1. Retailing on the Internet Back to Table of Contents

2. Retailing on the Internet Retailing–Then and Now The E-Tail Experience 2 Retailing on the Internet Section 3-1 Section 3-2 Chapter 3

3. Retailing on the Internet Section 3-1 Why It’s Important To attract customers and win market share, retailers develop new strategies to outdo their competitors. Understanding how the retail business has evolved since the 1800s will help you understand how retailing and e-commerce became what they are today. 3Section 3-1

4. Retailing on the Internet Section 3-1 Key Terms retailers wholesalers e-tailing services retailers non-store retailers 4Section 3-1

5. Retailing on the Internet Retailing Before E-Commerce First and foremost, retailers want your business. retailers establishments that sell goods and services to the general public 5Section 3-1 The retailing process is the final step in the distribution of products.

6. Retailing on the Internet Retailing Before E-Commerce Wholesalers supply retailers with products. wholesalers businesses that sell products to distributors or retailers and not usually to the end-user or consumer 6Section 3-1

7. the first retailers consumers bought directly from craftsmen, farmers, and local manufacturers general stores direct-to-consumer mail-order “Main Street” shopping strip malls shopping malls big-box retailers and category killers The History of Retailing 7 Retailing Timeline Section 3-1 1700s1800s1920s1850s1950s1970s1980s

8. Retailing on the Internet The History of Retailing The most modern innovation in retailing is e-tailing. e-tailing the buying and selling of retail goods on the Internet 8Section 3-1 E-tailing enables consumers to choose from an almost infinite variety of products and purchase them without leaving their own homes.

9. Retailing on the Internet The History of Retailing In the 1980s, big-box retailers such as Kmart, Target, and Wal-Mart brought about a revolution in retailing. Big box retailers have special distribution systems that keep operating costs and prices low. 9Section 3-1

10. Retailing on the Internet The History of Retailing In the 1980s, category killers became common. These large stores specialize in a particular type of product, such as toys, hardware, books, or sporting goods. They are called category killers because, by offering the lowest prices available, they are able to “kill” their competition. 10Section 3-1

11. Retailing Today 11 Major Categories of Retailers Section 3-1 specialty stores department stores discount stores services retailers non-store retailers

12. Retailing on the Internet Retailing Today Specialty stores, such as Toys “R” Us, Borders, Ace Hardware, and REI, are stores that specialize in specific kinds of products or product lines and offer a wide assortment within their given categories. 12Section 3-1

13. Retailing on the Internet Retailing Today Sears, Foley’s, Macy’s, and J.C. Penney fall into the category of department stores. These stores offer a variety of products and choices within each product line and a floor plan that provides specialized departments. 13Section 3-1

14. Retailing on the Internet Retailing Today Discount stores such as Wal-Mart offer very low prices. Some consumers prefer not to shop at discount stores because they often drive many small, local stores out of business, putting people out of work. 14Section 3-1

15. Retailing on the Internet Retailing Today Services retailers play an important role in our economy by providing specialized skills and expertise most consumers lack and need. services retailers businesses that provide services 15Section 3-1 Banks, dental offices, and pet groomers are examples of services retailers.

16. Retailing on the Internet Retailing Today Non-store retailers are able to lower costs by selling directly to consumers without the cost of maintaining a storefront. non-store retailers businesses that use means other than traditional storefronts to sell their products, such as infomercials, catalogs, door-to-door solicitation, trade shows, and vending machines 16Section 3-1 E-tailing is a form of non-store retailing.

17. Retailing on the Internet Section 3-1 Review How were early retail stores less convenient for shoppers than those of today? How do category killers “kill” their competition? Why might some retail customers prefer not to shop at discount stores? 1. 2. 3. 17Section 3-1

18. Retailing on the Internet Section 3-2 Why It’s Important When you understand the complexities of running a secure and reputable e-commerce site, you can better plan your business and purchases. Section 3-218

19. Retailing on the Internet Section 3-2 Key Terms hyperlink Electronic Funds Transfer smart card eWallet e-cash Secure Sockets Layer digital certificates Section 3-219

20. Retailing on the Internet The Nature of E-Tailing Setting up and maintaining an online business comes with a set of unique challenges. To be a successful e-tailer, you have to create an engaging e-tail experience and ensure the security of information. 20Section 3-2

21. Retailing on the Internet Product Merchandising Online merchandisers use hyperlinks as merchandising cues to present their products and motivate consumers. hyperlink also called a hypertext link, or simply a link; connects the current Internet document with another location in the same document, another document on the same Web site, or another document somewhere else on the Web; a blue, underlined font identifies hypertext links 21Section 3-2

22. Product Merchandising 22Section 3-2 cross-sell hyperlink upsell hyperlink recommendation hyperlink promotion hyperlink Hyperlinks Takes the user to an item associated with the item the user is currently viewing. Refers the user to a similar but more upscale and expensive item. Takes the user to a product that might interest the user based on products the user has purchased before. Refers the user to a “hot” product or sales item the site is currently offering.

