Overview Ch.

2
Define e-marketplaces and their components
List the major types of e-markets and their features
Define supply chains and value chains and understand
their roles
Describe the role of intermediaries in EC
Describe electronic catalogs, shopping carts, and
search engines
Describe the various types of auctions and list their
characteristics
Discuss the benefits, limitations and impacts of
auctions
Describe bartering and negotiating online
Describe the impact of e-marketplaces on
organizations
Define m-commerce and explain its role as a market
mechanism


Group Assignment
Companies:
1. Dell.com
2. Ebay.com + paypal.com
3. Amazon.com
4. Bestbuy.com
5. Walmart.com
6. Monster.com
7. Hotwire.com/priceline.com
8. Bluenile.com
9. Etrade.com
10. Netflix.com
11. Alibaba.com
12. Yahoo.com
Companies:
13. Cisco.com (SC or e-learning)
14. Facebook.com
15. Skype.com
16. Apple.com + the iTunes store
17. Fedex
18. Google.com
19. Craigslist.com

Retailing in Electronic
Commerce (E-Tailing)
Learning Objectives
Define and describe the primary business models of
e-tailing
Discuss various e-tail consumer aids, including
comparison-shopping aids
Discuss various e-tail markets, such as groceries,
music, cars, and others
Identify the critical success factors of direct
marketing and e-tailing, along with mistakes to avoid
Identify the principles of click-and-mortar
strategies for traditional retailers
Describe the issue of disintermediation,
reintermediation, and channel conflicts in e-tailing

Internet Marketing
and Electronic Retailing
A retailer is a sales intermediary, a seller
that operates between manufacturers and
customers
electronic retailing (e-tailing)
Retailing conducted online, over the Internet
e-tailers
Retailers who sell over the Internet
The concept of retailing and e-tailing implies
sales of goods and/or services to customers;
B2C and B2B
Internet Marketing
and Electronic Retailing
Travel
Computer Hardware
and Software
Consumer Electronics
Office Supplies
Sport and Fitness
Goods
Books and Music
Toys
Health and Beauty
Entertainment
Apparel and
Clothing
Jewelry
Cars
Services
Pet Supplies

What Sells Well on the Internet?

Internet Marketing
and Electronic Retailing
Characteristics of Successful E-Tailing
High brand recognition
A guarantee provided by highly reliable or well-known
vendors
Digitized format
Relatively inexpensive items
Frequently purchased items
Commodities with standard specifications
Well-known packaged items that cannot be opened
even in a traditional store
Opening Case: Amazon.com
Opening Case: Amazon.com
B2C business model where
customers look for a:
Low price
Fast shipment
Good return policy
Helpful customer service
Opening Case: Amazon.com [2]
Largest Bookstore in the world
Offers millions of items
Books and music
DVDs and videos
Toys and video games
Electronics and software
Home improvement products
Opening Case: Amazon.com [3]
Started business in 1995
Sales
1996 = $15.7 million
2000 = $1.8 billion
Products
1999 = 5 million titles
2000 = 13 million books, music, DVD/video titles
Opening Case: Amazon.com [4]
Auctions
Hosts and operates auctions for individuals
and small businesses
Shops service, Amazon marketplace,
Amazon payment processing
Provide the opportunity for small businesses to
develop custom storefront
Storefronts are supported by Amazons backend
order fulfillment processing
Opening Case: Amazon.com [5]
Easy browsing and
searching
Useful product
information
Reviews,
recommendations,
and personalization

Broad selection and low
prices
Secure payment system
(1-Click order
technology)
Gifts department
Online community
Features
Opening Case: Amazon.com [6]
Customer relationship management
Creates interesting and informative front-end
Highly automated and efficient back-end
support
Personalized service
Return customers are welcomed back by name
Customer wish lists available
E-mails customers purchase recommendations
based on their purchasing history
Did they Make Profits?
Opening Case: Amazon.com [7]
Financial performance
Overall losses rather than profits
Ability to move into new areas of business
should move them toward profitability, but
makes money from books
High level of customer service and
customer loyalty adds value
Opening Case: Amazon.com [8]
Diversification through business
alliances
Online sale of cars - greenlight.com
Online health and beauty aids -
drugstore.com
Wireless phones multiple business
partners
Toys - ToysrUs.com

