E-RETAILING

CHAPTER 1

WHAT IS E-RETAILING?

• E-RETAILING=ELECTRONIC RETAILING
The e-retailing (less frequently; e-Retailing, e-Tailing, etc.) is the concept
of selling of retail goods using electronic media, in particular, the internet.
The vocabulary electronic retailing, that used in internet discussions as
early as 1995, the term seems an almost inevitable addition to e-mail, e-
business and e-commerce, etc. e-retailing is synonymous with business-
to- consumer (B2C) transaction model of e-commerce.

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 Electronic Retailing

• Sale of goods and services via internet or other

electronic channels for personal or household use
by consumers.
• Retailing conducted online, over the Internet.
Usually B2C e-commerce concerned with
businesses selling products to customers.
• Electronic retailing is the direct sale (B2C) through
electronic storefronts or in electronic malls, usually
designed around an electronic catalog format online.

E-tailers

Retailers who sell over the Internet.

•Manufacturer sells directly to the
customer, cutting out the intermediary
•Catalog sales free a retailer from the
need for a physical store.

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 What Sells Well on the Internet?
• Computers and • Health and beauty
electronics • Entertainment
• Sporting goods • Apparel
• Office supplies • Cars
• Books and music • Services
• Toys • Others

Chapter 3 Prentice Hall 5

Electronic Retailing Channels

•In electronic retailing, there are several

selling channels:
•Solo electronic storefronts
•Electronic malls (or cybermalls)
•Shopping portals

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 PROCESS OF E-RETAILING

— Consumers find a product of interest

— Shopping cart software used

— A "checkout" process followed

— Consumers allowed to sign up for a permanent

online account

— The consumer receives e-mail confirmation

MODES OF PAYMENT

CREDIT
CARD

DEBIT
CARD

PAYPAL

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 PRODUCT DELIVERY

DOWNLOAD

DELIVERY DROP
SHIPPING WAYS SHIPPING

IN-STORE
PICK UP

EVOLUTION

• It is the modernization of traditional retailing.

• It has many advantages over traditional retailing.

• Internet has played a vital role in making e-retailing

such a big hit.

• Is spreading around the world on a fast pace

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 EVOLUTION

Although e-retailing is an independent business

model with certain specific constituents like; trust
model, electronic transaction process, etc, but in
reality it is a subset of e- commerce by nature.

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E-RETAILING IN PRACTICE

• Sales of goods and services among the

businesses.
B2B • Eg- ChemConnect’s

• Retailing products and services to individual

B2C shoppers
• Eg- Amazon.com, Barnesandnoble.com

• Consumers selling directly to consumers

C2C • Eg- ebay.

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 B2B Models

Sell-side model Buy-side model Exchanges

One company sells An organization Marketplaces in
to many
(usually large) which many
electronically.
buys from many buyers and
vendors. sellers meet.
(one-to-many)
(many-to-one) (many-to-many)

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B2B Model Types

Sell-side model Buy-side model Exchanges

Sell-side Reverse auctions Vertical Distributors
marketplace
Vertical Exchanges
Buyer’s Internal
Forward auctions Marketplace Horizontal
Distributors

Group Purchasing Functional

Exchanges

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 B2C e-Commerce
Business-to-consumer EC can be done in
two major ways:

1. Companies sell direct to the customer.

§ Such direct marketing has the advantage of
personalization and customization.
2. Companies use an intermediary.
§ There are two types of online infomediaries:
1. Pure online e-tailers
2. “Links on other websites”

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AMAZON

ØB2C type of e-retailing which deals with sales of

books, music CDs, DVDs, software, kitchen items etc
ØAmazon tracks what its customers purchase and then
uses that information to satisfy and meet customer
expectations
ØAmazon’s advantage lies in the fact that it lists huge
catalogue of titles, and is much easier to search among
them online

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E-BAY

• E bay is C2C type of e-retailing

• Buyers can bid on items of interest and all eBay
users to browse through listed items in a fully
automated way.
• When an item is listed on eBay a nonrefundable
Insertion Fee is charged.
• A fee is charged for additional listing options to
promote the item.
• A Final Value (final sale price) fee is charged at the
end of the seller's auction.

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STATISTICS OF ONLINE BUSINESS

COLLEGE
STUDENT(18-24)
21% YOUNG MEN(24-
6%
11% 35)
MEN(36-58)

15% WORKING
33% WOMEN
HOSEWIVES

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 FUTURE PROSPECTS

ØThe report, part of the University of Michigan’s

American Customer Satisfaction Index shows,
ranks consumers’ satisfaction with e-retailing at 83
out of 100.
ØCertain improvements which need to be made are:
• Infrastructure level
• Extensive technology development
• Better supply chain logistics
• Innovative business model to attract customer

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M-Commerce

• M-commerce (mobile commerce) refers to the conduct of e-

commerce via wireless devices.

