1. Business to Consumer Presented by Carol Reavey, Kevin Keely and Martha Harting

2. Who, What, How, When…..  Who is on the web?  Who is the target customer?  What vehicles can be used to reach the customer?  How to Attract the right customer  How to stand out amongst the pack?

3. Demographics Web and E-commerce Users

4. We’ve got a new way to talk 1 Total World Online Population: 619 million

5. Everybody’s Doing It!  The Internet is in 20 nations  E-commerce has 619 million potential customers  This number is estimated to reach 948 million by 2004

6. Who is doing it in the USA (2)  The total population of internet users in the US is 112 million  94.2 million are White (4% growth vs ‘01)  7.8 million are black (3% growth vs ‘01)  7.6 million are Hispanic (13% growth vs ‘01)  2.4 million are Asian (6% growth vs ‘01)

7. Frequency vs. Purchase  Only 2.8% of all surfers use the net primarily for purchasing product. This is an increase over 2.6% in 4 th Qtr 2001.  The average purchase increased from $298 to $364 in the $250 - $501 range.  It also increase from $1,298 to 1,668 in the +1,000 range.

8. E-Commerce Sales (10)  E-commerce sales rose in the 2 nd Qtr 3.7% over first quarter and 24.2% year over year  The US Department of Commerce expects record e-commerce sales for the holiday season.

9. Doing it with what….. (3)  Household income is significant in the e-commerce game.  72% of the surfers in the >$75k bracket do product/service research

10. When Are We Surfing (4)  112 million Americans use the Internet  46 million use it primarily at work – 17% higher than last year  20.4 million of the workers are women up by 23%  Men (of course) make up the remaining 25.3 million surfers – 12% increase over 2001

11. It’s a man’s world  Men dominate internet usage in the USA  Men view an average of 1900 pages versus 1700 pages for women  36% of the male usage is for adult entertainment. This is 8% for women.

12. Mom is Surfing More (5)  American Moms are on-line an average of 16 hours and 52 minutes every week.  Teens log about 12 hours and 17 minutes per week.  Mom’s and Hispanics are the fastest growing groups of surfers.  This may change the way companies market and target customers.

13. Top 5 Activities (6)  The primary reason for logging on is E-mail.  Products/Services activities have increased 7% over last year.  Women are sending the greeting cards and entering the sweepstakes (61%). E-mail93% Search Engine 79% Research products/services 63% Local Information 60% Sweepstakes59%

14. Buzz Words (7)  To increase strikes the week of October 5 th 2002 web content could have included these: –Halloween –Dragonball –KaZaA –Costumes –NFL –Tatoos –Hurricane Lilli –Britney Spears –Yu-Gi-Oh! –The Bible

15. What the E-Shopper Wants (8) Courteous and respectful employees 73% Consistently good merchandise quality 70% A clean and well-maintained ‘store’ 69% Unconditional return of merchandise 69% Visible prices 68%

16. Service versus Price  “Honest Price” is more important than “lowest price” to 64% of the American consumers  “Consistently good merchandise quality” was seen as essential to 70% of the consumers

17. Balancing Ethical Issues

18. Mis-Trust (7)  Many Consumers won’t by on-line because they don’t trust the process 68% of the consumers trust small business68% of the consumers trust small business 58% trust the newspapers and television58% trust the newspapers and television 55% trust financial institutions (banks, insurance companies)55% trust financial institutions (banks, insurance companies) 54% trust charities and non-profit organizations54% trust charities and non-profit organizations 47% trust the government47% trust the government 29% trust the e-commerce community!29% trust the e-commerce community!

19. SPAM (8)  SPAM is an ever-increasing issue  Hotmail estimates that 10% (1.3million) of the daily messages sent through Hotmail are SPAM  10% of the working day is spent deleting SPAM

20. The Choice isn’t much of a Choice

21. Selling your e-mail info (9)  Failed dot.coms have sold private information  They follow the letter of the “Opt Out” law by selling their web site and all the names with it.  “It’s a common business practice to “rent” your customer database” Cheryl Regan spokesperson for Network Solutions Inc.

