Porter and the Internet: An Empirical Assessment of Porter's Strategic Thinking as Applied to Online Strategies for Pet Supply Stores in the San Diego, CA Metropolitan Area

Journal of Applied Management and Entrepreneurship, Jul 2003 by Stretch, Robert T "Bob"

The Internet Experiences of Proxy Industries

Given the dearth of information regarding direct pet store experiences of Internet implementation, the use of proxies appears to be appropriate. There are a number of industries that exist which carry similar types of high tactile/high-service-requirement goods and who have attempted Internet penetration.

The electronic grocery shopping industry experienced massive failures when selling commodity dry goods similar to those dry goods found in the pet store industry. The only exceptions to this were when the electronic grocers focused on a tight niche market, the old and enfeebled, but even then the volume was insufficient to carry on any expansion (Anckar, Walden, & Jelassi, 2002).

The rare toys and collectibles online market was the only market to show a perfect linear relationship with four service quality factors (Cox & Dale, 2002) which would seem to indicate that perhaps lack of necessary tactile experience can be made up through increased service levels online.

In general SMEs experience online have not been profitable, even with government assistance (Jutla, Bodorik, & Dhaliwal, 2002; Jeffcoate et al., 2002; Anckar et al., 2002). Many leaders of SMEs do not have an overriding interest to jump into the Internet unless forced to do so by suppliers or buyers (Quayle, 2002). And many traditional brick and mortar retailers have not gone online for direct retailing, but instead have used it as a communications and indirect marketing channel (Fenech & O'Cass, 2001).

Finally examining those dot com businesses and e-commerce activities that survived the bubble bursting, it becomes obvious that high volumes of unique visitors and higher levels of assets were necessary to survive (Garbi, 2002). Many had already established their core competencies prior to going online and even those did not see short term profitability (Kinder, 2002).

Research Propositions

Based on Porter's Five Forces Model (1980,1985) and his observations on the Internet's impact on industries (2001) as they relate to the San Diego metropolitan pet supply industry the following research proposition is advanced:

P(1): The incidence of Internet retail presence, (defined as a website representing a firm with the capacity to take orders and payments online), should be low in this industry.

The research of Baourakis and Kourgiantakis (2002) in which larger firms had greater resources and therefore were earlier adopters of online activities suggests the following subproposition:

P(1a): It is more likely that larger firms have an Internet retail presence than do smaller firms.

And finally, Fenech and O'Cass' (2001) study which revealed that a large number of firms just use the Internet as an advertising or informational outlet, would lead to the last subproposition:

P(1b): Due to the nature of the pet supply industry, firms who do utilize the Internet in their pursuit of business are more likely to do so at a minimal level, such as advertising their brick & mortar locations rather than at the level of full Internet retail presence.