• Advantages of M-Commerce
• Mobility
• Reachability
• Ubiquity
• Convenience
• Location of products and services
• L-commerce

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 Essentials of E-Retailing

• Electronic retailing or e-tailing, as it is generally being called now, is

the direct sale of products, information and service through virtual
stores on the web, usually designed around an electronic catalogue
format and auction sites.
• There are thousands of storefronts or e-commerce sites on the
Internet that are extensions of existing retailers or start-ups.
• Penetration of computers and spread of the Internet has given rise
to many new forms of businesses, such as business process
outsourcing, call centers, based customer relationship management,
remotely managed educational and medical services and of course,
electronic retailing.

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Essentials of E-Retailing

There are certain essential ingredients for an electronic retailing

business to be successful. One must consider these components
well in advance before setting up an electronic storefront. These
essential components are:

1. Attractive business-to-consumer (B2C) e-commerce portal

2. Right revenue model

3. Penetration of the Internet

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 Essentials of E-Retailing

• E-Catalog It is a database of products with prices and

available stock.
• Shopping Cart The customers select their goodies and
fill shopping cart. Finally, as in a real store, at the time
of checkout, the system calculates the price to be paid
for the products.
• A payment gateway Customer makes payments
through his/her credit card or e-cash. The payment
mechanism must be fully secure.

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Support Services in E-Retailing

The electronic retail business requires support services, as a

prerequisite for successful operations. These services are required
to support the business, online or offline, throughout the
complete transaction-processing phases. The following are the
essential support services:

1. Communication backbone

2. Payment mechanism

3. Order fulfillment

4. Logistics

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 USES

— Web Store Front-- Online Catalog

ØUsing the online catalogue, one will be able to
manage online product listing pages, categories
and pricing.
— Business Intelligence- Analytics
ØHelps understand each step taken by potential
customer
ØHelps in increasing revenues and customer
satisfaction

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• E-Marketing-- New Media Tools

Øblogging and conversation management, the business
remains on the top of the vertical.
ØHelps to connect with the audience who are more
difficult to reach via traditional marketing and public
relations.
• Supply Chain Management
Ø Helps in proper shipping of products through proper
channels.
Ø Helps in managing inventories.

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 Advantages
of e-retailing

To To e-
To retailers
consumers retailers

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TO CONSUMERS

• Convenience
• Better information
• Competitive pricing
• Ability to shop 24/7
• Wider product availability
• Customized and personalized information and
buying options
• Easy comparison shopping
• Quick delivery of digital products
• Ability to create a one-on-one relationship with
the Seller

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 TO RETAILERS

• Location is unimportant
• Size does not matter
• Saves on the wages and premises costs
• Reach a larger audience
• Accepts orders 24-hours a day
• More opportunities for
– CRM and micro-marketing

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TO E-RETAILERS

• Global reach
• Better customer service
• Low capital cost
• Mass customization
• More value added services

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 Disadvantages

To consumers To retailers To e-retailers

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FOR CONSUMERS

• Credit card and security worries

• Lack of interaction
• Can’t see or feel the merchandise
• Don’t know how
• Premium charged for delivery
• Difficulties with returning goods for refund

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 FOR RETAILERS

• May lack know-how and technology

• Substantial set-up, investment and ongoing
costs
• Complex logistics of fulfillment
• E-selling less powerful than face-to-face
• Uptake slow for goods selected by taste or smell.
• Legal problems
• Less role for traditional high street retail
expertise
• After-sales care difficulties

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FOR E-RETAILERS

• Your site must be available and operational 24 hours

a day. This may mean employing a night shift of
customer service operators or maintenance staff.
• The Internet market is still only small in comparison
to the traditional market.
• You must be vigilant maintaining your site. Update
offers, prices, specials and products regularly. Check
for errors and working links. Answer queries
promptly.

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 Fraud on the Internet

• Internet Stock Fraud • Buyer Protection is critical to the

• Fraud in Electronic Auctions
• Other Financial Fraud
• e.g. Selling bogus investments
• Federal Trade Commission
• provides a list of 12 scams
most likely to arrive on the net
• e.g. Bulk mail solicitors, Chain
letters, Work-at-home
schemes
success of any commerce, and
especially EC, where buyers do
not see the sellers.
• Seller Protection safeguards
vendors against consumers who
refuse to pay or who pay with bad
checks.

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EC-related Legal Issues

• Domain Name
• Problems arise when several companies compete over a domain name.
• Taxes and Other Fees
• Federal, state, and local authorities are scrambling to figure out how to get a
piece of the revenue created electronically.
• Copyright
• Protecting software and other intangible creations is difficult over the Web.

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 Ethical Issues

• Privacy and Web tracking.

• Privacy issues are related to both customers and
employees.
• The human element.
• The implementation of EC may lead to personnel
dissatisfaction and loss of salespeople’s income
• Disintermediation.
• The use of EC may result in the elimination of a
company’s employees as well as brokers and agents.

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Ethical and Legal Issues

Consumer
Fraud
Supplier
Ecological
Labor
Considerations
Practices

Ethical and Legal

Issues in
Use of Retailing Retail
Customer
Theft
Information

Slotting
Allowances

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