E-Commerce BBA ( Hons )

© Farhan Mir© Farhan Mir

20201414 IMSIMS

E-CommerceE-CommerceBBA (Hons)BBA (Hons) (Electronic Retailing: Products (Electronic Retailing: Products and Services)and Services)Lectures 7,8,9Lectures 7,8,9

By: Farhan MirBy: Farhan Mir


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RetailingRetailing

Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.


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Issues in RetailingIssues in Retailing

How can organization best serve their customers while earning a fair profit?

How can they stand out in a highly competitive environment where consumers have too many choices?

How can they grow their business, while retaining a core of loyal customers?


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Electronic RetailingElectronic Retailing

Overview of Electronic Retailing

electronic retailing (e-tailing)

Retailing conducted online, over the Retailing conducted online, over the InternetInternet

e-tailerse-tailers

Retailers who sell over the InternetRetailers who sell over the Internet


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Retailing Approaches: Retailing Approaches: Virtual versus TangibleVirtual versus Tangible

Follow the functions of the traditional retailer but as a “back office operation,” hidden from public

Web site merchandise represented by invisible electronic data entries

Generally prices are lower because of reduced operating/overhead costs


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Size and Growth of the B2C MarketReported amounts of online sales Reported amounts of online sales deviate substantially deviate substantially based on how the based on how the numbers are derivednumbers are derived

Annual online 2004 sales were estimated to be over $70 billion The average online shopper spent over $350 per quarterForrester Research estimates that e-tailing will reach $316 billion by 2010


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Computer hardware and softwareConsumer electronicsOffice suppliesSporting goodsBooks and music

ToysHealth and beautyApparel and clothingJewelryCarsServicesOthers

What Sells Well on the Internet?What Sells Well on the Internet?


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Characteristics of Successful E-Tailing

High brand recognitionHigh brand recognition

A guarantee provided by highly reliable A guarantee provided by highly reliable or well-known vendorsor well-known vendors

Digitized formatDigitized format

Relatively inexpensive itemsRelatively inexpensive items

Frequently purchased items Frequently purchased items

Commodities with standard Commodities with standard specificationsspecifications


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Remember some of the Remember some of the Business ModelsBusiness Models

Classification by Distribution Channel

1.1. Mail-order retailers that go onlineMail-order retailers that go online

2.2. Direct marketing from manufacturersDirect marketing from manufacturers

3.3. Pure-play e-tailersPure-play e-tailers

4.4. Click-and-mortar retailersClick-and-mortar retailers

5.5. Internet (online) mallsInternet (online) malls


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E-Retailing Business E-Retailing Business ModelsModels

Direct Sales by ManufacturersSellers can understand their markets Sellers can understand their markets better because of the direct connection better because of the direct connection to consumersto consumers

Consumers gain greater information Consumers gain greater information about the products through their direct about the products through their direct connection to the manufacturersconnection to the manufacturers


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E-Retailing in famous E-Retailing in famous sectorssectors● Travel and Tourism● Job and Placement● Real State & Insurance ● Stock Trading● Banking and Personal Finance● On Demand Gaming, Entertainment


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Travel and Tourism Services Travel and Tourism Services OnlineOnlineOnline travel is probably the most

successful e-commerce implementation

Services provided include:General information General information

Reserving and purchasing tickets, Reserving and purchasing tickets, accommodations, and entertainmentaccommodations, and entertainment

Travel tips Travel tips

Electronic travel magazinesElectronic travel magazines

Fare comparisonsFare comparisons


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Travel and Tourism Services Travel and Tourism Services OnlineOnline

Benefits of Online Travel ServicesBenefits to consumersBenefits to consumers

Large amount of free information available 24/7Substantial discounts can be found

Benefits to providersBenefits to providersAirlines, hotels, and cruise lines are selling otherwise-empty spacesDirect selling saves the provider’s commission and its processing


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Limitations of Online Travel ServicesMany people do not use the InternetMany people do not use the Internet

The amount of time and the difficulty of The amount of time and the difficulty of using virtual travel agencies may be using virtual travel agencies may be significantsignificant

Complex trips or those that require Complex trips or those that require stopovers may not be available online stopovers may not be available online because they require specialized because they require specialized knowledge and arrangementsknowledge and arrangements


