Week 3 (Chapter 3) Retailing in Electronic Commerce: Products

Week 3 (Chapter 3)Week 3 (Chapter 3)

Retailing in Electronic Retailing in Electronic Commerce: Products and Commerce: Products and

ServicesServices

Learning ObjectivesLearning Objectives

1.1. Describe e-tailing and its Describe e-tailing and its characteristics.characteristics.

2.2. Define and describe the primary Define and describe the primary business models of electronic business models of electronic retailing (“e-tailing”).retailing (“e-tailing”).

3.3. Describe how online travel and Describe how online travel and tourism services operate and their tourism services operate and their industry impact.industry impact.

4.4. Discuss the online employment Discuss the online employment market, including its participants, market, including its participants, benefits, and limitations.benefits, and limitations.

Learning Objectives Learning Objectives (cont.)(cont.)

5.5. Describe online real estate Describe online real estate transactions.transactions.

6.6. Discuss online stock trading services.Discuss online stock trading services.7.7. Discuss cyberbanking and online Discuss cyberbanking and online

personal finance.personal finance.8.8. Describe on-demand delivery by Describe on-demand delivery by

e-grocers.e-grocers.5.5. Describe the delivery of digital Describe the delivery of digital

products and online entertainment.products and online entertainment.

Learning Objectives Learning Objectives (cont.)(cont.)

10.10. Discuss various e-tail consumer Discuss various e-tail consumer aids, including comparison-shopping aids, including comparison-shopping aids.aids.

11.11. Identify the critical success factors Identify the critical success factors and failure avoidance tactics for and failure avoidance tactics for direct online marketing and e-direct online marketing and e-tailing.tailing.

12.12. Describe reintermediation, channel Describe reintermediation, channel conflict, and personalization in e-conflict, and personalization in e-tailing.tailing.

Amazon.com: The King of Amazon.com: The King of E-TailingE-Tailing

The opportunityThe opportunityJuly 1995, e-tailing pioneer Amazon.com, July 1995, e-tailing pioneer Amazon.com, offered books via an electronic catalog offered books via an electronic catalog from its Web site (from its Web site (amazon.comamazon.com))The company has continually enhanced its The company has continually enhanced its business models and electronic store by:business models and electronic store by:

expanding product selectionexpanding product selectionimproving the customer’s experienceimproving the customer’s experienceadding services and alliancesadding services and alliancesrecognizing the importance of order recognizing the importance of order fulfillment and warehousingfulfillment and warehousing

Amazon.com: The King of Amazon.com: The King of E-Tailing E-Tailing (cont.)(cont.)

Technology usedTechnology usedAmazon.com has expanded in a variety of Amazon.com has expanded in a variety of directions: directions:

offers specialty stores (professional and offers specialty stores (professional and technical store)technical store)expands its editorial content through expands its editorial content through partnerships with experts in certain fieldspartnerships with experts in certain fieldsincreases product selection with the (used and increases product selection with the (used and out-of-print titles)out-of-print titles)expands its offerings beyond books (June 2002 expands its offerings beyond books (June 2002 became an authorized dealer of Sony Corp. became an authorized dealer of Sony Corp. selling Sony products online)selling Sony products online)today: a diversified retailer of products and today: a diversified retailer of products and servicesservices


Key features of the Amazon.com Key features of the Amazon.com superstore are:superstore are:

easy browsing, searching, and ordering easy browsing, searching, and ordering useful product information, reviews, useful product information, reviews, recommendations, and personalization recommendations, and personalization broad selectionbroad selectionlow priceslow pricessecure payment systemssecure payment systemsefficient order fulfillmentefficient order fulfillmentpersonalizationpersonalization


Enjoyable features:Enjoyable features:““Gift Ideas” section features seasonally Gift Ideas” section features seasonally appropriate gift ideas and servicesappropriate gift ideas and services

““Community” section provides product Community” section provides product information and recommendations information and recommendations shared by customersshared by customers

“ “E-Cards” section, free animated E-Cards” section, free animated electronic greetingelectronic greeting


Marketplace services:Marketplace services:hosts and operates auctions hosts and operates auctions

zShops service hosts electronic zShops service hosts electronic storefronts for a monthly feestorefronts for a monthly fee

allowing small businesses the allowing small businesses the opportunity to have customized opportunity to have customized storefronts supported by the richness of storefronts supported by the richness of Amazon.com’s order-fulfillment Amazon.com’s order-fulfillment processingprocessing


Amazon.com is recognized as an Amazon.com is recognized as an online leader in CRMonline leader in CRM

informative marketing front endsinformative marketing front ends

one-to-one advertisements one-to-one advertisements

free posting of restaurant menus from free posting of restaurant menus from thousands of restaurantsthousands of restaurants

