Internet Spending

QUESTION 1.

What other current Internet trends do you see as having an effect, negative or positive, on Internet spending? Explain your answer.

Mobile applications have a positive effect on Internet spending. With the growth of smartphones’ demand, companies are creating applications that give users an easier access to browsing products online and, therefore, facilitate Internet spending.

Also, social networks such as Instagram, Facebook, Pinterest and others, are increasing Internet spending with advertisement within the home pages and advertisement from celebrities that are regular users in the mentioned social networks.

QUESTION 2.

Fulgoni refers to two major factors that drive consumers to purchase online rather than in physical stores: convenience and lower prices. What other factors would drive a consumer to purchase a product online rather than from, say, the local Walmart? What are the advantages of purchasing at a store?

Another factor that would drive a consumer to make an online purchase would be the convenience of having the product delivered direct to someone’s home.

The advantage of buying a product in a physical store would be not having to wait for the product to arrive. The person can leave the store with the product in hands and use it immediately, while buying it online the person would have to wait. Also, some websites charge for the delivery of products, and buying it in a physical store would save the delivery money.

QUESTION 3.

Fulgoni states that the ability of consumers to use smartphones to scan barcodes at physical stores and seek lower prices could radically alter retailers’ decisions in locating and designing stores and warehouses. He specifically mentions retailers reducing the size of physical stores, and using these stores more as demonstration venues with fewer inventories, and placing warehouses in lower rent locations. Explain the rationale behind this. Are there any disadvantages in this solution?

The disadvantages would be having to dislocate from the local store to the warehouse to collect the product.