E-Tailing Business Models
E-Tailing and B2C Market Growth
Business-to-business (B2B)
Requires precise record keeping, trackability,
accountability, and formal contracts, usually
with high volume of transactions and large
amount payments
Business-to-consumer (B2C)
Ability to create direct relationships with
consumer without intermediaries like
distributors, wholesalers, or dealers
E-Tailing & B2C Market Growth [2]
The B2C Market success is derived
from:
Offering quality merchandise at good prices
Excellent customer service
Convenience
Characteristics of goods leading to
high online sales volumes
Brand recognition and guarantees
Digitized products
Frequently purchased, inexpensive items
Well-known items with standard specifications

Define How You Make a choice of
desired goods?
Consumer Purchase Process
and Marketing Plan
Purchase decision process
Prepurchase steps
Awareness of need for purchase
Identify basic need or want
Actual purchase
Establish decision criteria
Seek recommendations and information
Make purchase
Postpurchase steps
Assistance with installation or setup
Online help desks and instruction manuals
The Consumer Purchase
Decision Process
Consumer Purchase Process
and Marketing Plan [2]
Time-starved
consumers
Shopping avoiders
New technologists
Time-sensitive
materialists or click-
and-mortar
consumers
Hunter-gatherers
Brand loyalists
Single shoppers

Types of online shoppers
Decision Criteria
Value proposition
customer service, better prices, higher quality
Personal service
treat the customer as a unique individual
Convenience
self-contained site that serves all the
customers needs
Other criteria
service after the sale
A Marketing Plan
Influence the consumers decision
process through the marketing
mix
Productportfolio of items available
Price of the products
Promotion of products (advertisements and
giveaways)
Packaging and delivery

Online Purchasing Aids
Shopping portals
Comprehensive portals
Links to many different sellers
Shopping comparison sites
Comparison tools are available
Niche oriented
Specialize in a certain line of products
(dogtoys.com)
Some collect referral fee only
Others have formal relationships with affiliates
Online Purchasing Aids [2]
Shopbots and agents
tools that scout the Web for specific search
criteria requested by consumers
Mysimon.com - best prices on multiple items
AutoBytel.com cars
Zdnet.com/computershopper computers
Office.com office supplies
Online Purchasing Aids [3]
Business ratings sites
Sites that rate e-tailers
Bizrate.comcompiles results provided by a
network of shoppers
Gomez.comconsumer identifies relative
importance of different criteria
Online Purchasing Aids [4]
Other shopping tools
Escrow services
3
rd
party to assure quality
Proper exchange of money and goods
Research information
Payment-processing support
Communities of consumers
Epinions.com: searchable recommendations on
products
PriceGrabber.com: comparison shopping
E-Tailing Business Models
Subscription models
charge monthly or annual subscription fee for
service
Transaction fee models
charge service fee based on the level of
transaction offered
Advertising-supported models
charge fee to advertisers instead of
customers
Sponsorship models
companies sponsor the business through
donations (usually supplemental income)
Disintermediation in the
B2C Supply Chain
Source: M. Warkentin, et al. (2000). Used with permission of Dr. Merrill Warkentin.
E-Tailing Business Models [2]
Direct marketing
sell directly to consumers
Manufactures can sell directly to customers
Disintermediationremoval of business process layers in
the value chain
Shortens the distribution chain
Eliminates inefficiencies
Shortens delivery time
Builds closer relationships with consumers
Click-and-mortar
Additional marketing channel to the conventional one
Effectively supports build-to-order requests
E-Tailing Business Models [3]
Pure-play e-tailers
sell over the Internet without a physical sales
channel
General purpose e-tailers (Amazon.com)
Broad range of products
Large number of consumers
Specialty or niche e-tailers (CatToys.com)
One specific product area
High demand items in the area
Effective practices for customer appeal
E-Tailing Business Models [4]
Traditional retailers with Web sites
Physical store
May include mail-order or catalog sales
Multichannel store operates both
Physical store
E-tail site
3-35
E-Tailing Business Models
Classification by Distribution Channel
Mail-order retailers that go online
Direct marketing from manufacturers
Pure-play e-tailers
Click-and-mortar retailers
Internet (online) malls
3-36
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

virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet
without maintaining a physical sales channel
3-37
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
3-38
E-Tailing Business Models
multichannel business model
A business model where a company sells
in multiple marketing channels
simultaneously (e.g., both physical and
online stores)
Retailing in Online Malls
Referring directories
Malls with shared services
3-39
E-Tailing Business Models
Other B2C Models and Special
Retailing
Representative special B2C services
Postal services
Services and products for adults
Wedding channels
Gift registries


