Turban- 3e
Instructor’s Manual
Chapter 3
Retailing in Electronic Commerce: Products and Services
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Describe electronic retailing (e-tailing) and its characteristics.
3. Describe how online travel and tourism services operate and their impact on the industry.
5. Describe online real estate services.
7. Discuss cyberbanking and online personal finance.
9. Describe the delivery of digital products and online entertainment.
11. Describe disintermediation and other B2C strategic issues.
Content
Opening Case: Amazon.com: E-Tailing Grows Despite the Slumping Economy
3.1 Internet Marketing and Electronic Retailing
3.3 Travel and Tourism (Hospitality) Services Online
3.5 Real Estate, Insurance, and Stock Trading Online
3.7 On-Demand Delivery of Products, Digital Items, Entertainment, and Gaming
3.9 Issues with E-Tailing and Lessons Learned
Managerial Issues
Closing Case: Walmart Powers Online
Supplementary Videos for this Chapter
1. How to Create a Successful E-Commerce Web Site (4:25 min)
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4. ecommerce (8:02 min)
Overview of e-commerce; the benefits of buying online
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Answers to Pause/Break Section Review Questions
Section 3.1 Review Questions
1. Describe the nature of B2C EC.
2. What sells well in B2C?
3. What are the characteristics of high-volume products and services?
4. Describe the major trends in B2C.
Some trends include:
5. Describe considered commerce.
Section 3.2 Review Questions
1. List the B2C distribution channel models.
2. Describe how mail-order firms are going online.
3. Describe the direct marketing model used by manufacturers.
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4. Describe virtual e-tailing.
5. Describe the click-and-mortar approach.
6. Describe e-malls.
7. Describe B2C activities in social networks.
Section 3.3 Review Questions
1. What travel services are available online that are not available off-line?
2. List the benefits of online travel services to travelers and to service providers.
3. How do social networks facilitate travel?
4. Describe corporate online travel services.
Section 3.4 Review Questions
1. What are the driving forces of the electronic job market?
2. What are the major advantages of the electronic job market to the candidate? To employers?
3. Why is LinkedIn so useful for job seekers and for employees?
Section 3.5 Review Questions
1. List the major online real estate applications.
The major online real estate applications include: Advice systems for customers who are buying
2. What are the advantages of selling insurance online?
3. What are the advantages of online stock tracking?
4. What are some of the risks of trading stocks online?
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Section 3.6 Review Questions
1. List the capabilities of online banking. Which of these capabilities would be most beneficial to
you?
2. How are banks protecting customer data and transactions?
3. List the major personal finance services available online.
Section 3.7 Review Questions
1. Explain on-demand delivery service.
2. Describe e-grocers and how they operate.
3. What are the difficulties in shopping online for groceries?
4. Describe digital goods and their delivery.
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5. What are the benefits and the limitations of digital delivery?
6. What are the major forms of online entertainment?
7. Do you think people of different age groups and social classes might be attracted to different
types of online entertainment?
Section 3.8 Review Questions
1. Define shopping portals and provide two examples.
2. What are shopbots?
3. Explain the role of business and Web site rating and site verification tools in the purchase-
decision process.
4. Why are escrow services and electronic wallets useful for online purchases?
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Section 3.9 Review Questions
1. Define disintermediation.
2. Describe mediation issues, including disintermediation, reintermediation, cybermediation,
hypermediation, and unbundling.
The use of EC and IT can create changes in a traditional supply chain. These changes can
3. Describe channel and other conflicts that may appear in e-tailing.
4. Describe price determination in e-tailing.
5. Explain personalization and mass customization opportunities in e-tailing.
6. What makes click-and-mortar companies successful?
Answers to EC Application Case Questions
EC Application Case 3.1: WAYN: A SOCIAL NETWORK FOR TRAVELERS
1. Visit wayn.com. What options do you find most exciting on the site?
2. Why has WAYN been so successful even though the site requires subscription fees?
EC Application Case 3.2: SECURITY FOR ONLINE BANK TRANSACTIONS
1. Why is security so important for a bank?
2. Why is there a need for two firewalls?
3. Who is protected by the bank’s security system–the customer, the bank, or both? Elaborate.
4. What might be the limitations of such a system?
Individual Discussion Questions
1. What are Amazon.com’s critical success factors? Is its decision not to limit its sales to books,
music, and movies, but to offer a much broader selection of items, a good marketing strategy?
