ELC 200
Day 6
Prentice Hall, 2002
1
Agenda
Questions from last Class?
Assignment 2 posted to WebCT
Due Feb 9 (next class)
Assignment 3 will be posted on Feb 13
Begin Discussion on
Retailing in E-Commerce: Products and Services
Quiz 1 on Feb 13
Computer based WebCT exam
Chap 1-3
20 m/c (60 points) 5 short essays (40 points)
70 mins
open book, open notes, open computer
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Chapter 3
Retailing in E-Commerce:
Products and Services
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Learning Objectives
Define and describe the primary business
models of electronic retailing (“e-tailing”)
Discuss various e-tail markets, such as those for
books, music, and cars
Identify the principles of “click-and-mortar”
strategies for traditional retailers
Describe how online travel and tourism operate
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Learning Objectives (cont.)
Discuss the online employment market,
including its drivers and benefits
Describe online real estate, insurance, and
stock trading
Discuss cyberbanking and online personal
finance
Describe on-demand delivery by e-grocers
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Learning Objectives (cont.)
Describe the delivery of digital products
and online entertainment
Discuss various e-tail consumer aids,
including comparison-shopping aids
Identify the critical success factors for
direct marketing and e-tailing
Describe reintermediation, channel
conflicts, and personalization in e-tailing
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Amazon.com: King of E-Tailing
The Problem
Amazon.com has recognized that it must
continually enhance its electronic store by
expanding product selection and improving
the customer experience
The Solution
Amazon.com now offers specialty stores
Professional and technical store
Expanded book editorial content
Increased product selection
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Amazon.com (cont.)
Some key features of the Amazon.com
are:
Easy browsing and searching
Useful product information
Low prices
One-Click order technology
Features that make the online shopping
experience more enjoyable
Gift ideas
E-cards
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Amazon.com (cont.)
Various marketplace services
Amazon Auctions
zShops service hosts electronic storefronts for a
monthly fee
Customer relationship management
Creates interesting and informative front-end
Highly automated and efficient back-end support
Personalized service
Diversification through business alliances
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Amazon.com (cont.)
The Results
Financial performance—annual sales for
Amazon.com have trended upward, from $15.7
million in 1996 to $4 billion in 2002
Offers several features for international
customers
Declared its first profit for the 2001 first quarter
Yet the company’s financial success is by no
means assured
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E-Tailing and B2C Market Growth
A retailer is a sales intermediary, a seller
that operates between manufacturers and
customers
Electronic retailing (e-tailing)—retailing
conducted online, over the Internet
Catalog sales free a retailer from the need for
a physical store
Manufacturer sells directly to the customer,
cutting out the intermediary
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Size and Growth of the B2C Market
Statistics for volume of B2C EC sales come
from many sources:
emarketer.com
jmm.com
Statistics on e-tailing can be found at:
Cyberdialogue.com
Business2.com
Substantial deviations in the reported data
due to how the numbers are derived
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US figures
http://www.census.gov/
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What Sells Well on the Internet?
Computers and
electronics
Sporting goods
Office supplies
Books and music
Toys
Health and beauty
Entertainment
Apparel
Cars
Services
Others
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Characteristics of
Successful E-Tailing
Brand recognition and
guarantees
Commodities with
standard specifications
LL Bean
Office Depot
Guarantee provided by
highly reliable or wellknown vendors
Digitized products
Well-known packaged
items that cannot be
opened even in a
traditional store
itunes
Inexpensive items
Frequently purchased
Fredricks
Ammo
Gevalia Coffee
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E-Tailing Business Models
E-tailing business models can be classified in
several ways:
By the scope of items handled
General-purpose
Specialty e-tailing
By scope of the sales region covered
Global
Regional
Two main models
Direct selling model
Distribution channel
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Classification by Revenue Model
Product sales models
Charge customers directly for products or services
Subscription models
Charge monthly or annual subscription fee for service
Transaction-fee models
Charge service fee based on the level of transaction
offered
Advertising-supported models
Charge fee to advertisers instead of customers
Sponsorship models
Companies sponsor the business through donations
(usually supplemental income)
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Classification by
Distribution Channel
Direct marketing—manufacturers sell
directly from company sites to individual
customers
Pure-play e-tailers—have no physical
stores, only an online sales presence
Click-and-mortar retailers—traditional
retailers with a supplementary Web site
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Direct Marketing by Manufacturers
or Mail-Order Companies
Direct marketing—broadly, marketing that takes
place without intermediaries between
manufacturers and buyers; in the context of this
book, marketing done online between the seller
and the buyer
Disintermediation—removal of organizations or
business process layers responsible for certain
intermediary steps in a given supply chain
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Exhibit 3.1: Disintermediation in
the B2C Supply Chain
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Direct Marketing by Manufacturers
or Mail-Order Companies (cont.)