22. E-Commerce Phase Two What can we expect to see in the sector as the second era of e- commerce gathers steam?

23. New Technologies  Automating processes  Reducing costs in customer service  Streamlining replenishment  Streamlining aftermarket selling opportunities

24. Spending Mix Initial Phase  Computers  Brokerages  Travel  Books and Music  Auctions Generated 75% of Sales (1)

25. Spending Mix Current Phase Current Phase  Only 50% of online sales  Clothing, pharmaceuticals, groceries, communication services and general merchandise make up the other 50%.  Groceries went through a valley last year but may rebound this year.

26. Multichannel Selling  Systems allow customers to reserve product online for in-store pickup.  Manufacturers sell direct  Retailers fear of channel conflicts has faded.

27. Real-Time rules  Investing in real-time capabilities to manage orders.  Real-time order processing can increase order fulfillment accuracy and productivity by 50%. (2)  Real-time supply chain and inventory lets companies know what they have and when it’s coming.  Reduce or eliminate stock-outs and overstocks.

28. Improved Profitability  Improved profitability spurred by innovations.  Analyst predict a 20% year-over-year growth. (3)

29. The Seven Habits of Highly Effective Web Sites (6)  Personable  Remembrance (4)  Flexible Interaction  User Profiling  Abstract Interaction (5)  Context Creation and Use  Dialogue Structuring and Management

30. Five E-Commerce Trends to Watch

31. Trends  Multichannel Retailing (7)  Increased Customer Satisfaction (8)  Consumers do their own thing (9)  Death of the Mid-Size E-tailer  More Profit – 70% of the top 40 sites are profitable versus 30% last year.

32. Business Models on the Web (10)  Business models are perhaps the most discussed and least understood aspect of the web.  The web changed traditional business models.  Little clear-cut evidence of exactly what this means.  Auctions – An old way of doing business popularized and broadened. (11)

33. Models Continues  Varied Implementation  Blended Models  Intellectual Patents

34. Categories of Business Models BrokerageAdvertising InfomediaryMerchant ManufacturerAffiliate CommunitySubscription Utility

35. Brokerage Model  Marketplace Exchange – Orbitz  Buy/Sell Fulfillment – CarsDirect  Demand Collection System - Priceline.com  Auction Broker - eBay  Transaction Broker – PayPal  Bounty Broker – BountyQuest  Distributor – Quest  Search agent - Deal time  Virtual Mall - ChoiceMall

36. Advertising Model  Portal – Yahoo  Personalized Portal - MyYahoo  Niche Portal - iVillage  Classifieds - Monster.com  Registered Users - Anytime's Digital  Query-based Paid Placement – Google  Contextual - Gator

37. Infomediary Model  Advertising Networks – DoubleClick  Audience Measurement Services – Nielson  Incentive Marketing - MyPoints  Metamediary - Edmunds

38. Merchant Model  Virtual Merchant - Amazon.com  Catalog Merchant - Land’s End  Click and Mortar - Barnes &Noble  Bit Vendor - Eyewire

39. Community Model  Content Service - Netflix  Person-to-person Networking Services – Classmates  Trust Services - Truste

40. Subscription Model  Voluntary Contributor Model - WCPE.org  Knowledge Networks – AllExperts  Internet Service Provider - AOL

41. Other Models  Affiliate Model - Amazon.com  Manufacturer Model – Dell  Utility Model - Slashdot

42. Three Different Business Models

44. e-Bay is #1  e-Bay is the #1 in sales. (12)  $1.1 billion in revenues in 2002  Earnings.73 -.75 per share.  Brokerage model / Auction Broker / Transaction Broker.

