Chapter 3: Transcript
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Welcome to BCIS 5379. Chapter 3: Retailing in Electronic Commerce: Products and Services.
The learning objectives for this chapter include describing electronic retailing, sometimes
referred to as e-tailing and some of its characteristics. We will also talk about the primary
retailing business models and try to classify them in make it easier for you to be was to
distinguish one model from the next will describe how online travel and tourism services operate
in their impact on the industry will discuss the online employment market, including its
participants, benefits and limitations will describe online real estate services will discuss online
stock trading services. Then we’ll move on to discuss cyber banking and online personal finance
will talk about the on-demand delivery of groceries and similar perishable products and services
related to them talk about the delivery of digital products and online entertainment will discuss
various online consumer aids including comparison-shopping aids and then we’ll finish up by
discussing disintermediation and other be to see strategic issues electronic retailing or retailing
is a term that you might hear periodically and it’s really not anything to be intimidated by it’s
really nothing more than just simply a retailer that selling stuff over the Internet so that’s where
they do their their primary business about their their entire business detailers of the people were
actually doing that of the retailer to sell over the Internet. This first the seismic growth. The be to
see market. It’s really kindhearted to say the reason is the numbers get reported and collected
in a variety of different ways insult really hard to talk about the growth size and growth of the be
to see market at the what is really pretty well accepted, though, is inserted it’s a pretty sizable
more sizable market and that it continues to grow at a headache fairly steady pace pretty
aggressively. This part was so well on the Internet that really depends that something has
changed over time. Currently there’s a whole variety of different categories. So well but original
equipment Internet really started to get going in and detailing really for starting to get going first-
generation e-commerce if you will simple items were related items sold best things like books,
software, music things that were relatively small high-value to weight ratio, things of that nature.
However, as technologies come through in our faith and in in the ability of e-commerce to two e-
commerce websites to convey information about goods and services across the Internet have
improved to move beyond simple simple transactions and moved to smoke more complex type
products. For example, furniture expensive jewelry designer clothes, appliances, cars warring
big-screen TVs so the types of products of evolved over time. Traditional retailing and detailing
really aren’t all that different, but they sure probably more similarities than do different. Having
said that there obviously are some differences between 22 approaches. Probably nothing really
bigger than the fact that in the online environment. You really need to have a solid distribution
network or logistic strategy to be able to handle the delivery of goods and services is another
issue is the online environment detailing environment. You need to have an extremely flexible
infrastructure be able to have the ability to ramp up your your technology of the structure to be
able to handle significant increases in demand as far as a some of the other advantages will
general concepts about detailing utility should offer expanded customer services really offered
by some of the traditional retailers in the horse they have have some advantages. For example,
Chapter 3: Transcript
they have lower product cost which allows the allows for increasing competitive advantage to
get the name of the bad thing because that’s an advantage that you have local retailers is a
retailer that’s also an advantage that other retailers have as well so the competition becomes
much more significant will reach more customers than the outside of your normal traditional
regions. The words customers no longer those that are just around you. The whole world as it is
potentially your customer base is easy to change. Prices and catalogs quickly because of the
rings online you will have to mail a new catalog. Hopefully you have lower supply chain costs is
not necessarily the case because it literally everything a shift in your shipping onesies and
Tuesday shipping individual items to customers rather than shipping and bulk as a wholesaler
might do to retailer your will provide customers with a wealth of information. The setting
customer service cost. The words instead of dealing with the customer on a one-to-one basis
you publish all this information into your and your website and customers able to go and check
out that information individually as the as they see fit to having to deal with those customers
individually. They’re coming consuming that information on their own time and there’s a variety
of other advantages as well as well. Book this is the exhibit from the book and gives you a
general overall view of the supply chain of what might look and the book basically takes the
perspective or gives you the impression that you’re in the center of the supply chain will it if you
are the company that’s there in the middle of the of the exhibit to the right. It’s the traditional be
to see transactions that occur business to consumer your selling to consumers. B2B
transactions occur back to the left. In other words, we have to to be able sell to our customers.
We obtain goods and services from other businesses that are higher up the supply chain.
Essentially this is, generic business model if you will business models. A description of how the
organization intends to generate revenue through its business operations more specifically, it
includes an analysis of the organizations customers and from that discussion is created to help
how that organization will achieve profitability sustainability by delivering goods and services are
some some type of value to those customers the next several slides talk about very specific
detailing business models and in general you can, classify some of those different models by
the distribution channels used for example, direct marketing by mail order is go online direct
marketing my manufacturer’s pure play detailers click and mortar retailers and Internet or online
malls. If you direct marketers, direct marketing can either be companies that have just recently
gotten detailing business or they can come from traditional mail order retailers that their
business to the online environment. Some examples include QVC Sharper Image lands them.