GOODS
Digital Delivery
Digital (soft) goods
Music, movies, videos, software, newspapers,
magazines, graphics, etc.
Can be delivered in hard or soft form
Computer program on CD-ROM with owners
manual and warranty card
Download from Web site after payment
Digital Goods
Digital Delivery [2]
Napster experienceperson-to-
person sharing tool
Enables individual users to download music
files from each others computers
Phenomenal growth of Napster community
New version of its file-swapping software
includes a buy button linked to CDNow
May be beneficial to overall music sales as
individuals easily sample a broader range of
music

Digital Delivery [3]
New developments
Custom-publishing music CD sites
collection of personal favorites
Disintermediation of traditional print media
Journals and magazines
Newspapers (e.g., Wall Street Journal)
Successful Click-and-Mortar
Strategies
Click-and-mortar hybrid strategies
Speak with one voicelink all back-end
systems to create an integrated customer
experience
Empower the customerpowerful channel for
service and information
Leverage the channelsoffs advantages of
each channel to customers from all channels
Return item purchased online at physical store
Order via the Web at the physical store items not
available there
2014: Mobile Supported Apps
Successful Click-and-Mortar
Strategies [2]
Circuit City Case: transform to click-
and-mortar (CircuitCity.com)
Educates customers about features and
capabilities of products
Customers can perform powerful searches to
find most appropriate products
Offers extensive amount of information on
electronics etc., organized very flexible
Online purchases are smooth, secure and
seamless
What can be taken from this? User Experience
Successful Click-and-Mortar
Strategies [3]
Amazon and Toys R Us: alliance of
pure-play with traditional retailer
Toys R Us had limited logistics capabilities
including distribution centers
Amazon failed in the toy market lacking
supplier relationships with toy manufacturers
Alliance allows each partner to leverage each
others core strengths
Innovative model still working out problems
What can be taken from this? Joint Alliance is Good
Disintermediation & Reintermediaries
Disintermediation
Manufacturer sells directly to consumer
Reintermediaries
New intermediary roles in the digital
environment offer new ways to:
Reach new customers
Bring value to customers
Generate revenues
Cybermediation (electronic
intermediation)
The use of software (intelligent) agents to
facilitate intermediation
Issues in E-Tailing
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
Issues in E-Tailing
Issues in E-Tailing
cybermediation (electronic intermediation)
The use of software (intelligent) agents to
facilitate intermediation

hypermediation
Extensive use of both human and electronic
intermediation to provide assistance in all
phases of an e-commerce venture

Issues in E-Tailing
channel conflict
Situation in which an online
marketing channel upsets the
traditional channels due to real or
perceived damage from competition
Issues in E-Tailing
Determining the Right Price
Personalization
Fraud and Other Illegal Activities
How to Make Customers Happy
IF you are a decision maker in a
company, what would you do to e-
commerce threat?

(Imagine your company produce retail
goods)
Managerial Issues
1. What should our strategic position be?
2. Are we financially viable?
3. How should we introduce wireless
shopping?
4. Are there international legal issues
regarding online recruiting?
Managerial Issues
5. Do we have ethics and privacy guidelines?
6. How will intermediaries act in cyberspace?
7. Should we set up alliances?
E-Tailing: Lessons Learned
Profitability
online marginal sales dont lead to marginal
profits
Branding
drive to establish brand can lead to excessive
spending
Performance
Web sites need to function in a fast, user-
friendly manner
Design
dynamic sites with rich databases of
information appeal most to customers
Summary
The major e-tailing business models can
be classified as a manufacturer selling
direct to consumers, pure-play e-tailing
and a click-and-mortar strategy
Critical success factors for direct online
sales to consumers and e-tailing are
managing risk properly, creating a
profitable site and watching the cost of
branding
Group Exercise
Discuss some of the advantages of online
banks. Would you prefer an online or physical
bank? Why?
Explain cybermediation. Give an example of a
business or process that would benefit from it.
What are some of the benefits of online bill
paying over traditional methods? What are
some of the disadvantages?
To be Posted on Scele