Parties in direct marketing have a greater
opportunity to influence each other
Make-to-order online—direct sales by
manufacturers are gaining popularity due
to the ability to customize products or
services
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Lands’ End: How a Mail-Order
Company Moved Online
http://www.landsend.com/
Successful B2C e-tailers are mail-order
companies once based solely on paper catalogs
Logistics system were already in place
Lands’ End served over 6.2 million customers in
2000
Internet sales:
1999 were 5% of company’s total sales
2000 were 10%
2003 are 20% (projected)
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Lands’ End (cont.)
Landsend.com offers all its catalog
products online
Web site offers:
Allows women customers to build and store a
3D model of their body
Male customers use a feature called “Oxford
Express
Personal shopping accounts
Order status tracking
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Lands’ End (cont.)
The company has:
Affiliates network that pays 5% commission
for every sale that comes from a referral
B2B “store” (landsend.com/corpsales)
Allows online customers to shop with the
assistance of a “real” personal shopper
Global presence with localized sites
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Virtual (Pure-Play) E-Tailers
Virtual e-tailers sell over the Internet without
a physical sales channel
General purpose e-tailers (Amazon.com)
Broad range of products
Large number of consumers
Specialty or niche e-tailers (CatToys.com)
One specific product area
High demand items in the area
Effective practices for customer appeal
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Buying Cars Online:
Build to Order
Traditional system—”build-to-stock”:
Manufacturers conduct market research to estimate
which features and options will sell well
Make the cars they wish to sell
Cars are sold from stock at a loss when there is
insufficient demand for a particular vehicle
Auto giants intend to transform themselves from
build-to-stock to build-to-order companies
Cutting inventory requirements in half
Giving customers exactly what they want
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Buying Cars Online:
Build to Order (cont.)
Using a virtual car at jaguar.com
Consumers custom configure their car’s
features and components, see it online, price
it, have it delivered to a nearby dealer
Web site helps with the research process
The configuration is transmitted to the
production floor:
Reducing delivery time
Contributing to increased customer
satisfaction
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Cattoys.com: A Specialty E-Tailer
Cattoys.com is designed to appeal to cat
enthusiasts
No banner ads
Easy to navigate
Updated weekly
Displays products in clear categories
Retail prices comparable to pet stores
Prices kept low through aggressive cost control
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Cattoys.com: A Specialty E-Tailer (cont.)
CatToys.com hosts its site on Yahoo!
Allows it to use sophisticated technology
Cookies for the shopping-cart process
Payment security
Access to a large audience.
Concentrate on its core competencies:
Selecting the right cat toys
Marketing them effectively
Example of a low-volume specialized store that
attracts people with specific shopping needs
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Click-and-Mortar Retailers
Brick-and-mortar retailers—retailers who do business
in the non-Internet, physical world in traditional brickand-mortar stores
Click-and-mortar retailers—brick-and-mortar retailers
with a transactional Web site from which to conduct
business
Traditional retailing frequently involves a single
distribution channel, the physical store—may also
operate a mail-order business
Multichannel store—firm that operates both physical
stores and an online e-tail site
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Other Business Models
Electronic mall
Transaction brokers
Information portals
Communities portal
Content creator or
disseminators
Viral marketing
Market makers
Make-to-order
Service providers
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Travel and Tourism
Services Online
The Internet is an ideal place to plan,
explore, and arrange almost any trip and save
money
Travel-related information available at many
sites including:
Expedia.com
Travelocity.com
Travelweb.com
Eurovacations.com
Lonelyplanet.com
Orbitz.com
Asiatravel.com
Trip.com
Priceline.com
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Travel and Tourism Services (cont.)