For example, basically the idea is that marketing takes place without intermediaries between
manufacturers and buyers. This gives firms with an establishment your mail order business a
little bit of an advantage in the sense that they were to get an existing payment structure
inventory management order fulfillment operations in place, direct sales by manufacturers are
an attempt to remove his many intermediaries as possible between the manufacturer and the
consumer good drive behind this is the business model is to be will save the markups of those
recent years might might take world would take in most transactions occur: the best example of
this is Dell in the book. Also within the section, introduces a new another concept that the really
kind of important concept in comes to subfield the logistics if the idea of the pool distribution
channel in as opposed to the push distribution channel in which products are manufactured,
sold and sold downstream and it simply hoped that demand will be there to purchase those
goods or services walls goods the poll-based model is really more long lines with elbows
Chapter 3: Transcript
doesn’t manufacture a lot of their computers upfront. They wait until we get order and then they
produce so they pull based, so the they wait until the demand is there before they actually
produce a product in it that gives them a few advantages gives them improve customer
satisfaction, better pricing allows large cost savings and finished vehicle and a carrying cost was
they’ll have to sit there and store finished goods until her soul virtually real-time market
feedback a barrier to entry gives foreign-made goods and better cash flow to the manufacturers
now virtual or pure play detailers or firms that sold directly to consumers of the Internet without
maintaining a physical sales. So again, Dell was his is a great example that Amazon is a great
example that virtual retailers have an advantage of low overhead costs, streamline processes,
but never certain drawbacks as well. For example, they oftentimes they don’t have an
established infrastructure for to be oblivious or services or goods like traditional retailers. My
click and mortar retailer is really kind of hybrid combination of brick-and-mortar stores as well as
on an online presence since combination of both traditional retailer and an online transactional
website as opposed to brick-and-mortar retailers. Which is really what we typically think of think
of retail stores. So, Sears, Walmart, target, Macy’s were all examples of brick-and-mortar stores
of brick-and-mortar retailers. They have since the last several years, evolved into becoming
more and more retailers get another detailing business model is retailing in online malls. There‘s
a couple of different approaches to to this particular business model there’s referring directories
and there’s malls with shared resources referring directories are really just after directories of
director will usually round product type may have catalog listings are banner as and once you
select the the particular product that you’re interested in your take into the retailers from the e-
tailer’s website where the transaction is actually conducted a mall with shared services.
However, it is a little bit different from all shared services is actually actually advertises the
various goods and services provided by all the various participants in that mall in the mall itself
provides the services of arranging prepayment and taking the order arranging for shipment so it
reduces some of the burden on the e-tailer‘s there variety of other be to see models that the
special categories of retailing retailing project versus concept that these transactions separately
taken on the social nature of you will there’s the idea of online group buying where in a
traditional retail environment. You might have multiple people that come together in order to buy
in bulk in order to receive a large discount. Certainly the online environment allows groups to
come together much easier and in larger groups, thereby the idea is to receive an even larger
discount and so those are some things that are are popping up. It’s relatively easy to find
enough people to enjoy the discount large-volume buying and/or sure the freight cost in some
cases we rely on others as well. The social aspect of shopping we rely on the reviews of others
to come rate service to rate the products for the that were receiving from from the three to so
word-of-mouth becomes very important. Is also personalized event shopping. People like to be
invited special sales. As you can get a thrill from say that I’m one of those individuals. My
stepdaughter probably would fit right in the that the description essentially the ideas that you
receive an invitation to view your your favorite the method, twitter, Facebook, or email, or
however you choose and I once you get that invitation you are able to go enjoy some of the
savings, but the specialized event others. Also, private shopping clubs works, Sam’s if you will
Costco sleaze. These discount places free of purchase a membership in order to be able shop
of establishment. The online versions are referred to as private shopping clubs members only
shopping club members can buy goods a large discount. Still other bowl niches retailing
Chapter 3: Transcript
business models area include regifting online basically sites that allow different individuals to
come together as a group in order to make make a purchase for for an individual for the
preventer for particular occasion. Think of this is, like where you got a group of people that
normally would, during a birthday or something of that nature Pool their money together in order
to buy a bigger gift for for an individual group gifting online, helps to facilitate that process is also
location-based e-commerce. Imagine walking down the street passing a Starbucks and also get
a coupon for dollar off your Venti coffee it. Something is based on your location and trees
information from your your phone to determine where you are the greatest retailers around you
and you to target ads to to customers in the sense that way. There’s also the concept of
shopping and virtual worlds. For example, Dell has has a place in Second Life referred to as
Dell Island elastic to login the Second Life and travel around and enter various e-tailer sites
retailers stores in this virtual environment and examine their various products and talk to
individuals in this virtual environment and this is a test drive. Some of these products and that
that online environment that leads to the next point. There virtual visual shopping in a society
have been will present these goods in a three almost a 3-D environment. The in order to give us
all the more realistic experience very early on in in e-commerce very hard and very challenging
for sites to to kind of even really approach the experience he might have. If you actually go to a
retailer. Unfortunately for retailers and an awful lot of their role for e-tailer’s I should say an awful
lot of profit that retailers get is from impulse buys approximately 85% of all purchases were
made at the shelf so was impulse buys are very important. Well, at least conceptually. If we had
the ability to market goods in a 3-D environment. We would get much closer to that ability to to
