1. Chapter 5 Consumer-Focused E-Commerce

2. Copyright © 2003, Addison-Wesley The Dot-Com Revolution Internet growing exponentially Exploding potential marketplace Small slice valuable if pie big enough Improve customer service Base for comparison – call centers Hype

3. Copyright © 2003, Addison-Wesley Cost of Entry Bricks-and-mortar presence Real estate Sales support equipment E-retailer or e-tailer Open standard infrastructure Virtual “storefront” Low-cost real estate

4. Copyright © 2003, Addison-Wesley Funding Sources Angels Wealthy individuals, relatives, etc. Seed money for equity Venture capitalists Investing companies Seed money for equity Customer investment Computer and software ISP account Data entry

5. Copyright © 2003, Addison-Wesley The Hook A means of attracting customers Unique product or service Low price Convenience Customer services Free stuff A good hook, by itself, is not enough

6. Copyright © 2003, Addison-Wesley Figure 5.1 Some sites offer free services. Note buttons to left of Yahoo!

7. Copyright © 2003, Addison-Wesley The Race To Be First Accelerating rate of change Time to market Cycle time Delays mean lost sales opportunities First mover status The driving motivation for many dot-coms Just be first

8. Copyright © 2003, Addison-Wesley Back to Business Basics Brand name still counts Amazon, Barnes & Noble, and Borders Bricks-and-clicks strategy Brand name Implies stability Reduces perceived risk of fraud Minimizes returns hassle Bricks-and clicks business partners

9. Copyright © 2003, Addison-Wesley Figure 5.2 Maytag on the Sears website. Note: This page was accessed through Sears.com

10. Copyright © 2003, Addison-Wesley Figure 5.3 The dot-com advertisers from Super Bowl XXXIV. How many do you recognize? Speed branding doesn’t work!

11. Copyright © 2003, Addison-Wesley Finding Potential Customers Advertising Targeted e-mal Untargeted e-mail Risk – spam Search engine Target – be in top 20 following search Metatags

12. Copyright © 2003, Addison-Wesley Figure 5.4 The metatag entries for a textbook’s Web page.

13. Copyright © 2003, Addison-Wesley Creating Repeat Customers Window shoppers generate zero revenue Good Web site necessary Good Web site not sufficient Must offer the customer value Personalized catalog Customer relationship management

14. Copyright © 2003, Addison-Wesley Figure 5.5 A personalized Web page. No, this customer was not recently married. CRM software does not always work as advertised.

15. Copyright © 2003, Addison-Wesley Customer Relationship Management (CRM) Customer acquisition/retention tool Sales and marketing support Data collected at all contact points Stored in data warehouse Data analysis and data mining Ultimate objective is lock-in Vested interest not to change Interconnection is a dangerous form of lock-in

16. Copyright © 2003, Addison-Wesley Sustainable Competitive Advantage B2C front-end easy to copy Efficiency gains easier to protect Value chain integration Supply chain integration Customization One-to-one relationship marketing CRM Risk – privacy violations

17. Copyright © 2003, Addison-Wesley Figure 5.6 B2C, intra-business, and B2B are pieces of the same puzzle. B2C at down- stream end of value chain Sales and purchasing link two value chains across shared supply chain

18. Copyright © 2003, Addison-Wesley B2C Revenue Sources Selling digital products Software, music, images, electronic games Immune from diminishing returns Low distribution cost Danger – protecting intellectual property Selling physical products Intense price competition Cost-control is key to profitability

19. Copyright © 2003, Addison-Wesley Figure 5.7 Amazon’s virtual warehouse exists only in cyberspace. Significant reduction in operating costs

20. Copyright © 2003, Addison-Wesley Selling services Information is digital Fees Per transaction – E-Trade Percentage fee – eBay, Expedia Arrange physical delivery – FTD

21. Copyright © 2003, Addison-Wesley Figure 5.8 A local florist’s Web site.

22. Copyright © 2003, Addison-Wesley Selling Advertising Ad types Banner ad – same window as page Pop-up ad – new window Pop-under ad – hidden under page Pop-off ad – partly off page; must move Few good efficiency measures Pricing models include CPM Real potential is market segmentation

23. Copyright © 2003, Addison-Wesley Figure 5.9 A banner ad. This banner advertises Nanotech

24. Copyright © 2003, Addison-Wesley Figure 5.10 Measuring online advertising. These measures are largely ineffective

25. Copyright © 2003, Addison-Wesley Usage Charges and Subscription Fees Free content is becoming rare Giving stuff away  debt, not profit Evolving model may resemble TV Free, over-the-air channels Fee for basic cable service Additional fee for premium services Per-event fee for pay-per-view

26. Copyright © 2003, Addison-Wesley Not-for-Profit Web Sites Virtual communities Single focus Information, support, interaction Health support groups Government-to-consumer (G2C) sites Information Services

27. Copyright © 2003, Addison-Wesley Figure 5.11 The President’s Web site. Note: The image on this slide will almost certainly change

28. Copyright © 2003, Addison-Wesley Figure 5.12 Intermediary services.

29. Copyright © 2003, Addison-Wesley Payment Services Credit cards Visa, MasterCard, AE Escrow services Internet bill presentment and payment Service provider consolidation model Customer consolidation model E-cash and digital cash Pay for micro-transactions

30. Copyright © 2003, Addison-Wesley Figure 5.13 The Visa network.

31. Copyright © 2003, Addison-Wesley Information Services Objective Provide enough value to capture visitors Higher advertising fees More usage fees Search engines – Google Portals – AOL, MSN, Yahoo Bots, such as shopping bots

32. Copyright © 2003, Addison-Wesley Figure 5.14 Shopping bot parameters.

33. Copyright © 2003, Addison-Wesley Figure 5.15 Shopping bot results.