““Welcome back, Sarah Shopper” with Welcome back, Sarah Shopper” with recommendations of new books from the recommendations of new books from the customers preferred genre based on customers preferred genre based on previous purchasesprevious purchases


Sends purchase recommendations Sends purchase recommendations via via

e-mail to cultivate repeat buyerse-mail to cultivate repeat buyers

Efficient search engine and other Efficient search engine and other shopping aidsshopping aids

Customers can personalize their Customers can personalize their accounts and manage orders online accounts and manage orders online with the patented “One-Click” with the patented “One-Click” order feature including an order feature including an electronic walletelectronic wallet


In 1997, Amazon.com started an extensive In 1997, Amazon.com started an extensive affiliates programaffiliates program

by 2002, the company had more than 500,000 by 2002, the company had more than 500,000 partners that refer customers to Amazon.compartners that refer customers to Amazon.com

Amazon pays a 3 to 5% commission on any Amazon pays a 3 to 5% commission on any resulting saleresulting sale

alliances with major “trusted partners” provide alliances with major “trusted partners” provide knowledgeable entry into new marketsknowledgeable entry into new markets

Carsdirect.com allows it to sell cars onlineCarsdirect.com allows it to sell cars online

Drugstore.com connects to health and beauty aidsDrugstore.com connects to health and beauty aids

AT&T, Nextel and others suggest service plans for AT&T, Nextel and others suggest service plans for wireless phoneswireless phones


September 2001 Amazon signed an September 2001 Amazon signed an agreement with Borders Group Incagreement with Borders Group Inc

allows Amazon.com’s users to pick up allows Amazon.com’s users to pick up books, CDs, and other merchandise at books, CDs, and other merchandise at Borders’ physical bookstoresBorders’ physical bookstores

It is becoming a Web fulfillment It is becoming a Web fulfillment contractor for national chains such as: contractor for national chains such as:

Target Target

Circuit CityCircuit City


The ResultsThe ResultsIs the number one e-tailer since Is the number one e-tailer since 2001 generated $3.12 billion2001 generated $3.12 billion

Is becoming very successful in Is becoming very successful in reducing its costs and increasing its reducing its costs and increasing its profitabilityprofitability

Annual sales for Amazon.com have Annual sales for Amazon.com have trended upward (over $5 billion in trended upward (over $5 billion in 2003)2003)


$15.7 million in 1996 to $600 million in $15.7 million in 1996 to $600 million in 1998 to about $4 billion by 20021998 to about $4 billion by 2002

In 2003 the site offers over 17 million In 2003 the site offers over 17 million book, music, and DVD/video titles to some book, music, and DVD/video titles to some 20 million customers20 million customers

Offers several features for international Offers several features for international customerscustomers

In January 2002, Amazon.com declared its In January 2002, Amazon.com declared its first ever first ever profit—for the 2001 fourth profit—for the 2001 fourth quarterquarter


What can we learn…What can we learn…demonstrates the evolution of e-demonstrates the evolution of e-tailingtailing

some of the problems encountered by some of the problems encountered by

e-tailerse-tailers

solutions employed by Amazon.com to solutions employed by Amazon.com to expand its businessexpand its business

the opportunities for e-tailingthe opportunities for e-tailing

Internet Marketing and Internet Marketing and Electronic Retailing (E-Electronic Retailing (E-

Tailing)Tailing)Overview of e-tailingOverview of e-tailing

Electronic retailing (e-tailing):Electronic retailing (e-tailing): Retailing conducted online, over the Retailing conducted online, over the InternetInternet

E-tailers:E-tailers: Those who conduct retail Those who conduct retail business over the Internetbusiness over the Internet

Internet Marketing and Internet Marketing and E-Tailing E-Tailing (cont.)(cont.)

Size and growth of the B2C marketSize and growth of the B2C marketnumber of U.S. online buyers from 53.2% of all number of U.S. online buyers from 53.2% of all Internet users in 2001 to 6% by 2004 (90 Internet users in 2001 to 6% by 2004 (90 million people purchasing online)million people purchasing online)U. S. revenues from online B2C buying U. S. revenues from online B2C buying predicted to go from $73 billion in 2001 to predicted to go from $73 billion in 2001 to $190 billion in 2004$190 billion in 2004May 2002 sales of $9.8 billion in the first May 2002 sales of $9.8 billion in the first quarter of 2002 (up 19.3 percent from the first quarter of 2002 (up 19.3 percent from the first quarter of 2001)quarter of 2001)annual 2002 sales estimated to be over $40 annual 2002 sales estimated to be over $40 billion—1.4 % of total retail sales, up from 1.1 billion—1.4 % of total retail sales, up from 1.1 percent in 2001 percent in 2001 average online shopper spent over $300 per average online shopper spent over $300 per quarterquarter


What sells best on the Internet?

