Chapter 3 Retailing in E-Commerce Products and Ser

1PrenticeHall,2002Chapter3RetailinginE-Commerce:ProductsandServices2PrenticeHall,2003LearningObjectivesDefineanddescribetheprimarybusinessmodelsofelectronicretailing(“e-tailing”)Discussvariouse-tailmarkets,suchasthoseforbooks,music,andcarsIdentifytheprinciplesof“click-and-mortar”strategiesfortraditionalretailersDescribehowonlinetravelandtourismoperate3PrenticeHall,2003LearningObjectives(cont.)Discusstheonlineemploymentmarket,includingitsdriversandbenefitsDescribeonlinerealestate,insurance,andstocktradingDiscusscyberbankingandonlinepersonalfinanceDescribeon-demanddeliverybye-grocers4PrenticeHall,2003LearningObjectives(cont.)DescribethedeliveryofdigitalproductsandonlineentertainmentDiscussvariouse-tailconsumeraids,includingcomparison-shoppingaidsIdentifythecriticalsuccessfactorsfordirectmarketingande-tailingDescribereintermediation,channelconflicts,andpersonalizationine-tailing5PrenticeHall,2003Amazon.com:KingofE-TailingTheProblemAmazon.comhasrecognizedthatitmustcontinuallyenhanceitselectronicstorebyexpandingproductselectionandimprovingthecustomerexperienceTheSolutionAmazon.comnowoffersspecialtystoresProfessionalandtechnicalstoreExpandedbookeditorialcontentIncreasedproductselection6PrenticeHall,2003Amazon.com(cont.)SomekeyfeaturesoftheAmazon.comare:EasybrowsingandsearchingUsefulproductinformationLowpricesOne-ClickordertechnologyFeaturesthatmaketheonlineshoppingexperiencemoreenjoyableGiftideasE-cards7PrenticeHall,2003Amazon.com(cont.)VariousmarketplaceservicesAmazonAuctionszShopsservicehostselectronicstorefrontsforamonthlyfeeCustomerrelationshipmanagementCreatesinterestingandinformativefront-endHighlyautomatedandefficientback-endsupportPersonalizedserviceDiversificationthroughbusinessalliances8PrenticeHall,2003Amazon.com(cont.)TheResultsFinancialperformance—annualsalesforAmazon.comhavetrendedupward,from$15.7millionin1996to$4billionin2002OffersseveralfeaturesforinternationalcustomersDeclareditsfirstprofitforthe2001firstquarterYetthecompany’sfinancialsuccessisbynomeansassured9PrenticeHall,2003E-TailingandB2CMarketGrowthAretailerisasalesintermediary,asellerthatoperatesbetweenmanufacturersandcustomersElectronicretailing(e-tailing)—retailingconductedonline,overtheInternetCatalogsalesfreearetailerfromtheneedforaphysicalstoreManufacturersellsdirectlytothecustomer,cuttingouttheintermediary10PrenticeHall,2003SizeandGrowthoftheB2CMarketStatisticsforvolumeofB2CECsalescomefrommanysources:emarketer.comjmm.comStatisticsone-tailingcanbefoundat:Cyberdialogue.comBusiness2.comSubstantialdeviationsinthereporteddataduetohowthenumbersarederived11PrenticeHall,2003WhatSellsWellontheInternet?ComputersandelectronicsSportinggoodsOfficesuppliesBooksandmusicToysHealthandbeautyEntertainmentApparelCarsServicesOthers12PrenticeHall,2003CharacteristicsofSuccessfulE-TailingBrandrecognitionandguaranteesGuaranteeprovidedbyhighlyreliableorwell-knownvendorsDigitizedproductsInexpensiveitemsFrequentlypurchasedCommoditieswithstandardspecificationsWell-knownpackageditemsthatcannotbeopenedeveninatraditionalstore13PrenticeHall,2003E-TailingBusinessModelsE-tailingbusinessmodelscanbeclassifiedinseveralways:BythescopeofitemshandledGeneral-purposeSpecialtye-tailingByscopeofthesalesregioncoveredGlobalRegionalTwomainmodelsDirectsellingmodelDistributionchannel14PrenticeHall,2003ClassificationbyRevenueModelProductsalesmodelsChargecustomersdirectlyforproductsorservicesSubscriptionmodelsChargemonthlyorannualsubscriptionfeeforserviceTransaction-feemodelsChargeservicefeebasedontheleveloftransactionofferedAdvertising-supportedmodelsChargefeetoadvertisersinsteadofcustomersSponsorshipmodelsCompaniessponsorthebusinessthroughdonations(usuallysupplementalincome)15PrenticeHall,2003ClassificationbyDistributionChannelDirectmarketing—manufacturersselldirectlyfromcompanysitestoindividualcustomersPure-playe-tailers—havenophysicalstores,onlyanonlinesalespresenceClick-and-mortarretailers—traditionalretailerswithasupplementaryWebsite16PrenticeHall,2003DirectMarketingbyManufacturersorMail-OrderCompaniesDirectmarketing—broadly,marketingthattakesplacewithoutintermediariesbetweenmanufacturersandbuyers;inthecontextofthisbook,marketingdoneonlinebetweenthesellerandthebuyerDisintermediation—removaloforganizationsorbusinessprocesslayersresponsibleforcertainintermediarystepsinagivensupplychain17PrenticeHall,2003Exhibit3.1:DisintermediationintheB2CSupplyChain18PrenticeHall,2003DirectMarketingbyManufacturersorMail-OrderCompanies(cont.)PartiesindirectmarketinghaveagreateropportunitytoinfluenceeachotherMake-to-orderonline—directsalesbymanufacturersaregainingpopularityduetotheabilitytocustomizeproductsorservices19PrenticeHall,2003Lands’End:HowaMail-OrderCompanyMovedOnlineSuccessfulB2Ce-tailersaremail-ordercompaniesoncebasedsolelyonpapercatalogsLogisticssystemwerealreadyinplaceLands’Endservedover6.2millioncustomersin2000Internetsales:1999were5%ofcompany’stotalsales2000were10%2003are20%(projected)20PrenticeHall,2003Lands’End(cont.)Landsend.comoffersallitscatalogproductsonlineWebsiteoffers:Allowsw