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Copy of e retailing


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Copy of e retailing

  1. 1. Electronic Commerce and Retailing
  2. 2. E-Retailing <ul><li>Retailing is expected to change with rapid development of new online sales and distribution channels that literally can be used from anywhere, anytime- from work, school, a hotel, car etc. </li></ul><ul><li>In traditional model, the customer went to the store & located the product. In online model, the retailer seeks out the customer. </li></ul>
  3. 3. Issues consider in developing business model <ul><li>Retailers need to consider the following issues in developing business model:- </li></ul><ul><li>Product issues </li></ul><ul><li>S/W interface issues </li></ul><ul><li>Process issues </li></ul><ul><li>Pricing issues </li></ul><ul><li>Payment issues </li></ul><ul><li>Market penetration issues </li></ul>
  4. 4. Changing Retail Industry Dynamics <ul><li>Factors affecting retail industry dynamics are:- </li></ul><ul><li>Overbuilding & access supply </li></ul><ul><li>Demographic changes </li></ul><ul><li>Consumer behavior </li></ul><ul><li>Technology improvements in electronic Retailing </li></ul><ul><ul><ul><li>Television retailing </li></ul></ul></ul><ul><ul><ul><li>CD-ROM based shopping </li></ul></ul></ul><ul><ul><ul><li>Online based shopping </li></ul></ul></ul>
  5. 5. Changing Retail Industry Dynamics <ul><li> Overbuilding & excess supply </li></ul><ul><li>With online retailing, constraints of time & space disappear. </li></ul><ul><li>In 1980, period of overexpansion, profits were declining, retailers reduce staff & minimizing merchandise to reduce staff. </li></ul><ul><li>In 1990, companies are under pressure to grow & produce profit. </li></ul><ul><li>The shortage of entry level workers means that retailers are using under trained workers who are less able to emphasize with shopper needs- result is that shopping centers are unable to provide quality service. </li></ul>
  6. 6. Changing Retail Industry Dynamics <ul><li>Demographic Changes </li></ul><ul><li>Decline in amt. of time Americans are spending in shopping malls. </li></ul><ul><li>Reasons are: </li></ul><ul><ul><li>Time constraints </li></ul></ul><ul><ul><li>Safety concerns </li></ul></ul><ul><ul><li>Growing frustration </li></ul></ul><ul><ul><li>Insufficient product information. </li></ul></ul><ul><li>Americans shopping channels are: HSN(Home Shopping Network), CUC International. </li></ul><ul><li>Need of family </li></ul><ul><li>Lot of time wastage to pay in malls </li></ul>
  7. 7. Changing Retail Industry Dynamics <ul><li>Technology Improvements in Electronic Retailing </li></ul>Retailers offering all kinds of products that can be ordered over the phone. The goods are delivered within 48 hr. Mail orders & catalog shopping Retailers offering common consumer products at near wholesaler prices when purchased in bulk quantities. Warehouse clubs Three or more anchor stores Supercentres These primarily stock name brand manufacturers items. Factory outlet mall Includes under one roof general merchandise , groceries etc. Shopping malls & departmental stores Definition & Examples Types of Outlet
  8. 8. Changing Retail Industry Dynamics <ul><ul><li>Television retailing </li></ul></ul><ul><ul><li>Home Shopping Network (HSN) by America </li></ul></ul><ul><ul><li>In 1994, HSN reached 65.8 million television households throughout the united states, signals via cable, broadcast, dish, satellite etc. </li></ul></ul><ul><ul><li>TV retail marketing are divided into segments : TV live, with a show host who presents the merchandise & conveys information relating to the product, including price, quality, features & benefits. </li></ul></ul><ul><ul><li>Viewers place orders for products by calling a toll-free telephone number. </li></ul></ul><ul><ul><li>Merchandise delivered products within 10 days. </li></ul></ul><ul><ul><li>Purchased item may be returned within 30 days with a full refund of purchase price, including the original shopping & handling charges. </li></ul></ul>
  9. 9. Changing Retail Industry Dynamics <ul><li>CD-ROM based shopping </li></ul><ul><li>Retailers can create their own disk at a cost of between $10,000-$50,000 or participating in a multiple marketer disk for a fee between $1,000-$2,500 per megabyte of display space. </li></ul><ul><li>The business ideas behind catalogs is: build name, brand recognition for the stores & manufacturers, help determine store expansion plans. </li></ul><ul><li>CD-ROM catalog has multimedia capability & can enable merchant to add sound, photos & full motion video to a product presentation. </li></ul>
  10. 10. Changing Retail Industry Dynamics <ul><li>Online Retailing </li></ul><ul><li>American Online Services (AOL) offers 24 hr. access to their own shopping environment. </li></ul><ul><li>Home Shopping Network (HSN) </li></ul><ul><li>Via internet 365*24*7 days. </li></ul>
