Electronic Commerce The e-Trading Business Models B2C

2 Agenda E-Commerce – A Business Perspective: E-commerce classification and models. The Retail/Consumer Marketplace EC models (B2C).

e-Trading Implementation Domains 1. Business-to-Consumer (B2C)

4 B2C Electronic Marketing Business-to-consumer (B2C) Ability to create direct relationships with consumer without intermediaries like distributors, wholesalers, or dealers

5 B2C Electronic Markets B2C business model where customers look for: High quality Low price Fast shipment Good return policy Helpful customer service

6 What Sells Better on the Internet? Goods that can be transformed to digitized goods like books, music, and video Items with high brand recognition Items with security guarantee given by highly reliable or known vendors Relatively cheap items Repetitively purchased items such as groceries Commodities with standard specification Items whose operating procedures can be more effectively demonstrated by a video Packaged items which are well known to customers and which cannot be opened even when customers physically visit the store

7 B2C Electronic Markets (cont.) The B2C Market success is derived from: Offering quality merchandise at good prices Excellent customer service Convenience

B2C Different EC Models

9 Business Models of Electronic Marketing Direct Marketing Manufacturers Vs. Indirect Marketing Manufacturers Full Cybermarketing Vs. Partial Cybermarketing Electronic Distributor Vs. Electronic Broker Electronic Mall Vs. Electronic Store Proactive Strategic Posture Vs. Reactive Strategic Posture Global Marketing Vs. Regional Marketing Sales Vs. Customer Services Generalized Mall Vs. Specialized Mall/Store

10 E-store vs. E-mall. E-store.  An electronic distributor whose dealing items are handled by a single store. E-mall.  An electronic distributor or broker whose dealing items are handled by more than a single electronic store. Business Models of Electronic Marketing (Cont.)

11 Active Electronic Intermediaries (Cont.) Pure electronic mall Cybermall Partial electronic mall Company’s retailing business exists only on the internet Electronic mall as one of existing distribution channels Pure Vs. Partial E-Mall Strategy

12 Generalized vs. Specialized e-malls/stores Generalized e-malls/stores  Deal with various categories of items, so supply items is very wide, e.g., electronic department stores. Specialized e-malls/stores  Focus on only special types of items, e.g., cyber-book- stores like Amazon and computer vendors like Dell. Business Models of Electronic Marketing (Cont.)

13 E-distributor vs. E-broker E-distributor  Responsible of order fulfillment and guarantee, e.g., Amazon, eToys, Wal-mart online. AmazoneToys E-broker  Introduce suppliers who deal with the items that the customers are looking for, e.g., Choice mall, BestBookBuys, compare.Net, and directory sites like yahoo.Choice mall BestBookBuyscompare.Net  Payments can be either collected by suppliers or brokers depending on their agreements. Business Models of Electronic Marketing (Cont.)

14 Active Electronic Intermediaries (Cont.) E-Distributors CDNow E-Brokers ShopNow  Take full responsibility of fulfilling orders and collecting payments  Narrow scope of products usually specialized  Needs expertise in merchandizing, quality assurance, and customer service  Scope of products is broad and can link stores worldwide.  Assist the search process of finding the appropriate products and their vendors  May receive commissions from vendors to whom the orders are channeled  Main expertise is technical (Internet technology and support) Pure Electronic Malls

15 CD NOWCD NOW: Specialized e-Distributers

Flowers1-800-Flowers: Specialized e-Distributers

Flowers

18 Anniversary Flowers

19 Flower e-shop

20 ShopNowShopNow: e-Brokers

21 ShopNowShopNow: e-Brokers

22 Direct marketing vs. Indirect marketing. Direct marketing.  Manufacturers advertise and distribute their own products directly to their customers via their internet- based stores without intervention of any intermediaries, e.g., Dell.Com.  E-stores must be highly visible (high visibility of the company and the brand). Indirect marketing.  Products are distributed through third party intermediaries, e.g., E-malls.  Low visibility of products should be balanced by high visibility of the intermediary. Business Models of Electronic Marketing (Cont.)

23 Disintermediation in B2C Distribution Source: M. Warkentin, et al. (2000). Used with permission of Dr. Merrill Warkentin.

24 Full cybermarketing vs. Partial cybermarketing. Full cybermarketing.  Companies sell their products and services only through the internet, e.g., Amazon.  Mostly new companies born in the era of e-commerce.  Proactive e-commerce strategy Partial cybermarketing (Click & Mortar).  Companies sell not only through the internet but also through physical stores, e.g., Barns & Noble.  Reactive response of existing companies having physical distribution channels. Business Models of Electronic Marketing (Cont.)

25 Proactive vs. Reactive strategic posture toward cybermarketing Proactive strategic posture toward cybermarketing  A company’s main distribution channel is the internet, and internal management such as inventory and operations management is focused to affect the benefit of cybermarketing Reactive strategic posture toward cybermarketing  The traditional physical distribution channel is left as the company’s main distribution channel even though the company has opened another online distribution channel Business Models of Electronic Marketing (Cont.)

26 JCPenneyJCPenney: Reactive e-Department Stores

27 Reactive Electronic Department Stores (Cont.) The J.C. Penney case The Internet-based revenue amounts a small percentage of the total revenue Updating prices and adding new items to the electronic catalogs is convenient and inexpensive Overcoming the limitations of paper catalogs without incurring extra distribution cost

28 JCPenney

29 Dell.COM: Proactive Direct Marketing

30 Ford.com Ford.com Reactive Partial Direct Marketing