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Corporate TravelTo reduce corporate travel costs, companies To reduce corporate travel costs, companies can make arrangements that enable can make arrangements that enable employees to plan and book their own trips employees to plan and book their own trips using online optimization tools provided by using online optimization tools provided by travel companies, such as those offered by travel companies, such as those offered by Rosenbluth InternationalRosenbluth International

Travel authorization software that checks Travel authorization software that checks availability of funds and compliance with availability of funds and compliance with corporate guidelines is usually provided by corporate guidelines is usually provided by travel companiestravel companies


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Employment Placement Employment Placement and the Job Market Onlineand the Job Market Online

The Internet Job MarketJob seekersJob seekers

Employers seeking employeesEmployers seeking employees

Job agenciesJob agencies

Government agencies and institutionsGovernment agencies and institutions

The Internet is a global online portal for job seekers


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Employment Placement Employment Placement and the Job Market Onlineand the Job Market Online

Limitations of the Electronic Job Market

Many people do not use the Internet. This Many people do not use the Internet. This limitation is even more serious with non-limitation is even more serious with non-technology-oriented jobstechnology-oriented jobs

Security and privacy: resumes and other Security and privacy: resumes and other online communications are usually not online communications are usually not encrypted, so one’s job-seeking activities encrypted, so one’s job-seeking activities may not be securemay not be secure


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Exhibit 3.7 Intelligent Agents MatchExhibit 3.7 Intelligent Agents Match Resumes with Available Jobs Resumes with Available Jobs


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Real Estate OnlineReal Estate Online

Real Estate ApplicationsAdvice to consumers on buying or selling Advice to consumers on buying or selling a homea home

Commercial real estate listingsCommercial real estate listings

Listings of residential real estate in Listings of residential real estate in multiple databasesmultiple databases

The National Association of Realtors U.S The National Association of Realtors U.S ((realtor.comrealtor.com) has links to house listings in ) has links to house listings in all major citiesall major cities


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Real Estate OnlineReal Estate Online

Real Estate ApplicationsMaps are availableMaps are available

Information on current mortgage ratesInformation on current mortgage rates

Mortgage brokers can pass loan Mortgage brokers can pass loan applications over the Internet and receive applications over the Internet and receive bids from lenders who want to issue bids from lenders who want to issue mortgagesmortgages

Online lenders can tentatively approve Online lenders can tentatively approve loans onlineloans online

Automated closing of real estate Automated closing of real estate transactionstransactions


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Insurance OnlineInsurance Online

Insurance OnlineAn increasing number of companies use An increasing number of companies use the Internet to offer standard insurance the Internet to offer standard insurance policies (auto, home, life, or health) at a policies (auto, home, life, or health) at a substantial discountsubstantial discount

Third-party aggregators offer free Third-party aggregators offer free comparisons of available policiescomparisons of available policies

Several large insurance and risk-Several large insurance and risk-management companies offer management companies offer comprehensive insurance contracts onlinecomprehensive insurance contracts online


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Exhibit 3.8 Online Electronic Stock Exhibit 3.8 Online Electronic Stock TradingTrading


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Schematic Representation of a Stock Market TransactionSchematic Representation of a Stock Market Transaction


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Online Stock Trading Online Stock Trading ModelModel

CustomerCustomer(trader)(trader)

Online Online BrokerBroker

Market-Market-makermaker

Clearing-Clearing-househouse

StockStockExchangeExchangecustomer’scustomer’s

accountaccount


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Online Demonstration of one of the major online brokers

(AKD Securities – Akeel Karim Deddy Securities )

www.akdtrade.com


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After opening an account, you need to login through this interface

Note the secure server presence


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Trading Section

You need to place order


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You can cancel the order if it’s not executed

You can view the status of your order


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Banking and Personal Finance OnlineBanking and Personal Finance Online

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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Exhibit 3.9 Online Banking CapabilitiesExhibit 3.9 Online Banking Capabilities


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Virtual BanksVirtual banks Virtual banks have no physical location, but only have no physical location, but only conduct online transactionsconduct online transactions

International and Multiple-Currency Banking

Hong Kong and Shanghai Banking Corporation Hong Kong and Shanghai Banking Corporation ((hsbc.com.hkhsbc.com.hk))

Tradecard and MasterCard for global Tradecard and MasterCard for global transactions (see transactions (see tradecard.comtradecard.com))

