Chapter 3

Retailing In Electronic Commerce: Products and Services

INTRODUCTORY

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What is Retailer?
A retailer is a sales intermediary between
manufacturers and customers.

There are many manufacturers who sell directly

to consumers but to supplement major sales, they
choose Wholesalers and Retailers.
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In the physical world how

does retailing take place?
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Doyou4
know
this
brand?
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DO THEY NEED RETAILERS?

What about these guys?

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So what is Electronic Retailing?

Retailing conducted online, over the Internet.

And SELLERS who conduct

retail business are called?
e-tailers.

Electronic Retailing is also

called as E-tailing..
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How can it be conducted?

Fixed prices
Online auctions
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What sells Well on the Internet

It is said that B2C is growing at 15 per cent annually. But
what sold well last year?
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1 Women's Apparel 9

2 Books

3 Computer Hardware

4 Computer Software

5 Apparel

6 Toys / Video Games

7 Videos DVD's

8 Health and Beauty

9 Consumer Electronics

10 Music

Source : Statistic Brain

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Developments in E-tailing
First Generation Sold : Second wave of growth Today
Books in 2000 :
Software Bedding
Music Customers started to Spas
research and buy Jewelry
These were easy to complex products such Designer Clothes
ship as Appliances
Furniture Cars
Large appliances Flooring
Expensive Clothing Big Screen TVs
Building Supplies

College Education and

Insurance Policies
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What characteristics are
expected to sell more?
Do you think it is..
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What characteristics are
expected to sell more?
That means Brand Name Recognition will sell more
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What characteristics are
expected to sell more?
Do you think a product with this will sell more?
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What characteristics are
expected to sell more?
Do you think.
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What characteristics are
expected to sell more?
..So Digitized Format would sell more
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What characteristics are
expected to sell more?
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What characteristics are
expected to sell more?

Inexpensive Items
+

Frequently purchased items

Commodities in which physical examination is not necessary

Well Packaged items not generally opened by us at physical

stores
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What are the advantages
of E-tailing for Sellers?
Competitive Advantage due to Lower Product Cost
Reach more customers (outside the vendors region eg., going
global)

Flexibility in Changing Prices and catalogs quickly including

visual presentation.

Lower Supply Chain Costs

Provide Customers with wealth of information online such as

self service option
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What are the advantages
of E-tailing for Sellers?
Reach quickly to customers needs, complaints, tastes and so forth.

Provide Customization

Small companies can compete with big organisations

Understand customers and interact with them.

Sell Specialized Items

Engage customers in interesting search, comparison and discussion

activities

Contact customers who are not reachable by traditional means of

communication.
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Why do you use E-tailers?

Pay less than in Find products and Shop globally : Shop anytime and
traditional services that are compare prices from anywhere
not available in and services
local stores

To avoid wasting Create your own Find rare collectors Buy in groups and
time by traveling design and items with friends
and feeling product
pressured by sales
reps
E-tailing business
model

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E-tailing business models

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What are the different types of E-
Tailing Business Models
Direct marketing by mail-order retailers that
go online (Eg. QVC)
Direct marketing by manufacturers (Eg. Dell,
Lego, Godiva)
Pure-play e-tailers (amazon.com) Classification based
on Distribution
Click-and-mortar retailers (walmart.com) Model
multichannel business model
A business model where a company sells in
multiple marketing channels simultaneously
(e.g., both physical and online stores)
Internet (online) malls
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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.
Done without physical stores.
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Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall

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E-Tailing Business Models

Direct Sales by Manufacturers
Manufacturers such as Dell, LEGO, and Godiva market directly online
from their web- store to customers, in addition to selling via retailers.
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E-Tailing Business Models

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

click-and-mortar retailers
Brick-and-mortar retailers that offer a transactional
website from which to conduct business
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E-Tailing Business Models

Retailing in Online Malls
Referring Directories
This type of virtual mall contains a directory orga- nized by product
type. Banner ads at the mall site advertise the products or vendors.
When users click on the product and/or a specific store, they are
transferred to the webstore of the seller, where they can complete
the transaction.

Malls with Shared Services

In online malls with shared services, a consumer can find a
product, order and pay for it, and arrange for shipment. The
hosting mall provides these services.
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E-Tailing Business Models
OTHER B2C MODELS AND SPECIAL RETAILING
B2C SOCIAL SHOPPING

Social shopping activities are facilitated by new or improved

business model. For example, B2C sites such as amazon. com and
netflix.com provide consumers with extensive social context and
engagement opportunities, such as product ratings. Using blogs,
wikis, discussion groups, and Twitter, retailers can help customers
find and recommend shop- ping opportunities.
Flash Deals (Deals of the Day)
These are sales in which companies offer heavily discounted
products to consumers for a limited time (usually 2472 hours),
directly or via interme- diaries such as Groupon. The discounts are
so large that the sellers hope that people will spread the news to
their friends.
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Online Group Buying
Using online group buying, it is easy to join a group of
buyers 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

An online private shopping club, like an offline
shopping club (e.g., Costco), enables members to
shop at a discount, frequently for short periods of
time (just few hours or days). Members may need
to register before they are invited to see the
special offers. To assure quality, many clubs buy
directly from the manufacturers.
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E-Tailing Business Models

Group Gifting Online
In many cases, a group of friends can collaborate on gifts for events
such as a wedding. To help coordinate the group activities and select
the gifts, one can use sites like frumus.com and socialgift.com.

location-based e-commerce (l-commerce)

wireless-based technology used by vendors to send advertisements
relevant to the location where customers are at a given time by using
GPS
Shopping in Virtual Worlds
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VIRTUAL VISUAL SHOPPING
Many consumers embrace virtual shopping
because they get interesting products they
would never have bought without seeing them.

