Consumer To Business

E-Commerce Presentation

You’re Just a Few Clicks Away...

...From Consumer Bliss

Joe Statum III

Stacy Kelley
Jim Hughes
MS480 - 2003
1
Overview

 What and Who is Business-to-

Consumer E-commerce?
 How Big is It, Where is it Headed?
 Demographics
 Tax Implications
 Security & Impact of September 11
 What has it Done for You Lately?
2
 Quiz

Questions
 What/who is quixtar.com

 Country with Highest

percentage of at-home
internet use
 On-Line Industry
Hardest hit by Attacks
of September 11

3
What is Business-to-
Consumer E-commerce?

In the broadest terms...

 Business-to-Consumer E-commerce
could be defined as transactions and
interactions between consumers and
businesses where some part of the
exchanges are conducted over the
internet.
4
Who Makes up the Business-to-Consumer E-
Commerce Market Segment?

Traditional Hybrid Pure E-

Retailers E/Retailers Tailers
 Borders  Lands’ End  Amazon
 Pottery Barn  Gateway  E-bay
 ToysRUs  L.L. Bean  Travelocity
 Sears  Grizzley  Dell
 Home Depot  Scwabb  Martha Stewart
 Kmart  Hugger Mugger
 Talbot’s  Datek Online
 Merrill Lynch Et al.

5
 Top 20 Internet Retailers
 eBay (ebay.com)
 Amazon.com (amazon.com)
 Dell (dell.com)
 Buy.com (buy.com)
 Egghead.com (egghead.com)
 Gateway (gateway.com)
 Quixtar (quixtar.com)
 uBid (ubid.com)
 Barnes & Noble (bn.com)
 Cyberian Outpost (outpost.com) 6
 Top 20 Internet Retailers*
(continued)
 Value America (va.com)
 MicroWarehouse (microwarehouse.com)
 Office Depot (officedepot.com & vikingop.com)
 eToys.com (etoys.com & babycenter.com)
 Lands’ End (landsend.com)
 The Spiegel Group (spiegel.com,
eddiebauer.com, & newport-news.com)
 Fingerhut (fingerhut.com, andysauctions.com, &
andysgarage.com)
 CDW (cdw.com)
 JCPenney (jcpenney.com)
 Gap (gap.com)
*Internet.com (9/25/01) 7
How the Internet is used for Shopping

How internet is Used for Shopping

Shop Online, 51%
Purchase Offline
Shop Online, 40%
Purchase Online
Shop Offline, 9%
Purchase Online

8
How Big is Business-to-Consumer
E-commerce?

 Worldwide, GarterG2 expects 2001 online holiday

shopping sales to reach $25.3 billion this year, a
39 percent increase over last year, despite an
uncertain economic climate.

 In the US, more than 106 million people will shop

online in December, and they will spend a record
$9.9 billion during the holiday season, an increase
over last year's $6.9 billion, according to Nielsen//
NetRatings and Harris Interactive.
9
Where has it been and…?

10
Forrester Online Retail Index http://www.forrester.com/NRF/1,2873,0,00.html
 …. Where is it headed?

 Projected
Worldwide
E-Commerce
Growth*

http://www.forrester.com/ER/Press/ForrFind/0,1768,0,00.html 11
*Both B2B and B2C
 E-Commerce Sales
 US retail E-commerce sales for the
second quarter of 2001 were $7.5 billion

 An increase of 24.7% from the second

quarter of 2000

 Total retail sales increased 3.8% from

the second quarter of 2000
12
What Makes up the Business-to-
Consumer Market Segment in US

 Top Online Spending Categories

November and December 2001
Online Spending(in millions)
Category Estimated
Apparel $2,445
Books/Music/Video $1,696
Auctions $1,364
Toys $1,053
Computer Hardware $973
Source: Nielsen/NetRatings and Harris

13
 US E-Commerce Retail Quarterly
Results
$10.000

$9.000

$8.000

$7.000
Billions of Dollars

$6.000

$5.000

$4.000

$3.000

$2.000

$1.000

$0.000
1999-4th Qtr 2000-1st Qtr 2000-2nd Qtr 2000-3rd Qtr 2000-4th Qtr 2001-1st Qtr 2001-2nd Qtr

Series1 $5.266 $5.526 $5.982 $6.898 $8.881 $7.592 $7.458

Year/Quarter 14
Total Spent on US On-Line Retail Sales-
June, July, August & September (1000s)

June July August September

Apparel $217,611 $224,743 $262,642 $288,420
Books $136,567 $151,561 $202,494 $183,288
Music $107,484 $118,318 $124,185 $136,408
Software $101,288 $112,759 $121,727 $136,031
Office Supplies
$119,704 $82,716 $108,375 $109,059
Videos $91,207 $109,814 $92,582 $100,636
Linens/Home$62,376
Décor $72,479 $82,344 $97,013
Jewelry $84,339 $88,198 $76,999 $97,671
Footwear $51,317 $67,656 $71,880 $86,589
Flowers $40,168 $38,777 $37,922 $52,753
15
Retail Sales Graphic Comparison
(June, July, August & September) 1000s