Services provided:
Information and
bookings
Travel tips
Electronic Travel
magazine
Fare comparisons
Currency conversion
calculators
Fare tracker
Worldwide business
and places locator
Outlet for travel
accessories and books
Experts’ opinions
Major international
and travel news
Driving maps and
directions
Chat rooms
Frequent flier deals
Online travel auctions
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Travel and Tourism Services (cont.)
Special services
Very low airfares and discount accommodations
Last-minute trips can also be booked
Special vacation destinations
Sites that offer medical advice and services
for travelers:
World Health Organization (who.int)
Governments (cdc.gov/travel)
Private organizations (Healthcenter.com)
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Travel and Tourism Services (cont.)
Wireless services
Customers with WAP cell phones can check their
flight status, update frequent flyer miles, and
book flights
Direct marketing
Build customer profiles and target specific
customers with tailored offers
Alliances and consortia
Increase sales or reduce purchasing costs
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Travel and Tourism Services (cont.)
Benefits
Free information is tremendous
Free information is accessible anytime
Substantial discounts
Limitations
Not all people use the Internet
It may take a long time to find what you want
People are still reluctant to provide credit card
numbers
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Impacts of EC on the Travel Industry
Impacts of EC on the travel industry into 10
categories including:
Product promotion, new products, new business
models
Only the value-added activities of travel agencies
will not be automated
Performed by a new type of organization
Will serve certain targeted markets and customers
Entering the market will be:
Travel superstores that will provide
Innovative individuals operating from their homes
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Corporate Travel
Many large corporations receive additional
services from large travel agencies
Online optimization tools provided by travel
companies (rosenbluth.com)
Travel authorization software that checks
availability of funds and compliance with corporate
guidelines
This is a huge and rapidly growing market
Oracle’s e-Travel provides software to automate
and manage online booking
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Corporate Travel (cont.)
American Express,Microsoft and MCI have
developed AXI system that displays:
Airline seat charts
Maps showing hotels
Information on nearby health clubs
Weather information
Creates profiles for travelers and their
preferences
Attempts to satisfy both travelers and
corporate travel managers
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Intelligent Agents in Travel Services
Step 1: visit an online travel site and enter
Desired destination
Dates
Available budget
Special requirements
Desired entertainment
Step 2: computer dispatches an intelligent
agent that “shops around”
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Intelligent Agents in
Travel Services (cont.)
Step 3: agent attempts to match your
requirements with what is available,
negotiates with vendors
Step 4: agent returns within minutes with
suitable alternatives, modifies as per your
wishes, books the vacation
Voice communication with agent may be
possible by 2005?? (not yet)
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The Employment Placement
and the Job Market
Job markets
Employers are looking for employees with
specific skills, and individuals are looking for
jobs
Very volatile market
Moved to the Internet
Millions of job seekers, hundreds of thousands
of jobs
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The Internet Job Market
The Internet offers a perfect environment;
it is especially effective for technologyoriented jobs
Job seekers
Job offerers
Recruiting firms
Government agencies and institutions
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Matching Workers with
Jobs in the Philippines
Philippine Department of Labor created a
Web site that matches people with jobs as
a free service
For those who do not have computers or
Internet access, the government makes
computer terminals (kiosks) available
Government employees help those applicants
who do not know how to use the system
Job seekers can find a job that best suits their
qualifications
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Matching Workers with
Jobs in the Philippines (cont.)