One advantage of 3-D is its ability to make things

online look more realistic. For example, if you
want to see how a new sofa will look in your living
room, all you have to do is move a virtual 3D
picture of the sofa into an image of a similar
living room that is illustrated in 3D. Such an
experience can be extended to appliances,
decorating rooms, or improving structures.
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Travel And Tourism

(Hospitality) Services Online
SERVICES PROVIDED

SPECIAL SERVICES ONLINE

Wireless services
Advanced check-in
Direct marketing
Alliances and consortia
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Characteristics
Online travel services generate income from commissions,
advertising fees, lead-generation payments, subscription fees, site
membership fees, etc.

With rapid growth and increasing success, the online travel industry
is very popular, although online travel companies cite revenue loss
due to fraud as their biggest concern.

Competition among online travel e-tailers is intense and has low

mar- gins. In addition, customer loyalty and difference in prices
make it more difficult to survive. Thus, guaranteed best rates and the
provision of loyalty programs are becoming a necessity.
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Trends
Three important trends will drive further changes in the online
travel industry.

First, online travel agents may try to differentiate themselves by

providing superior customer-service.

Second, they provide easy search capabilities (e.g., for best

prices).

Third, online travel companies are likely to use social media

tools to provide content to travelers and would-be travelers
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Employment Placement
and the Job Market Online
What does an online job market do?
Connect Job Seekers to employees.

Ways to do this?
Job ads posting
Placement services through specialized websites
Careers portal on corporate websites.

Reduces : Recruitment costs and expedites the time to fill

vacancies
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Employment Placement
and the Job Market Online
PARTIES WHO USE THE INTERNET JOB MARKET
Job seekers
Employers seeking employees
Classified ads
Job agencies
Government agencies and institutions
Online Job Markets on Social Networks (linkedin, fb, craigslist)
Global Online Portals for Job Placement
The Internet is very helpful for anyone looking for a job in another
country. An interesting global site for placing/finding jobs in different
countries is xing.com

Virtual Job Fairs

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Advance reading
Page 118 Traditional vs online job markets
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Real Estate, Insurance,

and Stock Trading Online
Online infrastructures enable additional marketing channels, new
business models, and provide new capabilities. The infrastructures
provide a different way of delivering products and services. Some
major services are presented in this and the following section.

REAL ESTATE ONLINE

Zillow, Craigslist, and expatriates.com, commonfloor.com, olx.com
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INSURANCE ONLINE

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. Furthermore, third-party aggregators
offer free comparisons of available policies.

Although many people do not trust the faceless insurance agent,

others are eager to take advantage of the reduced premiums.

A visit to insurance. com will show a comparison of a variety of

different policies.

Eg. Allstate, Geico.com

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Banking and
Personal Finance Online
electronic (online) banking or e-banking

Various banking activities conducted from home or the

road using an Internet connection; also known as
cyberbanking, virtual banking, online banking, and
home banking
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What can you use Online
Banking for?
Check accounts

pay bills online

secure a loan

transfer money

mint.com, geezeo. com, and kiplinger.com help

with personal finance
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Advantages
E-banking saves users time and money.

For banks, it offers a rapid and inexpensive strategy to

acquire out-of-the-area customers.

The banks may need fewer branches or employees.

Many physical banks now offer online banking services, and

some use EC as a major competitive strategy.
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Personal Finance Online
ONLINE BANKING CAPABILITIES

Banking applications can be divided into the following

categories: informational, administrative, transactional, portal,
and others. In general, the larger the bank, the more services
are offered online.

VIRTUAL BANKS

Virtual banks have no physical location and conduct only online

transactions. Eg. Security First Network Bank (SFNB) now part
of RBC bank

INTERNATIONAL AND MULTIPLE-CURRENCY BANKING

International banking and the ability to handle trades in
multiple currencies are critical for international finance.
Although some international retail purchasing can be done by
providing a credit card number, other transactions may require
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 (hacking and liquidity risk)

ONLINE BILLING AND BILL PAYING

Taxes
One important area in personal finance is advice about and
computation of taxes. Dozens of sites re available to help people
with their federal tax preparations. Many sites will help people
legally reduce their taxes. The following list offers some sites worth
checking: irs.gov, taxsites.com, fairmark.com, taxaudit.com
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On-Demand Delivery of Products, 58

Digital Items, Entertainment, and

Gaming
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
on-demand delivery service
Express delivery made fairly quickly after an online order is
received
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On-Demand Delivery of Products, 59

Digital Items, Entertainment, and

Gaming
ONLINE DELIVERY OF DIGITAL PRODUCTS,
ENTERTAINMENT, AND MEDIA

ONLINE ENTERTAINMENT
Internet Gaming
Online Dating Services
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Online Purchasing-Decision
Aids
shopping portals

Gateways to webstores and e-malls; may be

comprehensive or niche oriented
Helping Communities
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Online Purchasing-Decision
Aids
PRICE AND QUALITY COMPARISON BY SHOPBOT
SOFTWARE AGENTS
shopping robots (shopping agents or shopbots)
Tools that scout the Web on behalf of consumers who
specify search criteria
Google Commerce Search 2.0
Spy Services
Wireless Shopping Comparisons
Ratings, Reviews and Recommendation Sites

Independent reading : Pg 137 Ratings, Reviews and

Recommendation Site
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Online Purchasing-Decision
Aids
BUSINESS RATINGS SITES
Recommendations from Other Shoppers and Friends
referral economy
The effect upon sales of consumers receiving a referral or
recommendation from other consumers.

TRUST VERIFICATION SITES

OTHER SHOPPING TOOLS

Yelp

Independent Reading (yelp.com) Page 140

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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