Computer hardware and softwareConsumer electronicsSporting goodsOffice supplies

Books and musicToysHealth and beautyEntertainmentApparelCarsServicesOthers


Characteristics of successful e-tailingCharacteristics of successful e-tailinghigh brand recognition (Lands’ End)guarantee provided by highly reliable or well-known vendors (Dell)digitized format (software)relatively inexpensive items (office supplies)frequently purchased items (groceries)commodities with standard specifications (books), physical inspection unimportantwell-known packaged items that cannot be opened even in a traditional store (vitamins)

E-Tailing Business ModelsE-Tailing Business Models

Classification by distribution Classification by distribution channelchannel

Mail-order retailers that go onlineDirect marketing from manufacturersPure-play e-tailersClick-and-mortar retailersInternet (online) malls

E-Tailing Business ModelsE-Tailing Business Models (cont.)(cont.)


Direct marketing by mail order Direct marketing by mail order companiescompanies

direct marketing:direct marketing: broadly, marketing broadly, marketing that takes place without that takes place without intermediaries between intermediaries between manufacturers and buyers; in the manufacturers and buyers; in the context of this book, marketing done context of this book, marketing done online between any seller and buyeronline between any seller and buyer


Lands’ End: How a mail-order company Lands’ End: How a mail-order company moved onlinemoved online

Successful because of the logistics system Successful because of the logistics system already in placealready in place

A subsidiary of Sears, Roebuck and A subsidiary of Sears, Roebuck and Company Company

Internet sales in 2000—10% of the Internet sales in 2000—10% of the company’s $1.3 billion totalcompany’s $1.3 billion total

Projected Internet sales are 20 percent in Projected Internet sales are 20 percent in 20032003

Lands’ EndLands’ End

In 1995 it offered only 100 products In 1995 it offered only 100 products online; as of 2002, all of its products online; as of 2002, all of its products are online are online

Global presence in Japan, Germany, Global presence in Japan, Germany, and the United Kingdomand the United Kingdom

Orders generated online are shipped Orders generated online are shipped from these distribution outlets—U.S. from these distribution outlets—U.S. customers usually receive their orders customers usually receive their orders 2 days2 days

Lands’ End Lands’ End (cont.)(cont.)

Women customers Women customers can build and store a can build and store a three-dimensional three-dimensional model of their body model of their body (Personal Model) that (Personal Model) that recommends outfits recommends outfits that flatter certain that flatter certain body profiles and body profiles and suggests sizes based suggests sizes based upon the customer’s upon the customer’s measurementsmeasurements

Male customers can Male customers can use a feature called use a feature called “Oxford Express” to “Oxford Express” to sort through sort through hundreds of fabrics, hundreds of fabrics, styles, collar and styles, collar and cuff options, and cuff options, and sizes within minutes sizes within minutes

Lands’ End Lands’ End (cont.)(cont.)

Personal shopping accounts are available Personal shopping accounts are available Customers can track their order status Customers can track their order status online and request catalogs using the online and request catalogs using the InternetInternetAn affiliate program pays a 5% An affiliate program pays a 5% commission for every sale that comes commission for every sale that comes from a referral from a referral Maintains a B2B “store” at Maintains a B2B “store” at landsend.com/corpsaleslandsend.com/corpsales, where , where companies can customize clothing such companies can customize clothing such as polo shirts with their logo for use as as polo shirts with their logo for use as company uniforms, incentives, or giftscompany uniforms, incentives, or gifts

E-Tailing Business ModelsE-Tailing Business Models

Direct sales by manufacturersDirect sales by manufacturersSellers understand their markets better because of the direct connection to consumers, and consumers gain greater information about the products through direct connection to the manufacturersExample: Dell Computers—build-to-order approach of customization


Pure-play e-tailersPure-play e-tailersVirtual (pure-play) e-tailers:Virtual (pure-play) e-tailers: Firms Firms that sell directly to consumers over that sell directly to consumers over the Internet without maintaining a the Internet without maintaining a physical sales channelphysical sales channel

Examples: cattoys.comExamples: cattoys.com


Click-and-mortar retailers:Click-and-mortar retailers: Brick-and-Brick-and-mortar retailers with a transactional Web mortar retailers with a transactional Web site from which to conduct businesssite from which to conduct businessBrick-and-mortar retailers:Brick-and-mortar retailers: Retailers who Retailers who do business in the non-Internet, physical do business in the non-Internet, physical world in traditional brick-and-mortar world in traditional brick-and-mortar storesstoresMultichannel business model:Multichannel business model: Describes a Describes a company that sells in multiple marketing company that sells in multiple marketing channels simultaneously (e.g., both channels simultaneously (e.g., both physical and online stores)physical and online stores)


Retailing in online mallsRetailing in online mallsReferring directories

directory organized by product typecatalog listings or banner ads at the mall site advertise the products or stores

