E-COMMERCE

By
Meghana G Raj, Assistant Professor, Information Technology
Chapter 7: Mercantile Process
Models
◦ Basically define interaction models between consumers and merchants for on-line
commerce.
◦ This is necessary because to buy and sell goods, a buyer, seller, and other parties must
interact in ways that represent some standard business processes.

Meghana G Raj, Assistant Professor 2

Mercantile Models from the
consumer perspective
◦ The online consumer expects QUALITY, CONVINIENCE, VALUE, LOW PRICE and CONTROL.
◦ To meet these expectations and understand the behavior of the online shoppers, there is a
need for a business process model that provides a standard product. Service purchasing
process from an interactive services and merchandising point of view.
◦ The business process model from a consumers perspective consists of seven activities that can
be grouped into three phases:
1) Pre-purchase phase
2) Purchase consummation
3) Post purchase interaction

Meghana G Raj, Assistant Professor 3

Mercantile Models from the
consumer perspective
◦ Pre-purchase preparation phase:
 Includes search and discovery for a set of products in the larger information space capable
of meeting customer requirements and product selection from the smaller set of products
based on attribute comparison.
o The purchase consummation phase:
 Includes mercantile protocols that specify the flow of information and documents
associated with purchasing and negotiation with merchants for suitable terms, such as
price, availability, and delivery dates and electronic payment mechanisms that integrate
payment into the purchasing process.
o The post purchase interaction phase:
 Includes customer service and support to address customer complaints, product returns
and product defects.

Meghana G Raj, Assistant Professor 4

Mercantile Models from the
consumer perspective

Meghana G Raj, Assistant Professor 5

Mercantile Models from the
consumer perspective
◦ Pre purchase preparation:
in general, consumers can be categorized into three types:
1) Impulsive buyers, who purchase products quickly.

2) Patient buyers, who purchase products after making some comparisons.

3) Analytical buyers, who do substantial research before making the decision to purchase
products or services.

It is important for e-commerce marketplaces to understand these types of buyers and the
associated purchase types.

Meghana G Raj, Assistant Professor 6

◦ Types of Purchases
1. Specifically planned purchases- decision on what product to buy and which
brand already taken before marketplace. e.g. Colgate toothpaste

2. Generally planned purchases- decision on what product to buy taken

beforehand but decision on brand to be taken at marketplace. e.g.
Toothpaste, decision on selection between Colgate, CloseUp, Pepsodent,
Meswak to be taken at marketplace

3. Reminder purchases- decision on product and brand not taken beforehand

but reminder at marketplace results in decision to buy. e.g. While buying
Cinthol soap, reminded by advertising at marketplace to also buy toothpaste
and decision on brand taken at marketplace

4. Unplanned purchases- decision on product and brand not taken

beforehand, in fact even need to buy was not identified until advertising at
marketplace results in decision to buy. e.g. While making payment for goods
bought, advertising for chewing gum/ chocolates results in decision to buy

Except for first type of purchase by Analytical Buyers, the remaining purchases
are by Patient and Impulsive buyers. It is important for e-commerce marketplaces
to understand these types of purchases and replicate “in store” advertising on
the website. Meghana G Raj, Assistant Professor 7
Organizational Search in e-
commerce environment
◦ Search for new products, new services, new suppliers by a buyer, on behalf of an organization
◦ Pace of change of technology and complexity of buying can impact organizational search
◦ Existing supplier relationships can impact organizational search
◦ Cost of searching for and switching from existing supplier to new supplier, existing products to new
products should be lower than benefits from the switch

Meghana G Raj, Assistant Professor 8

Consumer Search in e-
commerce environment
◦ Search for new products, new services, new suppliers by a buyer, for her/himself
◦ Utilitarian search- view purchasing as a necessary task, rational purchase
decision to be taken after evaluation
◦ Hedonic search- view purchasing as a fun task, pleasure driven activity that
may result in an impulsive buy (the price is too high but will purchase, as it
satisfies some other sensory requirement such as colour)
◦ Utilitarian search and purchase is more common in rational and organizational
buyers, as they are mainly looking at value for money
◦ Hedonic search and purchase is more common in impulsive buyers who value
other parameters apart from value for money (luxury goods for example)
◦ E-commerce marketplaces need to cater to both utilitarian and hedonic buyers
by making use of associative rules and data mining, in order to offer products
which are most likely to be purchased, based on buyer behaviour.

