Retailing In Electronic Commerce :

Products & Services

Chapter 3
Last Week Review
E-market / e-marketplace / marketspace :
 A virtual market in which sellers &
buyers meet & conduct different types of
transactions. Objective : money (profit).
 Have three main functions :
1. Matching buyers & sellers
2. Facilitating the exchange and payments
3. Providing an institutional infrastructure
Last Week Review
The 7 major components of e-marketplace :
1) Customers
2) Sellers
3) Products & services
4) Infrastructure
5) Front end
6) Back end
7) Intermediaries
Last Week Review
Three types of e-marketplaces :
A. Private E-Marketplaces
 Owned & operated by a single company
 Sell-side and/or buy-side e-marketplaces
B. Public E-Marketplaces
 Serve many sellers & many buyers (many-
to-many) and usually owned & managed
by an independent third party
Last Week Review
C. Consortia E-Marketplaces
 Owned & managed by a group of buying
or selling companies (referred to as a
consortium)
Last Week Review
a) Webstore (storefront)
 A single company’s website where products
and services are sold.
b) Electronic Malls (e-mall / online mall)
 An online shopping center where many
online stores are located.
Last Week Review
c) Web (Information) Portals
 Portal : an information gateway. Portals
present information from diverse sources
in a unified way.
 Web Portal : a single point of access to
critical business information located inside
and outside of an organization. Web portals
can be personalized for the users and
offer other services.
Last Week Review
I. Auction
 A competitive process in which a seller
solicits consecutive bids from buyers
(forward auctions) or a buyer solicits bids
from sellers (backward auctions)
II. Bartering
 Bartering : the exchange of goods &
services. E-bartering : bartering conducted
online, usually in a bartering exchange
Last Week Review
III. Online Negotiating
 Dynamic prices determined by
negotiation. Negotiated prices result
from interactions & bargaining among
sellers & buyers.
Last Week Review
• Virtual Community : A group of people with
similar interests who interact with one
another using the Internet.
• Social Network : A place where people
create their own space / homepage on
which they write blogs; post pictures,
videos, or music; share ideas; and link to
other web locations they find interesting
Retailing In Electronic Commerce :
Products & Services
Overview Of Electronic Retailing
 Retailer :
• A sales intermediary; A seller that operates
between manufacturers and customers.
 Electronic retailing (e-tailing)
• Retailing conducted online / over the
internet
 E-tailers
• Retailers who sell over the internet
• Example : Amazon.com, Walmart.com, etc.
Advantages of E-Tailing to Sellers
• Lower product cost & supply chain
costs
• Reach more customers
• Change price & catalogs quickly
• React quickly to customers’ needs,
complaints, tastes, etc
• Compete with larger companies
 Advantages of E-Tailing to Buyers
• Shop globally, compare prices & services
• Shop anytime & from anywhere
• Pay less
• Find products / services not available in
local stores
• Do not need to go to the store
Exhibit 3.4
E-Tailing as an Enterprise EC System
Five Classification of E-tailing Business Model by
Distribution Channel

I. Direct marketing by mail-order retailers that

go online
 Direct marketing : marketing that takes
place without intermediaries between
sellers (manufacturers / retailers) and
buyers; marketing done online between
any seller and buyer.
 Retailers with main distribution channel is
online direct marketing. Several also
operate physical stores.
 Example : QVC, Sharper Image, Bhinneka
Five Classification of E-tailing Business Model by
Distribution Channel

II. Direct marketing by manufacturers

 Manufacturers market directly online
from company sites to individual
customers.
 Most of these manufacturers are click-
and-mortar (also selling in their own
physical stores / via retailers)
 Example : Dell, NIKE, LEGO, Sony, etc
Five Classification of E-tailing Business Model by
Distribution Channel

III. Pure-play e-tailers

 E-tailers that sell directly to consumers
over the internet without maintaining a
physical store.
 Example : Amazon.com, Buy.com
Five Classification of E-tailing Business Model by
Distribution Channel

IV. Click-and-mortar retailers

 Retailers with the idea of selling both
online & offline (physical store). Also
known as multichannel business model
(company sells in multiple marketing
channels simultaneously)
 Example : Walmart.com, Zappos.com,
HomeDepot.com, Mitra10.com
Five Classification of E-tailing Business Model by
Distribution Channel