  11. 11. Online Retailing Successful Stories <ul><li>Online Retailing: Peapod’s Experience </li></ul><ul><li>Founded in 1989, by two brothers, peapod ( ) is a member of an online grocery shopping & delivery service. </li></ul><ul><li>Peapod has online database of over 25,000 grocery & drugstore items & allows comparison shopping based on price, nutritional contents, fat, calories etc. </li></ul><ul><li>Electronic coupons, customer discounts, recipes, tips & information. </li></ul><ul><li>Peapod customers create their own grocery in their own virtual store. </li></ul><ul><li>Customers can create repeated use shopping lists. </li></ul><ul><ul><ul><ul><ul><li>cont………… </li></ul></ul></ul></ul></ul>
  12. 12. Online Retailing Successful Stories <ul><li>Online Retailing: Peapod’s Experience </li></ul><ul><li>Online ordering is simple: user id & password. </li></ul><ul><li>The system allows users to sort items by various criteria like price, fat, proteins, cholesterol etc. </li></ul><ul><li>A “find item” option on the top of the screen lets the user search either by brand name or product type. </li></ul><ul><li>85-90% peapod’s order comes via comp, remaining via phone. </li></ul><ul><li>Membership service also available. </li></ul><ul><li>Peapod’s members are charged actual shelf prices, plus a monthly service fee, a per order charge of $5.00 plus 5% of order amount. </li></ul><ul><li>Peapod’s provides a lower cost shopping experience for the customer. </li></ul>
  13. 13. Online Retailing Successful Stories <ul><li>CUC International </li></ul><ul><li>CUC, a direct marketing powerhouse, was a sizzling public offering (IPO), you could build a billion doller business with no inventory (stockless dealers), no stores & few employees. </li></ul><ul><li>CUC was born in 1973, launched the company as comp-U-card International, a service for computer based shoppers. </li></ul><ul><li>Forbes remade CUC into a telephone based shopping (toll-free) club. </li></ul><ul><li>http:// , provides discount price per product. </li></ul><ul><li>CUC business is divided into three segments : individual, wholesale & discount. </li></ul><ul><li>CUC has found that online members generate: </li></ul><ul><ul><ul><li>Higher renewal rates </li></ul></ul></ul><ul><ul><ul><li>Higher usage rates </li></ul></ul></ul><ul><ul><ul><li>Lower operating cost </li></ul></ul></ul>
  14. 14. Online Retailing Successful Stories <ul><li>Virtual Vineyards </li></ul><ul><li> is an online retailer that creates to the need of wine lovers who want to buy wine on the internet. </li></ul><ul><li>Virtual Vineyards launched its online wine web marketplace using Netscape’s Commerce Servers. </li></ul><ul><li>VV lists the different wines & prices from each participating winery as well as a summery of information & tasting charts. </li></ul><ul><li>Pricing of wine starts at $10. </li></ul>
  15. 15. Online Retailing Successful Stories <ul><li>Web based Travel Agencies </li></ul><ul><li>The web has made an impressive foray into travel business- hotel booking, car rentals & air tickets. </li></ul><ul><li>Business problem: reduce booking problem, provide GUI interface to hotel, airline tickets. </li></ul><ul><li>Solution: use web for booking online. </li></ul><ul><li>Requirements: www </li></ul><ul><li>Benefits: up-to-date information </li></ul>
  16. 16. Mercantile Models from the Consumer’s Perspective <ul><li>Mercantile Models formalize the interaction between consumers & merchants. </li></ul><ul><li>MM can be developed from two perspectives: </li></ul><ul><ul><ul><li>Consumer side: sequence of activities a shopper takes in purchasing a product or service. </li></ul></ul></ul><ul><ul><ul><li>Retailer side: MM defines the order management cycle, which specifies the activities within the organization that must takes place in fulfilling the customer’s order. </li></ul></ul></ul>
  17. 17. Phases of Consumer Mercantile Model <ul><li>Prepurchase preparation phase includes search & discovery for a set of products in the large information space capable of meeting customer requirements & product selection from a smaller set of products. </li></ul><ul><li>Purchase consummation phase specifies the flow of information & documents associated with purchasing & negotiation with merchants for suitable items such as price, availability & delivery dates. </li></ul><ul><li>Postpurchase interaction phase includes customer service & support to address customer complaints, product returns & product defects. </li></ul>
  18. 18. Types of Consumers <ul><li>Impulsive buyers: who purchase products quickly. </li></ul><ul><li>Patient buyers: who purchase products after making some comparisons. </li></ul><ul><li>Analytical buyers: who do substantial research before making the decision to purchase products or services. </li></ul><ul><li>Marketing researchers over the year have categorized shopping experiences into two dimensions: </li></ul><ul><li>Utilitarian: carrying out a shopping activity means a product is purchased in deliberate & efficient manner. </li></ul><ul><li>Hedonic: carrying out a shopping activity because “it is fun & I love it” means shopping entertainment (bargain perceptions) </li></ul>
