0. Retailing in Electronic Commerce: Products and Services
Chapter 3
Retailing in Electronic Commerce:
Products and Services

1. Learning Objectives
Describe electronic retailing (e-tailing) and its characteristics.
Define and describe the primary e-tailing business models.
Describe how online travel and tourism services operate and their impact on the industry.
Discuss the online employment market, including its participants, benefits, and limitations.
Describe online real estate services.
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2. Learning Objectives Discuss online stock-trading services.
Discuss cyberbanking and online personal finance.
Describe on-demand delivery of groceries and similar products/services.
Describe the delivery of digital products and online entertainment.
Discuss various e-tail consumer aids, including comparison-shopping aids.
Describe disintermediation and other B2C strategic issues.
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3. Internet Marketing and Electronic Retailing
OVERVIEW OF ELECTRONIC RETAILING
electronic retailing (e-tailing)
Retailing conducted online, over the Internet. Usually B2C e-commerce concerned with businesses selling products to customers.
e-tailers
Retailers who sell over the Internet.
Manufacturer sells directly to the customer, cutting out the intermediary
Catalog sales free a retailer from the need for a physical store
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4. Internet Marketing and Electronic Retailing
SIZE AND GROWTH OF THE B2C MARKET
($70,$90 billion for 2004, 2005) = 2- 4% of total retails in US.
A growth of about 20% per annum.
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5. What Sells Well on the Internet?
Computers and electronics
Sporting goods
Office supplies
Books and music
Toys
Health and beauty
Entertainment
Apparel
Cars
Services
Others
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6. Considered Commerce Considered commerce
Conducting e-commerce where the online channel of a business is integrated with the physical retail business as opposed to being a separate channel.
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7. CHARACTERISTICS AND ADVANTAGES OF SUCCESSFUL E-TAILING Basic Principles for E-TAILING Success
Sound business thinking, visionary leadership, thorough competitive analysis and financial analysis, and the articulation of a well-thought-out EC strategy are essential.
Ensure appropriate infrastructure, particularly a stable and scalable technology infrastructure to support the online and physical aspects of EC business operations.
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8. Characteristics of Successful E-Tailing
Characteristics of high-volume products and services:
Brand recognition and guarantees
Guarantee provided by highly reliable or well-known vendors
Digitized products
Inexpensive items (office supplies, vitamins)
Frequently purchased (prescription drugs)
Commodities with standard specifications (books, CDs)
Well-known packaged items that cannot be opened even in a traditional store (chocolates, foods)
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9. E-Tailing Business Models
CLASSIFICATION BY DISTRIBUTION CHANNEL
Direct marketing by mail-order retailers that go online.
Direct marketing by manufacturers
Pure-play e-tailers
Click-and-mortar retailers
Internet (online) malls
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10. E-Tailing Business Models
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11. E-Tailing Business Models
Direct marketing by mail-order retailers that go online. (QVC) Companies are attempting to leverage their existing infrastructures by using a new marketing system (online), in addition to their existing method (catalogs, etc.). No intermediaries.
Direct marketing by manufacturers (Dell)
The direct marketing model takes place without intermediaries between manufacturers and buyers.
Pure-Play E-Tailers (Amazon)
virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet without maintaining a physical sales channel.
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12. E-Tailing Business Models
click-and-mortar retailers (Wallmart)
the firm sells to customers through the Internet and through physical sales locations.
brick-and-mortar retailers
Retailers who do business in the non-Internet, physical world in traditional brick-and-mortar stores.
multichannel business model
A business model where a company sells in multiple marketing channels simultaneously (e.g., both physical and online stores).
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13. E-Tailing Business Models
Retailing in Online Malls
Referring directories
Malls with shared services (find, order and pay for a product)
Online Group Buying
Find people to share freights and buy in bulk to lower prices.
B2C IN SOCIAL NETWORKS
Social networks can be used as a platform to advertise and support purchases, as well as acting as a review center (customers can leave reviews about the products they bought).
Virtual Shopping
(3D SW in buying furniture, LCD).
