1. 3.4: Banking and Personal Finance Online
electronic banking (e-banking):
Various banking activities conducted from home or the road using an Internet connection;
Also known as cyberbanking, virtual banking, online banking, and home banking.
Virtual Banks
Have 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

2. 3.4: Banking and Personal Finance Online
Online Banking Capabilities
View current account balances and history at anytime
Access to statements
Pay bills online
Download account transactions
Transfer money between accounts
Balance accounts
Communicate with the bank
Access information anytime
Access information anywhere
Use additional services

3. 3.4: Banking and Personal Finance Online
Implementation Issues in Online Financial Transactions:
Securing financial transactions
Access to banks’ Intranets by outsiders
Using imaging systems
Differential pricing of online versus off-line services
Potential Risks

4. 3.4: Banking and Personal Finance Online
Personal Finance Services Online
Bill paying and electronic check writing
Tracking of bank accounts, expenditures, and credit cards
Portfolio management
Investment tracking and monitoring
Stock quotes and past and current prices of stocks
Personal budget organisation
Record keeping of cash flow and profit and loss analysis
Tax services
Retirement goals, planning, and budgeting

5. 3.4: Banking and Personal Finance Online
In online bill paying, funds are taken from the user's accounts by an intermediary who then arranges payments with the user's debtor.
Online Billing and Bill Paying
Automatic transfer of mortgage payments
Automatic transfer of funds to pay monthly utility bills
Paying bills from online banking accounts
Merchant-to-customer direct billing
Using an intermediary for bill consolidation
Person-to-person direct payment
Pay bills at bank kiosks
Taxes

6. 3.5: On-Demand Delivery Services and E-Grocers
A grocer that will take orders online and provide deliveries on a daily or other regular schedule or will deliver items within a very short period of time
On-demand delivery service:
Express delivery made fairly quickly after an online order is received

7. 3.5: On-Demand Delivery Services and E-Grocers
Who are the e-grocery shoppers?
Shopping avoiders (dislike going to physical stores)
Necessity users (e.g., disabled and elderly)
New technologists (young and technology savvy)
Extremely busy consumers (time-starved)
Consumers who gain a sense of self-worth from online shopping (leading edgers)

8. 3.6: Online Delivery: Digital Products, Entertainment & Media
Certain goods, (software and music) may be digitised completely and delivered over the Internet.

9. 3.6: Online Delivery: Digital Products, Entertainment & Media
Napster: Its Rise, Collapse and Revival
Consumers-to-consumers (peer-to-peer) digital distribution
Napster only shares “libraries” or lists of songs, and then enables a peer-to-peer file-sharing environment
Sued for copyright infringement in 2002
Free file sharing is no longer allowed
Napster forced to charge customers for use of its file-sharing service
Entered into an agreement with Bertelsmann AG (large global music label that participated in the lawsuit against Napster)
Went into bankruptcy in 2002
Roxio purchased and reopened in late 2003 as “for fee file-sharing service”.

10. 3.6: Online Delivery: Digital Products, Entertainment & Media
Benefits and Limitations of Digital Delivery
There are several advantages to the use of digital delivery including increased speed of delivery, low product cost and low distribution costs.
The major disadvantage is that not all goods can be digitised.

11. 3.6: Online Delivery: Digital Products, Entertainment & Media
Online Entertainment
Interactive Entertainment
Web browsing
Internet gaming
Single and multiplayer games
Adult entertainment
Participatory Web sites
Reading

12. 3.6: Online Delivery: Digital Products, Entertainment & Media
Noninteractive Entertainment
Event ticketing
Restaurants
Information retrieval
Retrieval of audio and video entertainment
Live events

13. 3.7: Online Purchase Basics
Shopping Portals:
Gateways to storefronts and malls; may be comprehensive or niche-oriented. Examples:
gomez.com and shopping.yahoo.com
Shopping Robots (Shopping Agents or Shopbots)
Tools that scout the Web looking for goods and services that meet consumer’s specified search criteria
Wireless Shopping Comparisons
Enable shoppers to compare prices any time from anywhere, including from any physical store.

14. 3.7: Online Purchase Decision Aids
Business Ratings Sites
Rating of e-tailers and online products based on multiple criteria.
Trust Verification Sites
Evaluate and verify the trustworthiness of various e-tailers
Other Shopper Tools
Escrow services: 3rd party to assure quality
Communities of consumers who offer advice and opinions. Examples: Epinions.com, PriceGrabber.com.
e-wallet: A program that contains a shopper’s information.
Note: Escrow services and electronic wallets are useful for online purchases because they can decrease the amount of contract risk for the customer during an online purchase.

15. 3.7: Online Purchase Decision Aids
Business Rating Sites. Examples:
Bizrate.com
Consumer Reports Online (consumerreports.org)
Forrester Research (forrester.com)
Gomez Advisors (gomez.com)
Trust verifications sites. Examples:
TRUSTe, VeriSign, BBBOnline, WebTrust.
The above two tools add to customers’ feelings of security in making an online purchase. They allow the customer to evaluate the quality of the merchant, and not just the price of the good, before making a purchasing decision.