With the broader selection, do you think the company will dilute its brand or extend the value
proposition to its customers?
Amazon.com has several success factors including their brand recognition and well-developed
2. Discuss the importance of comparison tools, product reviews, and customer ratings in online
shopping.
Shopping aides provide a variety of advantages to the customer. The greatest advantage is the
3. Discuss the advantages of specialized e-tailor, such as dogtoys.com. Can such a store survive
in the physical world? Why or why not?
4. Discuss the benefits of build-to-order to buyers and sellers. Are there any disadvantages?
5. Why are online travel services such a popular Internet application? Why do so many Web
sites provide free travel information?
6. Compare the advantages and disadvantages of online stock trading with off-line trading.
7. It is said that the service Zuji.com provides to travel agents will lead to their reintermediation.
Discuss.
8. Compare the advantages and disadvantages of distributing digitizable products electronically
versus physically.
Class Discussion Questions
1. Do you trust your personal data on social networks such as LinkedIn? How do you protect
your privacy?
Student answers will vary.
2. Discuss the advantages of established click-and-mortar companies such as Walmart over
pure-play e-tailors such as Amazon.com. What are the disadvantages of click-and-brick retailers
as compared with pure-play e-tailers?
3. Online employment services make it easy to change jobs; therefore, turnover rates may
increase. This could result in total higher costs for employers because of increased costs for
recruiting and training new employees and the need to pay higher salaries and wages to attract
or keep employees. What can companies do to ease this problem?
4. Discuss each of the following as limiting factors on the growth of B2C EC: (a) Too much
competition, (b) expensive technology, (c) need a computer to shop, (d) people need the social
interaction in face-to-face shopping, (e) many people cannot afford an Internet access, (f ) the
EC market is already saturated.
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Student opinions and responses will vary.
5. How should a company handle channel conflict with its distributors?
6. Should online sales be an independent unit in a click-and-mortar firm?
7. Will P2P lending disrupt banking?
Student opinions will vary – P2P lending has the potential to shift some lending away from
banks.
8. Would you use Monster.com or LinkedIn for recruiting?
Student opinions and responses will vary.
Internet Exercises
(Note: URLs may change over time; please check the Internet Exercises on the Turban
Web site for possible updates: www.pearsonhighered.com/turban.)
1. Many consumer portals offer advice and ratings of products or e-tailers. Identify and examine
two separate general-consumer portals that look at other sites and compare prices or other
purchase criteria. Try to find and compare prices for a digital camera, a microwave oven, and
an MP3 player. Visit clusty.com. How can this site help you in your shopping? Summarize your
experience. Comment on the strong and weak points of such shopping tools.
2. Visit amazon.com and identify at least three specific elements of its personalization and
customization features. Browse specific books on one particular subject, leave the site, and then
go back and revisit the site. What do you see? Are these features likely to encourage you to
purchase more books in the future from Amazon.com? List the features and discuss how they
may lead to increased sales. Now visit Amazon zShop (go to amazon.com, and click on zShops)
to identify and compare three sellers of food and beverages. Can you find items not normally
available in your local grocery store?
3. Visit landsend.com and prepare a customized order for a piece of clothing. Describe the
process. Do you think this will result in better-fitting clothing? Do you think this personalization
feature will lead to greater sales volume for Lands’ End?
Student answers will vary.
4. Make your resume accessible to millions of people. Consult asktheheadhunter.com or
careerbuilder.com for help in rewriting your resume. See jobweb.com for ideas about planning
your career. Get prepared for a job interview. Also, use the Web to determine what salary you
can get in the city of your choice in the United States.
Student answers will vary.