45. Holiday Strategy  Printed Catalogs in 2001  Amazon.com is copying the idea.  Bidders wait to find out if they won, e- Bay instituted a “buy it now” feature.  Also advertised on AOL Time Warner cable and network outlets to promote their site for holiday gifts. (13)

47. Amazon.com is # 2  Amazon.com is # 2 with Online sales to U.S. consumers estimated between 1.7 – 1.9 billion. (14)  Amazon made a profit for the first time, in the last quarter. It has not made a profit for a fiscal year.  Merchant Model / Virtual Merchant

48. Product Offering  Free electronic greeting cards  On-line auctions  Millions of books, CD’s, videos, DVD’s,  Toys and games  Electronics  Kitchenware  Computers and more (15)

49. Holiday Strategy  Free Shipping

51. Quixtar.com is # 7  400-450 million in sales in the U.S. (16)  Privately Held  Believed to be profitable.  No marketing expenses  Company world-wide sales for fiscal 2002 where $4.5 billion. (17)  Unique Merchant Model – could be Virtual Merchant / Catalog Merchant

52.  Amway - Person-to-person multilevel marketing.  In business since 1959  Manufacture items for nutrition, wellness, beauty and home products. Vitamins, food supplements and cosmetics are among the company's leading global brands.  Manufacturers pay to have products sold.  Order a car direct from the manufacturer delivered to the nearest dealership.  Bass Pro, Chevrolet, Ford, IBM, are just a few companies that allow direct selling from Quixtar.

53. Pay to Use and Earn  Pay to use this site.  IBO to purchase from this site.  Earn bonuses or cash based on product sales.  Currently 3.3 million distributors that teach their people how to shop the site.  Infrequent catalog distribution.

54. Could other models be used to describe this e-tailer? Which models?

55. e-Commerce: Steps to Success Gain Trust PersonalizationMulti-channeling

56. Gaining Trust Online 1 Why don’t consumers trust cyberspace? –No close physical presence Incomplete, ambiguous physical location No people to talk to Reputation, size, and background unknown –History of security and privacy problems Privacy invasion and abuse of customer information –Potential for misrepresentation and fraud “On the Internet nobody knows that you are a dog”

57. How to gain trust online: –Similar backgrounds Translate into customer’s language References regarding adherence to local regulations and business practices Promotional campaigns to stimulate repeat business –Personalization Photos and video clips of store owners Order confirmation Stronger product warranties Customer support –Reputation Trust can be transferred – link site to other reputable sites Easier to obtain when part of a large chain

58. Level of Trust Online 2 Financing/banking has successfully gained trust online, while other uses have declined in overall trust. 3

59. The Personal Touch 4 Benefits: –Forms a relationship with the customer –Increases trust –Increases sales and repeat business Difficulties: –Gathering data –Analyzing data –Utilizing data –Expense

60. Virtual 3D models – Lands’ End Live chat feature – Lands’ End E-mail reminders – Drugstore.com Suggestions for visitors – American Greetings and 1-800-Flowers.com One-click shopping – Amazon.com Records of previous purchases – Office Depot Smart recommendation engines – Amazon.com 6 Personalization on the Web 5

61. Multi-channeling The Future of E-Commerce?

62. The Channels Web Site –Click and Mortar Store Brick and Mortar Store Catalog The more channels a customer uses, the more valuable they are to a business. 7 (e.g., JC Penney found their 3- channel customers are worth $1000/year; 2-channel customers $700/year; 1-channel customers only $300/year.)

63. The New Customer 8 Customers want old-fashioned service with all the new tools and convenience According to Brylane e-commerce, web sites have to “Sail the Seven C’s” “You must Combine Customized Content, Community and Commerce to provide Control and Convenience.”

