e retailing

Electronic Electronic Commerce and Commerce and

RetailingRetailing

E-RetailingE-Retailing

Retailing is expected to change with Retailing is expected to change with rapid development of new online sales rapid development of new online sales and distribution channels that literally and distribution channels that literally can be used from anywhere, anytime- can be used from anywhere, anytime- from work, school, a hotel, car etc.from work, school, a hotel, car etc.

In traditional model, the customer In traditional model, the customer went to the store & located the went to the store & located the product. In online model, the retailer product. In online model, the retailer seeks out the customer.seeks out the customer.

Issues consider in Issues consider in developing business modeldeveloping business model

Retailers need to consider the Retailers need to consider the following issues in developing following issues in developing business model:-business model:-

Product issuesProduct issues S/W interface issuesS/W interface issues Process issuesProcess issues Pricing issuesPricing issues Payment issuesPayment issues Market penetration issuesMarket penetration issues

Changing Retail Industry Changing Retail Industry DynamicsDynamics

Factors affecting retail industry Factors affecting retail industry dynamics are:-dynamics are:-

Overbuilding & access supplyOverbuilding & access supply Demographic changesDemographic changes Consumer behaviorConsumer behavior Technology improvements in Technology improvements in

electronic Retailingelectronic Retailing Television retailingTelevision retailing CD-ROM based shoppingCD-ROM based shopping Online based shoppingOnline based shopping


Overbuilding & excess supplyOverbuilding & excess supply With online retailing, constraints of time & space With online retailing, constraints of time & space

disappear.disappear. In 1980, period of overexpansion, profits were In 1980, period of overexpansion, profits were

declining, retailers reduce staff & minimizing declining, retailers reduce staff & minimizing merchandise to reduce staff. merchandise to reduce staff.

In 1990, companies are under pressure to grow & In 1990, companies are under pressure to grow & produce profit.produce profit.

The shortage of entry level workers means that The shortage of entry level workers means that retailers are using under trained workers who are less retailers are using under trained workers who are less able to emphasize with shopper needs- result is that able to emphasize with shopper needs- result is that shopping centers are unable to provide quality service.shopping centers are unable to provide quality service.


Demographic ChangesDemographic Changes Decline in amt. of time Americans are spending Decline in amt. of time Americans are spending

in shopping malls.in shopping malls. Reasons are: Reasons are:

Time constraints Time constraints Safety concernsSafety concerns Growing frustrationGrowing frustration Insufficient product information.Insufficient product information.

Americans shopping channels are: HSN(Home Americans shopping channels are: HSN(Home Shopping Network), CUC International.Shopping Network), CUC International.

Need of familyNeed of family Lot of time wastage to pay in malls Lot of time wastage to pay in malls


Technology Improvements in Electronic RetailingTechnology Improvements in Electronic Retailing

Types of OutletTypes of Outlet Definition & ExamplesDefinition & Examples

Shopping malls & Shopping malls & departmental storesdepartmental stores

Includes under one roof Includes under one roof general merchandise , general merchandise , groceries etc.groceries etc.

Factory outlet mallFactory outlet mall These primarily stock name These primarily stock name brand manufacturers items.brand manufacturers items.

SupercentresSupercentres Three or more anchor stores Three or more anchor stores

Warehouse clubsWarehouse clubs Retailers offering common Retailers offering common consumer products at near consumer products at near wholesaler prices when wholesaler prices when purchased in bulk quantities.purchased in bulk quantities.

Mail orders & catalog Mail orders & catalog shoppingshopping

Retailers offering all kinds of Retailers offering all kinds of products that can be ordered products that can be ordered over the phone. The goods are over the phone. The goods are delivered within 48 hr.delivered within 48 hr.


Television retailingTelevision retailing Home Shopping Network (HSN) by AmericaHome Shopping Network (HSN) by America In 1994, HSN reached 65.8 million television households In 1994, HSN reached 65.8 million television households

throughout the united states, signals via cable, throughout the united states, signals via cable, broadcast, dish, satellite etc.broadcast, dish, satellite etc.

TV retail marketing are divided into segments : TV live, TV retail marketing are divided into segments : TV live, with a show host who presents the merchandise & with a show host who presents the merchandise & conveys information relating to the product, including conveys information relating to the product, including price, quality, features & benefits.price, quality, features & benefits.

Viewers place orders for products by calling a toll-free Viewers place orders for products by calling a toll-free telephone number.telephone number.

Merchandise delivered products within 10 days.Merchandise delivered products within 10 days. Purchased item may be returned within 30 days with a Purchased item may be returned within 30 days with a

full refund of purchase price, including the original full refund of purchase price, including the original shopping & handling charges. shopping & handling charges.


CD-ROM based shoppingCD-ROM based shopping Retailers can create their own disk at a cost Retailers can create their own disk at a cost

of between $10,000-$50,000 or participating of between $10,000-$50,000 or participating in a multiple marketer disk for a fee between in a multiple marketer disk for a fee between $1,000-$2,500 per megabyte of display space.$1,000-$2,500 per megabyte of display space.