At the heart of the system is its matchmaking
capabilities
This job-matching feature differentiates this
site from other online job sites
Everything is done electronically, so job
seekers can see the match results in seconds
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Benefits of the Electronic Job Market
For job seekers
Find very detailed and timely information on a large
number of jobs world-wide
Quickly communicate with potential employers
Post resumes for large-volume distribution
Search for jobs quickly from any place at any time
Obtain several support services at no cost
Assess their market value
Find out how to use their voice in an interview
Can access newsgroups that are dedicated to
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finding jobs
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Benefits of the
Electronic Job Market (cont.s)
For employers
Advertise to a large number of job seekers
Save on advertisement costs
Lower the cost of processing (using electronic
application forms)
Provide greater (‘equal opportunity’) for job
seekers
Find highly skilled employees
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Exhibit 3.5
Virtual Job Employment Agent
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Limitations of the Electronic Job Market
Many people do not use the Internet
Companies may use both traditional advertising
approaches and the Internet
Clear trend: more and more of the job market are
going to the Internet
Security and Privacy
Resumes and other online communications are
usually not encrypted
Possibility that someone at your current place of
employment may find out that you are job hunting
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Limitations of the
Electronic Job Market (cont.)
Electronic job market may also create high
turnover costs for employers by accelerating
employees’ movement to better jobs
Finding candidates online is more
complicated:
There is a large number of resumes available
online
Some sites offer prescreening of candidates to
help alleviate this problem (jobtrak.com)
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Intelligent Agents in the
Electronic Job Market
For Job Seekers
Jobsleuth.com offers a free service that uses
intelligent agents
To search the Internet’s top job sites and databases
for job postings based on users’ profiles
Users can create as many as five different profiles
based on
Careermosaic.com
Users receive a daily e-mail containing job
opportunities from over a dozen top job sites
around the Internet interests.
Saves the users a tremendous amount of time
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Intelligent Agents in the
Electronic Job Market (cont.)
For employers
Resumix.com (now part of Yahoo!) has a special
intelligent-agent powered search engine helps
employers find resumes that match specific job
descriptions
Its Knowledge Base interprets a candidate’s
resume, determining skills based on context and
matching those skills to the position criteria
The Knowledge Base would select only the
candidates with relevant skills
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ELC 200
Day 7
Prentice Hall, 2002
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Agenda
Questions from last Class?
Assignment 2 Due
Assignment 3 will be posted on Feb 13
Finish Discussion on
Retailing in E-Commerce: Products and Services
Quiz 1 on Feb 13
Computer based WebCT exam
Chap 1-3
20 m/c (60 points) 5 short essays (40 points)
70 mins
open book, open notes, open computer
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Real Estate
You can view many properties on the screen
You can sort and organize properties
You can find detailed information about the
properties
You can search, compare and apply for loans
http://www.eradawson.com/listings.html
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Real Estate (cont.)
In some locations, real estate databases are
only available to realtors over private networks
in their offices
Builders use virtual reality technology on their
Web sites to demonstrate three-dimensional
floor plans to home buyers
“Virtual models” enable buyers to “walk
through” three-dimensional mock-ups of homes
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Real Estate Applications
Advice to consumers on buying or selling a home
assist2sell.com
International Real Estate Directory and News is a
comprehensive real estate Web site
ired.com
National listing of properties for sale
homesinamerica.com
Commercial real estate listings
commercialproperty.com
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Real Estate Applications (cont.)
Searching residential real estate in multiple
databases
homegain.com
realestate.yahoo.com
National Association of Realtors, has links to
property listings in all major US cities
realtor.com
Real estate related maps
mapquest.com
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Real Estate Applications (cont.)
Information on current mortgage rates
bankrate.com
eloan.com
Mortgage comparisons, calculations, and other
financing information; mortgage application
eloan.com
quickenloans.quicken.com
Online lenders can approve loans online
arcsystems.com
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Real Estate Applications (cont.)
Automated closing of real estate transactions
datatrac.net
Home seller sites provide a place for persons
who want to sell their homes privately, without
using a real estate agent
owners.com
Rental properties
homestore.net
Several services are available, including a virtual
walk-through of some listings
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Real Estate Applications (cont.)
