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.
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. 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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7. Characteristics of Successful E-Tailing
Brand recognition and guarantees
Guarantee provided by highly reliable or well-known vendors
Digitized products
Inexpensive items
Frequently purchased
Commodities with standard specifications
Well-known packaged items that cannot be opened even in a traditional store
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8. 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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9. E-Tailing Business Models
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10. E-Tailing Business Models
direct marketing
Broadly, marketing that takes place without intermediaries between manufacturers and buyers; in the context of this book, marketing done online between any seller and buyer.
Direct Sales by Manufacturers
Pure-Play E-Tailers
virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet without maintaining a physical sales channel.
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11. E-Tailing Business Models
click-and-mortar retailers
Brick-and-mortar retailers that offer a transactional Web site from which to conduct business.
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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12. E-Tailing Business Models
Retailing in Online Malls
Referring directories
Malls with shared services
OTHER B2C MODELS AND SPECIAL RETAILING
Online Group Buying
B2C IN SOCIAL NETWORKS
Virtual Shopping
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13. 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 Asiatravel.com
Travelweb.com Trip.com
Eurovacations.com Priceline.com
Lonelyplanet.com
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14. 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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15. 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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16. 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
Build customer profiles and target specific customers with tailored offers
Alliances and consortia
Increase sales or reduce purchasing costs
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17. Travel and Tourism Services
Benefits
Free information is tremendous
Free information is accessible anytime
Substantial discounts
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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18. Impacts of EC on the Travel Industry
Impacts of EC on the travel industry into 10 categories including:
Product promotion, new products, new business models
Only the value-added activities of travel agencies will not be automated
Performed by a new type of organization
Will serve certain targeted markets and customers
Entering the market will be:
Travel superstores that will provide
Innovative individuals operating from their homes
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19. Corporate Travel
Many large corporations receive additional services from large travel agencies
Online optimization tools provided by travel companies (rosenbluth.com)
Travel authorization software that checks availability of funds and compliance with corporate guidelines
This is a huge and rapidly growing market
Oracle’s e-Travel provides software to automate and manage online booking
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20. Corporate Travel
American Express,Microsoft and MCI have developed AXI system that displays:
Airline seat charts
Maps showing hotels
Information on nearby health clubs
Weather information
Creates profiles for travelers and their preferences
Attempts to satisfy both travelers and corporate travel managers
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21. Intelligent Agents in Travel Services
Step 1: visit an online travel site and enter
Desired destination
Dates
Available budget
Special requirements
Desired entertainment
Step 2: computer dispatches an intelligent agent that “shops around”
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22. Intelligent Agents in Travel Services
Step 3: agent attempts to match your requirements with what is available, negotiates with vendors
Step 4: agent returns within minutes with suitable alternatives, modifies as per your wishes, books the vacation
Voice communication with agent may be possible by 2005
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23. 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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24. 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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25. 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
Assess their market value
Find out how to use their voice in an interview
Can access newsgroups that are dedicated to finding jobs
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26. 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
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27. 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 may find out that you are job hunting
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28. 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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29. Virtual Job Employment Agent
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30. Real Estate Online For Sale You can view many properties on the screen
You can sort and organize properties
You can find detailed information about the properties
You can search, compare and apply for loans
For Sale
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31. Real Estate Applications
Advice to consumers on buying or selling a home
assist2sell.com
International Real Estate Directory and News is a comprehensive real estate Web site
ired.com
National listing of properties for sale
homesinamerica.com
Commercial real estate listings
commercialproperty.com
Rental properties
homestore.net
Real estate related maps
mapquest.com
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32. Insurance Online
Insurance—auto, home, life, and health at a substantial discount
Insureate.com
Order.com
Quotesmith.com
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33. Online Stock Trading
Costs between $5 and $29 per transaction (vs. $10 - $35 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
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34. Online Stock Trading
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35. 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
Many traditional banks around the world offer diversified e-banking services
main.hangseng.com
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36. 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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37. International and Multiple-Currency Banking
Some international retail purchasing can be done by credit card
Other transactions may require international banking support
Hong Kong Bank’s HEXAGON provides e-banking in Asia
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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38. Implementation Issues in Online Financial Transactions
Using bank intranets
Banks provide large business customers with personalized service by allowing them access to the bank’s intranet to access accounts, historical transactions, intranet-based decision-support applications
Imaging systems—allow customers to view images of all:
Incoming checks
Invoices
Other related online correspondence
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39. Personal Finance Online
Bill paying and
e-checks
Tracking bank accounts etc.
