1、Chapter 2 Retailing in Electronic Commerce,Learning Objectives,Define the factors that determine the business models of electronic marketing Identify the critical success factors of direct marketing Design the desirable relationship in a direct marketing setting Analyze the critical success factors
2、of electronic intermediaries Identify the typical products that sold well in the electronic market,Observe the reactive strategy of traditional department stores Discuss whether electronic commerce should always target global markets Describe the consumers shopping procedures on the Internet Discuss
3、 the types of aiding-comparison-shopping devices Describe the impact of EC on disintermediation and re-intermediation in retailing,Learning Objectives (cont.),Overview of Electronic Marketing Structure,Business-oriented Electronic Marketing (B2B) Needs more precise record keeping, trackability, acco
4、untability, and formal contracts, usually with high volume of transactions and large amount payments,Consumer-oriented Electronic Marketing (B2C) Mostly online; on the Internet Growing offline too, mainly by using smart cards, although it is still experimental,Advantages of Electronic Marketing,Dire
5、ct marketing Customization Online customer service Electronic shopping malls: Intermediaries (e.g. Internet Mall) Stores (e.g. Amazon, J.C.Penney Online) Electronic intermediaries Global marketing,Customers can order from cyberstores 24 hours a day, 7 days a week from any place in the world,Forecast
6、 of the B2C Electronic Markets,Initial Forecast of B2C Electronic Market Size,Forecasting Institutions 1997 2000,IDC 1,000 117,000 VSAComm 48 3,500 VeriFone 350 65,000 Actif Media 436 46,000 Killen & Assoc. 775,000 Yankee 850 144,000 Jupiter 45 580 E-land 450 10,000 EU 228,000 USA 200 EITO 363 200,0
7、00 AEA/AU 200 45,000 Hambrecht & Quest 1,170 23,200 Forrester 518 6,579,Source: OECD, 1997,Kinds of items sold,Forecast of the B2C Electronic Markets (cont.),(Unit: Millions of U.S. Dollars),Items 1997 2000,Apparel 46 322,Gifts/flowers 45 658,Books 16 Not available,Food/drink 39 336,Clothing 89 322,
8、Entertainment 85 1,250,Subscription services 120 966,Pornography 52 Not available,Music 9 186,Online games 127 1,013,Consumer finance 68 Not available,Consumer insurance 30 1,110,Source: OECD, Sept. 1997,Initial Forecast of B2C Electronic Market Segments,What sells on the Internet?,Forecast of the B
9、2C Electronic Markets (cont.),Items with high brand recognition Goods that can be transformed to digitized goods like books, music, and video Items with security guarantee given by highly reliable or known vendors Relatively cheap items Repetitively purchased items such as groceries Commodities with
10、 standard specification Items whose operating procedures can be more effectively demonstrated by a video Packaged items which are well known to customers and which cannot be opened even when customers physically visit the store,Business Models of Electronic Marketing,Direct Marketing Manufacturers V
11、s. Indirect Marketing Manufacturers,Full Cybermarketing Vs. Partial Cybermarketing,Electronic Store Vs. Electronic Broker,Electronic Mall Vs. Electronic Store,Active Strategic Posture Vs. Reactive Strategic Posture,Global Marketing Vs. Regional Marketing,Sales Vs. Customer Services,Generalized Mall
12、Vs. Specialized Mall/Store,Proactive Vs. reactive strategic posture toward cybermarketing Proactive strategic posture toward cybermarketing a companys main distribution channel is the Internet, and internal management such as inventory and operations management is focused to affect the benefit of cy
13、bermarketing Reactive strategic posture toward cybermarketing the traditional physical distribution channel is left as the companys main distribution channel even though the company has opened an online distribution channel Global Vs. regional marketing Sales Vs. customer services,Business Models of
14、 Electronic Marketing (cont.), Prentice Hall, 2000,10,Active and full direct Marketing,Direct Marketing,Dell Computer Corporation CaseFounding spirit of dell: telemarketing Astonishingly high growth and returns Revenue via the Internet Dells products on the Internet,Dells Critical Success Factors,Di
15、rect Marketing (cont.),Price competitiveness owing to mass-customization and direct marketing Database marketing and customer intimacy Global reach and value added services at a single contact point High reliability and reputation Delivery support Advanced web applications,Reactive and Partial Direc
16、t Marketing,Direct Marketing (cont.),Sell their products mainly through traditional channels like department stores, discount stores, and franchises Ford Case including dealers as partners is optimal because orders that are received directly by the automakers may not be physically fulfilled without
17、the cooperation of dealers the received orders can then be assigned to the nearest dealer who owns the desired car in the inventory the dealers inventory information should be shared by automakers through a common network,Fords reactive direct marketing model (procedure),Direct Marketing (cont.),Rea
18、ctive and Partial Direct Marketing,Select the brand of car or truck that interests you,Choose the body style you most desire,Select the option package(s) that appeals to you,Add other individual options to build your most comfortable, useful customized vehicle,Pick your favorite exterior paint color
19、,Pick the interior upholstery that suits your taste,Then the Online Shopping Service System will provide you with a “Vehicle Summary”,You can change options to accommodate the budget, and finalize the configuration,Decide whether to lease or buy, with the aid of Payment Calculator System,Search a de
20、aler online by dealer name, city, or state,Send the “Vehicle Summary” to the dealer,The dealer will contact you with a price and availability of the vehicle you configured,Apply for financing,Ford supports a pre-owned showroom in the following way :,Enter your ZIP code,Search the inventory,Enter you