5. Visit move.com, decisionaide.com, or a similar site and compute the mortgage payment on a
30-year loan at 7.5 percent fixed interest. Also check current interest rates. Estimate your
closing costs on a $200,000 loan. Compare the monthly payments of the fixed rate with that of an
adjustable rate for the first year. Finally, compute your total payments if you take the loan for 15
years at the going rate. Compare it to a 30-year mortgage. Comment on the difference.
Student answers will vary.
6. Access the Virtual Trader game at citycomment.co.uk and register for the Internet stock game.
You will be bankrolled with £100,000 in a trading account every month. You can also play
investment games at investorsleague.com, fantasystockmarket.com, and etrade.com.
Student answers will vary.
7. Compare the price of a Sony digital camera at shopping.com, mysimon.com,
bottomdollar.com, bizrate.com, and pricescan.com. Which site locates the best deal? Where do
you get the best information?
Student answers will vary.
8. Enter xing.com and identify its job-related offerings. Prepare a list of support activities
offered.
9. Enter Bazaarvoice (bazaarvoice.com) and find how consumers can engage in a dialog. Look
at its Ask & Answer service. How is quality of content maintained? Write a report based on your
findings.
Student answers will vary.
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10. Enter vivente.com/resumix/website, examine the capabilities of the tools, and write a report.
Student answers will vary.
Team Assignments and Role Playing
1. Each team is to investigate the services of two online car selling sites in the following list (or
other sites). When teams have finished, they should bring their research together and discuss
their findings.
a. Buying new cars through intermediary (autobytel.com, carsdirect.com, autoweb.com, or
amazon.com)
b. Buying used cars (autotrader.com)
c. Buying used cars for auto dealers (manhiem.com)
d. Automobile rating sites (carsdirect.com and fueleconomy.gov)
e. Car-buying portals (thecarportal.com and cars.com)
f. Sites where antique cars can be purchased (classiccars.com and antique-cars.com)
Student answers will vary.
2. Each team will represent a broker-based area (e.g., real estate, insurance, stocks, job finding).
Each team will find a new development that has occurred in the assigned area over the most
recent months. Look for the site vendor’s announcement and search for more information on
that development with google.com or another search engine. Examine the business news at
bloomberg.com. After completing your research, as a team, prepare a report on
disintermediation in your assigned area.
Student answers will vary.
3. Each team will examine fantasy games at various sites. Each team should examine the type of
game, the rules, and the cost. Play at least one time. Each team should write a report based on
their experience.
Student answers will vary.
Answers to End-of-Chapter Real-World Case Questions: WALMART
POWERS ONLINE
1. Compare walmart.com with amazon.com. What features do the sites have in common? Which
are unique to walmart.com? To amazon.com?
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2. Will Walmart become the dominant e-tailer in the world replacing Amazon, or will Amazon
dominate Walmart online? What factors would contribute to Walmart’s success in the online
marketplace? What factors would detract from its ability to dominate online sales the way it has
been able to dominate physical retail sales in many markets?
3. Check the shopping aids offered at walmart.com. Compare them with those at amazon.com.
Student answers will vary. Both sites provide a variety of robust aids.
4. What online services can be purchased at walmart.com?
Student answers will vary. Examples include: B2C sales, photos, gift cards and other services.
5. Compare buying a song from walmart.com versus buying it from Apple’s iTunes.
Student answers will vary.
6. Walmart.com sells movies online for a monthly fee. How do similar sellers compare?
Student answers will vary. This model is quite similar to netflix.com and blockbuster.com.
7. Visit walmart.com, target.com, marksandspencer.com, and sears.com. Identify the common
features of their online marketing and at least one unique feature evident at each site. Do these
sites have to distinguish themselves primarily in terms of price, product selection, or Web site
features?
Student answers will vary. Each merchant sells goods online with fairly standard storefronts and
a general overlap of product categories. Both Walmart and Sears seem to focus on driving
compatibility with their physical stores, with Sears having the greater emphasis. Walmart
appears to have the widest selection. Target has the most eye-catching site. Mark and Spencer
appears to be the most targeted. Each site appears to have a slightly different position:
• Walmart – selection and cost
• Sears – integration with local stores
• Target – upscale but broad
• Mark & Spencer – Niche
8. Investigate the options for international customers on the Walmart Web site.
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