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Business in Action

Kelkoo - the future of shopping?

(Example of e-commerce, perfect/imperfect competition, marketing)

Kelkoo is an interesting example of how retail is changing.  Remember the days when you shopped around the high street looking for the product you wanted and maybe comparing prices for the best deal?  Perhaps you still do it?  Life has now been made a lot easier for you but a lot more difficult for the typical high street retailer.  In the comfort of your own home (or work!) you can now browse thousands of products and base your decision on price.  Economists talk of 'perfect competition' where, amongst other things there are many buyers and sellers and everyone has a perfect knowledge of the marketplace - to an extent, price comparison websites bring this a little bit closer.  However, perfect competition also assumes identical products and with the massive variety of MP3 players, cameras, etc, available this is not the case.  But if you know the iPod you want, it makes life that bit easier for you and more difficult for the seller.

Or perhaps it doesn't - perhaps it has become easier for them to target you now?  Perhaps instead of enticing you into their store they can get you in on the click of a button?  And once they've got you and have seen what you're interested in they can start building up a customer profile of you.  So maybe everyone wins?

Have a look at their site and think about the effects it may have on 'traditional' retailers such as Currys, PC World and HMV.

Questions:

Business Studies:  Explain three ways in which a 'traditional' high street retailer could deal with the threat from 'Kelkoo'.

Economics:  To what extent does 'Kelkoo' turn the market for MP3 players into a more perfectly competitive market?