V. Internet (Online) Malls

There are two types of online malls :
a. Referring directories  When users click
on the product and/or store, they are
transferred to the seller’s storefront (e.g.
Shopping.com)
b. Malls with shared services  Users can
find a product, order & pay for it, and
arrange for shipment (e.g. Yahoo! Stores,
bing.com/shopping, firststopshops.com)
Travel And Tourism (Hospitality)
Services Online
 Example of Travel & Tourism e-tailers :
expedia.com, travelocity.com, agoda.com.
Travel And Tourism (Hospitality)
Services Online
 Competition is fierce, low margins, little
customer loyalty, and increasing
commoditization of products & services.
 3 important trends that will drive further
changes in the online travel industry :
a. Differentiation through customer service
b. Travel meta search facilities / travel bots
c. The use of social commerce
Travel And Tourism (Hospitality)
Services Online
Social commerce collaboration :
Backpackstory.me + Travelio.com
Services Provided
 Same like conventional travel agencies :
providing general information, reserving &
purchasing tickets, accommodations &
entertainment.
 Addition : travel tips, fare tracking, experts’
opinions, driving maps & directions, chat
rooms & bulletin boards, and online travel
auctions.
 Special Services Online
Travel bargains / bargain fares, very low airfares &
discounted accommodation prices, steep discounts,
special vacation destinations, cheap tickets.
Other Special Services
 Wireless services : many airlines (e.g.
Cathay Pacific, Delta, Qantas) provide
internet access.
 Advanced check-in : most airlines provide
advanced online check in (print boarding
pass within 24 hours prior to departure,
download boarding pass into your cell
phone). Example : AirAsia, Garuda
Indonesia.
Other Special Services
 Direct marketing : airlines sell electronic tickets
over the internet.
 Alliances & consortia : airlines & other travel
companies are creating alliances to increase sales /
reduce purchasing costs. Example : Traveloka.
Benefits & Limitations of Online
Travel Services
• Benefits for user : free information,
accessible at any time from any place,
substantial discounts can be found.
• Benefit for providers of travel services :
airlines, hotels, and cruise lines are selling
empty spaces online, direct selling saves the
provider’s commission & its processing.
Benefits & Limitations of Online
Travel Services
• Limitations : the amount of time and the
difficulty of using virtual travel agencies can
be very large (especially for complex trips &
inexperienced internet surfers), complex trip
or those that require stopovers might not be
available online because they require
specialized knowledge & arrangements.
Employment Placement & The
Job Market Online
Example : CareerBuilder.com, LinkedIn, JobStreet.com,
career portals on company’s website.
Employment Placement & The
Job Market Online
Employment Placement & The
Job Market Online
 The online job market connects individuals
who are looking for a job with employers
who are looking for employees with specific
skills.
 Swift from traditional print-based advertising
and recruitment methods to online
advertisements and recruitment activities.
5 Parties Who Use The Internet
Job Market
1. Job seekers
 Reply to employment ads, place their
resumes online, use the sites of recruiting
firms, use the web to compare salaries, etc
5 Parties Who Use The Internet
Job Market
2. Employers seeking employees
 Many organizations advertise openings on their
website. Others advertise on popular public
portals, online newspapers, bulletin boards,
and with recruiting firms.
5 Parties Who Use The Internet
Job Market
3. Classified ads
 Available at job regarding websites, online
classified sections of many newspapers, and
social networks.
4. Job agencies / headhunters
 They use their own web pages, e-mails, online
forums, portals, and other websites to post
available job and advertise their services.
5. Government agencies and institutions
 Advertise openings on their website and other
sites. Also help job seekers find jobs elsewhere.
5 Parties Who Use The Internet
Job Market
Limitation Of The Online Job Market
1. Some people do not use & do not have
access to the internet.
2. Security & privacy
Real Estate, Insurance, and Stock
Trading Online
I. Real Estate Online
– Intended to disintermediate unnecessary
middlemen, allow buyers to find
information and do comparisons, ask a
question, and get advice.
– Ex : Craigslist, Zillow, Rumah123.com.
Real Estate, Insurance, and Stock
Trading Online
II. Insurance Online
– Many insurance companies use a dual
strategy : keeping human agents but also
selling online.
– Companies use the internet to offer
standard insurance policies (auto, home,
life, or health), comparisons of available
offerings & policies, and customers can
also make a purchase online.
– Example : Aegon group, Allianz.co.id,
Prudential.co.id
Real Estate, Insurance, and Stock
Trading Online
Real Estate, Insurance, and Stock
Trading Online
III. Online Stock Trading
– With online trading, orders can be placed
from anywhere at any time, no biased
broker to push a sale, investors can find