64. Benefits of Multi-Channel Integration 9 Capture sales regardless of channel Build and strengthen customer loyalty Improve direct marketing efforts Seamless service experience Improved demand planning and product distribution Increased revenue and gross margin

65. Disadvantages of Multi- Channeling 9 Costs (specialty or medium-sized department store) –Brick and mortar costs range from an average of $8 to $28 million for startup and can expect to break even in about two years –E-commerce sites cost $73 million to $1.2 billion break-even volume –May not generate positive returns quickly May distract from core business Active shoppers may prove to be a liability 10 –More deal driven –Look for costly site features such as live help

66. Tier 1 - Multi-Channel Functionality – Low Risk 9 Accept returns in physical store without exception Offer store pickups Accept retail store credit card online Provide basic customer service –Frequently asked questions, how-to guides, warranty information, etc. Retail store locator information Coordinate logo, information, graphics, etc. Consistent messaging across all channels Use e-mail campaigns to reinforce marketing efforts along with direct mail, billing inserts, and other promotional advertising

67. Tier 2 – Multi-Channel Functionality – Some Risk 9 Install in-store kiosks for online ordering Integrate loyalty and registry programs Implement ERMS (e-mail response management system)

68. Tier 3 – Multi-Channel Functionality – Substantial Risk 9 Web-enable point of sale (POS) systems to bring the Internet into the store (very expensive) Use hand-held/wireless devices process web/store orders. Implement “guided merchandising” – use customer relationship information and blend with product descriptions and merchandising rules

69. Multi-Channel Leaders 9 Office Supply Retailers –Office Depot –OfficeMax –Staples Consumer Electronic Retailers –Circuit City –Best Buy –CompUSA Others –Department Stores-Sears, JC Penney –Pharmacies-Walgreens –Discount Stores – WalMart, K-Mart, Target

70. Multi-Channel Challenges 8 Plan promotions as a single company with multiple channels, not separately Integrate online into offline –Promote web benefits and URLs in all communications Promote offline into online –Mention in-store promotions, store locators –Provide catalog requests Pay attention to time-sensitivity –Just because e-mails can be sent quickly, this does not guarantee that your target market will be accessed immediately or that it will even be read at all.

71. Keys to Multi-Channel Success 9 Integrate in stages Evaluate the organizational impact Implement the right multi-channel approach for your business Get the organization ready –Collect customer data – determine target customers –Focus on customer incentives Pricing Return policies Support

72. Most Popular Web Sites 11 Nielsen Net Ratings for Week Ending 10/13 Top Sites Overall:

73. Most Popular Web Sites 11 SportsEntertainmentMusicMovieTVNews

74. Sources for Demographics 1. Global Internet Statistics (by Language) www.global- research.biz/globstats/index.php3 (9/30/02) www.global- research.biz/globstats/index.php3www.global- research.biz/globstats/index.php3 2. Saunders, Christopher, “Latinos Outpace Other Groups’ On-line growth www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1 428231,00.html 10/20/02. www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1 428231,00.html www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1 428231,00.html 3. Greenspan, Robyn, “High-Speed Connects High-Income Homeswww.cyberatlas.internet.com/markets/article/0,,10099_1467471,0 0.html9/20/02. www.cyberatlas.internet.com/markets/article/0,,10099_1467471,0 0.htmlwww.cyberatlas.internet.com/markets/article/0,,10099_1467471,0 0.html 4. Cyberatlas staff, “Traffic Patterns for August 2002” www.cyberatlas.internet.com/big picture.com (9/12/02). www.cyberatlas.internet.com/big picture.com www.cyberatlas.internet.com/big picture.com 5. Saunders, Christopher, “Moms, Hispanics Increasing Web Use www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1 041581 (05/08/02). www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1 041581 www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1 041581 6. Greenspan, Robyn, American Surfers Keep It Simple www.cyberatlas.internet.com/big_picture/geographics/article/0,,5901_146 6661.html 9/19/02 www.cyberatlas.internet.com/big_picture/geographics/article/0,,5901_146 6661.html www.cyberatlas.internet.com/big_picture/geographics/article/0,,5901_146 6661.html

