Lecture 4
Supakorn Kungpisdan

• Internet Marketing and Electronic Retailing
• E-tailing Business Models
• Travel and Tourism Services Online
• Employment Placement and the Job Market Online
• Real Estate Online
• Banking and Personal Finance Online
• Online Delivery of Digital Products, Entertainment, and Media
• Online Purchase-decision Aids
• Successful Click-and-mortar Strategies
• Problems with E-tailing and Lessons learned
• Issues in E-tailing
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Internet Marketing and Electronic Retailing
• Overview of Electronic Retailing electronic retailing (e-tailing)
Retailing conducted online, over the Internet e-tailers
Retailers who sell over the Internet
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Internet Marketing and Electronic Retailing
What Sells Well on the Internet?
• Computer hardware and software
• Consumer electronics
• Office supplies
• Sporting goods
• Books and music
• Toys
• Health and beauty
• Apparel and clothing
• Jewelry
• Cars
• Services
• Others
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Internet Marketing and Electronic Retailing
• Characteristics of Successful E-Tailing
– High brand recognition
– A guarantee provided by highly reliable or wellknown vendors
– Digitized format
– Relatively inexpensive items
– Frequently purchased items
– Commodities with standard specifications
– Well-known packaged items that cannot be opened even in a traditional store
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• Classification by Distribution Channel
1. Mail-order retailers that go online
2. Direct marketing from manufacturers
3. Pure-play e-tailers
4. Click-and-mortar retailers
5. Internet (online) malls
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direct marketing
Broadly, marketing that takes place without intermediaries between manufacturers and buyers; in the context of this book, marketing done online between any seller and buyer
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• Landsend.com
• Increase sales by going online
• Website contains product catalogs and features
– My Virtual Model
– Wide range of fabric to choose from
– Affiliate program: pay 5% commission
– Real-time chat with customer service reps
– Less than 2 days delivery 16 distribution outlets and the US and 3 in the UK
• 88% of their customers are college graduates
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• Direct Sales by Manufacturers
– Sellers can understand their markets better because of the direct connection to consumers
– Consumers gain greater information about the products through their direct connection to the manufacturers
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• Retailing in Online Malls
– Referring Directories
– Malls with Shared Services
• Representative B2C Services
– Postal Services
– Services and Products for Adults
– Wedding Channels
– Gift Registries
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Travel and Tourism Services Online
• Online travel is probably the most successful e-commerce implementation
• Services provided include:
– General information
– Reserving and purchasing tickets, accommodations, and entertainment
– Travel tips
– Electronic travel magazines
– Fare comparisons
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Travel and Tourism Services Online
• Benefits of Online Travel Services
– Benefits to consumers
• Large amount of free information available 24/7
• Substantial discounts can be found
– Benefits to providers
• Airlines, hotels, and cruise lines are selling otherwise-empty spaces
• Direct selling saves the provider’s commission and its processing
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Travel and Tourism Services Online
• Limitations of Online Travel Services
– Many people do not use the Internet
– The amount of time and the difficulty of using virtual travel agencies may be significant
– Complex trips or those that require stopovers may not be available online because they require specialized knowledge and arrangements
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Travel and Tourism Services Online
• Corporate Travel
– To reduce corporate travel costs, companies can make arrangements that enable employees to plan and book their own trips using online optimization tools provided by travel companies
– Travel authorization software that checks availability of funds and compliance with corporate guidelines is usually provided by travel companies
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Travel and Tourism Services Online
• Intelligent Agents in Travel Services
– Software agents emulate the work and behavior of human agents in executing organizational processes like travel authorization, planning or decision making
– Each agent is capable of acting autonomously, cooperatively, or collectively to achieve the stated goal
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• The Internet Job Market
– Job seekers
– Employers seeking employees
– Job agencies
– Government agencies and institutions
• The Internet is a global online portal for job seekers
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• Limitations of the Electronic Job Market
– Many people do not use the Internet. This limitation is even more serious with non-technology-oriented jobs
– Security and privacy: resumes and other online communications are usually not encrypted, so one’s job-seeking activities may not be secure
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Real Estate Online
• Real Estate Applications
– Advice to consumers on buying or selling a home
– Commercial real estate listings
– Listings of residential real estate in multiple databases
– Maps are available
– Information on current mortgage rates
– Mortgage brokers can pass loan applications over the
Internet and receive bids from lenders who want to issue mortgages
– Online lenders can tentatively approve loans online
– Automated closing of real estate transactions
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Real Estate Online
• Real Estate Applications
– Property management companies (residential, commercial, and industrial) are using the Internet for many applications ranging from security to communication with tenants
– Sites for persons who want to sell their homes privately, without using a real estate agent
– Rental properties are listed
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What’s its revenue model?
