Chapter 3 Retailing in Electronic Commerce: Products and Services

3-2 Learning Objectives 1.Describe electronic retailing (e-tailing) and its characteristics. 2.Define and describe the primary e-tailing business models. 3.Describe how online travel and tourism services operate and their impact on the industry. 4.Discuss the online employment market, including its participants, benefits, and limitations. 5.Describe online real estate services. 6.Discuss online stock-trading services.

3-3 Learning Objectives 7.Discuss cyberbanking and online personal finance. 8.Describe on-demand delivery by e-grocers. 9.Describe the delivery of digital products and online entertainment. 10.Discuss various e-tail consumer aids, including comparison-shopping aids. 11.Identify the critical success factors and failure avoidance tactics for direct online marketing and e-tailing.

3-4 Internet Marketing and Electronic Retailing electronic retailing (e-tailing) Retailer is a sales intermediaries, a seller that operates between manufactures and consumers. E-catalogs sales free a retailer from the need for physical store to distribute products. E-retailing (e-tailing) Retailing conducted online, over the Internet. E-tailing makes it possible for a manufacture to sell directly to consumers, cutting out the intermediaries. e-tailers Retailers who sell over the Internet Amazon.com is the most recognize e-tailer worldwide

3-5 Internet Marketing and Electronic Retailing Travel (e.g., priceline.com) Computer Hardware and Software (e.g., Dell) Consumer Electronics Office Supplies (e.g., Staples.com) Sport and Fitness Goods (e.g., fogdog.com) Books and Music (e.g., Amazom.com) Toys (e.g., Kbkids.com) Health and Beauty Entertainment (e.g., espn.go.com) Clothing Jewelry Cars What Sells Well on the Internet?

3-6 Internet Marketing and Electronic Retailing Characteristics of Successful E-Tailing Retailer and e-tailer success comes from offering quality goods at good prices, coupled with excellent services. Goods with the following characteristics are expected to facilitate higher sales volumes: High brand recognition (e.g., Sony) A guarantee provided by highly reliable or well-known vendors Digitized format (e.g., software, music, or videos) Relatively inexpensive items Frequently purchased items Commodities with standard specifications Well-known packaged items that cannot be opened even in a traditional store

3-7 E-Tailing Business Models Classification by Distribution Channel Direct marketing from manufacturers Pure-play e-tailers Click-and-mortar retailers

3-8 E-Tailing Business Models direct marketing Broadly, marketing that takes place without intermediaries between manufacturers and buyers; marketing done online between any seller and buyer. By direct marketing, product delivery time is decreased, manufactures can build closer relationship with customers, order accuracy is increased, and order can be placed quickly.

E-Tailing Business Models virtual (pure-play) e-tailers Firms that sell directly to consumers over the Internet without maintaining a physical sales channel. Virtual e-tailers have the advantages of low overhead cost and streamlined processes. 3-9

3-10 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 physical world in traditional brick-and- mortar stores.

3-11 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)

3-12 Travel and Tourism Services Online Travel-related Web sites are ideal places to plan, explore, and arrange almost any trip. Some major travel-related Web sites are expedia.com, orbitz.com, travelocity.com, and priceline.com Services provided Online travel agencies offer almost all the services provided by the conventional agencies such as reserving and purchasing tickets, accommodations, and entertainment. They often provided services that conventional agencies do not offer such as e-travel magazines, fare comparison, currency conversion calculator, fare tracking, and so many.

Expedia.com 3-13

3-14 Travel and Tourism Services Online Special Services Many online travel sites such as Lastminute.com offer very low airfares and discount accommodations prices to fill otherwise- empty seats and hotel rooms. Last-minute trips can also be booked on americanexpress.com, sometimes at a steep discount. Special vacation destinations can be founded at priceline.com. Many sites such as tripprep.com and medicalert.com offer medical advice and services for travelers. Wireless services Direct marketing Alliances and consortia

Travel and Tourism Services Online Benefits of Online Travel Services To travelers Free information accessible at any time from any place Substantial discounts are available To travel services providers Airlines, hotels, and cruise lines sell otherwise- empty spaces Direct selling saves the provider’s commission and its processing 3-15

3-16 Travel and Tourism Services Online Limitations of Online Travel Services Many people do not use the Internet The amount of time and the difficulty of using virtual travel agencies may be significant, especially for complex trips and for inexperienced Internet surfers Complex trips or those that require stopovers require specialized knowledge and arrangements, which maybe better done by knowledgeable, human travel agent

3-17 Travel and Tourism Services Online Impact of EC on the Travel Industry The Internet may be contributing to a sharp reduction in the number of travel agents It has also driven the rise of intermediaries—third- party online sellers and portals provide price comparisons and a range of other value-adding services for the consumer

Employment, Placement, and the Job Market Online Traditionally, job matching has been done in several ways: Ads in classified sections of newspapers Corporate recruiters Commercial employment agencies The job market has now moved online. The online job market connects individuals who are looking for a job with employers who are looking for employees with specific skills. 3-18