75. Demographics Cont. 7. Greenspan, Robyn, “Consumers Rank Trust Above Low” www.cyberatlas.internet.com/marketing/retailing/article/0,60611014831.html 4/23/02. www.cyberatlas.internet.com/marketing/retailing/article/0,60611014831.html 8. Staff, “Spam poses threat to privacy” BBC News World Edition, Technoligies 10/16/02 9. Greg Sandavol, “Failed dot-coms may be selling your private information” www.news.com/2100-1017-242649.html 06/29/00 www.news.com/2100-1017-242649.html 10. U.S. Commerce www.uscomerce.gov 10/20/02 www.uscomerce.gov

76. Sources for the Second Phase 1. LeClaire, Jennifer, “Phase Two for E-Commerce”, E-Commerce Times 8.1 (2002), 26 Oct 2002, http://www.ecommercetimes.com/perl/story/18840.html http://www.ecommercetimes.com/perl/story/18840.html 2. LeClaire, Jennifer, “Phase Two for E-Commerce”, E-Commerce Times 8.1 (2002), 26 Oct 2002, http://www.ecommercetimes.com/perl/story/18840.html http://www.ecommercetimes.com/perl/story/18840.html 3. LeClaire, Jennifer, “Phase Two for E-Commerce”, E-Commerce Times 8.1 (2002), 26 Oct 2002, http://www.ecommercetimes.com/perl/story/18840.html http://www.ecommercetimes.com/perl/story/18840.html 4. Martin, Mike, “The Seven Habits of Highly Effective Web Sites”, CRM Daily.com, 9.3 (2002), 26 Aug. 2002, http://www.crmdaily.com/perl/story/19270.html http://www.crmdaily.com/perl/story/19270.html 5. Martin, Mike, “The Seven Habits of Highly Effective Web Sites”, CRM Daily.com, 9.3 (2002), 26 Aug. 2002, http://www.crmdaily.com/perl/story/19270.html http://www.crmdaily.com/perl/story/19270.html

77. Phase Two Cont. 6. Martin, Mike, “The Seven Habits of Highly Effective Web Sites”, CRM Daily.com, 9.3 (2002), 26 Aug. 2002, http://www.crmdaily.com/perl/story/19270.html http://www.crmdaily.com/perl/story/19270.html 7. Regan, Keith, “ Five E-Commerce Trends to Watch”. E-Commerce Times, 3.3 (2002), 26 Aug 2002, http://www.ecommercetimes.com/perl/story/16967.html http://www.ecommercetimes.com/perl/story/16967.html 8. Regan, Keith, “ Five E-Commerce Trends to Watch”. E-Commerce Times, 3.3 (2002), 26 Aug 2002, http://www.ecommercetimes.com/perl/story/16967.html http://www.ecommercetimes.com/perl/story/16967.html 9. Regan, Keith, “ Five E-Commerce Trends to Watch”. E-Commerce Times, 3.3 (2002), 26 Aug 2002, http://www.ecommercetimes.com/perl/story/16967.html 10. Rappa, Michael, “ Business Models on the Web” Managing the Digital Enterprise, 27 Aug 2002, http://www.digitalenterprise.org/models/models_text.html http://www.ecommercetimes.com/perl/story/16967.html http://www.digitalenterprise.org/models/models_text.html http://www.ecommercetimes.com/perl/story/16967.html http://www.digitalenterprise.org/models/models_text.html 11. Rappa, Michael, “ Business Models on the Web” Managing the Digital Enterprise, 27 Aug 2002, http://.digitalenterprise.org/models/models_text.html http://.digitalenterprise.org/models/models_text.html