free research information, financial
statements, real-time news, and even
tutoring on how to trade.
– Example : BNI Sekuritas
Banking & Personal Finance Online
• Electronic (online) Banking (e-banking)
– Various banking activities (e.g. check
accounts, pay bills) conducted from home or
the road using an internet connection (online).
– Also known as cyber-banking / virtual
banking / home banking.
– E-banking saves users time & money. For
banks, it offers an inexpensive alternative to
branch banking & a chance to enlist remote
customers (e.g. Agen BRI Link).
4 Online Financial Transaction
Implementation Issues
1) Securing financial transactions
 Example : using pin / token to conduct a
secure EC payment systems.
2) Imaging systems
 Customers can view images of their
incoming checks, invoices, and other
related online correspondence.
4 Online Financial Transaction
Implementation Issues
3) Fees online vs fees for offline services
 Some banks offered free computer-based
banking services. Many banks charge more
for offline service in order to encourage
customers to go online.
4) Risks
 The risk of hackers getting into customer
account
 Liquidity risk (the risk of not having sufficient
funds to pay obligations as they come due)
On-Demand Delivery of Products, Digital
Items, Entertainment, and Gaming
I. On-Demand Delivery of Products
 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.
 Example : home delivery of food from restaurant,
online groceries, office supplies, repair parts
 On-demand delivery service
 Express delivery made fairly quickly after an online
order is received  “Same-day delivery” : delivery is
done faster than “overnight” but slower than the 30-
60 minutes.
On-Demand Delivery of Products, Digital
Items, Entertainment, and Gaming
II. Online Delivery of Digital Products,
Entertainment, and Media
 Certain goods (software, music, news) can
be distributed in a physical form (CD-ROM,
DVD, newspaper) or they can be digitized
and delivered over the internet.
 A major revolution in the online
entertainment is when Napster introduced
the P2P (peer-to-peer) file sharing of
music & YouTube.
On-Demand Delivery of Products, Digital
Items, Entertainment, and Gaming
 Traditional entertainment (TV, film, radio,
music, games, reading, and gambling) are
now available over the internet.
 Modern technology enhanced people
experience when enjoying those
activities. For example, online games
(SecondLife) offer multimedia
experiences with colorful animations &
sound and allow the player to affect the
course & outcome of the game.
Online Purchasing-Decision Aids
 Many sites & tools are available to help
consumers with online purchasing decisions
 sites / tools for price comparison,
evaluate services, trust, quality & other
factors (rating sites), shopping portals,
shopping robots (shopbots), friends’ advice
in social netword, and other shopping aids.
Shopping Portals
 Definition : gateways to webstore and e-malls;
may be comprehensive / niche oriented.
 Comprehensive / general-purpose portals have
links to many different sellers and present &
evaluate a broad range of products (e.g.
eCost.com)
 Several public portals also offer shopping
opportunities & comparison aids / tools to help
identify the best price for a particular item (e.g.
Shopping.com)
Price & Quality Comparison by
Shopbot Software Agents
 Shopping robots / shopping agents /
shopbots : tools that scout the web on
behalf of consumers who specify search
criteria. Example : mySimon.com searches
the web to find the best prices & availability
for thousands of popular items; Hotwire
provides comparisons for travelers.
Business Ratings Sites
 Many websites rate various e-tailers and online
products based on multiple criteria. Example :
Alexa.com  provides information on web traffic
to other websites.
 It also occurs on the internet via blogs, social
networking sites, and review sites where users
recommend items to other users (“word of
mouth”)
 There is also a number of companies purport to
evaluate & verify the trustworthiness of various e-
tailers (e.g. TRUSTe.com).
Other Shopping Tools
 Escrow services (escrow.com) : assist buyers
& sellers in the exchange of items & money.
Escrow sites may also provide payment-
processing support, as well as letters of
credit.
 TheFind.com : to organize store information
in a standard, easy to see, and
understandable format. Shoppers quickly
can find information about the vendors &
products.
Other Shopping Tools
 Epinions.com : has searchable
recommendations on thousands of products.
 Pricescan.com : price comparison engine
 Pricegrabber.com : a comparison shopping
tool that covers over 1 million products.
 Electronic wallet (“wallet”) : a program that
contains the shopper’s information.
Consumers can use electronic wallet so that
they do not need to reenter the information
each time they shop.
Other Shopping Tools
 Yelp.com : a search engine whose mission is
to help people find local (in a specific city)
qualified services ranging from mechanic to
restaurants to hairstylists. Community
members (Yelpers) write reviews of the
businesses and then rate them. It
concentrates on local search for its visitors.