Dell sells computers in virtual world
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14. Travel and Tourism Services Online
The Internet is an ideal place to plan, explore, and arrange almost any trip and save money
Travel-related information available at many sites including:
Expedia.com Orbitz.com
Travelocity.com marriot.com
Priceline.com
Lonelyplanet.com
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15. Travel and Tourism Services
Services provided:
Outlet for travel accessories and books
Experts’ opinions
Major international and travel news
Driving maps and directions
Chat rooms
Frequent flier deals
Online travel auctions
Information and bookings
Travel tips
Electronic Travel magazine
Fare comparisons
Currency conversion calculators
Fare tracker
Worldwide business and places locator
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16. Travel and Tourism Services
Special services
Very low airfares and discount accommodations
Last-minute trips can also be booked
Special vacation destinations
Sites that offer medical advice and services for travelers:
World Health Organization (who.int)
Governments (cdc.gov/travel)
Private organizations (Healthcenter.com)
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17. Travel and Tourism Services
Wireless services
Customers with WAP cell phones can check their flight status, update frequent flyer miles, and book flights
Direct marketing
Airlines sell e-tickets over the Internet
Alliances and consortia
Airlines and travel companies make this to increase sales or reduce purchasing costs
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18. Travel and Tourism Services
Benefits
Free information is tremendous
Free information is accessible anytime
Substantial discounts
Social networks (blogs) allow for additional marketing through direct and indirect methods, including word-of-mouth.
Limitations
Not all people use the Internet
It may take a long time to find what you want
People are still reluctant to provide credit card numbers
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19. Corporate Travel This is a huge and rapidly growing market
Can receive additional services.
Reduce cost
Employees plan and book their own trips.
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20. The Employment Placement and the Job Market
Job markets
Employers are looking for employees with specific skills, and individuals are looking for jobs
Very volatile market
Moved to the Internet
Millions of job seekers, hundreds of thousands of jobs
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21. The Internet Job Market
The Internet offers a perfect environment; it is especially effective for technology-oriented jobs
Job seekers
Job offerers
Recruiting firms
Government agencies and institutions
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22. Benefits of the Electronic Job Market
For job seekers
Find very detailed and timely information on a large number of jobs world-wide
Quickly communicate with potential employers
Post resumes for large-volume distribution
Search for jobs quickly from any place at any time
Obtain several support services at no cost – career planning
Assess their market value
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23. Benefits of the Electronic Job Market
For employers
Advertise to a large number of job seekers
Save on advertisement costs
Lower the cost of processing (using electronic application forms)
Provide greater (‘equal opportunity’) for job seekers
Find highly skilled employees
Conduct interviews online
Describe positions in great detail
Arrange for testing online
Salary surveys
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24. Limitations of the Electronic Job Market
Many people do not use the Internet
Companies may use both traditional advertising approaches and the Internet
Clear trend: more and more of the job market are going to the Internet
Security and Privacy
Resumes and other online communications are usually not encrypted
Possibility that someone at your current place of employment (your boss) may find out that you are job hunting
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25. Limitations of the Electronic Job Market
Electronic job market may also create high turnover costs for employers by accelerating employees’ movement to better jobs
Finding candidates online is more complicated:
There is a large number of resumes available online
Some sites offer prescreening of candidates to help alleviate this problem (jobtrak.com)
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26. Real Estate Online Advice systems for customers
You can view many properties on the screen (residential, commercial)
links to realtors, maps, …etc
You can find detailed information about the properties
You can search, compare and apply for loans (online lenders) and montages
Examples: Zillow.com : make me move function
Craigslist.org : ads for realestate
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27. Insurance Online
It allows for very low overhead and the ability to quickly compare multiple policies.
