.03 0.03 0.04 14 LINKS 0 8 1.30 1.33 0.82 0.60 0.87 15 BANNER 0 1 0.25 0.00 0.12 0.10 0.04 16 APPETS 0 4 1.50 0.73 0.29 0.60 0.35 17 WHATNEW 0 1 0.30 0.00 0.06 0.00 0.04 18 SHOPMOD 0 1 0.35 0.03 0.00 0.03 0.00 19 SITEIDX 0 1 0.10 0.00 0.03 0.10 0.00 20 PRODIDX 0 2 1.20 0.40 0.85 0.10 0.04 21 PRODSEAR 0 1 0.20 0.03 0.03 0.00 0.04 22 BROWSE 0 1 0.20 0.17 0.29 0.30 0.04 23 PRODLINK 0 1 0.15 0.10 0.03 0.03 0.00 24 PRODSELE 0 3 1.85 1.23 1.18 1.27 1.17 25 PRODNUMB 1 25 3.18 3.15 4.43 3.52 5.37 26 MENUBARS 0 2 1.55 1.27 1.00 0.90 1.04 27 BACKGRO 0 3 1.55 1.03 1.15 1.27 0.70 28 HELPINTF 0 4 1.45 0.20 0.12 0.00 0.13 29 HPLENGTH 0 11 1.34 1.33 1.83 2.55 1.72 30 NAVILENG 0 8 1.84 1.44 1.04 0.51 0.72 31 EPROPLEN 0 12 1.64 1.94 2.14 1.70 2.63 32 HPIMAG 0 1 0.15 0.12 0.11 0.11 0.09 33 PRODIMAG 0 1 0.11 0.08 0.16 0.10 0.07 34 IMAGEUSE 0 2 1.95 1.47 1.50 1.30 1.17 35 THUMBS 0 1 0.85 0.43 1.00 0.00 0.00 * See Appendix A for a complete variable description Table 2: Means for each of the five on-line store categories for all 35 variables used in the cluster analysis 31
  • 33. Strategy Main Features Examples 1. Super Store •large catalog size L.L.Bean, Land’ End, Spiegel, Online s (20 stores) •ample extra information and Sports, J.C. Penney, Shoppers Advantage, appetizers (magazines) Service Merchandise •navigation tools •pages fit on one screen page 2. Promotional Store •limited product range AWEAR, Tara Thralls, Madeleine Vionnet’ s, (30 stores) •extensive company information Cheyenne Outfitters, Real Bodies, Utilities •ample appetizers and links Design Match, The Old Hide House 3. Plain Sales Catalog •medium or large catalog size Milano, Rhondi, First Lady, Dock of the Bay, (34 stores) •large images, use of thumbnails Clothes Horse, Leather & Gift Outlet, • appetizers or links no Skinzwear, Sophie la Nuit 4. One Page Catalog •limited catalog size Mariam Apparel, Lims, KHLA; Alaska (30 stores) •few hierarchical levels Mountaineering, Australian Coat, Al’ Texas s •product browse function Jeans, Close To You • page catalog one 5. Product Listing •medium catalog size Rocky Mountain Outfitters, Seabury’ The s, (23 stores) •long product pages / lists Dress Connection, Dance Supplies, Full •small product images Swing Golf of Alaska, Fisher Henney •few hierarchical levels Naturals Table 3 Classification of five major on-line catalog strategies 32
  • 34. Aggregate Variable Consists of Variables (simple unweighted sum) Interface Navigation SITEIDX, PRODIDX, BROWSE [IDXBROW] site-index, product-index, browse function Search Tool and Shopping Modes PRODSEAR, SHOPMOD [PSEASHMO] product search function, shopping in more than one mode? Customer Information WHATNEW, FAQ [CUSTINFO] what’ new section, FAQ section s Customer Care GETKNOW, SALEREP, FEEDBACK, GIFTSERV [CUSTCARE] get to know the customer questions, access to sales rep, feedback section, gift services Appetizers APPET1, APPET2 [APPETS] product related appetizers, not product related appetizers All Links to Other Areas PRODLKS, COMPLKS, REGIOLKS, INTERLKS [LINKS] product, competitor, geographical region or Internet links Additional Product Information XTRAINFO, SIZESELE [PRINFO] extra product information, help on product size selection Basic Variables used in Principal Factor Analysis CATSIZE COMPINFO IMAGEUSE TEXTLENG HIERARCH MENUBARS HELPINTF ORDERINF Table 4 Fifteen variables used in the principal factor analysis 33
  • 35. Factor 1 Factor 2 Factor 3 Size Services Interface Quality CATSIZE LINKS MENUBARS HIERARCH APPETS IMAGEUSE COMPINFO PRINFO CUSTINFO ORDERINFO TEXTLENG IDXBROW HELPINTF PSEASHMO CUSTCARE 20.4% 14.0% 11.8% Table 5 Results of the factor analysis (percentages denote explained variances) 34
  • 36. Catalog Attribute Descriptive Statistics Consumer Reaction from Jarvenpaa & Todd (1997) Merchandise Catalog size: number of •62% have less than 50 products •31% were disappointed with different products •Only 5% had more than 500 products product variety Price •78% had prices comparable with paper •18% felt that prices seem to be catalogs or store prices higher on the Web •22% sold at a discount Quality •33% did not provide any company policy •Absence of familiar brand information (returns, guarantees, etc). name merchandise Product descriptions, use of •50% had less than 3 lines of text per •Need better descriptions and images, text length product pictures of the products Service General service, gift services, •Only 19% offered extra product information •80% had at least one negative FAQ on product related •80% had less than 10 lines of text about the comment about customer questions, and information company’ history, reputation, policies, etc. s service on the Web about the company •Only 9% had a FAQ section •Hidden shipping costs Sales clerk service, phone •47% did not offer email for interactive •Merchants did not anticipate number, email of sales reps, service consumer queries and requests feedback section, get to know •95% did not have links on end product for policy information the customer questions, help pages to related products •Responsiveness determined if on product-size selection •Only 25% had help for size selection it was a good or bad site Order information, •Only 30% used a shopping cart metaphor •41% noted a lack of merchandise return, credit, •Most required manual re-entry of product information on returns, and payment policies information onto an order form delivery time, guarantees, etc. Fast checkout •41% did not offer on-line ordering with a •Some sites had hard to follow credit card ordering directions Promotion Advertising links to other •76% did not offer incentives or appetizers to •“You never get a sale” sites, use of banner ads, attract and retain customers •“You never get to see head-to- appetizers to attract •Only 6% offered a “What’ New” section s head competition that you see customers, sales promotion in a mall” Interface Quality Navigation indices and •4% had a site index •44% felt goal directed browsing, ease to find items, •6% had a product search function shopping and product number of shopping modes, •Only 6% allowed multiple shopping modes comparisons are difficult on convenience •Only 22% had a product browsing function the Web Consistency of the interface •24% did not have consistent menu bars •“This is not for computer illiterate people.” Providing help •12% had on-line help for interface usage •“I had places I wanted to go and couldn’ understand how” t Use of images for navigation, •Less than 8% of the total screen area •Inability to adequately size of images, enlargeable contained images or graphics visualize the products thumbnail pictures •Over 50% used images for navigation Table 6 Comparison of attributes of on-line catalogs with a survey of consumer reactions to electronic shopping from Jarvenpaa and Todd (1997) 35
  • 37. Super Stores Promotional Stores Product Listings Plain Sales Stores One Page Stores Figure 1 Apparel Internet catalogs classified by Size, Services and Interface (To accommodate store names, only a subset of the 137 stores are displayed) 36
  • 38. Appendix A Variables used in the Internet survey Data Coding and examples Data Collection / Comments Merchandise 1. size, number of different 1: 6 - 10 products The number was counted and summed products [CATSIZE] 2: 11-50 products for all product categories in the on-line 3: 51 - 100 products store. 4: 101 - 500 products 5: 501 - products 2. number of hierarchies average number The straightest path through the general between home page and transition network of the catalog was end product page evaluated for 6 different products. [HIERARCH] 3. order information - 0: less than 4 lines The total number of lines providing shipping / ordering / product 1: 5-20 lines information about guarantees and the quality / return information 2: 21 - 40 lines ordering process was counted. [ORDERINF] 3: 41 - 60 lines 4: 61 lines & greater Service 4. gift services 0: no Wrapping, gift certificates [GIFTSERV] 1: yes 5. FAQ on product related 0: no Did the store provide an frequently questions [FAQ] 1: yes asked questions section on product related questions or the company? 6. company information 0: 0 - 11 lines The total number of lines providing mission statement, history, 1: 11 - 20 lines company information was counted. policies 2: 21 - 40 lines 3: 41 - 80 lines [COMPINFO] 4: 81 lines & greater 7. text length on “end product average number of lines for 6 Any full line on the screen was counted pages” end product pages as one line, single items of information [TEXTLENG] (e.g. “waterproofed”) were counted as 0.5 lines. 8. phone number / email of 0: none Did the on-line store offer any way to sales reps 1: yes contact a sales representative, by email, [SALEREP] phone or fax? 9. feedback section 0: no Did the retailer ask for feedback (email [FEEDBACK] 1: yes comments (mailto), blank email form, email questionnaire, phone)? 10. extra get-to-know-the- 0: no Any personal questions about the buyer customer questions 1: yes on the order form were rated 1. [GETKNOW] 11. extra product information 0: no Any information on care, maintenance, [XTRAINF] 1: yes use of products etc. was rated 1. 12. help on product-size 0: no Stores presenting tables, figures, etc. selection [SIZESELE] 1: yes with product sizes were rated 1. 37