3-19 Employment, Placement, and the Job Market Online

3-20 Employment, Placement, and the Job Market Online THE INTERNET JOB MARKET The following are parties use the internet job market: Job seekers Employers seeking employees Job agencies Government agencies and institutions

3-21 Employment, Placement, and the Job Market Online

3-22 Employment, Placement, and the Job Market Online Limitations of the Electronic Job Market The biggest limitation of the online job market is the that many people do not use the Internet. Finding candidates online is complicated due to the large number of resumes available online Security and privacy High turnover costs for employers by accelerating employees’ movement to better jobs

3-23 Employment, Placement, and the Job Market Online Intelligent Agents in the Electronic Job Market Intelligent agents for job seekers Intelligent agents for employers

3-24 Employment, Placement, and the Job Market Online

3-25 Real Estate, Insurance, and Stock Trading Online Real Estate E-commerce and the Internet are surely having an ever increasing impact on the real estate industry for many reasons: 1.Potential home buyers can view many properties online, saving time for the buyer and the broker 2.Potential home buyers can sort properties according to specific criteria and preview the design of the properties, shortening the search process 3.Potential home buyers can find detailed information about the properties 4.Builders can use virtual reality technology on their Web sites to demonstrate three-dimensional floor plans to home buyers

3-26 Real Estate, Insurance, and Stock Trading Online Real Estate Applications and Services Advice for consumers on buying or selling, assist2sell.com Commercial real estate listings, realcommercial.com.au Maps, mapquest.com Information on current mortgage rates, bankrate.com Mortgage comparisons and calculations, eloan.com

3-27 Real Estate, Insurance, and Stock Trading Online Insurance Online Standard insurance policies, such as auto, home, life, or health are offered at a substantial discount Third-party aggregators offer free comparisons of available policies

3-28 Banking and Personal Finance Online electronic (online) banking (e-banking) Various banking activities conducted from home or the road using an Internet connection. E-banking also known as cyberbanking, virtual banking, online banking, and home banking For users, e-banking saves time and money. For banks, it offers inexpensive alternative to a branch banking and a chance to enlist remote customers.

3-29 Banking and Personal Finance Online

3-30 Banking and Personal Finance Online Online billing and Bill-paying Major payment systems Automatic transfer of loan payments Paying bills from online banking accounts. Merchant-to-customer direct billing Using an intermediary for bill consolidation, First Data Merchant Solutions Person-to-person direct payment, Paypal (paybal.com)

3-31 On-Demand Delivery Systems and E-Grocers E-tailers may use the postal system within their country or they may use private shippers such as FedEx, DHL, or UPS. Delivery can be made within days or overnight if the customer is willing to pay for expedited shipment. Some e-tailers provide delivery functions by using either company-owned delivery vehicles or outsourced

On-Demand Delivery Systems and E-Grocers 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 3-32

3-33 Online Delivery of Digital Products, Entertainment, and Media

3-34 Online Delivery of Digital Products, Entertainment, and Media Online Entertainment Examples of online entertainment Web browsing Internet gaming Fantasy sports games Single and multiplayer games Card games Social networking sites Reading Live events

3-35 Online Delivery of Digital Products, Entertainment, and Media Developments in the Delivery of Digital Products CD customization sites The disintermediation of traditional print media Time will tell if digital delivery may replace or enhance traditional delivery methods for various types of digital content

3-36 Online Purchase-Decision Aids Many sites and tools are available to help online consumers with purchasing decisions shopping portals Gateways to e-storefronts and e-malls They have links to many different sellers that evaluate a broad range of products They also may provide comparison aids Several portals have purchased shopbots and incorporate them shopping robots (shopping agents or shopbots) Tools that scout the Web on behalf of consumers who specify search criteria, for example mysimon.com Some of agents are specialized in a certain product category. For example, the agent in office.com helps consumers find the best price for office supplies

3-37 Online Purchase-Decision Aids Business Ratings Sites Rate e-tailers and online products based on multiple criteria Trust Verification Sites Evaluate and verify the trustworthiness of various e-tailers

3-38 Successful Click-and-Mortar Strategies Speak with one voice Regardless how the customers interface with a company, the information received and services provided should be consistent Leverage the multichannels The retailer will offer the advantages of each marketing channels to customers of all channels Empower the customer The seller needs to create a powerful 24/7 channel for services and information

3-39 Problems with E-Tailing and Lessons Learned Lessons Learned Don’t ignore profitability If it doesn’t make cents, it doesn’t make sense. Manage new risk exposure The Internet has the potential to expose a retailer to more sources of risk. Watch the cost of branding The drive to establish brand recognition quickly often leads excessive spending.

Problems with E-Tailing and Lessons Learned Do not start with insufficient funds It may seems obvious that a venture will not succeed if it lacks funds at the start, The web site must be effective Internet shoppers expect Web sites to offer superior technical performance- fast page loads, quick database searches, … Keep it interesting Web sites without dynamic content will bore returning visitors 3-40