23. Retailing on the Internet Product Merchandising A company can offer photos, color change interfaces, and video clips to enhance the presentation of its products on its Web site. When customers are able to see more details of a product, they are more likely to buy. 23Section 3-2

24. Retailing on the Internet Setting Up an Online Purchasing Process Before you can sell goods to customers, you must either have them available in stock or have the ability to get them from a manufacturer quickly once you’ve received orders. The Web allows new forms of online collaboration between retailers and their suppliers. 24Section 3-2

25. Payment Options 25Section 3-2 Online Payment Options $ credit cardsdebit cards Electronic Funds Transfer (EFT) smart cardseWallets e-cashe-checks

26. Retailing on the Internet Payment Options Consumers use credit cards to pay for approximately 95 percent of all purchases on the Internet. When customers use debit cards for their online purchases, they are authorizing the withdrawal of money from their bank accounts. 26Section 3-2

27. Retailing on the Internet Payment Options When you purchase a product online using Electronic Funds Transfer (EFT), you can pay for it by having money transferred from your checking account to the checking account of the seller. Electronic Funds Transfer (EFT) provides electronic payments and collections for online sales 27Section 3-2

28. Retailing on the Internet Payment Options A smart card can be used to make financial transactions over the Internet. smart card credit card with an embedded microchip, which is loaded with data that can be programmed for various applications 28Section 3-2 More than a billion smart cards are currently in use, mostly in Europe.

29. Retailing on the Internet Payment Options Much like a smart card, an eWallet can be used to make online purchases. eWallet a software application that stores a customer's data for easy retrieval during online purchases 29Section 3-2 The eWallet utility encrypts your personal information.

30. Retailing on the Internet Payment Options E-cash provides rapid, secure, and reliable real- time payment processing worldwide. e-cash a legal form of computer-based currency that allows for the purchase of items by credit card, check, or money order 30Section 3-2 One of the global leaders in online e-cash payments is PayPal.

31. Retailing on the Internet Payment Options E-checks, or electronic checks, provide a handy way to get payment from customers who do not own or use credit cards. 31Section 3-2

32. Retailing on the Internet Order Fulfillment and Customer Service Part of your customers’ e-tail experience consists of receiving the goods they ordered quickly and efficiently. You need to consider how to warehouse your products and what methods to use to deliver them. 32Section 3-2

33. Retailing on the Internet Security Issues and Concerns One issue that may keep customers from making purchases on your Web site is security. It is important to protect customers’ personal information and have proof that you are a legitimate business. 33Section 3-2

34. Retailing on the Internet Security Issues and Concerns Secure Sockets Layer (SSL) encrypts customers’ personal information, keeping it safe from hackers. Secure Sockets Layer (SSL) helps encrypt and protect the information that customers enter into Web pages when making a purchase; this protocol is built into most browsers and is supported by most Web servers 34Section 3-2

35. Retailing on the Internet Security Issues and Concerns To help your customers feel confident that you run a reputable business, purchase a digital certificate. digital certificate computer file used to verify to customers that a company is what it claims to be 35Section 3-2 Digital certificates are issued by a trusted third party.

36. Retailing on the Internet Advantages and Disadvantages of E-Tailing Advantages A great Web site can attract new customers, Customers can shop 24/7. Disadvantages Customers concerned about security may be reluctant to release personal information. Customers are not able to examine merchandise. 36Section 3-2

37. Retailing on the Internet Section 3-2 Review What is a cross-sell? What product might be cross-sold to a customer purchasing a coffeemaker? Why? How could a company enhance the presentation of its products on its Web site? How would this influence its sales? Why might a Web site’s sales suffer if it only permits customers to pay using smart cards and EFTs? How can a Web site assure customers of security? 1. 2. 3. 37Section 3-2 4.

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39. Retailing on the Internet End of Back to Table of Contents