Insurance—auto, home, life, and health at a substantial discount
Insurance.com – different policies
answerfinancial.com – car
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28. Online Stock Trading
Commission $1 and $19 per transaction vs. $25 - $100 in traditional brokerage
No waiting on busy telephone lines
No oral communication, less chance for errors
Place orders from anywhere, any time, day or night
No biased broker to push you
Considerable amount of free information
BUT there is a risk of hacking (non-secured)
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29. Online Stock Trading
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30. Banking Online
Electronic banking (e-banking)—various banking activities conducted from home or the road using an Internet connection; also known as:
Cyberbanking Virtual banking
Online banking Home banking
Electronic banking
Saves time and money for users
Offers an inexpensive alternative to branch banking
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31. Capabilities of Home Banking
Get current account balances any time
Obtain charge and credit card statements
Pay bills
Download account transactions
Transfer money between accounts
Balance accounts
Send to the bank
Expand the meaning of “banker’s hours”
Handle finances when traveling
Additional services
Free phone banking
Waive checking fees
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32. HOME BANKING CAPABILITIES
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33. International and Multiple-Currency Banking
Some international retail purchasing can be done by credit card
Other transactions may require international banking support
Tradecard and MasterCard developed a multiple-currency system for global transactions (tradecard.com)
A multidealer foreign exchange service that enables faster and cheaper foreign exchange transactions (fxall.com)
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34. Implementation Issues in Online Financial Transactions
Security of financial transaction
Fees for services (or free services)
$5-$10 per month
Imaging systems—allow customers to view images of all: Incoming checks, invoices, …etc.
Risks of hacking
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35. Personal Finance Online Online Billing and Bill Paying
Budget organization
Record keeping
Tax computations
Retirement goals, planning and budgeting
Stock quotes and prices (past and current)
Automatic transfer of funds to pay monthly utility bills
e-checks
Tracking bank accounts etc.
Portfolio management
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36. On-Demand Delivery Service (ODDS)
On-demand delivery service (ODDS)—express delivery made fairly quickly after an online order is received – same day delivery
On-Demand Delivery Services (ODDS)
May own a fleet of delivery vehicles for regular deliveries and delivery within short time period
Use common logistics carriers (use private shippers like FedEx, UPS,DHL)
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37. On-Demand Delivery Services Model
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38. The Case of E-Grocers
E-grocer—a grocer that will take orders online and provide regular deliveries on a daily or other regular schedule or will deliver items within a very short period of time
All e-grocers offer consumers the ability to order items online and have them delivered to their house
Some e-grocers offer free regular “unattended” weekly delivery based on a monthly subscription model
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39. Online Delivery of Products
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40. ONLINE ENTERTAINMENT ONLINE ENTERTAINMENT Adult Entertainment
Internet Gaming
Online Dating Services
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41. ONLINE ENTERTAINMENT
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42. Online purchase decision aids
shopping portals
Gateways to e-storefronts and e-malls;
may be comprehensive or niche oriented.
shopping robots (shopping agents or shopbots)
Tools that scout the Web on behalf of consumers who specify search criteria.
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43. Online purchase decision aids
BUSINESS RATINGS SITES
Websites to rate e-tailers based on multiple criteria
TRUST VERIFICATION SITES
The seal of TRUSTe at the bottom of e-tailers website)
Recommendations from Other Shoppers and Friends
referral economy
The effect upon sales of consumers receiving a referral or recommendation from other consumers. (used in blogs)
OTHER SHOPPING TOOLS
Escrow: third party to facilitate exchange
Wallets: a program that contains shoppers information. No need to enter info with each shopping
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44. Disintermediation & Reintermediaries
Disintermediation — The removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain
Reintermediation — The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles
new intermediary roles in the digital environment offer new ways to:
Reach new customers
Bring value to customers
Generate revenues
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45. Issues in E-Tailing
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46. Conflict and Personalization
Channel conflict —situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition
DETERMINING THE RIGHT PRICE
Personalization — The ability of the seller to craete an element of personalization.
This create a large demand for customized products
Sellers can meet this by Mass customization.
Examples:
Tailored to buying patterns
Excellent customer service
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47. Leassons learned from failures
What makes click-and-mortar companies more successful:
Speak with one voice
Leverage the multichannels
Empower the customer
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