3.1 – Online Shopping Effects of E-Commerce ◦ Fast Growth In 1999, business-to-consumer e-commerce totaled over $20 Billion. By 2004 it was $184 Billion. ◦ Slim Profits E-Commerce has taken away profits from traditional stores. For Example: Traditional Travel Agencies By 2000, had lost over 2% of their business to online shoppers. A 5% loss would put most of them out of business.
Effects Cont. More Effects ◦ Changing Rules Funding was switched from traditional retailers and put into online resources, even though profits were not expected for years. As the newness of e-commerce wore off, investor pressure to make a profit increased
Economics Traditional Store ◦ Pay for the store itself (“called bricks and mortar”) ◦ Utilities (Electricity, Water) ◦ Insurance E-Commerce ◦ Minimizes the cost of renting or owning a building ◦ Many times still need a warehouse for inventory ◦ Traditional companies are doing both Example: Barnes and Noble (“Clicks and Mortar”)
Banking A typical transaction with a live bank teller costs around $1.14 The cost for the same transaction at an ATM is 29 cents On the Internet the transaction on costs a penny Offer a variety of services to save time and money online.
Capital and Offsetting Costs Online business need less working capital ◦ Working Capital – money available to buy more goods or services to resell ◦ The distributor can ship the product directly to the consumer (instead of it going to the store first). Other Costs ◦ Operate and maintain website that is reliable ◦ Equipment and software ◦ Personal to keep the site running
Priceline Consumers who visit the site are told they are setting the price of an airline ticket. However, this is not the way it works. ◦ The airline enters the minimum prices before the bids are received. So the bid is only filled if it meets or exceeds the airlines price.
Different types of Sales B2B = Business to Business B2C = Business to Consumer C2B = Consumer to Business sales (Priceline) C2C = Consumer to Consumer (Ebay)
Differences What are the differences between online B2C and traditional retailing? Answer: ◦ B2C – Products delivered later, you can customize order ◦ Traditional – can touch items, try on, take home right away.
3.2 Information Management Gathering Data ◦ Every purchase online leaves “footprints” of personal information Credit Card Phone Number Mailing/shipping address ◦ Online stores use that info to track trends (who, what, when, etc) Software called Predictive and descriptive analysis does this for them
Customer Profiles and Traffic ◦ People do not like answering lots of questions when they first visit a site ◦ Online retailers have to be careful about what and how much to ask ◦ Result: If not careful people will not come back to site
Segmenting and Tracking Segmenting ◦ Based on your demographic information and the web sites you visit, your ads are personalized to fit your interests. Tracking ◦ Traffic info includes the number of new visitors compared to repeat visitors ◦ Whether the visit resulted in a sale, which pages were most popular, and how they got to the site
Cookies ◦ Most websites place a cookie on your computer ◦ Cookie = A file created when you visit a website You can stop these from being put on your computer or delete them ◦ It allows the company to identify you and your preferences. A company can only access the cookie they placed on your computer not others
Your Web Address (Domain Name) Unique name Easy to remember .com - commercial institutions or businesses .edu – educational institutions .gov - Government sites .net – Network gateways .org – non-profit organizations
Avoid names that are to challenging to remember Example: www.dv2u.com Avoid long and complicated domains from 3-rd party hosting www.viaweb.com/muesumcompany/ Register related items and common typos Mcdonalds.com, bigmac.com, goldenarches.com, macdonalds.com
75% of all online transactions are done through one of five portal sites: amazon.com, ebay, AOL, Yahoo, and Buy.com
Advertising Online is similar to traditional advertising Difference is its interactive Banner Ads Account for 60% of all online advertisements Least likely kind of ad to get a customer response
Superstitials Ads that pop-up on your monitor between web pages Expanding Banners Combine video, audio, animation, and photographs Visitors can click on without leaving original page.
Communicate directly with the customer Selling products or services to people through email is one of the least expensive methods The response rate to email is 5-25%
Offering an incentive to special reason to buy a product or visit a website A good place to find Coupons, Discounts, and samples of products. Example: John Hancock (insurance company) provides a place for parents to figure the cost of college at different universities In doing so, parents must enter personal data on the website. Later the can sell products like life insurance that will pay for college
Banner ads that flash “Click here to win money” or “Enter this contest to win a i-pod” In order to enter you must give personal information that the company can use
Sponsorships When an advertiser places a banner ad on the home page of a website, the advertiser becomes the sponsor. The advertiser pays a fixed amount based on time. Impressions The number of times that viewers visit a web site that has a banner ad on it is counted. The cost of the ad is figured as a cost per 1,000 impressions.
Results Base the payment on results The website must draw in visitors to make sure that advertisers are paid for their advertisements. Affiliates Can receive payment by linking with the websites of affiliates. Affiliates have similar products or services The hosting site receives a % of all of the sales made by the affiliates. Amazon.com is an example.
The main goal is brand building Getting the company name and products known to potential customers. In the future their will be an increase in how people are rewarded for viewing ads.
The answers are not easy, you will have to do some critical thinking and research for this assignment. Make up your own online store. Describe what types of products you would sell. Use this store to compare similar website and traditional stores. (Slide 1 in your PowerPoint) Look at advertisements on 3 Websites and describe what they have in common, and what is different. (Slide 2)
Broken down into 4 Parts You must complete this assignment by yourself Part 1 - Spreadsheet or Table to Compare (Slide 3) Examples of sites: Amazon, buy.com, yahoo shopping, etc. Examples of traditional: Target, Meijer, JC Penny, Best Buy (Use ones that are similar to yours) What things are the same, what things are different? Part 2 – What info do they collect when you try to buy something? (Slide 4)
CompanyCompare Products Sales, Discounts Website 1Yes Website 2No Website 3Yes Traditional Retail 1Yes Traditional Retail 2No Traditional Retail 3No What makes a E-commerce website effective? What makes it ineffective?
Part 3 (Slide 5) With the things you have found so far, how would you use that data and e-commerce advertising to attract young people age 13-22 to your website. Part 4 (Slide 6) Make a list of promotional activities you could use to further advertise your website.