Malls with shared servicesconsumer can find the product, order and pay for it, and arrange for shipmenthosting mall provides these services, but they are executed by each store independently


Other B2C business modelsOther B2C business modelsTransaction brokersTransaction brokersInformation portalsInformation portalsCommunity portalsCommunity portalsContent creators or disseminatorsContent creators or disseminatorsViral marketingViral marketingMarket makersMarket makersBuild-to-orderBuild-to-orderService providersService providers

Travel and Tourism Travel and Tourism Services OnlineServices Online

Major travel-related Web sites are:

expedia.comorbitz.comtravelocity.comasiatravel.comhotwire.comtravelweb.comeurovacations.compriceline.com

Travel and Tourism Travel and Tourism Services Online Services Online (cont.)(cont.)

Revenue models of online travel services include:

Direct revenues (commissions)Revenue from advertisingConsultancy feesSubscription or membership feesRevenue-sharing feesOthers


Services provided:Services provided:Traditional services

providing general informationreserving and purchasing tickets, accommodations, and entertainment


Unique servicestravel tips (a visa problem)electronic travel magazinesfare comparisonscurrency conversion calculatorsworldwide business and place locators

outlet for travel accessories and booksexperts’ opinionsmajor international and travel newsdetailed driving maps and directions chat rooms and bulletin boardsfrequent-flier dealsonline travel auctions


Wireless servicesWireless servicescheck flight status, update frequent flyer check flight status, update frequent flyer miles, and book flights through cell phones miles, and book flights through cell phones

Direct marketing—sell Direct marketing—sell electronic tickets over the Internet

airlines are able to build customer profiles and target specific customers with tailored offers

Alliances and consortiaAlliances and consortiaaggregate participants’ Internet-only fares


BenefitsBenefitsHuge amount of free informationHuge amount of free informationAccessible at any time from any placeAccessible at any time from any placeSubstantial discounts Substantial discounts

LimitationsLimitationsAmount of time and the difficulty of using virtual travel agencies significant for inexperienced Internet surfersComplex trips require specialized knowledge


Impact of EC on the travel industryImpact of EC on the travel industryConsumers who used to order accommodations Consumers who used to order accommodations directly from a hotel are now using the Internet directly from a hotel are now using the Internet to compare prices and frequently are buying to compare prices and frequently are buying from an intermediary (Hotwire.com) from an intermediary (Hotwire.com)


Corporate travelCorporate travelTo reduce corporate travel costs, companies can make arrangements that enable employees to plan and book their own tripsUsing online optimization tools provided by travel companiesTravel authorization software checks availability of funds and compliance with corporate guidelines


Intelligent agents in travel servicesIntelligent agents in travel servicesAgent is capable of acting autonomously, cooperatively, and collectively to achieve the stated goalInvolved in buyer-seller negotiationsAgents may activate other agents to make special arrangements, cooperate with each other, activate multimedia presentations, or make special inquiries

Employment Placement and Employment Placement and the Job Marketthe Job Market

The Internet offers a rich environment for job seekers and for companies searching for hard-to-find employeesWho uses the Internet job market?

Job seekersEmployers seeking employeesJob agenciesGovernment agencies and institutions

Employment Placement and Employment Placement and the Job Market the Job Market (cont.)(cont.)

Consortium of large employersConsortium of large employersdirectemployers.com

site is used primarily to catalog job postings from the sites of the member employersHaving the job postings of a number of large employers in one place makes it easy for job searchers to explore available openings



Limitations of the electronic job Limitations of the electronic job market:market:

many people do not use the Internetmany people do not use the Internetsecurity and privacycreate high turnover costs for employers by accelerating employees’ movement to better jobsfinding candidates online is complicated due to the large number of resumes available online


Intelligent agents in the electronic job Intelligent agents in the electronic job market—job seekersmarket—job seekers

free service that uses intelligent agents to search the Internet’s top job sites and databases for job postings based on users’ profiles is offered at careershop.comusers create as many as 5 different profiles based on more than 100 different job categories, geographic regions, and key words. users receive a daily e-mail containing job opportunities from over a dozen top job sites around the Internet



Intelligent agents in the electronic Intelligent agents in the electronic job market—employers job market—employers (Resumix.com)(Resumix.com)

hiring managers view job applicationsoperators can scan resumesrecruiters can search for a candidate or identify existing employees for training programs, redeployment opportunities, or new initiatives

Real Estate OnlineReal Estate Online

Potential homebuyers can:view many properties online, at any time and from anywhere, saving time for the buyer and the brokersort and organize properties according to specific criteria and preview the exterior and interior design of the properties, shortening the search process

Real Estate Online Real Estate Online (cont.)(cont.)

