Reasons For Rejecting Extranet Technology In Channel Relationships : A Study Of White Goods Retailers In Germany

Extranets are the third wave of Internet technology. In business-to-business relationships more and more companies offer Extranets that – while maintaining privacy and confidentiality – make internal information available to business partners and offer process integration via the World Wide Web. Especially for small companies an Extranet is an appealing alternative to EDI technology. Despite all the potential benefits, a large number of companies do not use or outright reject Extranet technology. The purpose of this exploratory study is to find out the reasons of non-use/rejection. A questionnaire-based mail survey was conducted in March 2001 among 2080 German retailers, all of them customers of a large manufacturer of white goods with access to the supplier’s Extranet system. Roughly 1/3 of the respondents do not use the Extranet. Responses to open questions provide qualitative data that is analysed by cut-and-sort technique and content analysis. The findings show that information quality and design quality of the Extranet system are relevant factors for the acceptance/rejection of an Extranet system. However, this is not the main reason. The quality of the traditional channel tremendously reduces the willingness of adapting that new technology. Especially the need for interpersonal contact is the main reason for system non-use among small retailers. Retailers who have frequent transactions with the supplier prefer face-to-face price negotiations. Larger retailers are more concerned about the lack of process integration of the Extranet channel. Two managerial implications are deducted from the findings. First, companies should be very careful in deciding and implementing a channel strategy. Potential cost savings and service improvements is not of much value if the established communication with customers breaks down. Second, companies have to identify the differing customer expectations and communication profiles before choosing a strategy.