Online real estate is supporting rather than
replacing existing agents
Real estate agents are still charging high
commissions
Several Web sites have started to offer services
at lower commissions
assist2sell.com
To find mortgage interest rates online use
lendingtree.com
eloan.com
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Insurance Online
Insurance—auto, home, life, and health at
a substantial discount
Insureate.com
Order.com
Quotesmith.com
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Online Stock Trading
Costs between $5 and $29 per transaction (vs. $10
- $35 in traditional discount brokerage ad ~$100
for full service broker )
No waiting on busy telephone lines
No oral communication, less chance for errors
Place orders from anywhere, any time, day or
night
No biased broker to push you
Considerable amount of free information
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Exhibit 3.6
Online Electronic Stock Trading
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Investment Information
For current financial news
cnn.com, hoovers.com, bloomberg.com
For municipal bond pricing
bloomberg.com
For overall market information and many links
cyberinvest.com
For free Guru advice see
upside.com
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Investment Information (cont.)
For stock screening and evaluation:
multexinvestor.com
money.cnn.com
For articles from the Journal of the American
Association of Individual Investors
aaii.com
For reports the latest findings and pricing of IPOs
hoovers.com/ipo
For chart lovers
bigcharts.com
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Investment Information (cont.)
For mutual funds evaluation and other interesting
investment information
morningstar.com
For earning estimates and much more
firstcall.com
For almost anything you need
finance.yahoo.com
Online trading is expanding to include
Mutual funds, commodities, financial derivatives
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Banking & Personal
Finance Online (cont.)
Electronic banking (e-banking)—various banking
activities conducted from home or the road using an
Internet connection; also known as:
Cyberbanking
Virtual banking
Online banking
Home banking
Electronic banking
Saves time and money for users
Offers an inexpensive alternative to branch banking
Many traditional banks around the world offer
diversified e-banking services
main.hangseng.com
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Capabilities of Home Banking
Get current account
balances any time
Obtain charge and
credit card statements
Pay bills
Download account
transactions
Transfer money
between accounts
Balance accounts
Send e-mail to the
bank
Expand the meaning
of “banker’s hours”
Handle finances when
traveling
Additional services
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Free phone banking
Waive checking fees
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International and
Multiple-Currency Banking
Some international retail purchasing can be done
by credit card
Other transactions may require international
banking support
Hong Kong Bank’s HEXAGON provides e-banking in Asia
Tradecard and MasterCard developed a multiplecurrency system for global transactions (tradecard.com)
A multidealer foreign exchange service that enables
faster and cheaper foreign exchange transactions
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(fxall.com)
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Implementation Issues in
Online Financial Transactions
Using bank intranets
Banks provide large business customers with
personalized service by allowing them access to
the bank’s intranet to access accounts, historical
transactions, intranet-based decision-support
applications
Imaging systems—allow customers to view
images of all:
Incoming checks
Invoices
Other related online correspondence
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Online Security at
Bank of America
Safeguards provided by Bank of America:
1. Encryption and digital certification verification—
assures users that they are connected to the B of A
2. Information flows through a direct Web server,
then goes through an internal firewall to the
application server
3. The bank maintains accurate information and
corrections are made quickly
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Online Security at
Bank of America (cont.)
4. Information is shared among the company’s
family of partners only for legitimate
business purposes
5. The company uses “cookies” to learn about
its customers; customers can control both
the collection and use of the information
6. The bank provides suggestions on how users
can increase security ( “Use a browser with
128-bit encryption”)
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Online Security at
Bank of America (cont.)
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Personal Finance Online
Bill paying and
e-checks
Tracking bank
accounts etc.
Portfolio management
Investment tracking
Stock quotes and
prices (past and
current)
Budget organization
Record keeping
Tax computations
Retirement goals,
planning and
budgeting
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Online Billing and Bill Paying
Automatic transfer of mortgages
This method has existed for several years
The payer authorizes its bank to pay the
mortgage, including tax escrow payments
Automatic transfer of funds to pay monthly
utility bills
Paying bills from online banking account
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Online Billing and Bill Paying (cont.)
A merchant-to-customer direct billing
A merchant posts bills on its Web site
Customers can view and pay their bill
Using an intermediary
A third party consolidates all bills related to
each customer in one site in a standard format
Collects a certain commission
Makes it convenient to complete transactions
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Online Billing and Bill Paying (cont.)
