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Compiled: Er. Ayush Shrestha

Introduction to E-Commerce
PRINCIPLES OF MANAGEMENT :

Compiled By: Er. Ayush Shrestha [ 9841515311 ]

Lesson 3: EC Retailing in ecommerce
Products and services

Compiled: Er. Ayush Shrestha

Topics 4
3 Retailing in EC: Products and services
1. Electronic Retailing and the B2C market
2. E-tailing business model
3. Travel and tourism services online
4. Employment placement and the job market
5. Real estate, insurance, and stock trading online
6. Banking and personal finance online
7. On Demand Delivery Services
8. Online delivery of digital products, entertainment, and media
9. Issues in E-tailing

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3.1 Electronic Retailing and the B2C market 5
Electronic Retailing (e-tailing)
• Retailer is a sales intermediaries, a seller that operates between manufactures
and consumers.
• E-catalogs sales free a retailer from the need for physical store to distribute
products.
E-retailing (e-tailing)
• Retailing conducted online, over the Internet.
• E-tailing makes it possible for a manufacture to sell directly to consumers, cutting
out the intermediaries.
e-tailers
• Retailers who sell over the Internet
• Amazon.com is the most recognize e-tailer worldwide

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Size and Growth of the B2C Market
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Reported amounts of online sales deviate substantially based on how the numbers are derived
• Annual online 2004 sales were estimated to be over $70 billion
• The average online shopper spent over $350 per quarter
• Forrester Research estimates that e-tailing will reach $316 billion by 2010

According to eMarker (2006)

• e-tailing will increase by more than 23% in 2007
• Estimation of etailing (2007): $180 billions
• 106 millions of users purchased online
• Daily average: 70 millions go online
• 140 millions send daily e-mails
• 5 millions write blogs
• 4 millions share music on peer-2-peer network (e.g. lime wire)
• 3 millions use internet to rate a person (???), product, or service
• 106 millions of people who have purchased an item online Compiled: Er. Ayush Shrestha
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What Sells Well on the Internet?
 Computer hardware and software  Toys
 Consumer electronics  Health and beauty
 Office supplies  Apparel and clothing
 Sporting goods  Jewelry
 Books and music  Cars
 Services
 Others

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Characteristics of Successful E-Tailing
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Retailer and e-tailer success comes from offering quality goods at good prices, coupled with
excellent services.

Goods with the following characteristics are expected to facilitate higher sales volumes:

 High brand recognition

 A guarantee provided by highly reliable or well-known vendors
 Digitized format
 Relatively inexpensive items
 Frequently purchased items
 Commodities with standard specifications
 Well-known packaged items that cannot be opened even in a traditional store

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3.2 E-tailing business model
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A. Classification by Distribution Channel
1. Mail-order retailers that go online
2. Direct marketing from manufacturers
3. Pure-play e-tailers
4. Click-and-mortar retailers
5. Internet (online) malls

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Direct marketing
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 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

 By direct marketing, product delivery time is decreased, manufactures can build closer
relationship with customers, order accuracy is increased, and order can be placed quickly.

virtual (pure-play) e-tailers

 Firms that sell directly to consumers over the Internet without maintaining a physical sales
channel

 Virtual e-tailers have the advantages of low overhead cost and streamlines process

Click-and-mortar retailers

 Brick-and-mortar retailers that offer a transactional Web site from which to conduct business

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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)

Retailing in Online Malls

Referring Directories
Malls with Shared Services

Representative B2C Services

Postal Services
Services and Products for Adults
Wedding Channels
Gift Registries

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B. E-Tailing Business Models: Classification by Revenue Model 12

There are many models, e.g.

• Product sales models
– Charge customers directly for products or services
• Subscription models
– Charge monthly or annual subscription fee for service
• Transaction-fee models
– Charge service fee based on the level of transaction offered
• Advertising-supported models
– Charge fee to advertisers instead of customers
• Sponsorship models
– Companies sponsor the business through donations (usually supplemental income)

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3.3 Travel and tourism services online 13

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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Services provided:
• Outlet for travel accessories and books
• Information and bookings
• Experts’ opinions
• Travel tips
• Major international and travel news
• Electronic Travel magazine
• Driving maps and directions
• Fare comparisons
• Chat rooms
• Currency conversion calculators
• Frequent flier deals
• Fare tracker
• Online travel auctions
• Worldwide business and places locator

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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
• Governments
• Private organizations (Healthcenter.com)

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Wireless services 16
• Customers with WAP cell phones can check their flight status, update frequent flyer miles,
and book flights

Direct marketing
• Based on e-ticket companies can build customer profiles and target specific customers
with tailored offers

Alliances and consortia

• The biggest alliance is between KLM and Air France, Star Alliance is also one o the largest
• Objective: reduce purchasing costs and increase sales or

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Benefits
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• Free information is tremendous (great)
• 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

Impact
• The Internet may be contributing to a sharp reduction in the number of travel agents
• It has also driven the rise of intermediaries—third- party online sellers and portals provide
price comparisons and a range of other value-adding services for the consumer

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3.4 Employment placement and the job market 20
Traditionally, job matching has been done in several ways:
• Ads in classified sections of newspapers
• Corporate recruiters
• Commercial employment agencies

o The job market has now moved online.

o The online job market connects individuals who are looking for a job with employers who are
looking for employees with specific skills

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Compiled: Er. Ayush Shrestha

THE INTERNET JOB MARKET 22

The following are parties use the internet job market:

