Importance of Knowledge Management Systems in Online Retail Compared to Traditional Retail

Knowledge management systems (KMS) are becoming an essential resource for gaining a competitive advantage in all industries. A well implemented KMS enables industries selling products and services to numerous small customers to understand and track these customers, a practice which traditionally was limited to industries with few large clients, as industries with many customers had no economic way of recoding and using records of customer interactions. An industry that increasingly benefits from real-time collection and usage of customer data through KMS and customer knowledge management systems (CKMS) is retail. A sub-segment of the retail industry which not only depends on KMS to gain a competitive advantage, but whose existence has become dependent on KMS is online retail. KMS are present in all business areas and are directly impacting almost every line of the profit and loss statement of an online retailer. Customer acquisition, customer retention, product offering, pricing, marketing mix and purchasing are some of the key areas of e-commerce in which decisions are very often taken with the help of advanced KMS. This article compares the importance of KMS for the success of e-commerce companies and traditional retail companies. The results of our research show that while KMS can benefit traditional retailers, it is life-defining for e-commerce companies due to the increased information transparency the internet is offering. Furthermore, as cross-channel activities are growing rapidly for traditional retailers, an early adoption of modern KMS can prepare such companies for the future.