Real estate applicationsReal estate applicationsassist2sell.com: advice to consumers on buying or selling a homerealtor.com and land.net: national listing of properties for salebankrate.com and eloan.com: information on current mortgage ratesowners.com: persons selling their homes privately without using a real estate agent

Real Estate Online Real Estate Online (cont.)(cont.)

Real estate mortgagesReal estate mortgageslendingtree.com and eloan.com: online mortgage loansPriceline.com (priceline.com) offers “name your own price” model for obtaining residential loansa Singaporean company aggregates loan seekers and then places the package for bid on the Internet

Insurance OnlineInsurance Online

Standard insurance policies are available online at a substantial discount :

Auto HomeLifeHealth

Third-party aggregators offer free comparisons of available policies

Insurance Online Insurance Online (cont.)(cont.)

Examples of Internet insurance Examples of Internet insurance sites:sites:

insurate.cominsurate.comorder.comorder.comquotesmith.cominsweb.cominsurance.comebix.comquicken.com

Online Stock TradingOnline Stock Trading

Online Stock Trading Online Stock Trading (cont.)(cont.)

Well-known companies that offer online trading:

E*TRADEAmeritradeTDWaterhouseSuretradeDiscoverLombard


Investment informationInvestment informationmoney.cnn.com: current financial newsbloomberg.com: municipal bond pricesinvestorguide.com: overall market information with many links to other financial sitesthestreet.com: free “guru” (expert) advice


marketguide.com: stock screening and evaluation tools (MultexInvestor)ipodata.com: latest on funding and pricing of initial public offerings (IPOs)bigcharts.com: chart lovers will enjoymorningstar.com: mutual fund evaluation tools and other interesting investment information


firstcall.com: earnings estimates and morefinance.yahoo.com: anything that anyone would need to know about finance and stocksfool.com: The Motley Fool is a comprehensive site that tries to educate, amuse, and enrich; a portal for individual investors


Related financial marketsRelated financial marketsCommoditiesFinancial derivativesMortgage banking

Risk of having online stock accounts

All trading sites require users to have an ID and password

Banking and Personal Banking and Personal Finance OnlineFinance Online

electronic banking (e-banking): electronic banking (e-banking): Various banking activities Various banking activities conducted from home or the road conducted from home or the road using an Internet connection; also using an Internet connection; also known as known as cyberbanking, virtual cyberbanking, virtual banking, online bankingbanking, online banking, and , and home bankinghome banking

Banking and Personal Banking and Personal Finance Online Finance Online (cont.)(cont.)

Dangers of online tradingDangers of online tradingalmost 55% of stock trading in Korea almost 55% of stock trading in Korea is done online is done online fraudulent online stock trading—fraudulent online stock trading—August 2002August 2002

A criminal used a PC in an Internet cafe A criminal used a PC in an Internet cafe to place a buy order at a fairly high to place a buy order at a fairly high price for 5 millions shares of Delta price for 5 millions shares of Delta Information and Communication in the Information and Communication in the name of a well-known buyer name of a well-known buyer


Using the trust company’s stolen account Using the trust company’s stolen account number and password number and password

In 90 seconds, over 100 people sold more In 90 seconds, over 100 people sold more than 10,000 shares each for a total of 2.7 than 10,000 shares each for a total of 2.7 million shares pushing the price of the shares million shares pushing the price of the shares way up way up

Hacker stopped buying and disappeared Hacker stopped buying and disappeared

Without buyers the price of Delta’s shares Without buyers the price of Delta’s shares started to declinestarted to decline

In 2 days Daewoo Securities (manager of the In 2 days Daewoo Securities (manager of the Hyundai account) suffered U.S. $5 million Hyundai account) suffered U.S. $5 million paper lossespaper losses


Home banking capabilitiesHome banking capabilitiesView current account balances and history at anytimeObtain charge and credit card statementsPay billsDownload account transactionsTransfer money between accountsBalance accountsSend e-mail to the bankExpand the meaning of “banker’s hours”Handle finances when travelingUse additional services


Virtual banksVirtual banksHave no physical location, but only conduct online transactions

NetBank (netbank.com)First Internet Bank (firstib.com)

Make sure that the bank is legitimate before sending money to a virtual bank


International and multiple-International and multiple-currency bankingcurrency banking

Hong Kong Bank developed a special system called HEXAGON to provide electronic banking in AsiaTradecard and MasterCard have developed a multiple-currency system for global transactions


Bank of America and most other major banks offer:

international capital raisingcash managementtrades and servicesforeign exchangerisk management investments merchant servicesspecial services for international traders


Fxall.com is a multidealer foreign exchange service that enables faster and cheaper foreign exchange transactions Special services are being established for stock market traders who need to pay for foreign stocks


Implementation issues in online Implementation issues in online financial transactions:financial transactions:

securing financial transactionsaccess to banks’ intranets by outsidersusing imaging systemspricing online versus off-line servicesrisks

Online Security Online Security Bank of AmericaBank of America

Online security at Bank of America—Online security at Bank of America—security safeguards provided:security safeguards provided:

encryption provided by SSL (Secure Socket Layer)

maintains accurate information; maintains accurate information; corrections made quickly corrections made quickly

information is shared among the information is shared among the company’s family of partners only for company’s family of partners only for legitimate business purposes legitimate business purposes

Online Security Online Security Bank of America Bank of America (cont.)(cont.)