• Job seekers
• Employers seeking employees
• Job agencies
• Government agencies and institutions

The Internet is a global online portal for job seekers

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Compiled: Er. Ayush Shrestha

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Limitations of the Electronic Job Market
• The biggest limitation of the online job market is the that many people do not use the Internet.
• Finding candidates online is complicated due to the large number of resumes available online
• Security and privacy
• High turnover costs for employers by accelerating employees’ movement to better jobs

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Intelligent Agents in the Electronic Job Market
• Intelligent agents for job seekers 25
• Intelligent agents for employers

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3.5 Real estate, insurance, and stock trading online 29

E-commerce and the Internet are slowly but surely having an ever increasing impact on the real
estate industry

Real Estate Applications

• Advice to consumers on buying or selling a home
• Commercial real estate listings
• Listings of residential real estate in multiple databases
• The National Association of Realtors (realtor.com) has links to house listings in all major cities
• Maps are available
• Information on current mortgage rates
• Mortgage brokers can pass loan applications over the Internet and receive bids from
lenders who want to issue mortgages

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Real Estate Applications
 Online lenders can tentatively approve loans online

 Automated closing of real estate transactions

 Property management companies (residential, commercial, and industrial)

are using the Internet for many applications ranging from security to
communication with tenants
 Sites for persons who want to sell their homes privately, without using a real
estate agent
 Rental properties are listed

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Insurance Online

 An increasing number of companies use the Internet to offer standard

insurance policies (auto, home, life, or health) at a substantial discount

 Third-party aggregators offer free comparisons of available policies

 Several large insurance and risk-management companies offer

comprehensive insurance contracts online

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Compiled: Er. Ayush Shrestha

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Investment Information Online
 Current financial news
 Municipal bond prices
 Many tools are available to help investors in the bond market
 Free “guru” (expert) advice
 Stock screening and evaluation tools
 Articles from the Journal of the American Association of Individual
Investors
 Schwab Trader encourages consumers to practice trading strategies
 The latest on funding and pricing of IPOs
 Earnings estimates

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3.6 Banking and personal finance online 36

electronic (online) banking (e-banking)

Various banking activities conducted from home or the road using an Internet
connection; also known as cyberbanking, virtual banking, online banking, and home banking

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Compiled: Er. Ayush Shrestha

 International and Multiple-Currency Banking 38
Some international retail purchasing can be done by providing a credit card
number, other transactions may require international banking support

Implementation Issues in Online Financial Transactions

• Securing financial transactions
• Access to banks’ intranets by outsiders
• Using imaging systems
• Pricing online versus off-line services
• Risks

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Personal Finance Online
Online Billing and Bill Paying
• Automatic transfer of mortgage payments
• Automatic transfer of funds to pay monthly utility bills
• Paying bills from online banking accounts.
• Merchant-to-customer direct billing
• Using an intermediary for bill consolidation
• Person-to-person direct payment
• Pay bills at bank kiosks
Taxes

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3.7 On Demand Delivery Services and and E-grocers 40

 on-demand delivery service

Express delivery made fairly quickly after an online order is received

 e-grocer

A grocer that takes orders online and provides deliveries on a daily or other regular
schedule or within a very short period of time

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3.8 Online delivery of digital products, entertainment, and media 41

 Certain goods, (software, music, or news stories) may be distributed in a

physical form or they may be digitized and delivered over the Internet

 For sellers, the costs associated with the manufacture, storage, and
distribution of physical products can be enormous

 Inventory management also becomes a critical cost issue, and so does

delivery and distribution

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Compiled: Er. Ayush Shrestha

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 Online Entertainment
 Examples of online entertainment
 Web browsing
 Internet gaming
 Fantasy sports games
 Single and multiplayer games
 Adult entertainment
 Card games
 Social networking sites
 Participatory Web sites
 Reading
 Live events

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  Entertainment-related services
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 Event ticketing

 Restaurants

 Information retrieval

 Retrieval of audio and video entertainment

 Developments in the Delivery of Digital Products

 CD customization sites

 The disintermediation of traditional print media

 Digital delivery may replace or enhance traditional delivery methods for various
types of digital content

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3.9 Issues in E-tailing 45
 disintermediation
The removal of organizations or business process layers responsible
for certain intermediary steps in a given supply chain
 reintermediation
The process whereby intermediaries (either new ones or those that
had been disintermediated) take on new intermediary roles

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Compiled: Er. Ayush Shrestha

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 cybermediation (electronic intermediation)

The 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

 Unbundling

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 channel conflict 48
Situation in which an online marketing channel upsets the
traditional channels due to real or perceived damage from
competition

 Determining the Right Price

 Personalization

 Fraud and Other Illegal Activities

 How to Make Customers Happy

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Managerial Issues

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1. What should our strategic position be?
2. Are we financially viable?
3. How should we introduce wireless shopping?
4. Are there international legal issues regarding online recruiting?
5. Do we have ethics and privacy guidelines?
6. How will intermediaries act in cyberspace?
7. Should we set up alliances?

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Assignment
Deadline: 17th January 2019

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1. What are the limitations of e-tailing? Where is e-tailing going?
2. How should we introduce wireless shopping?
3. Do we have ethics and privacy guidelines?
4. How will intermediaries act in cyberspace?
5. Should we try to capitalize on social networks?
6. How should we manage multichannel marketing to avoid channel and/or price conflicts?
7. What are the major potential limitations of the growth of B2C EC?

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Thank You

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Any Question?

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