Analysis of the cost impact of the new technologies in E-tail

• Author: Drumea C.
• Pages: 159-168

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 8 (57) No. 1 - 2015

Analysis of the cost impact of the new technologies

in e-tail

Cristina DRUMEA1

Abstract: The impact of new technologies on retail is studied in terms of costs. Starting

from the idea that reducing costs should have a significant effect of the new technologies in

retail, it is investigated the possibility that it actually constitutes the basis of a new facette of

the cost leadership generic strategy. Exploratory research tracks some automation effects on

transaction costs and labour costs in retail. General business models in the field are

analysed, with a focus on some concrete ways of implementation in retail, particularly as e-

tail. In the background we grasp and discuss the aspects of the financial flows related to

trade. Even when those issues may prevail, one cannot elude discussing the cultural and

ethical standards associated to the trade new features induced by e-tail and the new

technologies.

Key-words: E-tail, new technologies, business models, cost leadership, pricing.

1. Introduction to the real new world of retail

It seems obvious that the ultimate metric, in any commercial activity, is the profit.

Many definitions, approaches and statements that elude this simple truth were put up

front over the time – such as society benefit and welfare, environment care, social

responsibility and so on, but the ultimate expression of success remains, for a

company, the profit as a simple equation that involves Revenue and Expenses (as in

costs and taxes).

It is the same old balance that drives the company’s efforts and resources

towards achieving a positive financial flow after reimbursing all the factors that

intercede in the process. It works for all kind of activities, but for the retailer area,

with its often narrow margins, it seems to be even more challenging.

The retailer will obviously work steadily at increasing its revenues and at

reducing its costs. On the income side, unless new and revolutionary products are

brought to market, we consider the revenues as being approximately inelastic, at

least in the short term (on the hypothesis that the venue is fixed, the market

positioning is relatively stationary, and the prices cannot be increased suddenly).

1 Transilvania University of Brasov, cristina.drumea@unitbv.ro