Does not capture information provided by customerscustomersCustomers can control both the collection and use of information collected by cookiesProvides suggestions on how users can increase security

Online Security Online Security Bank of America Bank of America (cont.)(cont.)


Personal finance onlinePersonal finance onlineCombine electronic banking with personal finance and portfolio managementPersonal finance services such as retirement planning


Specialized personal finance softwarebill paying and electronic check writingbill paying and electronic check writing

tracking of bank accounts, expenditures, and credit tracking of bank accounts, expenditures, and credit cardscards

portfolio portfolio

investment tracking and monitoring of securitiesinvestment tracking and monitoring of securities

stock quotes and past and current prices of stocksstock quotes and past and current prices of stocks

personal budget organizationpersonal budget organization

record keeping of cash flow and profit and loss record keeping of cash flow and profit and loss computationscomputations

tax computations and preparations tax computations and preparations

retirement goals, planning, and budgetingretirement goals, planning, and budgeting


Online billing and bill paying Online billing and bill paying Automatic transfer of mortgage paymentsAutomatic transfer of funds to pay monthly utility billsPaying bills from online banking accountsMerchant-to-customer direct billingUsing an intermediary for bill consolidationPerson-to-person direct payment


TaxesTaxesirs.gov: extensive tax-related site run by the U.S. governmentwebtax.com: massive directory of tax-related information, research, and servicesfairmark.com: a tax guide for investorsmoneycentral.msn.com/tax/workshop: useful reference and educational sitequicken.com/taxes: emphasizes tax planning


taxcut.com/taxtips and smartmoney.com/ac/tax: advice on ways to minimize taxestaxprophet.com: tax advice in an entertaining mannerbankrate.com/brm/itax: informative articles about taxation1040.com: teaches about deduction rulesunclefed.com: advice on audits

On-Demand Delivery On-Demand Delivery Services and E-GrocersServices and E-Grocers

E-grocer:E-grocer: A grocer that will take A grocer that will take orders online and provide deliveries orders online and provide deliveries on a daily or other regular schedule on a daily or other regular schedule or will deliver items within a very or will deliver items within a very short period of timeshort period of time

On-demand delivery service:On-demand delivery service: Express delivery made fairly quickly Express delivery made fairly quickly after an online order is receivedafter an online order is received

On-Demand Delivery On-Demand Delivery Services and E-Grocers Services and E-Grocers

(cont.)(cont.)E-grocersE-grocers

offer consumers the offer consumers the ability to order items ability to order items online and have online and have them delivered to them delivered to their houses free their houses free regular regular “unattended” “unattended” weekly delivery weekly delivery based on a monthly based on a monthly subscription modelsubscription modelon-demand on-demand deliveries—a deliveries—a surcharge and surcharge and additional delivery additional delivery chargecharge

nonperishable items nonperishable items shipped via common shipped via common carriercarrierdry-cleaning pickup dry-cleaning pickup and deliveryand delivery““don’t run out” don’t run out” automatic reordering automatic reordering fresh flower deliveryfresh flower deliverymovie rentalsmovie rentalsmeal planningmeal planningrecipe tipsrecipe tipsmultimedia featuresmultimedia featuresnutritional nutritional informationinformation

On-Demand Delivery On-Demand Delivery Services and E-Grocers Services and E-Grocers

(cont.)(cont.)

Who are e-Who are e-grocery shoppers?grocery shoppers?

Shopping avoidersNecessity usersNew technologistsTime-starved consumers

Example: SafewayExample: Safeway

Grocery shopping in the palm of Grocery shopping in the palm of your handyour hand

Safeway implemented its Easi-Order Safeway implemented its Easi-Order services using a Palm handheld services using a Palm handheld device (PDA) to allow customers to device (PDA) to allow customers to point and click their grocery lists and point and click their grocery lists and send them to Safeway via phonesend them to Safeway via phonePart of the company’s “Collect & Go” Part of the company’s “Collect & Go” service service

Safeway Safeway (cont.)(cont.)