Portfolio management
Investment tracking
Stock quotes and prices (past and current)
Budget organization
Record keeping
Tax computations
Retirement goals, planning and budgeting
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40. Online Billing and Bill Paying
Automatic transfer of mortgages
This method has existed for several years
The payer authorizes its bank to pay the mortgage, including tax escrow payments
Automatic transfer of funds to pay monthly utility bills
Paying bills from online banking account
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41. Online Billing and Bill Paying
A merchant-to-customer direct billing
A merchant posts bills on its Web site
Customers can view and pay their bill
Using an intermediary
A third party consolidates all bills related to each customer in one site in a standard format
Collects a certain commission
Makes it convenient to complete transactions
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42. Online Billing and Bill Paying
Person-to-person direct payment
Paypal.com (now an eBay company)—enables you to send funds to another individual over the Internet
Online billing and bill-paying can be classified into B2C, B2B, or C2C.
Opportunities exist in B2B services—can save businesses about 50 percent of billing costs
In Hong Kong, CitiCorp links suppliers, buyers, and banks on one platform, enabling automatic payments
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43. On-Demand Delivery Service (ODDS)
On-demand delivery service (ODDS)—express delivery made fairly quickly after an online order is received
On-Demand Delivery Services (ODDS)
May own a fleet of delivery vehicles for regular deliveries and delivery within short time period
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44. On-Demand Delivery Services Model
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45. 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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46. The Case of E-Grocers
Others offer on-demand deliveries with a surcharge or additional delivery charge added
One e-tail grocer sells only nonperishable items shipped via common carrier
Many offer additional services
Dry cleaning pickup and delivery
“Don’t run out” automatic reordering
Fresh flower delivery
Movie rentals
And more
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47. Problems with E-Tailing & Lessons Learned
Profitability
Lose money on every sale as they try to grow to a profitable size and scale
Underlying cost and revenue models were not sound
Long-run success requires financial viability
Manage new risk exposure
Local companies contend with local customers and local regulations
National firms have more constituents
Global firms deal with numerous cultural perspectives
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48. Problems with E-Tailing & Lessons Learned (cont.)
Branding—drive to establish brand can lead to excessive spending
Starting with insufficient funds
Keep it interesting
Static design is a “turn-off”
Dynamic sites with rich databases of information appeal most to customers
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49. Disintermediation & Reintermediaries
Disintermediation—manufacturer sells directly to consumer
Reintermediearies—new intermediary roles in the digital environment offer new ways to:
Reach new customers
Bring value to customers
Generate revenues
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50. Intermediary’s New Role
Role will shift to one that emphasizes value-added services such as:
Assisting customers in comparison shopping from multiple sources
Providing total solutions by combining services from several vendors
Providing certifications and trusted third-party control and evaluation systems
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51. Reintermediaries
Reintermediaries—intermediaries that have restructured their roles in the purchase process
Kbb.com—pricing information for consumers
Edmunds.com—information about the dealer’s true costs
“Lead services” that
Direct buyers to member dealers
Offer direct sales of new cars
autobytel.com
carsdirect.com (Amazon.com’s partner)
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52. Cybermediation and Hypermediation
Cybermediation (electronic intermediation) —use of software (intelligent) agents to facilitate intermediation
Hypermediation—extensive use of both human and electronic intermediation to provide assistance in all phases of an
e-commerce venture
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53. Conflict and Personalization
Channel conflict—situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition
Personalization—custom designed marketing plan
Tailored to buying patterns
Appeal to sense of value
Excellent customer service
Mass customization
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54. Issues in E-Tailing
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