Retailing In Electronic Commerce: Products and Services

Learning Objectives
1. Describe electronic retailing (e-tailing) and its
characteristics.
2. Classify the primary e-tailing business models.
3. Describe how online travel and tourism services
operate and their impact on the industry.
4. Discuss the online employment market, including
its participants, benefits, and limitations.
5. Describe online real estate services.
6. Discuss online stock-trading services.

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Learning Objectives
7. Discuss cyberbanking and online personal finance.
8. Describe on-demand delivery of groceries and
similar perishable products and services related to
them.
9. Describe the delivery of digital products and online
entertainment.
10. Discuss various online consumer aids, including
comparison-shopping aids.
11. Describe disintermediation and other B2C strategic
issues.
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Internet Marketing and B2C Electronic
Retailing
electronic retailing (e-tailing)
Retailing conducted online, over the Internet
e-tailers
Retailers who sell over the Internet (via e-catalogs with fixed
price or via e-auctions)
SIZE AND GROWTH OF THE B2C MARKET (growing
rapidly especially in developing countries; typical statistics that
measure this growth depend on demographics (e.g. gender, age
and country) and consumer behavior e.g. purchasing patterns)
WHAT SELLS WELL ON THE INTERNET
 Developments in E-Commerce: first generation of EC started
with very simple products music, books – easy to ship; second
generation more deals with more complex items: jewelry, furniture,
cars and even services.
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Internet Marketing and B2C Electronic Retailing
CHARACTERISTICS AND ADVANTAGES OF
SUCCESSFUL E-TAILING
 basic principles that apply to physical retailing success also apply to e-
tailing success However e-tailers can offer special services not offered by
retailers . Comparison between retailing and e- tailing table 3.1, P.109
 What make goods more salable online (characteristics):
 Brand name recognition (Dell), product guarantee and return policy
provided by well-known vendor
 digitized format (software, music, e-books etc.)
 Relatively inexpensive items (office supplies)
 Frequently purchased items (cosmetics, books, …)
 Commodities for which physical inspection is not a necessary (CDs, Airline
tickets)
 Well-known packaged items (chocolates, vitamins)
 Advantages of E-Tailing: lower product cost and increased competitive
advantage, reach more customers outside the region, change prices and
catalogues quickly. Textbook pp. 109-110

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E-Tailing Business Models
CLASSIFICATION OF MODELS BY DISTRIBUTION
CHANNEL
 Traditional mail-order retailers that also sell online
 Direct marketing by manufacturers: Dell
 Pure-play e-tailers: sells online only (do not have physical
stores )
 Click-and-mortar retailers (brick-and-click)
 multichannel business model
A business model where a company sells in multiple marketing
channels simultaneously (e.g., both physical and online stores)
 Two types: traditional then went online, online then established
physical storefronts leveraging the brand power.
 Internet (online) malls: large number of independent
storefronts on one website
 Flash sales: In any of the above categories, sellers can offer
steep discounts via an intermediary or directly to the consumers
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E-Tailing Business Models
direct marketing: (mail-order businesses)
direct marketing describes marketing that takes place
without physical stores. Direct marketers take orders
directly from consumers, frequently bypassing
traditional intermediaries. Sellers can be retailers or
manufacturers.

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E-Tailing Business Models
 Direct Sales by Manufacturers (Make-to-order):
Manufacturers are selling directly to customers. It is usually
combined with self-configuration of products (customized,
build to order). The major success factor of this model is the
ability to offer customized products at a reasonable cost.
 Virtual (pure-play) e-tailers

are companies with direct online sales that do not need

physical stores. Virtual e-tailers have the advantage of low
fixed costs. However, one drawback can be a lack of an
efficient order fulfillment system. Can be general-purpose or
specialized e-tailers
 Click-and-mortar retailers and multichanneling
this is probably the most commonly used model of e-tailing
competing with pure play e-tailers. Retailers offer products and
services online as an additional sales channel. This strategy it is not
always successful for large companies. Brick-and-mortar retailers
Retailers who do business in the non-Internet, physical world in
traditional brick-and-mortar stores

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E-Tailing Business Models
Retailing in Online Malls
 Referring Directories: directory of products categories where
consumers are transferred to the store front of the seller
 Malls with Shared Services: consumers find a product, order

and pay for it and arrange for shipment. The hosting mall
provide these services
 Ideally, different products from different shopping stores

should be handled by one shopping cart and paid only once

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E-Tailing Business Models
OTHER B2C MODELS AND SPECIAL RETAILING
B2C SOCIAL SHOPPING: provide consumers with
extensive social context and engagement opportunities
 Flash Deals (deals of the day): large discounts in an
attempt that people will spread the news to their friends
 Online Group Buying: buying in groups to get volume
discounts
 Personalized Event Shopping
 event shopping