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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, and home banking
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• E-banking:
– Various banking activities conducted from home or the road using an Internet connection; aka. cyberbanking, virtual banking, online banking, and home banking
• 54M americans use online banking in 2005,
47% increase in only 2 years
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• Implementation Issues in Online Financial Transactions
– Securing financial transactions
– Access to banks’ intranets by outsiders
– Using imaging systems
• Incoming checks, invoices, letters from banks and customers
– Pricing online versus off-line services
– Risks
• Hackers
• People are afraid of not having sufficient funds  resulted in panic withdrawals
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• Online Billing and Bill Paying
– Automatic transfer of mortgage payments
– Automatic transfer of funds to pay monthly utility bills
– Paying bills from online banking accounts
– Merchant-to-customer direct billing
– Using an intermediary for bill consolidation
• collect commission from payer and payee
– Person-to-person direct payment
– Pay bills at bank kiosks
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• Interactive Entertainment
– Web browsing
– Internet gaming
• Online arcade, lotteries, casino gaming
– Fantasy sport games
• Sportline.com, espn.com
– Single and multiplayer games
– Adult entertainment
– Card games
– Participatory Web sites:
• clubs, user groups, infotainment sites
– Reading
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• Non-interactive Entertainment: entertainment that users are not being entertained
– Event ticketing
– Restaurants
– Information retrieval
– Retrieval of audio and video entertainment
– Live events
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Online Purchase-Decision Aids
• Business Ratings Sites
– Bizrate.com, gomez.com
• Trust Verification Sites
– TRUSTe (truste.org), Verisign.com
• Other Shopper Tools
– Escrow services
– Communities of consumers who offer advice and opinions
– E-wallet (or e-purse)
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• A traditional brick-and-mortar store with a mature Web site uses a click-and-mortar strategy to:
– Speak with one voice
• Communicate the same thing to customers in every channel
– Leverage the multi-channels
• Purchase online, return at store
– Empower the customer
• A powerful 24/7 channel for service and information
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• A successful click-and-mortar company
• The second-largest US retailer of consumer electronics
• Manage 650 stores around the country
• Features
– Educate customers about features and capabilities of products
– Power search on a product database
– Extensive amount of product information
• Over 50% of purchase processes completed compared to 17% of ones at others
• Customers have 3 choices: 3-day delivery, overnight delivery, or self-pickup in a store
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• Alliance between amazon.com and Toys“R”Us
• Amazon.com expertises in e-tailing business, but could not get best deal from toy manufacturers
• Toys“R”Us is the best in toy industry but failed in etailing
• Seemed to be a promising agreement
• However, they sued each other after 4 years out of 10year agreement.
– Toy“R”Us wanted amazon to sell only its products
– Amazon interpreted the agreement to allow it to sell other companies’ products
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• Don’t ignore profitability
– If it doesn’t make cents, it doesn’t make sense
• Manage new risk exposure
– Concern about scope of target customers
– Wallmartsucks.com
• Watch the cost of branding
• Do not start with insufficient funds
• The Web site must be effective
• Keep it interesting: dynamic content
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disintermediation
The removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain reintermediation
The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles
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Disintermediation and Reintermediation in the
B2C Supply Chain
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• channel conflict
Situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition
• Determining the right price
• Personalization
– Mass customization
• Fraud and illegal activities
• How to make customers happy
– Need market research
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