Online Retailers' Strategies to Survive in Homogeneous Product Market: An Exploratory Analysis

The shakeup in e-commerce gives us an opportunity to reevaluate the effectiveness of various business strategies in this electronic revolution. This study investigates the strategies adopted by 125 online retailers in the PDA market during the period between July 2001 and December 2002, including economies of scale, developing first-mover or multichannel advantages, branding, offering value-added services, being a loss leader, and going public. Results of logistic regression show that branding, multichannel operation, and offering value-added services give retailers sustainable competitive advantages in the electronic market. Findings from cluster analysis reveal that online retailers who offer customers superior value enjoy a price premium and are more likely to survive competition. Implications for both researchers and practitioners are discussed.