Person-to-person direct payment
Paypal.com (now an eBay company)—enables you
to send funds to another individual over the
Internet
Online billing and bill-paying can be classified into
B2C, B2B, or C2C.
Opportunities exist in B2B services—can save
businesses about 50 percent of billing costs
In Hong Kong, CitiCorp links suppliers, buyers, and
banks on one platform, enabling automatic
payments
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On-Demand Delivery Service (ODDS)
On-demand delivery service (ODDS)—express
delivery made fairly quickly after an online order is
received
On-Demand Delivery Services (ODDS)
May own a fleet of delivery vehicles for regular
deliveries and delivery within short time period
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The Case of E-Grocers
E-grocer—a grocer that will take orders online and
provide regular deliveries on a daily or other
regular schedule or will deliver items within a very
short period of time
All e-grocers offer consumers the ability to order
items online and have them delivered to their house
Some e-grocers offer free regular “unattended”
weekly delivery based on a monthly subscription
model
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The Case of E-Grocers (cont.)
Others offer on-demand deliveries with a
surcharge or additional delivery charge added
One e-tail grocer sells only nonperishable
items shipped via common carrier
Many offer additional services
Dry cleaning pickup and delivery
“Don’t run out” automatic reordering
Fresh flower delivery
Movie rentals
And more
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Exhibit 3.7
On-Demand Delivery Services Model
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Who Are the Online Grocery Shoppers?
Shopping avoiders
Necessity users—limited by their ability to shop
offiline
New technologists
Time-starved consumers
Consumers who gain a sense of self-worth from
online shopping
Older individuals who enjoy shopping in any
type of store
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Who Are the
Online Grocery Shoppers? (cont.)
Repeat customers with an ongoing
relationship with the grocer
Parknshop.com in Hong Kong offers a
“personal shopping list” that helps customers
easily order repetitive items
Tesco.com in the United Kingdom is another
successful e-grocer
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Who Are the
Online Grocery Shoppers? (cont.)
Offers grocers an additional channel to
increase their sales volume and serve
customers
Increases their publicity by maintaining an
Internet presence
Despite the promise that on-demand
delivery seems to hold, virtual e-grocers
have not been successful in this
competitive market
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Digital Delivery
Digital (“soft”) goods
Music, movies, videos, software, newspapers,
magazines, graphics, etc.
Can be delivered in “hard” or “soft” form
Computer program on CD-ROM with owner’s
manual and warranty card
Download from Web site after payment
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Napster Experience:
Person-to-Person Sharing Tool
Enabled individual users to download music files
from each other’s computers
Court ruled that as a manager of file exchanges,
Napster must observe copyright laws
Napster began charging customers for use of its
file-sharing service
Napster entered into an agreement with
Bertelsmann AG (now owns Napster)
The latest version of Napster’s file-swapping
software features a “buy button” that links to
CDNow, a Bertelsmann-owned Web site that sells
traditional, physical music CDs
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New Developments in Digital Delivery
Custom-publishing music CD sites—collection of
personal favorites
Disintermediation of traditional print media
Journals and magazines
Newspapers (e.g., Wall Street Journal)
Comprehensive portals
Links to many different sellers
Shopping comparison sites
Comparison tools are available
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Shopping Portals (cont.)