78. Phase Two Cont. 12. “Top 100 Internet Retailers”, Russell Reynolds Associates, 7.6 (2002), 24 Aug 2002, http://www.stores.org/archives/ootop100int_.html http://www.stores.org/archives/ootop100int_.html 13. Saunders, Christopher, “e-Bay Taps Catalogs for Holiday Push” Ecommerce News, 11.27 (2001), 26 Aug 2002, http://ecommerce.internet.com/news/news/print/0,,10375_929661,0... 14. “Top 100 Internet Retailers”, Russell Reynolds Associates, 7.6 (2002), 24 Aug 2002, http://www.stores.org/archives/ootop100int_.html http://ecommerce.internet.com/news/news/print/0,,10375_929661,0http://www.stores.org/archives/ootop100int_.html http://ecommerce.internet.com/news/news/print/0,,10375_929661,0http://www.stores.org/archives/ootop100int_.html 15. “About Amazon.com”, Amazon.com, 27 Aug 2002, http://www.amazon.com/exec/obidos/subst/misc/company-info.html http://www.amazon.com/exec/obidos/subst/misc/company-info.html 16. “Top 100 Internet Retailers”, Russell Reynolds Associates, 7.6 (2002), 24 Aug 2002, http://www.stores.org/archives/ootop100int_.html http://www.stores.org/archives/ootop100int_.html 17. “Alticor Inc”, 26 Aug 2002, http://www.alticor.com/news/pop_alticor_fact.html http://www.alticor.com/news/pop_alticor_fact.html

79. 1.Jarvenpaa, S., and Grazioli, S. “Surfing among sharks: how to gain trust in cyberspace”Mastering Informational Management. Prentice Hall, London, 2000. pgs 197-201. 2.Greenspan, Robyn. “More Users, Less Trust”. http://www.cyberatlas.internet.com/markets/retailing/print/0,,6061_148 3061,00.html, 10/24/2002. http://www.cyberatlas.internet.com/markets/retailing/print/0,,6061_148 3061,00.html 3.Taylor, Charlie. “Banking on success” http://www.nua.ie/surveys/analysis/weekly_editorial/archives/issue1no 316.html, 10/30/2002. http://www.nua.ie/surveys/analysis/weekly_editorial/archives/issue1no 316.html 4.Walsh, John. “Websites with a personal touch” Mastering Informational Management. Prentice Hall, London, 2000. pgs 201-204. 5.Regan, Keith. “The Best of E-Commerce” E-Commerce Times http://www.ecommercetimes.com/perl/story/19323.html, 11/5/2002. http://www.ecommercetimes.com/perl/story/19323.html 6.Hirsh, L, and LeClaire, J. “Kings of Repeat E-Business” E-Commerce Times http://www.crmdaily.com/perl/printer/19137/, 10/30/2002.http://www.crmdaily.com/perl/printer/19137/ Sources Step to Success

80. 7.Bartram, Michelle. “Multi-Channel Secrets to Success” http://www.webpractices.com/slideshows/Multichannel%20Success /multi_2Tech.pdf, 10/30/2002. http://www.webpractices.com/slideshows/Multichannel%20Success /multi_2Tech.pdf 8.Bartram, Michelle. “Multi-Channel Secrets to Success” http://www.webpractices.com/slideshows/Multichannel%20Success /multi_2Tech.pdf, 10/31/2002. http://www.webpractices.com/slideshows/Multichannel%20Success /multi_2Tech.pdf 9.“Multi-Channel Integration, A Retailers Perspective” Escalate http://www.escalate.com/whitepaper3.html, 10/31/2002. http://www.escalate.com/whitepaper3.html 10.Cox, Beth. “Are Multi-Channel Shoppers a Liability?” http://www.internetnews.com/ec-news/article.php/1442631, 11/5/2002. http://www.internetnews.com/ec-news/article.php/1442631 11.Internet: Nielsen Net Ratings: Nielsen Net Ratings for Week Ending 10/13. http://alliance.zap2it.com/zap2it/zp_int_nielsen_net_ratings/1,1648, 173__,00.html, 10/30/2002. http://alliance.zap2it.com/zap2it/zp_int_nielsen_net_ratings/1,1648, 173__,00.html Step for Success Cont.