A B2C model in which sales are done to meet the needs of

special events (e.g., a wedding, Black Friday).
 private shopping club
A members-only shopping club, where members can buy
goods at large discounts, frequently, for a short period of
time (hours or days). To ensure quality, many clubs by
directly from the manufacturers (bestsecret.com)
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E-Tailing Business Models
Group Gifting Online: a group of friends can
collaborate on gifts for events
location-based e-commerce (l-commerce)
Delivery of e-commerce transactions to individuals in a
specific location, at a specific time
Shopping in Virtual Worlds: dell sells laptops in
SecondLife in Dell’s Island
VIRTUAL VISUAL SHOPPING
use of 3-D technology to make things online look more
realistic

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Online Travel And Tourism (Hospitality) Services
 Competition very intense and has low margin
 Customer loyalty and differences in prices make it difficult to survive
 Best rates and loyalty programs are necessities
 Important trends will drive further the change
 Differentiation based on superior customer services
 The provision of easy search capabilities
 The use of social media
 Characteristics of online travel:
 SERVICES PROVIDED
Similar to the services delivered by traditional agencies (tickets, travel vacations, trains, car rentals, etc.)


 Additional services e.g. travel tips and reviews, fare tracking and experts opinions
 SPECIAL SERVICES ONLINE
 travel bargains (lastminute.com)

 Wireless services: internet access during the flight

 Advanced check-in: print boarding pass or download it one cell phone to be read by security using electronic

reader.
 Direct marketing

 Alliances and consortia: to increase sales and reduce costs

 Use of mobile devices

 Social Travel Networks
 BENEFITS AND LIMITATIONS OF ONLINE TRAVEL SERVICES
 Free information available at any time and any place
 Availability of low prices
 Limitations: Complex trips are sometimes hard to arrange

 CORPORATE TRAVEL: some online travel services provide software tools for corporate planning and booking

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Employment Placement
and the Job Market Online
 Connects individuals who are looking for a job with employers who are
looking for employees with specific skills. Large companies are building
their own career portals on their websites
 Online Job Markets on Social Networks
 86% of recruiters and job seekers use LinkedIn
 Refer to the textbook table 3.3, p.118 traditional versus online job
market
 Global Online Portals for Job Placement
 Virtual Job Fairs
 Advantages of electronic job markets: textbook table
3.4, p. 121
 Limitations
 some people do not use of have Internet access!
 Security and privacy concerns

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Real Estate, Insurance,
and Stock Trading Online
 REAL ESTATE ONLINE
 Zillow, Craigslist, and Other Web 2.0 Real Estate Services
 E-commerce and the Internet are slowly but surely having an ever-increasing impact on
the real estate industry; For example, real estate agents have not been
disintermediated. Home buyers today tend to use both real estate agents and the
Internet.
 INSURANCE ONLINE
 An increasing number of companies use the Internet to offer standard insurance policies,
such as auto, home, life, or health, at a substantial discount, mostly to individuals.
 Third-party aggregators offer free comparisons of available policies
 Many insurance companies use a dual strategy, using sales agents in the field but also
selling online
 ONLINE STOCK TRADING AND INVESTMENTS
 Orders can be placed from anywhere, at any time, and there is no biased broker to push a sale
 Investors can find a considerable amount of free research information about specific companies or
mutual funds
 Many services are provided such as: online statements, tax-related calculations, extensive research
on industries, real-time news, and even tutoring on how to trade
 Many online investments opportunities especially in China

 The Risk of Trading in an Online Stock Account: security concerns

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ONLINE BANKING AND PERSONAL
FINANCE
Electronic (online) banking or e-banking
Various banking activities conducted from home or
the road using an web or smart phones; also known as
cyberbanking, virtual banking, online banking, and
home banking.
- Consumers can use e-banking generally to check their accounts, pay
bills online and may more.
- E-banking saves users time and money.
- Many physical banks now offer e-banking services as a major
competitive strategy.
- An emerging innovation P2P online lending example: www.zopa.com