Bank of America and most other major banksBank of America and most other major banks

Fxall.comFxall.com is a multidealer foreign exchange is a multidealer foreign exchange serviceservice


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Implementation Issues in Online Financial Transactions

Securing financial transactionsSecuring financial transactions

Access to banks’ intranets by outsidersAccess to banks’ intranets by outsiders

Using imaging systemsUsing imaging systems

Pricing online versus off-line servicesPricing online versus off-line services

RisksRisks


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Online Billing and Bill PayingAutomatic transfer of mortgage Automatic transfer of mortgage paymentspayments

Automatic transfer of funds to pay Automatic transfer of funds to pay monthly utility billsmonthly utility bills

Paying bills from online banking Paying bills from online banking accountsaccounts

Merchant-to-customer direct billingMerchant-to-customer direct billing

Using an intermediary for bill Using an intermediary for bill consolidationconsolidation

Person-to-person direct paymentPerson-to-person direct payment

Pay bills at bank kiosksPay bills at bank kiosks

TaxesTaxes


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On-Demand On-Demand Delivery Services and E-grocersDelivery Services and E-grocers

on-demand delivery serviceExpress delivery made fairly quickly after an online order is received (fedEx, DHL, UPS)

e-grocerA grocer that takes orders online and provides deliveries on a daily or other regular schedule or within a very short period of time (freshdirect.com)


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Online Delivery of Digital Products,Online Delivery of Digital Products,Entertainment, and MediaEntertainment, and Media

Certain goods, (software, music, or news stories) may be distributed in a physical form or they may be digitized and delivered over the Internet

For sellers, the costs associated with the manufacture, storage, and distribution of physical products can be enormous


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Interactive EntertainmentWeb browsingWeb browsing

Internet gamingInternet gaming

Fantasy sport gamesFantasy sport games

Single and multiplayer gamesSingle and multiplayer games

Card gamesCard games

Participatory Web sitesParticipatory Web sites

ReadingReading


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Noninteractive EntertainmentEvent ticketingEvent ticketing

RestaurantsRestaurants

Information retrievalInformation retrieval

Retrieval of audio and video Retrieval of audio and video entertainmententertainment

Live eventsLive events


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Online EntertainmentMore than 50% US youngsters prefer to More than 50% US youngsters prefer to go online for entertainment purposesgo online for entertainment purposes

Online MusicOnline Musicwww.napster.com launched P2P file sharing of musinwww,youtube.com

Online GamingOnline GamingExpected to be around a 12 Billion$ market

Online Dating & Adult EntertainmentOnline Dating & Adult Entertainment


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Online Purchase-Decision Online Purchase-Decision AidsAids

shopping portalsGateways to e-storefronts and e-malls; may be comprehensive or niche oriented

shopping robots (shopping agents or shopbots)Tools that scout the Web on behalf of consumers who specify search criteria

Wireless Shopping Comparisons—Enable shoppers to compare prices any time from anywhere, including from any physical store


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Business Ratings Sites

Trust Verification Sites

Other Shopper ToolsEscrow servicesEscrow services

Communities of consumers who offer Communities of consumers who offer advice and opinionsadvice and opinions

E-wallet (or e-purse)E-wallet (or e-purse)


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Other Shopper ToolsAmazon.com’s A9 Search EngineAmazon.com’s A9 Search Engine

Remembers information A user can make notes about any Web page and search themOffers a new way to store and organize bookmarksRecommends new sites and favorite old sites specifically for the user to visit


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Issues in E-Tailing Issues in E-Tailing

disintermediationThe removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain

reintermediationThe process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles


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Exhibit 3.12Exhibit 3.12 Disintermediation and Disintermediation and ReintermediationReintermediation

in the B2C Supply Chain in the B2C Supply Chain


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Issues in E-TailingIssues in E-Tailing

Channel ConflictSituation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition

Determining the right pricePersonalizationFraud and illegal activitiesHow to make customers happy


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Managerial IssuesManagerial Issues1. What should our strategic position

be?

2. Are we financially viable?

3. Should we recruit out of town?

4. Are there international legal issues regarding online recruiting?

5. Do we have ethics and privacy guidelines?

6. How will intermediaries act in cyberspace?

7. Should we set up alliances?

Documents

E-Commerce BBA ( Hons )