The business ideas behind catalogs is: build The business ideas behind catalogs is: build name, brand recognition for the stores & name, brand recognition for the stores & manufacturers, help determine store manufacturers, help determine store expansion plans.expansion plans.

CD-ROM catalog has multimedia capability & CD-ROM catalog has multimedia capability & can enable merchant to add sound, photos & can enable merchant to add sound, photos & full motion video to a product presentation.full motion video to a product presentation.


Online RetailingOnline Retailing American Online Services (AOL) American Online Services (AOL)

offers 24 hr. access to their own offers 24 hr. access to their own shopping environment.shopping environment.

Home Shopping Network (HSN) Home Shopping Network (HSN) Via internet 365*24*7 days.Via internet 365*24*7 days.

Online Retailing Successful Online Retailing Successful StoriesStories

Online Retailing: Peapod’s ExperienceOnline Retailing: Peapod’s Experience Founded in 1989, by two brothers, peapod (Founded in 1989, by two brothers, peapod (

http://www.peapod.com/http://www.peapod.com/) is a member of an online ) is a member of an online grocery shopping & delivery service.grocery shopping & delivery service.

Peapod has online database of over 25,000 Peapod has online database of over 25,000 grocery & drugstore items & allows comparison grocery & drugstore items & allows comparison shopping based on price, nutritional contents, shopping based on price, nutritional contents, fat, calories etc.fat, calories etc.

Electronic coupons, customer discounts, Electronic coupons, customer discounts, recipes, tips & information.recipes, tips & information.

Peapod customers create their own grocery in Peapod customers create their own grocery in their own virtual store.their own virtual store.

Customers can create repeated use shopping Customers can create repeated use shopping lists.lists.

cont…………cont…………


Online Retailing: Peapod’s ExperienceOnline Retailing: Peapod’s Experience Online ordering is simple: user id & password.Online ordering is simple: user id & password. The system allows users to sort items by various The system allows users to sort items by various

criteria like price, fat, proteins, cholesterol etc.criteria like price, fat, proteins, cholesterol etc. A “find item” option on the top of the screen lets the A “find item” option on the top of the screen lets the

user search either by brand name or product type.user search either by brand name or product type. 85-90% peapod’s order comes via comp, remaining 85-90% peapod’s order comes via comp, remaining

via phone.via phone. Membership service also available.Membership service also available. Peapod’s members are charged actual shelf prices, Peapod’s members are charged actual shelf prices,

plus a monthly service fee, a per order charge of plus a monthly service fee, a per order charge of $5.00 plus 5% of order amount.$5.00 plus 5% of order amount.

Peapod’s provides a lower cost shopping experience Peapod’s provides a lower cost shopping experience for the customer. for the customer.


CUC InternationalCUC International CUC, a direct marketing powerhouse, was a sizzling public CUC, a direct marketing powerhouse, was a sizzling public

offering (IPO), you could build a billion doller business with no offering (IPO), you could build a billion doller business with no inventory (stockless dealers), no stores & few employees.inventory (stockless dealers), no stores & few employees.

CUC was born in 1973, launched the company as comp-U-card CUC was born in 1973, launched the company as comp-U-card International, a service for computer based shoppers.International, a service for computer based shoppers.

Forbes remade CUC into a telephone based shopping (toll-Forbes remade CUC into a telephone based shopping (toll-free) club.free) club.

http:// http:// www.cuc.comwww.cuc.com , provides discount price per product. , provides discount price per product. CUC business is divided into three segments : individual, CUC business is divided into three segments : individual,

wholesale & discount.wholesale & discount. CUC has found that online members generate:CUC has found that online members generate:

Higher renewal ratesHigher renewal rates Higher usage ratesHigher usage rates Lower operating costLower operating cost


Virtual VineyardsVirtual Vineyards http://www.virtualvin.comhttp://www.virtualvin.com is an online is an online

retailer that creates to the need of wine retailer that creates to the need of wine lovers who want to buy wine on the internet.lovers who want to buy wine on the internet.

Virtual Vineyards launched its online wine Virtual Vineyards launched its online wine web marketplace using Netscape’s web marketplace using Netscape’s Commerce Servers.Commerce Servers.

VV lists the different wines & prices from VV lists the different wines & prices from each participating winery as well as a each participating winery as well as a summery of information & tasting charts.summery of information & tasting charts.

Pricing of wine starts at $10.Pricing of wine starts at $10.


Web based Travel AgenciesWeb based Travel Agencies The web has made an impressive foray The web has made an impressive foray

into travel business- hotel booking, car into travel business- hotel booking, car rentals & air tickets.rentals & air tickets.

Business problem: reduce booking Business problem: reduce booking problem, provide GUI interface to hotel, problem, provide GUI interface to hotel, airline tickets.airline tickets.