Valued customers are given Valued customers are given handheld devices that are loaded handheld devices that are loaded with an application that contains a with an application that contains a list of thousands of grocery items, list of thousands of grocery items, including descriptions and prices including descriptions and prices Customers review the items and Customers review the items and make their grocery lists off-line make their grocery lists off-line when time permits when time permits Estimated time savings is 60 to 90 Estimated time savings is 60 to 90 minutes each week minutes each week


Device is plugged into a standard Device is plugged into a standard phone socket, and it dials up the phone socket, and it dials up the Collect & Go server Collect & Go server Shopping list is downloaded to the Shopping list is downloaded to the server, and next week’s suggested list server, and next week’s suggested list along with suggestions and along with suggestions and promotions are uploaded to the device promotions are uploaded to the device Data collected by Safeway allow the Data collected by Safeway allow the company to offer outstanding company to offer outstanding customer service customer service


Order is picked and packed by the Order is picked and packed by the store and set aside for the customer store and set aside for the customer to pick up at their specified, to pick up at their specified, convenient time convenient time

Collection at dedicated checkout Collection at dedicated checkout counters—Easi-Pay terminals, which counters—Easi-Pay terminals, which allow customers to avoid check-out allow customers to avoid check-out lines altogether lines altogether

Home delivery may also be availableHome delivery may also be available


Customers download their orders Customers download their orders directly to the Collect & Go intranet directly to the Collect & Go intranet through the Internetthrough the Internet

In the future, Safeway plans to have In the future, Safeway plans to have screen phones, digital TV, and speech screen phones, digital TV, and speech processing devices assist grocery processing devices assist grocery shoppers in making their shopping shoppers in making their shopping experiences as easy as verbally telling experiences as easy as verbally telling the program what they want the program what they want

Online Delivery of Digital Online Delivery of Digital Products, Entertainment, and Products, Entertainment, and

MediaMediaDigital products: products that can be transformed to digital format and delivered over the Internet


Media Media (cont.)(cont.)

Napster Napster Consumers-to-consumers (peer-to-peer) digital distributionNapster only shares “libraries” or lists of songs, and then enables a peer-to-peer file-sharing environmentSued for copyright infringement in 2002


Media Media (cont.)(cont.)Free file sharing is no longer allowedNapster forced to charge customers for use of its file-sharing serviceEntered into an agreement with Bertelsmann AG (large global music label that participated in the lawsuit against Napster)Went into bankruptcy in 2002Roxio purchaced and reopened in late 2003 as “for fee file-sharing service”



Online entertainmentOnline entertainmentInteractive entertainmentInteractive entertainment

Web browsingInternet gamingSingle and multiplayer gamesAdult entertainmentParticipatory Web sitesReading



Noninteractive entertainmentNoninteractive entertainmentEvent ticketingRestaurantsInformation retrievalRetrieval of audio and video entertainment



Developments in the delivery of Developments in the delivery of digital productsdigital products

Custom CD sites (angelfire.com and grabware.com)Disintermediation of traditional print media (pcai.com and wsj.com)

Online Purchase Online Purchase Decision AidsDecision Aids

Shopping portals:Shopping portals: Gateways to Gateways to storefronts and malls; may be storefronts and malls; may be comprehensive or niche oriented comprehensive or niche oriented

dealtime.comshopping.yahoo.comeshop.msn.comwebcenter.shop.aol.com

Online Purchase Online Purchase Decision Aids Decision Aids (cont.)(cont.)

shopping robots (shopping agents shopping robots (shopping agents or shopbots):or shopbots): Tools that scout the Tools that scout the Web on behalf of consumers who Web on behalf of consumers who specify search criteriaspecify search criteria

autobytel.comZdnet.com/computershopperoffice.comdealtime.com


““ Spy services”Spy services”services that visit Web sites for you, at your direction, and notify you of their findingsspyonit.comweb2mail.comalerts.yahoo.com

Wireless shopping comparisonsMysimon.comAT&T Digital PocketNet


Business rating sitesBusiness rating sitesBizrate.comConsumer Reports Online (consumerreports.org)Forrester Research (forrester.com)Gomez Advisors (gomez.com)


Trust verifications Trust verifications sites:sites:

evaluate and verify the trustworthiness of various e-tailers

TrustETrustE

VersignVersign

BBB onlineBBB online

WebtrustWebtrust


Other shopping toolsOther shopping toolsdigital intermediaries assist buyers or sellers, with the research and purchase processescommunities of consumers who offer advice and opinions on products and e-tailers (epinions.com)wallet—is a program that contains the shopper’s information

Successful Successful Click-and-Mortar Click-and-Mortar

StrategiesStrategiesSpeak with one voiceEmpower the customerLeverage the multichannels

Example: Circuit CityExample: Circuit City

Transformation to click-and-Transformation to click-and-mortar: Circuit Citymortar: Circuit City

1999, Circuit City’s Web site largely a brochureware site capable only of selling gift certificatesEC system credit card authorization and inventory-management systems were in place

Circuit City Circuit City (cont.)(cont.)