Shopping portals—niche oriented
Specialize in a certain line of products
Some collect referral fee only
Others have formal relationships with affiliates
Shopbots and agents—tools that scout the Web for
specific search criteria requested by consumers
Mysimon.com - best prices on multiple items
AutoBytel.com – cars
Zdnet.com/computershopper – computers
Office.com – office supplies
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Business Rating Sites &
Trust Verification Sites
Sites that rate e-tailers
Bizrate.com—compiles results provided by a
network of shoppers
Gomez.com—consumer identifies relative
importance of different criteria
Sites that evaluate and verify trustworthiness and
integrity of e-tailers
TRUSTe seal of assurance
BBBOnLine
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Other Shopping Tools
Escrow services—3rd party to assure
quality
Communities of consumers—offer advice
and opinions on products
Other software agents and comparison
sites are presented in Exhibit 3.9
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Successful Click-and-Mortar Strategies
Click-and-mortar hybrid strategies
Speak with one voice
Empower the customer
Leverage the channels
Return item purchased online at physical store
Order via the Web at the physical store items not
available there
Large, efficient established retailers are able to
create the optimum value proposition for their
customers by providing a complete offering of
services
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Transformation to Click-and-Mortar
at CircuitCity
Educates customers about features and
capabilities of products
Customers can perform powerful searches
to find most appropriate products
Offers extensive amount of information on
electronics etc., organized very flexibly
Online purchases are smooth, secure and
seamless
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Alliance of Virtual with Traditional
Retailers: Amazon and Toys R Us
Toys R Us had limited logistics capabilities
including distribution centers
Amazon failed in the toy market lacking
supplier relationships with toy
manufacturers
Alliance allows each partner to leverage
each others core strengths
Innovative model still working out
problems
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Problems with E-Tailing &
Lessons Learned
Profitability
Lose money on every sale as they try to grow to a profitable
size and scale
Get Big Fast!
Underlying cost and revenue models were not sound
Long-run success requires financial viability
Manage new risk exposure
Local companies contend with local customers and local
regulations
National firms have more constituents
Global firms deal with numerous cultural perspectives
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Problems with E-Tailing &
Lessons Learned (cont.)
Branding—drive to establish brand can lead
to excessive spending
Starting with insufficient funds
Keep it interesting
Static design is a “turn-off”
Dynamic sites with rich databases of
information appeal most to customers
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A Blooming Success
Ambassador.com.hk sells attractively packaged
customized designer flower baskets, cakes,
gourmet gift baskets
Expanded the business by adding functions such
as online payments
Success factors that helped Ambassador’s online
business blossom:
Extensive experience in the business
Analysis that floral gift products are suitable for
Internet sales
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A Blooming Success (cont.)
Back-end operations for the online floral gift shop
were already in place
Multichannel retailing strategy
Initial pilot implementation that resulted in orders
Plans and budgets prepared for experimentation
Decision to outsource the implementation from
scratch
Integration of online store functions with other
business models and IT systems
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Disintermediation & Reintermediaries
Disintermediation—manufacturer sells
directly to consumer
Reintermediearies—new intermediary roles
in the digital environment offer new ways
to:
Reach new customers
Bring value to customers
Generate revenues
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Intermediary’s New Role
Role will shift to one that emphasizes
value-added services such as:
Assisting customers in comparison shopping
from multiple sources
Providing total solutions by combining services
from several vendors
Providing certifications and trusted third-party
control and evaluation systems
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Reintermediaries
Reintermediaries—intermediaries that have
restructured their roles in the purchase process
Kbb.com—pricing information for consumers
Edmunds.com—information about the dealer’s true
costs
“Lead services” that
Direct buyers to member dealers
Offer direct sales of new cars
autobytel.com
carsdirect.com (Amazon.com’s partner)
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Cybermediation and
Hypermediation
Cybermediation (electronic intermediation)—
use of software (intelligent) agents to
facilitate intermediation
Hypermediation—extensive use of both
human and electronic intermediation to
provide assistance in all phases of an
e-commerce venture
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Conflict and Personalization
Channel conflict—situation in which an online
marketing channel upsets the traditional channels
due to real or perceived damage from competition
Personalization—custom designed marketing plan
Tailored to buying patterns
Appeal to sense of value
Excellent customer service
Mass customization
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Managerial Issues
Should we grab a first-mover advantage or wait and learn?
Get big fast or get it right first?
What should our strategic position be?
Are we financially viable?
Should we recruit out of town?
Are there international legal issues regarding online
recruiting?
Do we have ethics and privacy guidelines?
How will intermediaries act in cyberspace?
Should we set up alliances?
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Summary
E-tailing business models
The major e-tail markets
Click-and-mortar strategy
How online travel/tourism services operate
The online job market,its drivers,and
benefits
The electronic real estate market
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Summary (cont.)
Online stocks and bonds
Cyberbanking and personal finance
On-demand delivery service
Delivery of digital products
Aiding consumer purchase decisions
Critical success factors
Disintermediation and reintermediation
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