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ONLINE BANKING AND PERSONAL
FINANCE
Online banking capabilities Divided into the
following categories: informational, administrative,
transactional, portal and others. Generally, the larger the bank the
more services are offered.
PURE VIRTUAL BANKS: no physical locations but only
conduct online transactions. However, should be dealt with caution:
many virtual banks failed due to the lack of financial viability;
sometimes it can fraud. The most successful form a virtual banks
seem to be of the click-and-mortar type.
 P2P lending: this model allows people to lend money and to
borrow from each other via the Internet
INTERNATIONAL AND MULTIPLE-CURRENCY
BANKING: the ability to handle trades in multiple currencies are
crucial for international trading. This situation requires international
banking support
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Banking and Personal Finance Online
ONLINE FINANCIAL TRANSACTION
IMPLEMENTATION ISSUES
Securing Financial Transactions
Imaging Systems
Fees Online Versus Fees for Offline Services
Risks: hackers, liquidity risks (for virtual banks).
ONLINE BILLING AND BILL PAYING
 You either pay from your account for car loan, telephone, utility bills,
etc. OR your pay using electronic bill presentment payments (EBPP).
With this method you pay using a credit card or by giving the biller
enough information to complete an electronic withdrawal directly
from the consumer’s bank account
Taxes: there are some websites help people to estimate/pay for
their taxes.
 Mobile banking: conducting financial transaction suing smart
phones of wireless mobile devices
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On-Demand Delivery of Products,
Digital Items, Entertainment, and Gaming
 ON-DEMAND DELIVERY OF PRODUCTS
 Generally e-tailers use logistics carriers to deliver products to consumers.
 Some might use the local postal systems, others may use private shippers
(UPS, DHL or FedEx)
 Some e-tailers have their own delivery vehicles.
 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 (usually same day
delivery model) (AmazonFresh).
 on-demand delivery service
Express delivery made fairly quickly after an online order is received. This help
increase the value proposition for the buyers. Some innovative models, e.g.,
Instacart will buy all your groceries from your favorite stores and deliver them
within one-two hours
 Speed of delivery is critical for not only for groceries but also for other on-demand
and large items. Uber was once partnered with to deliver Christmas trees.
Possibilities for some large e-tailers to deliver using drones

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On-Demand Delivery of Products,
Digital Items, Entertainment, and Gaming
ONLINE DELIVERY OF DIGITAL PRODUCTS,
ENTERTAINMENT, AND MEDIA
Delivery of digitized products over the Internet. It is much cheaper and
sellers storage, handling and distribution costs.
ONLINE ENTERTAINMENT
 iTunes
 Online ticketing
 Internet TV: delivery of content by videos streaming technology
 Internet Radio: audio content transmitted live via the Internet
 Social TV: Enables TV viewers who are in different locations to
interactively share experiences such as discussions, reviews, and
recommendations while watching the same show simultaneously.
For the characteristics of social TV read page 132.
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Online Purchasing-Decision Aids
shopping portals
Gateways to webstores and e-malls; may be
comprehensive or niche oriented:
shopping.yahoo.com, cnet.com
Helping Communities
Social communities

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Online Purchasing-Decision Aids
PRICE AND QUALITY COMPARISON BY SHOPBOT
SOFTWARE AGENTS
shopping robots (shopping agents or shopbots)
Search engines that look for the lowest price or other
search criteria (mysimon.com)
Google Enterprise Search:
Google Enterprise search helps companies search all internal
and public information
“Spy” Services
For example, track airlines special sales and then notify
customers using personalized email alerts

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Online Purchasing-Decision Aids
RATINGS, REVIEWS AND RECOMMENDATION
SITES: major types as follows
 Customer ratings and reviews
 Customer testimonials: typically found on the vendor site
 Expert ratings and reviews
 Sponsored reviews
 Conversational marketing: communication through preferred channels
for each individual customers. Adobe campaign software
 Video product review
 Blogger post review

COMPARISON SHOPPING WEBSITES

TRUST VERIFICATION SITES: TRUST-e seal for
approved e-tailers websites
OTHER SHOPPING TOOLS: virtual visual shopping,
mobile apps
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Issues In E-Tailing
and Lessons Learned
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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Issues In E-Tailing
and Lessons Learned
channel conflict
Situation in which an online marketing channel
upsets the traditional channels due to real or
perceived damage from competition

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Issues In E-Tailing
and Lessons Learned
POSSIBILITY OF A PRICE CONFLICT AND
DETERMINING THE RIGHT PRICE BY SELLERS
PRODUCT AND SERVICE CUSTOMIZATION AND
PERSONALIZATION
ONLINE COMPETITION
FRAUD AND OTHER ILLEGAL ACTIVITIES

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Issues In E-Tailing
and Lessons Learned
LESSONS LEARNED FROM FAILURES AND LACK
OF SUCCESS OF E-TAILERS
Speak with one voice
Leverage the multichannels
Empower the customer

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Managerial Issues
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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Summary
1. The scope and characteristics of e-tailing
2. Classify e-tailing business models
3. How online travel/tourism services operate
4. The online job market and its benefits
5. The electronic real estate marketplace
6. Online trading of stocks and bonds

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Summary
7. Cyberbanking and personal finance
8. On-demand delivery service
9. Delivery of digital products
10. Aiding consumer purchase decisions
11. Disintermediation and other B2C strategic issues

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