Features of the circuitcity.com site:educates customers about the various features and capabilities of different productscustomers gain valuable knowledge to assist them in the purchase decisionextensive amount of information about electronics and other products, organized in a very flexible way

Circuit City Circuit City (cont.)(cont.)

Online purchase to be smooth, secure, and seamlessOrder fulfillment method is flexible

receive the purchase via common carrier pay a larger shipping charge for overnight deliverypick up the item at the nearby brick-and-mortar store

Successful Click-and-Successful Click-and-Mortar Strategies Mortar Strategies (cont.)(cont.)

Alliance of virtual and traditional Alliance of virtual and traditional retailers: Amazon.com and ToysRUsretailers: Amazon.com and ToysRUs

Amazon.com known as a premier site for creating customer loyalty and for driving sales through its execution of CRM with efficient back-office order fulfillment systemsToysRUs known for its broad product offerings and a deep understanding of the toys market, customer tastes, and suppliers

Successful Click-and-Successful Click-and-Mortar Strategies Mortar Strategies (cont.)(cont.)

During the 1999 Christmas season, before their alliance, both companies failed to profitably deliver toys on timeThey have pooled their expertise to form a single online toy storeThe alliance allows the partners to leverage each other’s core strengthsThe two companies must coordinate disparate systems—operational, technological, and financial—as they merge their corporate cultures

Problems with E-Tailing Problems with E-Tailing and Lessons Learnedand Lessons Learned

Reasons retailers give for not going online include:

product is not appropriate for Web saleslack of significant opportunitytoo expensivetechnology not readyonline sales conflict with core business

Problems with E-Tailing Problems with E-Tailing and Lessons Learned and Lessons Learned

(cont.)(cont.)Failures in B2C dot-comsFailures in B2C dot-coms

Kozmo.com—a Kozmo.com—a creative idea for on-demand deliveries of movie rentals—difficulty in how to return the videosFurniture.com—difficulty in delivering products in a timely mannereRegister.com—registering for courses etc. online was not popular with consumers


(cont.)(cont.)Go.com—business model called for selling a large amount of ad impressions, which proved to be impossiblePets.com—cost of acquiring customers was too costly


(cont.)(cont.)Lessons learned:Lessons learned:

Don’t ignore profitabilityDon’t ignore profitabilityManage new risk exposureWatch the cost of brandingDo not start with insufficient fundsThe web site must be effectiveKeep it interesting

Issues in E-TailingIssues in E-Tailing

Disintermediation:Disintermediation: The removal of The removal of organizations or business process layers organizations or business process layers responsible for certain intermediary responsible for certain intermediary steps in a given supply chain steps in a given supply chain

Reintermediation:Reintermediation: The process whereby The process whereby intermediaries (either new ones or those intermediaries (either new ones or those that had been disintermediated) take on that had been disintermediated) take on new intermediary rolesnew intermediary roles

Issues in E-Tailing Issues in E-Tailing (cont.)(cont.)

Cybermediation (electronic Cybermediation (electronic intermediation):intermediation): The use of software The use of software (intelligent) agents to facilitate (intelligent) agents to facilitate intermediationintermediation

Hypermediation:Hypermediation: Extensive use of Extensive use of both human and electronic both human and electronic intermediation to provide assistance intermediation to provide assistance in all phases of an e-commerce in all phases of an e-commerce ventureventure


Unbundling:Unbundling: old economy processes will be broken into specialized segments that can be delivered by specialized intermediaries

Channel conflict:Channel conflict: Situation in which Situation in which an online marketing channel upsets an online marketing channel upsets the traditional channels due to real the traditional channels due to real or perceived damage from or perceived damage from competitioncompetition


Determining the right priceDetermining the right priceprices competitive on the Internetprices should be in line with the corporate policy on profitability

PersonalizationPersonalizationuse cookie files and other technologies to track the specific browsing and buying behavior of each consumermarketing plan tailored to that consumer’s pattern

Managerial IssuesManagerial Issues

1. Should we grab a first-mover advantage or wait and learn?

2. What should our strategic position be?

3. Are we financially viable?4. Should we recruit out of town?

Managerial Issues Managerial Issues (cont.)(cont.)

5. Are there international legal issues regarding online recruiting?

6. Do we have ethics and privacy guidelines?

7. How will intermediaries act in cyberspace?

8. Should we set up alliances?

SummarySummary

1. The scope of e-tailing2. E-tailing business models3. How online travel/tourism services

operate4. The online job market and its

benefits5. The electronic real estate market6. Online trading of stocks and bonds

Summary Summary (cont.)(cont.)

7. Cyberbanking and personal finance8. On-demand delivery service9. Delivery of digital products10. Aiding consumer purchase decisions11. Critical success factors12. Disintermediation and

reintermediation