Online Retailing through the Five Porter´s Force Model

Part I. Analysis of online retailing (B2C) industry by Five Porter’s Force Model 1. Bargaining Power of Customers The bargaining power of customers is high. First of all, the customer size is tremendous globally, which also has an accelerating growth rate in recent years. Customers’ leverage is strengthening as a result of this. Another inevitable factor is that with countless retailors online, there is low switching cost for customers to find other alternative companies that suits their desire to conduct purchases. Moreover, consumers today are more sophisticated. Consumers are less commit to impulsive-buying, yet are more willing to study about product features and evaluate their options before purchasing online. Their purchase pattern can also be hard to learn too. 2. Bargaining Power of Suppliers The bargaining power of suppliers is medium. Since corporates conditions vary, whether the power of suppliers is strong should be determined accordingly. But to survive in the online retailing industry, keeping a close relationship with the suppliers is imperative. Many of the multi-national companies in the industry is depending on limited numbers of suppliers that are concentrated in production, differentiated in products, and not heavily relied on a single industry, which give them great bargaining power and can better facilitate the corporations’ success. Small companies may not have established such strong alliance with its vendors. 3. Substitutes The threat ofShow MoreRelatedPorters Five Forces1232 Words   |  5 Pageshead: The Theory of Porter’s Five Forces Porters Five Forces Kimberly S. Lawson 1018525 American Military University 04 October 2012 Abstract Michael Porter’s Five Forces model is a very sophisticated theory for calculating a company s economical standing. Michael Porter established a structure that shapes a structure that monitors an industry and is often used in strategic planning. 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