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Cybermediaries and Retailing


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The Impact and Role of Cybermediaries in Retailing: Implications For Global Competition.

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Cybermediaries and Retailing

  1. 1. The Impact and Role of Cybermediaries in Retailing:Implications For Global Competition. <br />Presented By : Supervised By: Research Coordinator:<br />MadhuryKhatun Daniel Vidal SubhashAppanna<br />Batch: MBA 100<br />AIS ST HELENS<br />Auckland, New Zealand<br />Date: July 7, 2011<br />
  2. 2. Area of Research Interest<br /><ul><li>Global Retailing
  3. 3. Ecommerce
  4. 4. Channel Intermediaries:
  5. 5. Retailers:
  6. 6. Traditional Intermediaries( Brick and Mortars)
  7. 7. Online Intermediaries (Cybermediaries: Click and Click )
  8. 8. Ecommerce adopted firms ( Brick and Click)
  9. 9. Consumers Purchasing behaviours</li></li></ul><li>PURPOSE OF THE RESEARCH<br /><ul><li>To identify the role of Cybermediaries in global retailing
  10. 10. To understand the affects of E-commerce and traditional intermediaries in presence of Cybermediaries in on value chain in global retail business
  11. 11. To analyze and understand the opportunities and threats of organizations in retail business in presence Cybermediaries in their value chain
  12. 12. To understand and analyze the threats and opportunities of internal and external stakeholders
  13. 13. To understand and analyze the consumers’ purchasing behavior influenced by Cybermediaries</li></li></ul><li>SIGNIFICANCE OF RESEARCH<br /><ul><li>The research is important in the following reasons based on literature analysis: </li></ul>It will be particularly valuable to demonstrate the current and future strategic directions of retail sectors’ distribution channel<br />It will be particularly useful to demonstrate strategic plans for distribution channel which are benefits for the firms in retail sector<br />Companies can potentially use SWOT guidelines to perform strategic planning for a business venture in retail sector using different intermediaries <br />To confirm if Cybermediary are a real threat for the firms, traditional intermediaries, and ecommerce adopted firms<br />
  14. 14. Problem Statement<br /><ul><li>Cybermediariesintegrate markets at the global level and create opportunities and threats for firms, distribution channel intermediaries and all internal and external stakeholders. To what extent is this the case?
  15. 15. Cybermediaries force industry restructuring and the need to articulate hypotheses for the future of intermediation in the competitive market place using this framework. How is this perceived in practice?
  16. 16. Cybermediaries influence consumer buying behaviours. To what extent is this the case?</li></li></ul><li>Research Questions<br />The study attempts to analyse the benefits to stakeholders through the presence of Cybermediaries and other intermediaries in the retail industry.<br /><ul><li>What are the roles of Cybermediaries and traditional intermediaries and e-commerce in the global retail business process?
  17. 17. What will be the cost to a company for intermediation, disintermediation, and re-intermediation through an "IDR framework?”
  18. 18. What are the threats and opportunities for Global Retail Business in the presence of Cybermediaries and traditional intermediaries and E-commerce?
  19. 19. What are the ethical issues for global retail business in the presence of Cybermediaries, traditional intermediaries and E-commerce?
  20. 20. Are Cybermediaries really a threat or potential revenue generator for global retail business?</li></li></ul><li>Global Retailing<br /><ul><li>Retail Sector and Retailers (Kocic, A., 2010):
  21. 21. Retail sector includes all the shops (online and off line Intermediaries) that sell goods and services to the final consumers who buy them for personal use and not for business use. Retailing is the last stage in the distribution process.
  22. 22. Examples retail products:
  23. 23. Ranging from cars to apparel, meal at restaurants, airline tickets, digital products (books, magazine, newspapers, software, Movie, education etc) and theatre tickets (Berman & Evans, 2004).
  24. 24. Products sell well in online are travel tickets, computer hardware and software, consumers electronics, office supplies, sport and fitness goods, books and music including digital products, toys, health and beauty, entertainment, apparel and clothing, jewellery, cars, services ( Turban et al p- 96).
  25. 25. The retailers are sales intermediaries or sellers those operate between manufacturers and consumers .</li></ul>Manufacturers, Online/OfflineRetailers <br />Manufacturers<br />Intermediaries<br />Consumers<br />
  26. 26. The Global Retail Sector<br /><ul><li>One-fifth (22 per cent) of the world's population will be online by 2011 - with around 1.5 billion users expected to be surfing the web (, 2011)
  27. 27. The most significant areas of growth are expected to be Brazil, Russia, India and China.