16. 3.7: Online Purchase Decision Aids
Role of search agents to support shopping
Agents are able to aggregate information from several sources as well as maintaining information about personal preferences to enhance the shopping experience.
Amazon.com’s A9 Search Engine
Remembers information
A user can make notes about any Web page and search them
Offers a new way to store and organise bookmarks
Recommends new sites and favorite old sites specifically for the user to visit

17. 3.8: Successful Click-and-Mortar Strategies
What motivates a brick-and-mortar company to sell online?
Traditional firms sell online to compete with new e-commerce entrants and to preserve market share. Additionally, traditional firms may see e-commerce as a way to expand their existing market share.
Click-and-mortar hybrid strategies:
Speak with one voice
Link all backend systems to an integrated customer service
Empower the customer
A powerful 24/7 channel for service and information
Leverage the channels
Offers advantages of each channel to customers from all channels

18. 3.8: Click-and-Mortar Strategies
Alliance of virtual and traditional retailers: Amazon.com and ToysRUs
The alliance between these two firms allowed Amazon.com to concentrate on its core competence of effective online logistics and customer relationship management, while Toys’R’Us could concentrate in their area of core competence–purchasing and marketing toys.
During the 1999 Christmas season, before their alliance, both companies failed to profitably deliver toys on time
Pooled their expertise to form a single online toy store
The alliance allows them to leverage each other core strengths
Revenues are split between the two companies; the risks are also equally shared.

19. 3.8: Click-and-Mortar Strategies
Alliance of virtual and traditional retailers: Amazon.com and ToysRUs (cont’d)
After 4 years, the partners sued each other
One reason for the difficulties was that the two companies had to coordinate disparate systems (operational, technological, and financial) as they merge their corporate cultures.
For example, Toys’R’Us wanted Amazon to sell only Toys’R’Us toys, and it paid $250 million a year for this exclusivity. Amazon interpreted the contract to allow them to sell toys from any company.
The alliance failed due to systems issues, corporate cultures and contract issues.

20. 3.8: Problems with E-Tailing and Lessons Learned
Reasons retailers give for not going online include:
Product is not appropriate for web sales
Lack of significant opportunity
Too expensive
Technology not ready
Online sales conflict with core business

21. 3.8: Problems with E-Tailing and Lessons Learned
Failures in B2C dot-coms
Kozmo.com
A creative idea for on-demand deliveries of movie rentals
Difficulty in how to return the videos
Furniture.com
Difficulty in delivering products in a timely manner
eRegister.com
Registering for courses etc. online was not popular with consumers

22. 3.8: Problems with E-Tailing and Lessons Learned
Don’t ignore profitability
Online marginal sales don’t lead to marginal profits
Manage new risk exposure
Watch the cost of branding
Drive to establish brand can lead to excessive spending
Do not start with insufficient funds
The web site must be effective and able to perform
Keep it interesting
Dynamic sites with rich databases of information appeal most to customers

23. 3.9: Issues in E-Tailing Disintermediation: Reintermediation:
The removal of organisations or business process layers responsible for certain intermediary steps in a given supply chain
Manufacturer sells directly to consumer.
Reintermediation:
The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles.
Unbundling:
Offering specialised services in small segments in order to improve speed and efficiency.

25. 3.9: 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.
The use of EC and IT can create changes in a traditional supply chain. These changes can remove existing players (disintermediation) and can bring them back with different roles and functions (reintermediation). Cybermediation uses intelligent agents while hypermediation uses extensive human and electronic intermediation at all stages of the value chain.

26. 3.9: Issues in E-Tailing Channel Conflict Determining the right price
Occurs when an upstream member of the value chain begins to sell directly to customers.
Can also occur when the online division of an existing company begins to compete with its off-line division or existing third party distribution channels.
Determining the right price
Prices need to be competitive, while still providing an adequate margin.
EC can allow companies to segment users into different price groups and test pricing more than was possible with only brick-and-mortar operations.

27. 3.9: Issues in E-Tailing Personalisation Fraud and illegal activities
Personalisation is the ability to use technology to create goods that meet the exact specifications of the consumer.
For example, an e-tailer can use cookie files and other technologies to track the specific browsing and buying behavior of each consumer. Next, produce a marketing plan tailored to that consumer’s pattern
Mass customisation is the ability to create personalised goods for a large number of customer goods based on their exact specifications. Highly risky for pure-play e-tailing.
Fraud and illegal activities
A major problem in B2C is the increasing rate of online fraud
How to make customers happy
Merchants can find out what customers want through market, the topic of of our next lesson.

28. Managerial Issues 1. What should our strategic position be?
2. List the B2C distribution channel models.
3. How will intermediaries act in cyberspace?
4. Should we set up alliances?
5. Describe channel and other conflicts that may appear in e-tailing.
6. Why are virtual e-tailers usually not profitable?