E-RETAILING

CHAPTER 3
E-Retailing: Distribution
channels

E-Tailing Business Models

• Direct marketing by mail-order retailers that go online. (QVC) Companies are attempting
to leverage their existing infrastructures by using a new marketing system (online),
in addition to their existing method (catalogs, etc.). No intermediaries.
• Direct marketing by manufacturers (Dell)
The direct marketing model takes place without intermediaries between manufacturers and
buyers.
• Pure-Play E-Tailers (Amazon)
• virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet without maintaining a physical sales channel.

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E-Tailing Business Models

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CLASSIFICATION BY DISTRIBUTION CHANNEL

• Direct marketing by mail-order retailers that go

online.
• Direct marketing by manufacturers
• Pure-play e-tailers
• Click-and-mortar retailers
• Internet (online) malls

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 Examples of e-retailing distribution channel

• Direct marketing by mail-order retailers that go online. (QVC) Companies are attempting
to leverage their existing infrastructures by using a new marketing system (online),
in addition to their existing method (catalogs, etc.). No intermediaries.
• Direct marketing by manufacturers (Dell)
The direct marketing model takes place without intermediaries between manufacturers and
buyers.
• Pure-Play E-Tailers (Amazon)
• virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet without maintaining a physical sales channel.

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Examples of e-retailing distribution channel

• click-and-mortar retailers (Wallmart)
the firm sells to customers through the Internet and through
physical sales locations.
• 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).

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 Examples of e-retailing distribution channel

• Retailing in Online Malls

• Referring directories
• Malls with shared services (find, order and pay for a product)
• Online Group Buying
• Find people to share freights and buy in bulk to lower
prices.

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SOCIAL NETWORKS AND DISTRIBUTION

CHANNEL
• IN Social networks can be used as a platform to advertise and
support purchases, as well as acting as a review center
(customers can leave reviews about the products they bought).
• Virtual Shopping
• (3D SW in buying furniture, LCD).
• Dell sells computers in virtual world

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 On-Demand Delivery Service (ODDS)

•On-demand delivery service (ODDS)—express

delivery made fairly quickly after an online order is
received – same day delivery
•On-Demand Delivery Services (ODDS)
• May own a fleet of delivery vehicles for regular deliveries and delivery within short
time period
• Use common logistics carriers (use private shippers like FedEx, UPS,DHL)

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On-Demand Delivery Services Model

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 Online Delivery of Products

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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

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 Online purchase decision aids
• shopping portals
Gateways to e-storefronts and e-malls;
may be comprehensive or niche oriented.
• shopping robots (shopping agents or shopbots)
Tools that scout the Web on behalf of consumers who specify search
criteria.

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Online purchase decision aids

• BUSINESS RATINGS SITES
• Websites to rate e-tailers based on multiple criteria
• TRUST VERIFICATION SITES
• The seal of TRUSTe at the bottom of e-tailers website)
• Recommendations from Other Shoppers and Friends
• referral economy
The effect upon sales of consumers receiving a referral or
recommendation from other consumers. (used in blogs)
• OTHER SHOPPING TOOLS
• Escrow: third party to facilitate exchange
• Wallets: a program that contains shoppers information. No
need to enter info with each shopping

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Disintermediation & Reintermediaries

• 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
• new intermediary roles in the digital environment offer
new ways to:
• Reach new customers
• Bring value to customers
• Generate revenues

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Issues in E-Tailing

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 Conflict and Personalization
• Channel conflict —situation in which an online marketing
channel upsets the traditional channels due to real or
perceived damage from competition
• DETERMINING THE RIGHT PRICE
• Personalization — The ability of the seller to craete an
element of personalization.
• This create a large demand for customized products
• Sellers can meet this by Mass customization.
• Examples:
• Tailored to buying patterns
• Excellent customer service

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CHARACTERISTICS AND ADVANTAGES OF SUCCESSFUL E-

TAILING
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.

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Characteristics of Successful E-Tailing

Characteristics of high-volume products and services:

• Brand recognition and guarantees
• Guarantee provided by highly reliable or well-known vendors
• Digitized products
• Inexpensive items (office supplies, vitamins)
• Frequently purchased (prescription drugs)
• Commodities with standard specifications (books, CDs)
• Well-known packaged items that cannot be opened even in a
traditional store (chocolates, foods)

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Leassons learned from failures

• What makes click-and-mortar companies more successful:

• Speak with one voice
• Leverage the multichannels
• Empower the customer

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