$350,000
$300,000 Apparel
$250,000 Books
$200,000 Music
$150,000 Software
Office Supplies
$100,000
Videos
$50,000
Linens/Home Décor
$0 Jewelry
July

August
June

September Footwear
Flowers

16
Size of Business-to-Consumer Market
Segment Worldwide
Worldwide Internet Retailing Sales Forecast

Estimate for Fourth Quarter 2001 Billions of U.S. Dollars)

Q4 2001 Q4 2000
Percent
Region Revenue Market Revenue Market Growth
Share Share
North 11.86 46.9 9.13 50.1 30.0
America
Europe 8.58 33.9 6.15 33.7 39.6
Asia- 2.46 9.7 1.60 8.8 53.4
Pacific
Japan 1.40 5.5 0.83 4.6 68.0
Rest of 0.99 3.9 0.52 2.9 90.1
World
Total 25.29 100.0 18.23 100.0 38.7

 Notes: Figures in millions and exclude travel-related purchases and movie and event ticket
sales. Source: GartnerG2

17
Worldwide Internet Retailing Sales Forecast
Estimate for Fourth Quarter 2001 Billions of

U.S. Dollars)

Worldwide Projected Online E-commerce

12
North America
10 Europe

Asia-Pacific
8
Japan
6 Rest of World

0
Q4 2000 Revenue Q4 2001 Revenue

 Notes: Figures in millions and exclude travel-related purchases and movie and event
ticket sales. Source: GartnerG2 18
Demographics

19
 Demographics
 In US there are over 168 million
Internet Users

 Expanding online population is an

opportunity and threat to E-commerce
vendors

20
World’s Online Population
Internet Universe by Country
At-home users, July 2001
Current Internet Active Internet Sessions Time Spent
Universe Estimate Universe, July 2001 per Month per Month
Global 426,491,303 236,258,612 18 9:36:12
United States 165,180,807 102,077,288 20 10:19:06
Japan 45,659,923 20,061,849 19 9:27:04
Germany 27,914,911 15,144,455 17 7:49:23
South Korea 26,590,004 13,098,235 13 19:20:17
United Kingdom 23,870,341 13,098,235 13 6:22:21
Italy 18,697,197 8,321,314 12 5:48:17
Canada 14,445,047 8,754,653 19 9:36:12
Brazil 11,937,559 6,038,867 13 8:10:48
Taiwan 11,602,523 5,021,109 13 8:04:21
France 11,107,974 5,468,447 15 6:58:58
Australia 9,674,157 5,640,427 13 7:41:43
Netherlands 8,671,316 4,526,370 15 6:44:11
Sweden 5,543,193 3,048,001 12 5:29:16
Source: Nielsen//NetRatings 21
World’s Home Online Population
Top 30 Countries

Percent Home Internet Users of Total Population

70%

60%

50%

40%
% Users of Total
30% Population
20%

10%

0%

United Kingdom
United States

South Korea

New Zealand
Netherlands
Hong Kong

Switzerland
Singapore
Denmark
Norway
Sweden

Australia
Taiwan

Canada

22
 World’s Home Online Population
Top 30 Countries cont.

Percent Home Internet Users of Total Population

40%

35%
% Users of
30%
Total
25%
Population
20%

15%

10%

5%

0%
Spain

Italy

Germany

Japan
Brazil

Global

Israel

Belgium
South Africa
Mexico

Argentina

France

Ireland

Austria

Finland
23
 World’s Online Gender
Distribution
Internet Audiences by Gender Percent Females
At-home users, June 2001
70.0% Percent Males
Percent Percent
Country
Male Female 60.0%

Germany 63.40 36.60 50.0%

France 61.88 38.12 40.0%

Italy 60.91 39.09
30.0%
Spain 60.88 39.12
20.0%
Belgium 60.60 39.40
Netherlands 59.81 40.19 10.0%

Brazil 59.71 40.29 0.0%

United States

Canada
UK 57.17 42.83
Australia

UK

Brazil

Netherlands

Belgium

Spain

Italy

France
Australia 51.57 48.43

Germany
Canada 49.00 51.00
United States 47.28 52.18
Source: Nielsen//NetRatings

24
 Race Does Matter
US Department of Commerce found:

A child in a low-income White family is

three times more likely to have web
access than a low-income Black child
and four times more likely than a low-
income Hispanic family

25
Race (cont.)

26
 Income
 The average
online
household
annual income
is 50% higher
than average
nonuser

27
 Age
 65% of those under age 30 have
internet access.

 Age 18 to 30 age group is the most

active online users.
– By 2004 almost 91% of this group will be
online

28
 Age –The Senior Years
 87% of those 65 and over do not have
internet access
 Seniors that are active on the Internet spend
more time online
 Adults 55 and older represent the fastest
growing group of Internet users
 Ages 45-64 years old is one of the most
desired Internet markets

29
Internet Tax Freedom Act
 Internet Tax Freedom Act- passed by
Congress October 1998

 Establishes a moratorium on direct and

indirect state or local taxes on the
Internet or interactive computer
services or the use of those services.