21、r personal information,Secure your vehicle,Select a dealership for test-drive and delivery,Choose a Ford Extended Service Plan,Explore leasing or financing options,Print your order,Confirm your order,Confirm you delivery,Test drive and accept delivery,Online Customer Service,Provided in conjunction
22、with online sales Provided to products which are sold offline Example: service and support homepage of Hewlett Packard (HP) By using computer telephone integration (CTI) technology, the same screen that a customer sees can be automatically displayed to the human agent (and vice versa) who responds t
23、o the customers call watching the online data about the customer,Active Electronic Intermediaries,Pure electronic mall Companys retailing business exists only on the Internet Electronic distributors take full responsibility of fulfilling orders and collecting payments Electronic brokers assist the s
24、earch process of finding the appropriate products and their vendors Partial electronic mall Electronic mall as one of existing distribution channels,Generalized Electronic Intermediaries,Active Electronic Intermediaries (cont.),Examples : Choice Mall, and iMall Provide a directory, keyword search en
25、gine, message encryption, optional Web site hosting service and a common platform of electronic payments Necessary factors to make shopping successful Screening quality and reliability for assurance customers need a reliable screening capability of quality and reliability of brands and companies e-b
26、rokers should create a trusted third party Competing electronic channels several electronic channels help in finding the items needed e-brokers should provide some differentiated attraction,Specialized Electronic Distributors,Active Electronic Intermediaries (cont.),Cyber Bookstores Amazon, Barnes a
27、nd Noble Cyber CD Stores Columbia House, Music Boulevard, CD Universe, and CDNow Digitized Products and Services Stores Software, games, CDs, and videos Cyber Flower Stores 1-800-FLOWERS,Reactive Electronic Department Store,The J.C. Penney Case,The Internet-based revenue amounts to only 1 to 2% of $
28、30.5 billion total sales of 1997 (3.5% in 1999),Updating prices and adding new items to the electronic catalogs is convenient and inexpensive Overcoming the limitations of paper catalogs without incurring extra distribution cost,Electronic Department Stores Worldwide,Reactive Electronic Department S
29、tore (cont.),Marks & Spencer in the U.K., La Redoute in France, Jusco in Japan, Nordstrom in the U.S.A., and Lotte and Hyundai in Korea Common strategy is finding significant benefits from merchandising online Offering electronic service on the Internet is a supplementary channel of advertisement By
30、 2000, 3.5% of all U.S. major retailing will be done online,Regional Shopping Service,Peapod Case,The leading Internet supermarket, providing consumers with broad product choices and local delivery services Provide pictures of items, nutritional contents, past purchase records Users: middle and uppe
31、r class people, some of whom are single parents, and all of whom are very busy. Also sick and elderly people or those without transportation.,$4.95/month membership fee, and $6.95 service free + 5% of the purchased amount= cost of delivery service,Procedures for Internet Shopping : The Consumers Per
32、spective,Preliminary requirement determination to meet the needs Search for the available items that can meet the requirements Compare the candidate items with multiple perspectives: specification, price, delivery date, and other terms and conditions,Place an order Pay the bill Receive the delivered
33、 items and inspect; possibly while using Contact the vendor to get service and support, or to return if disappointed,Procedures for Internet Shopping : The Consumers Perspective (cont.),Aiding Comparison Shopping,Search hypertext files by agents Search in a web-based database both by human and softw
34、are agents within an e-mall Comparable item retrieval and tabular comparison Comparisons over multiple malls Comparisons as a multiple criteria decision making,The Impact of EC on Traditional Retailing System,Disintermediation and Re-intermediation,Disintermediation the removal of organizations or b
35、usiness process layers responsible for certain intermediary steps in a given value chain eliminating the traditional intermediaries, such as wholesalers, distributors, and retailers, to reduce the cost Re-intermediation the shifting or transfer of the intermediary functions, rather than the complete
36、 elimination intermediation such as electronic shopping malls, directory and search engine service, and comparison aids using agents creates the role of re-intermediation,Impact on Manufacturers Distribution Strategy,The Impact of EC on Traditional Retailing System (cont.),Manufacturers monopolistic
37、 Internet-based distribution: Levis does not allow any one else to sell the Levis product on the Internet (policy changed in 1999). Coexistence with the dealers: This is the case in car distribution. Regionally mixed strategy: Nike sells on the Internet, but only in the U.S.A. Mass Customization for
38、 Make-to-Order: Manufacturers have to be adaptive to the customized orders of ultimate consumers. This means the manufacturer should be ready for mass customization.,Managerial Issues,From a manufacturers point of view:,Fully committed to direct marketing, restructuring the current manufacturing and
39、 distribution systems,Regard the electronic store as an additional channel of distribution,OR,From an intermediarys point of view:,Commit to the directory service,Retailing a specialized breed of items,OR,Managerial Issues (cont.),For existing retailer in the physical space: How to transform its business posture to get the highest possible customer satisfaction at a minimum operating cost?,