  28. 28. Growing at faster rate than offline segments 14.5% in 2009 reach to 348.6 billion USD (IMAP, 2010)
  29. 29. Primary beneficiaries (Laudon &Traver, 2010):
  30. 30. Established offline retailers with online presence (e.g., Staples, Wal-Mart)
  31. 31. First mover dot-com companies (e.g., Amazon, eBay, )
  32. 32. U.S. retail market accounts for over $9.7 trillion (70%) of total GDP (Laudon &Traver, 2010)
  33. 33. Personal consumption:
  34. 34. 60% services
  35. 35. 29% nondurable goods
  36. 36. 11% durable goods
  37. 37. Internet users ( Internet World Statistics, 2011):</li></ul> Asia – 44%, Europe – 22.7%, North America – 13%, Latin America - 10.3%, Africa – 5.7%; Middle East - 3.3%, Australia – 1%<br /><ul><li>World internet penetration rates: </li></ul> North America – 78.3%; Oceania/Australia – 60.1%; Europe – 58.3%; Latin America – 37%; Middle East – 31.7%; World average- 32.2%.<br />
  38. 38. THE GLOBAL RETAIL SECTOR TODAY<br />Traditional vs. Online global retail growth<br />New Development in Ecommerce Solutions<br /> Globalization<br />Social networking Multiple device<br />Multiple business Rich content<br />model Optimization <br />Personalization Product <br />Multiple channels discovery<br /> Data mining<br />Multichannel Retail Strategy now a days:<br />E-commerce<br />Solutions <br />Catalogue<br />Store<br />Online<br />Mobile<br />Source: (IMAP, 2010)<br />
  39. 39. THE ONLINE RETAIL SECTOR TODAY<br />Source: Laudon &Traver, 2010, P- 9-11<br />
  40. 40. THE ONLINE RETAIL SECTOR TODAY <br /><ul><li>Bras N Things expands e-store
  41. 41. The brand’s business grew by 288 per cent last year leading to a three-fold increase in staff numbers.
  42. 42. Online retail growth will result in net-employment gain to the Australian economy, even if there are some job losses in bricks-and-mortar retail.”
  43. 43. Sales of Off lines retailers expected to grow 2.3 % in 2010-2011
  44. 44. Exceeding $650 million ( 2.1%) online retail spend by 2015-16
  45. 45. Australia flat traditional retail market
  46. 46. Online group buying and daily discount sector has grown to be worth $377 million in 2010-11.
  47. 47. Sites such as Cudo, Spreets, Ozsale, Catch of the Day and Stardeals accounts for 1.8 per cent of Australia’s online retail spend of $21.3 billion.
  48. 48. Daily deal websites have shown a 1000 per cent growth in visit in the past 12 months</li></ul>Source:, 2011<br />
  49. 49. UK ONLINE RETAIL SECTOR GROWTH <br />In March 2011, UK online spending is a total of £5.1 billion, 14% more than March 2010.<br /> Health and beauty sector (which includes perfume and make up) rocketing up 20% from February, and 32% year-on-year<br />The travel sector down to 15% on February from 2% compared with March 2010 ( due to economic downturn).<br />The Index reveals an encouraging performance for the e-retail market during these tough economic conditions, high street suffering its worst drop in sales for 15 years during the same period.  <br />Source: (Netimperative, 2011)<br />
  50. 50. PORTER’S FIVE FORCES MODEL IN RETAIL INDUSTRY ANALYSIS<br />Competitions:<br /> There is High among intermediaries, producers, and e-commerce adopted firms<br />Threat of new entrants: <br />High due to presence of Cybermediary, lowering cost of startup and small business.<br />Buyer’s power: <br /> High due to Cybermediary , consumers can compare price<br />Threat of Substitute Products: High as too many start up and small firms are using Cybermediaries , for example , GroupOn, eBay, Amazon for sell their products.<br />Supplier power : Low because of Cybermediary ( B2B) <br /> Source: (Turban & Volonino, 2010)<br /> B2C<br /> B2B B2C<br /> B2C<br />Threat of new entrants<br />(High)<br />Supplier<br />Power<br />(Low) <br />Buyer’s power<br />(High)<br />Rivalry<br />Among competitors<br />(High)<br />Threat of substitutes<br />(High)<br />
  51. 51. Consumers purchasing behaviors<br /><ul><li>Media that Influence consumers to start search shopping online (Laudon &Traver, 2009):</li></ul>Magazine – 47%;Email – 29%; Online advertizing 26%; Online communities - 10%; Blogs 8% ; In-store promotion – 27%; Outdoor billboard 12%; Instant massage 9%; Mobile phone 8% ; yellow pages – 7%<br /><ul><li>Purchasing Online or Offline:
  52. 52. 42% research online and purchase the products online
  53. 53. 34% research online and then purchased the product at the store. 