30
State Revenues that could be
generated from an Internet tax
 This year State and local governments
will lose $13.3 billion

 An estimated $45.2 billion loss in annual

revenue in 2006 and $54.8 billion by
2011

31
 Reasons for Internet Tax
 Toll on State Revenue
 Government should not be in position of
creating incentives to buy online
 Uneven Playing Field for Offline retailers
 E-commerce has advanced
 Based on what you buy not where you buy
32
 Other Interesting Facts
About E-Commerce Sales

 Average amount spent per person

– June: $247.00
– July: $270.00
– August: $273.00
– September: $262.00

 Number of households shopping on-line

– June: 13.1 million
– July: 14.7 million
– August: 14.8 million
– September: 15.2 million 33
September 11 and Security

34
 September 11, 2001
Impact on Business-to-Consumer E-Commerce
Sales

35
 News Traffic vs. E-Commerce
 Visitors to news sites
– 1 week prior to attacks: 6 million daily
– 1 week after attacks: 11.7 million daily
 ABCNews.com- 360% daily increase in
daily visitors to news site
 Sales volume before and after attack
– Immediately following attack-complete halt
– As of 9/24/01-97% of normal sales volume
36
 Top News Sites in Wake of
September 11 Attacks
 CNN.com
 MSNBC.com
 ABC News
 CBS.com sites
 NYtimes.com
 WashingtonPost.com
 Slate.com
 USAToday.com
37
 For E-Commerce: A return to
Normalcy!

 Week ending 10/21/01: Internet sales

7% below average week observed during
the 5 months prior to the September 11 th
attacks.
– Entirely attributable to the continued softness
in one area…………..

38
Hardest Hit: Travel Sector

Travel Sector
Sales remain
approximately
17% Below
Pre-Attack
Levels
39
 Travel Sector News

 Priceline.com expected $341 million 2001

revenues - changed to $280-$300 million.
 Expedia.com-travel bookings had declined
60-65% as of 9/19/01.
 Travelocity-travel bookings had declined
approximately 50% as of 9/19/01.

40
 Analysts’ Predictions

 2001 Online Travel Industry forecast lowered to

25% growth from 35-40% previous to attacks.
 2002 forecast lowered to 15-20% growth from
25-30% previous to attacks.

41
Security of E-Commerce
KPMG surveyed 1250 Large Companies In 12 Countries*

 When a security breach occurred 83%

reported no legal action was pursued
because:
– Inadequate Legal Remedies Available
– Loss Not Quantifiable
– No possibility of recovery
– Lack of evidence
– Other reasons

* KPMG 2001 Global e.fr@ud Survey 42

Security of E-Commerce
KPMG surveyed Large Companies In 12 Countries*

 Less than 35 % had security audits performed on their e-commerce

systems
 Only 12% reported their web site bears a seal identifying their web site
has passed a security audit.
 88% reported the public perceives the “brick and mortar” businesses to
be were more secure and less prone to fraud than e-commerce dot.com
companies, yet only 9% reported a security breach had occurred in the
last 12 month. (There is evidence these events are under reported.)
 National and Geographic Boundaries are non-existent in e-commerce -
Security related risks affect businesses in all regions

* KPMG 2001 Global e.fr@ud Survey 43

What has it Done for You Lately?

 Demonstrations
– Lands’ End / Virtual Model
– Staples
– E-bay

44
 landsend.com
myvirtualmodel.com

45
Lands’ End Summary

 Revenues $1.5 Billion

 Income $52.8 Million
 % Margin 3.30%
 Model Direct Merchant
 Employees 4,700
 $/Associate $319,150

46
47
48
49
staples.com

50
Staples Summary

 Revenues $10.674 Billion

 Income $60 Million
 % Margin .50%
 Model Traditional Merchant
 Employees 48,458
 $/Associate $361,836

51
52
ebay.com

53
ebay Summary

 Revenues $582.4 Million

 Income $84.7 Million
 % Margin 14.50%
 Model Auction
 Employees 1,927
 $/Associate $302,023

54
55
56
 Quiz

Questions Prize
 What/who is quixtar.com  Dishwasher

 Country with Highest  Philips Color Printer

percentage of at-home
internet use
 On-Line Industry  Washer & Dryer
Hardest hit by Attacks
of September 11

57
Questions?

58
 References

 ComScore Networks-Reston, VA (10/26/01)

 Internet.com (9/24/01 & 9/27/01)
 Goldman Sachs Analysts-Internetnews.com (9/19/01) Internet.com
(9/25/01)
 Cyberatlas.internet.com (10/02/01)
 E-commerce.times (11/05/01)
 emarketer.com (5/28/00)
 emarketer.com (5/22/00)
 cyberatlas.internet.com (10/29/01)
 cyberatlas.internet.com (10/29/01)
 U.S. Department of Commerce News (8/30/01)
 Russell Reynolds Associates (10/27/01)
– www.stores.org
59