Performance measurement among small-and-medium-sized UK Internet retailers

Internet retailing is one of the fast-growing business sectors in the UK, and this sector is currently entering a more stable development stage. In this stage, the issue of business strategy and performance measurement, often neglected during the dotcom era, is gaining in importance. Although various studies have been done, the investigation of this issue is limited. This study helps to fill this gap by investigating performance measurement and business strategy of Internet retailing business, and their significance in enhancing business performance. A mail questionnaire was used in a survey of UK Internet retailers. The questionnaire contained variables of performance indicators, use of performance measurement, strategic orientation, businessp erformance, and business profile. The survey produced 252 responses of small-and-medium-sized internet retailers, defined as having less than £10 million of annual online sales turnover. By factor analysis, strategic orientation can be treated as having two dimensions:( 1) conservativeness, and (2) aggressiveness; business performance, two: (1) financial, and (2) operational; and performance measurement, one: the number of performance indicators measured. The findings show that UK Internet retailers are likely to concentrate their performance measurement more on financial, market-sales, and web-related indicators rather than customer and process. After controlling for variations of business size, the empirical results reveal that (1) more conservative retailers are likely to measure more performance indicators, (2) retailers using more performance indicators are likely to have better operational performance, and (3) less aggressiveness retailers tend to be associated with better financial performance. This study has provided evidence that strategic orientation is associated with the financial aspect of business performance, and performance measurement with the operational aspect of business performance. The results provide useful insights for Internet retailing managers, especially concerning the importance of performance measurement, and the choice of strategic orientation. More importantly, this study opens up possibilities for further study of performance measurement and businesss strategy of internet retailing business