  54. 54. 21% research online, research at the store and then purchase later online 
  55. 55. 12% research at the store first and then purchase the product online 
  56. 56. 7% purchase the product at the store and research the product later online( Amazon web services, 2010).
  57. 57. Why more people don’t shop online?
  58. 58. Uneasy about online card use (44%)
  59. 59. Concerns about privacy of data (42%)
  60. 60. Shipping charges (37%)
  61. 61. No need to purchase online (33%)
  62. 62. Prefer to touch and feel products before purchase (32%)
  63. 63. Returning a product too difficult (27%)
  64. 64. Not seen anything online interested in buying (21% )</li></ul> Source: (Laudon &Traver, 2009)<br />
  65. 65. Intermediation, disintermediation and re-intermediation – IDR Framework<br /><ul><li>Traditional distribution Channel:</li></ul> $ $ $ <br /><ul><li>Intermediation: Job Loses ( Turban et al p – 231), Govt. loses tax</li></ul> $ $<br /><ul><li>Disintermediation: Job loses eBay or Amazon, GroupOn</li></ul> Dell<br /><ul><li>Reintermediation: More Job loses/ more competitions</li></ul> $ $<br /> EBay $ Amazon $ <br />Suppliers<br /> Distributers<br />Retailers<br />Consumers<br />Producers<br />Suppliers<br />Wholesalers<br />Retailers<br />Consumers<br />Producers<br />Cybermediary<br />Suppliers<br />Producers<br />Distributer<br />Retailers<br />Consumers<br />Suppliers<br />Producers<br />Distributer<br />Retailers<br />Consumers<br />Cybermediary<br />Cybermediary<br />Cybermediary<br />
  66. 66. Research issues finding from the literature review<br /><ul><li>Increase competitions among the firms , Cybermediaries, traditional intermediaries and e-commerce adopted firms
  67. 67. Increase in global online population promotes online retail spending
  68. 68. More affected traditional Intermediaries
  69. 69. Online shopping threatens 88k jobs next five years , Australian traditional retail sector claims
  70. 70. Start up Business or small business from low labour cost countries more benefited using Cybermediaries
  71. 71. Cybermediaries are more benefited due to economic downturn
  72. 72. Job loses due to intermediation, disintermediation and re-intermediation process from traditional retail shops
  73. 73. Government loses personal income tax revenue plus sell tax
  74. 74. Consumers are always benefited due to price competition and product comparison in presence of Cybermediaries in online value chain</li></li></ul><li>References<br /><ul><li>Amazon web services (2011).Purchasing Online or Offline: How Consumers Shop. Retrieved June 24, 2011 from online-or-offline-how-consumers-shop
  75. 75. eBay (2011). The eBay Marketplace: Retrieved June 28, 2011 from
  76. 76. Gregor, K. ( 2011). The New Zealand Herald :Retailer's rough patch costs jobs. Retrieved June 27, 2011 from bjectid=10732476
  77. 77. IMAP ( 2010).Retail Industry Global Report 2010: Change in consumer preference fuels online retail: Retrieved June 30, 2011 from
  78. 78. Internet World Statistics (2011). World Internet usage statistics. Retrieved July 1, 2011 from
  79. 79. Netimperative (2011). UK online retail sector enjoys ‘strongest growth in 3 Years. Retrieved June 22, 2011 from ector_enjoys.php
  80. 80. Parker, P.( 2011). Google: Mobile Growth Occurring Faster Than Expected. Retrieved June 28, 2011, from than-expected-66330
  81. 81. Turban et al (2008).Electronic Commerce 2008: A Managerial Perspective. New Jersey, USA: Pearson.
  82. 82. (2011).Latest news. Retrieved June 28, 2011 from
  83. 83. ( 2011). One fifth of the world online by 2011. Retrieved July 1, 2011 from by-2011-39167959/</li></li></ul><li>THANK YOU<br />