The Internet for Distribution Instructor: Hanniya Abid Assistant Professor COMSATS Institute of Information Technology Lecture 14 E-Marketing.

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Presentation transcript:

The Internet for Distribution Instructor: Hanniya Abid Assistant Professor COMSATS Institute of Information Technology Lecture 14 E-Marketing

Objectives After this lecture, you will be able to: Describe the three major functions of a distribution channel. Explain how the Internet is affecting distribution channel length. Discuss trends in supply chain management and power relationships among channel players. Outline the major models used by online channel members. Highlight how companies can use distribution channel metrics.

The Zappos Story Zappos is the world’s largest online shoe store. Sales over $1 billion in Part of amazon.com since November Success factors include a culture of outstanding customer service. Other success factors: great search engine marketing, strong word of mouth, and repeat customers.

Distribution Channel Overview A distribution channel is a group of interdependent firms that transfer product and information from the supplier to the consumer. Producers Intermediaries Buyers The structure of the channel can make or impede opportunities for marketing on the Internet.

Online Channel Intermediaries Wholesalers buy products from the manufacturer and resell them to retailers. Retailers buy products from manufacturers or wholesalers. Brokers facilitate transactions between buyers and sellers. Agents may represent either the buyer or seller. Manufacturer’s agents represent the seller. Purchasing agents represent the buyer.

E-Business Models

Content Sponsorship In this model firms create websites, attract traffic, and sell advertising. All the major portals utilize this model: Google Yahoo! MSN Content sponsorship is often used in combination with other models to generate multiple revenue streams.

Infomediary  An infomediary is an online organization that aggregates and distributes information.  Market research firms are examples of infomediaries.  Some infomediaries compensate consumers for sharing demographic and psychographic information and receiving ads targeted to their interests.

Intermediary Models Three intermediary models are in common use on the Internet: Brokerage models Online Exchange Online Auction Agent models for sellers and buyers Online retailing

Brokerage Models  The broker creates a market in which buyers and sellers negotiate and complete transactions.  Online Exchange: E*Trade, Schwab and Ameritrade allow customers to place trades online.  The B2B market has also spawned brokerages.  Converge is the leading exchange for global electronics.  Guru.com is an exchange for talent in 220 professional categories.  Online auctions are available in the B2B (uBid), B2C (Priceline), and C2C (ebay) markets.

Agent Models May represent sellers or buyers. Agent models that represent sellers include: Selling agents Manufacturer’s agents Metamediaries Virtual malls

Agent Models, cont. Agent models that represent buyers include: Shopping agents BizRate, PriceScan, and CNET Shopper Reverse auctions Priceline Buyer Cooperatives (buyer aggregators) pool many buyers together to drive down prices.

Shopping Agent:CNET Shopper

Online Retailing Merchants set up storefronts online that can sell a greater assortment of products in smaller quantities than offline. The “long tail” refers to the ability to increase revenue by selling small quantities of large numbers of products online. Shopping cart abandonment is one of online retailing’s biggest problems. Digital goods such as news, music, software, movies, etc. may be delivered over the Internet. The manufacturer sells directly to the customer in the direct distribution model.

What Do Consumers Buy Online?

Dimensions of e-Commerce