  • 39. Promotion 13. frequent buyer incentives 0: no Any discounts or gifts associated with [FREQBUY] 1: yes higher sales per customer. 14. links to product related Four variables, one for each of Some sites offered a large number of information sites, the link categories (see left), links in one of the categories (e.g., to competitors, regional were defined as follows: general Internet sites like search sources or general Internet 0: no links engines). This was considered less sites 1: 1 - 5 links useful than offering links in different [LINKS] 2: 6 or more links categories which was reflected in the The variables were summed to coding scheme. The variable LINKS form one LINKS variable. eventually took values from 0 to 8. 15. extra banner ads on the 0: no Ads for other companies or the store pages [BANNER] 1: yes itself were rated 1. 16. product-related and non- Two variables, one for product- Examples for product-related appetizers product related appetizers related and one for non-product- are: hot product of the day, mailing list, related appetizers were coded: sale items. [APPETS] 0: none Examples for non-product-related 1: one closely product related appetizers are: magazines, travel item information, guest books, games. 2: more than one item or total content more than 10 pages The variables were summed to form one APPETS variable. 17. “What’ new” section s 0: no A section introducing new products, [WHATNEW] 1: yes catalog features or news was rated 1. Other Store Variables 18. shopping in different 0: no Were there different strategies the modes 1: yes customer can use to find a product (store [SHOPMOD] organization by product category, gender, price level, etc.)? 19. site index 0: no A site index gives an overview of the [SITEIDX] 1: yes structure and hierarchies of all pages. 20. product index 0: no Stores providing comprehensive lists of 1: yes, text all their products, in addition to the [PRODIDX] 2: yes, with thumbnails departmental product organization, were rated 1 or 2. 21. product search function 0: no Any inter-catalog search function was [PRODSEAR] 1: yes rated 1. 22. product image browse 0: no A browse function that enables shoppers function [BROWSE] 1: yes to navigate directly between products, without changing store levels. 23. links between related 0: no Links between related products or links product pages 1: yes between products and additional [PRODLINK] information (magazine pages, games, etc.) was rated 1 24. product selection 0: off-line 1 refers to an on-line form which has to 1: on-line form to fill manually be filled out manually; 2 was a form [PRODSELE] 2: on-line clickable form consisting of pull-down menus listing 3: shopping cart all product options. An on-line shopping cart only requires the shopper to hit an order button on end product pages. 38
  • 40. Interface Variables 25. number of products on end average number The number was counted on 6 different product page end product pages. [PRODNUMB] 26. menu bars on all pages 0: no Menu bars had a home page button and 1: yes, text at least one further navigation button. [MENUBARS] 2: yes, image overlays The buttons had to be placed consistently on all pages of one level. Buttons using image overlays were considered more sophisticated. 27. background color or 0: no color, white /gray In case of changing background colors pattern 1: one color on different pages, the modal level was 2: pattern recorded. [BACKGRO] 3: texture 28. help on interface usage 0: no Any full line of text on the screen was 1: 1 - 11 lines counted as one line. [HELPINTF] 2: 11 - 20 lines 3: 21 - 40 lines 4: 41 - lines 29. page length of home page length in screen pages Taking the normal screen size as reference6, total page length was [HPLENGTH] estimated as a multiple of this size by scrolling the page down. If the interface used inter-page links, page length was only measured down to the line where the first link pointed to. 30. page length of navigation average length in screen pages average length in screen pages page [NAVILENG] 31. page length of end product average length in screen pages average length in screen pages page [EPROPLEN] 32. image size on the home measured as a percentage of the Image size was determined by page total visible screen area (549 measuring width and height of all home square cm) page images, excluding buttons. [HPIMAG] 33. image size on “end product mean of 6 pictures; measured as Image size was determined by pages” a percentage of the total visible measuring width and height of an [PRODIMAG] screen area average end product image. 34. use of images 0: none Did the catalog use images for product 1: to show products only display only, or for graphical buttons, [IMAGEUSE] 2: image overlay and product too? display 35. use of enlargeable thumb- 0: no The use of any enlargeable image was nail pictures [THUMBS] 1: yes rated 1. 39