Meghana G Raj, Assistant Professor 9

◦ Information brokers for consumer search

◦ Aid in discovery of new products, new services, new suppliers by a buyer

◦ Provide comparative information on products from various suppliers

◦ Provides the service of best price discovery, based on various search parameters

◦ Eg. PolicyBazaar.com helps searching for best insurance product out of various insurance companies 'offers

◦ Eg. Google Flights helps searching for best flight option out of various airlines 'offers

◦ Eg. Trivago helps searching for best hotel option out of various hotels 'offers

◦ The consumer specifies various parameters for search and the information broker then supplies details of
suppliers who may best meet the demand of the consumer

Meghana G Raj, Assistant Professor 10

◦ Steps in Purchase Consummation process

1. Consumer raises request to purchase, with details of payment instrument proposed to be used
2. Supplier verifies with payment institution (bank, credit card company, digital wallet company etc) that funds
are available in consumer’s account and that payment can be processed
3. Payment institution approves and processes payment
4. Supplier, on receiving approval for payment, initiates delivery of goods/ services to consumer
5. Payment institution aggregates all payments made on behalf of consumer for a month and raises monthly
bill to be paid by the consumer

Meghana G Raj, Assistant Professor 11

◦ Issues in post purchase interaction

1. Supplier should be able to inform buyer when exactly delivery has

been initiated. This means for each product offered on e-
commerce marketplace, supplier should have clarity on storage
location of the product and the route by which product will be
delivered to consumer. Lack of clarity will result in dissatisfied
consumers.

2. Return of product should be able to be handled efficiently by

supplier. Product may have to be picked up from consumer’s
location at a specified time, which has to be taken into account
to initiate return.

3. Handling consumer queries about the product- Helpdesk or toll

free number may be required to answer queries from consumers
about the product on details not listed on the e-commerce
marketplace.

4. Processing refunds of payment for returned products on time-

crucial if consumer is to be encouraged to make another
purchase in future.
Meghana G Raj, Assistant Professor 12
◦ Mercantile models from suppliers 'perspective

Pre Sales interaction

1. Supplier should be able to decide on how much of
product quantity is to be stocked (inventory) and
how much of product quantity can be
manufactured/ procured on receipt of order.
2. Supplier should be able to estimate costs of
manufacturing, advertising and delivering the
product.
3. Supplier should be able to compare prices by
competitors and decide on pricing of product on
the e-commerce marketplace.

Order Fulfilment
1. Once orders are received, supplier should be able
to decide on priority of orders scheduling and
processing.
2. Some orders may have to be delivered faster
(guaranteed 2 day delivery) than others, so may
not follow FIFO all the time.
Meghana G Raj, Assistant Professor 13
◦ Mercantile models from suppliers 'perspective
Order Fulfilment (continued)
3. Storage locations of products belonging to same
order have to be identified.
4. Products belonging to same order have to brought
to one common location before delivery.
5. Order has to then be fulfilled through delivery of
products at consumer location.
6. Maintenance of pending orders for monitoring
purpose.

Post sales interaction

1. Handling consumer queries after purchase-
Helpdesk, toll free number for consumer service
and support
2. Handling returns- logistics of arranging for pick up
of returned products from consumer location on
time
3. Handling refunds- interacting with payment
institution (bank/ credit card company/ digital
wallet) of buyer to process reverse payment or
refund on time Meghana G Raj, Assistant Professor 14
THANK YOU

Meghana G Raj, Assistant Professor 15