Question:
Some companies opt to generate revenue through the licensing and sales of their proprietary software.
Some choose to use an open-systems approach and make it available for free.
This decision is driven by what do you think?
Your textbook suggests that multichannel Internet retailers are more successful in the long-term than pure-play Internet retail outlets.
You can take a position and defend your position.
Answer:
1. Software monetarization can be driven by many factors.
While some companies may prefer their software to remain free, others might want to make money from it.
Selenium, for example, is an open-source software testing program that can be used free of charge.
UFT (Unified Functional Testing), which is from HP, is another similar program that can be used for free.
The underlying purpose of software development is one of the main reasons for this decision (Bowie & Paraskevas (2014).
UFT was created by HP with one objective: profit realization. It is therefore sold as a licensed product in the market.
Thought Works created selenium to help the community. Therefore, the software is freely available in the marketplace.
You could also have other reasons, such as existing competition or the type of software.
Monetizing software may not be a wise strategy if the goal of the organization is increase the user base. (Lewis & Whysall (2014)
Software such as FB, for example, is freely available to anyone who wants it.
FB has monetization through advertisements, and the software is therefore freely available to the users.
Software that is not available for advertising can only be monetized through licensing.
Commercial software is sold to businesses with licenses, as there’s no way for them to advertise because they are not user facing.
2: It’s difficult to judge the long-term success rates of multichannel and Internet retailers.
But, multichannel retailers might have an edge over the Internet-only retailer.
The customers want to touch and feel many products before buying them. This personal touch is not available in Internet retailing.
Verhoef & Kannan (2015) state that internet retailing has many advantages over multichannel retailers in terms of cost and efficiency.
But, there will always be customers who want to shop in a physical location.
Multichannel retailers enable retailers to concentrate on the advantages of both offline and online channels.
Multichannel retailer does not just mean focusing on physical retailing.
Multichannel retailer basically aims to maximize the benefit of a combined approach between multichannel retailer and Internet retailing. (Lewis & Whysall (2014)
It would be a great idea for players like eToys.com, and other players, to focus on multichannel selling.
Refer to
Technology-driven online performance measurement: Lessons from affiliate market.
International Journal of Online Marketing 4(4), 1-16
Technology-related hurdles and drivers for multichannel retailing.
International Journal of Electronic Commerce (18(4)), 43-68.
Retracted: An empirical investigation of an internet marketing plan for search engine optimization.
Human Factors and Ergonomics for Manufacturing & Service Industries. 23(6), 528–540.
Multi-channel retailing transformed into omni-channel selling: Introduction to the special edition on multichannel retailing.
Journal of retailing, 1991(2): 174-181.
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