Describe electronic retailing (e-tailing) and its characteristics.
Define and describe the primary e-tailing business models.
Describe how online travel and tourism services operate and their impact on the industry.
Discuss the online employment market, including its participants, benefits, and limitations.
Describe online real estate services.
Learning Objectives
Discuss online stock-trading services.
Discuss cyberbanking and online personal finance.
Describe on-demand delivery of groceries and similar products/services.
Describe the delivery of digital products and online entertainment.
Discuss various e-tail consumer aids, including comparison-shopping aids.
Describe disintermediation and other B2C strategic issues.
Internet Marketing and Electronic Retailing
OVERVIEW OF ELECTRONIC RETAILING
electronic retailing (e-tailing)
Retailing conducted online, over the Internet.
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
Internet Marketing and Electronic Retailing
SIZE AND GROWTH OF THE B2C MARKET
($70,$90 billion for 2004, 2005) = 2-4 of total retails in US.
A growth of about 20% per annum.
What Sells Well on the Internet?
Computers and electronics
Sporting goods
Office supplies
Books and music
Toys
Health and beauty
Entertainment
Apparel
Cars
Services
Others
Basic Principles for E-TAILING Success
Sound business thinking, visionary leadership, thorough competitive analysis and financial analysis, and the articulation of a well-thought-out EC strategy are essential.
Ensure appropriate infrastructure, particularly a stable and scalable technology infrastructure to support the online and physical aspects of EC business operations.
Characteristics of Successful E-Tailing
Brand recognition and guarantees
Guarantee provided by highly reliable or well-known vendors
Digitized products
Inexpensive items
Frequently purchased
Commodities with standard specifications
Well-known packaged items that cannot be opened even in a traditional store
Direct marketing by mail-order retailers that go online
Direct marketing by manufacturers
Pure-play e-tailers
Click-and-mortar retailers
Internet (online) malls
E-Tailing Business Models
E-Tailing Business Models
direct marketing
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.
Direct Sales by Manufacturers
Pure-Play E-Tailers
virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet without maintaining a physical sales channel.
E-Tailing Business Models
click-and-mortar retailers
Brick-and-mortar retailers that offer a transactional Web site from which to conduct business.
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).
E-Tailing Business Models
Retailing in Online Malls
Referring directories
Malls with shared services
OTHER B2C MODELS AND SPECIAL RETAILING
Online Group Buying
B2C IN SOCIAL NETWORKS
Virtual Shopping
Travel and Tourism Services Online
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:
Place orders from anywhere, any time, day or night
No biased broker to push you
Considerable amount of free information
Online Stock Trading
Banking Online
Electronic banking (e-banking)—various banking activities conducted from home or the road using an Internet connection; also known as:
Cyberbanking Virtual banking
Online banking Home banking
Electronic banking
Saves time and money for users
Offers an inexpensive alternative to branch banking
Many traditional banks around the world offer diversified e-banking services
main.hangseng.com
Capabilities of Home Banking
Get current account balances any time
Obtain charge and credit card statements
Pay bills
Download account transactions
Transfer money between accounts
Balance accounts
Send e-mail to the bank
Expand the meaning of “banker’s hours”
Handle finances when traveling
Additional services
Free phone banking
Waive checking fees
International and Multiple-Currency Banking
Some international retail purchasing can be done by credit card
Other transactions may require international banking support
Hong Kong Bank’s HEXAGON provides e-banking in Asia
Tradecard and MasterCard developed a multiple-currency system for global transactions (tradecard.com)
A multidealer foreign exchange service that enables faster and cheaper foreign exchange transactions (fxall.com)
Implementation Issues in Online Financial Transactions
Using bank intranets
Banks provide large business customers with personalized service by allowing them access to the bank’s intranet to access accounts, historical transactions, intranet-based decision-support applications
Imaging systems—allow customers to view images of all:
Incoming checks
Invoices
Other related online correspondence
Personal Finance Online
Bill paying and
e-checks
Tracking bank accounts etc.
Portfolio management
Investment tracking
Stock quotes and prices (past and current)
Budget organization
Record keeping
Tax computations
Retirement goals, planning and budgeting
Online Billing and Bill Paying
Automatic transfer of mortgages
This method has existed for several years
The payer authorizes its bank to pay the mortgage, including tax escrow payments
Automatic transfer of funds to pay monthly utility bills
Paying bills from online banking account
Online Billing and Bill Paying
A merchant-to-customer direct billing
A merchant posts bills on its Web site
Customers can view and pay their bill
Using an intermediary
A third party consolidates all bills related to each customer in one site in a standard format
Collects a certain commission
Makes it convenient to complete transactions
Online Billing and Bill Paying
Person-to-person direct payment
Paypal.com (now an eBay company)—enables you to send funds to another individual over the Internet
Online billing and bill-paying can be classified into B2C, B2B, or C2C.
In Hong Kong, CitiCorp links suppliers, buyers, and banks on one platform, enabling automatic payments
On-Demand Delivery Service (ODDS)
On-demand delivery service (ODDS)—express delivery made fairly quickly after an online order is received
On-Demand Delivery Services (ODDS)
May own a fleet of delivery vehicles for regular deliveries and delivery within short time period
On-Demand Delivery Services Model
The Case of E-Grocers
E-grocer—a grocer that will take orders online and provide regular deliveries on a daily or other regular schedule or will deliver items within a very short period of time
All e-grocers offer consumers the ability to order items online and have them delivered to their house
Some e-grocers offer free regular “unattended” weekly delivery based on a monthly subscription model
The Case of E-Grocers
Others offer on-demand deliveries with a surcharge or additional delivery charge added
One e-tail grocer sells only nonperishable items shipped via common carrier
Many offer additional services
Dry cleaning pickup and delivery
“Don’t run out” automatic reordering
Fresh flower delivery
Movie rentals
And more
Problems with E-Tailing & Lessons Learned
Profitability
Lose money on every sale as they try to grow to a profitable size and scale
Underlying cost and revenue models were not sound
Long-run success requires financial viability
Manage new risk exposure
Local companies contend with local customers and local regulations
National firms have more constituents
Global firms deal with numerous cultural perspectives
Problems with E-Tailing & Lessons Learned (cont.)
Branding—drive to establish brand can lead to excessive spending