  19. 19. Types of Purchases <ul><li>Specific planned purchases: where the need was recognized on entering the store & shopper bought the exact item to planned. </li></ul><ul><li>Generally planned purchases: where need was recognized, but shoppers decide in stores on the actual manufacturer of the item to satisfy the need. </li></ul><ul><li>Remainder purchases: the shopper is influenced by in-store advertisements & can substitute products easily. </li></ul><ul><li>Entirely unplanned purchases: where the need was not recognized upon entering the store. </li></ul>
  20. 20. Prepurchase Preparation <ul><li>Includes search & discovery for a set of products in the large information space capable of meeting customer requirements & product selection from a smaller set of products. </li></ul><ul><li>Consumer goes through in the prepurchase phase: </li></ul><ul><ul><ul><li>Deliberation </li></ul></ul></ul><ul><ul><ul><li>Comparison </li></ul></ul></ul><ul><ul><ul><li>Negotiation. </li></ul></ul></ul>
  21. 21. Prepurchase Deliberation <ul><li>It is defined as the elapsed time between a consumer first thinking about buying & actual purchase itself. </li></ul><ul><li>E.g. the purchase of a new car involves an appreciable time lag between the initiation of the information search process & the decision. </li></ul><ul><li>The answer to several questions about the purchase deliberation process: </li></ul><ul><ul><ul><li>How much time buyers spend in shopping? </li></ul></ul></ul><ul><ul><ul><li>Factors for differences in consumer decision time? </li></ul></ul></ul><ul><ul><ul><li>Technology used to reduce decision time? </li></ul></ul></ul><ul><ul><ul><li>What shopping environment keeps customer happy? </li></ul></ul></ul>
  22. 22. Prepurchase Comparison & Negotiation Process <ul><li>Consumer search: obtaining data related to an individual purchase decision problem. </li></ul><ul><li>Organization search: process through an organization adapt to such a change in its external environment as new suppliers, new products & new services. </li></ul>
  23. 23. Purchase Consummation <ul><li>After identifying the product to be purchased, the buyer & seller must interact in some way to carry out the merchantile interaction. A merchantile interaction is defined as exchange of information between buyer & seller followed by the necessary payment. </li></ul><ul><li>A simple merchantile protocol requires following transections: </li></ul><ul><ul><ul><li>Buyer contact to vendor for purchasing </li></ul></ul></ul><ul><ul><ul><li>Vendor tell price </li></ul></ul></ul><ul><ul><ul><li>If satisfied, buyer authorizes encrypted payment to vendor </li></ul></ul></ul><ul><ul><ul><li>Vendor verify encrypted billing payment of buyer </li></ul></ul></ul><ul><ul><ul><li>Billing service decrypt payment details & checks buyer a/c details </li></ul></ul></ul><ul><ul><ul><li>Billing service gives green light to vendor to deliver product </li></ul></ul></ul><ul><ul><ul><li>On receiving goods, buyer signs & delivers the receipt. </li></ul></ul></ul>
  24. 24. Postpurchse Interaction <ul><li>Customer value, price & cost </li></ul><ul><li>Refunds of payments </li></ul><ul><li>Affect customer satisfaction & company profile ability for years </li></ul>
  25. 25. Management Challenges in Online Retailing <ul><li>Retail advertising & marketing issues: </li></ul><ul><ul><ul><li>Advertising </li></ul></ul></ul><ul><ul><ul><li>Product display </li></ul></ul></ul><ul><ul><ul><li>Brand & category </li></ul></ul></ul><ul><ul><ul><li>Pricing & incentives </li></ul></ul></ul><ul><li>Retail operations issues: </li></ul><ul><ul><ul><li>Inventory management </li></ul></ul></ul><ul><ul><ul><li>Customer service quality </li></ul></ul></ul><ul><li>Retail management issues: </li></ul><ul><ul><ul><li>Location & decision making (site selection) </li></ul></ul></ul><ul><ul><ul><li>Retail policies </li></ul></ul></ul>
  26. 26. Management Challenges in Online Retailing : Retailing Strategy <ul><li>Qualifying a customer </li></ul><ul><li>Learning the customer needs </li></ul><ul><li>Understanding the customer purchasing process </li></ul><ul><li>Making the presentation based on customer interaction </li></ul><ul><li>Handling objections, negotiations with the customer </li></ul><ul><li>Closing the sale </li></ul><ul><li>Building an ongoing relationship through the service </li></ul><ul><li>Retailers lifestyle, voice, image </li></ul>
  27. 27. Management Challenges in Online Retailing <ul><li>Manage channel conflict </li></ul><ul><li>Learn to price online products/ services </li></ul><ul><li>Deliver a satisfying shopping experience </li></ul><ul><li>Design the layout of online store </li></ul><ul><li>Mange brands </li></ul><ul><li>Create the right incentives </li></ul>