Solution: use web for booking online.Solution: use web for booking online. Requirements: www Requirements: www Benefits: up-to-date informationBenefits: up-to-date information

Mercantile Models from the Mercantile Models from the Consumer’s PerspectiveConsumer’s Perspective

Mercantile Models formalize the Mercantile Models formalize the interaction between consumers & interaction between consumers & merchants.merchants.

MM can be developed from two MM can be developed from two perspectives:perspectives:

Consumer side:Consumer side: sequence of activities a shopper sequence of activities a shopper takes in purchasing a product or service.takes in purchasing a product or service.

Retailer side:Retailer side: MM defines the order MM defines the order management cycle, which specifies the activities management cycle, which specifies the activities within the organization that must takes place in within the organization that must takes place in fulfilling the customer’s order.fulfilling the customer’s order.

Phases of Consumer Phases of Consumer Mercantile ModelMercantile Model

Prepurchase preparation phase Prepurchase preparation phase includes includes search & discovery for a set of products in the search & discovery for a set of products in the large information space capable of meeting large information space capable of meeting customer requirements & product selection from customer requirements & product selection from a smaller set of products.a smaller set of products.

Purchase consummation phase Purchase consummation phase specifies the specifies the flow of information & documents associated with flow of information & documents associated with purchasing & negotiation with merchants for purchasing & negotiation with merchants for suitable items such as price, availability & suitable items such as price, availability & delivery dates.delivery dates.

Postpurchase interaction phasePostpurchase interaction phase includes includes customer service & support to address customer customer service & support to address customer complaints, product returns & product defects.complaints, product returns & product defects.

Types of ConsumersTypes of Consumers Impulsive buyers:Impulsive buyers: who purchase products quickly.who purchase products quickly. Patient buyers:Patient buyers: who purchase products after who purchase products after

making some comparisons.making some comparisons. Analytical buyers:Analytical buyers: who do substantial research who do substantial research

before making the decision to purchase products before making the decision to purchase products or services.or services.

Marketing researchers over the year have Marketing researchers over the year have categorized shopping experiences into two categorized shopping experiences into two dimensions:dimensions:

Utilitarian: carrying out a shopping activity means Utilitarian: carrying out a shopping activity means a product is purchased in deliberate & efficient a product is purchased in deliberate & efficient manner.manner.

Hedonic: carrying out a shopping activity because Hedonic: carrying out a shopping activity because “it is fun & I love it” means shopping “it is fun & I love it” means shopping entertainment (bargain perceptions)entertainment (bargain perceptions)

Types of PurchasesTypes of Purchases Specific planned purchases:Specific planned purchases: where the need where the need

was recognized on entering the store & was recognized on entering the store & shopper bought the exact item to planned.shopper bought the exact item to planned.

Generally planned purchases: Generally planned purchases: where need was where need was recognized, but shoppers decide in stores on recognized, but shoppers decide in stores on the actual manufacturer of the item to satisfy the actual manufacturer of the item to satisfy the need.the need.

Remainder purchases: Remainder purchases: the shopper is the shopper is influenced by in-store advertisements & can influenced by in-store advertisements & can substitute products easily.substitute products easily.

Entirely unplanned purchases:Entirely unplanned purchases: where the need where the need was not recognized upon entering the store.was not recognized upon entering the store.

Prepurchase PreparationPrepurchase Preparation

Includes search & discovery for a set of Includes search & discovery for a set of products in the large information space products in the large information space capable of meeting customer capable of meeting customer requirements & product selection from requirements & product selection from a smaller set of products.a smaller set of products.

Consumer goes through in the Consumer goes through in the prepurchase phase: prepurchase phase:

DeliberationDeliberation ComparisonComparison Negotiation.Negotiation.

Prepurchase Prepurchase DeliberationDeliberation

It is defined as the elapsed time between a It is defined as the elapsed time between a consumer first thinking about buying & actual consumer first thinking about buying & actual purchase itself.purchase itself.

E.g. the purchase of a new car involves an E.g. the purchase of a new car involves an appreciable time lag between the initiation of appreciable time lag between the initiation of the information search process & the the information search process & the decision.decision.

The answer to several questions about the The answer to several questions about the purchase deliberation process:purchase deliberation process:

How much time buyers spend in shopping?How much time buyers spend in shopping? Factors for differences in consumer decision time?Factors for differences in consumer decision time? Technology used to reduce decision time?Technology used to reduce decision time? What shopping environment keeps customer happy?What shopping environment keeps customer happy?

Prepurchase Comparison & Prepurchase Comparison & Negotiation ProcessNegotiation Process

Consumer search: obtaining data Consumer search: obtaining data related to an individual purchase related to an individual purchase decision problem.decision problem.

Organization search: process Organization search: process through an organization adapt to through an organization adapt to such a change in its external such a change in its external environment as new suppliers, new environment as new suppliers, new products & new services.products & new services.

Purchase ConsummationPurchase Consummation After identifying the product to be purchased, the After identifying the product to be purchased, the

buyer & seller must interact in some way to carry out buyer & seller must interact in some way to carry out the merchantile interaction. A merchantile interaction the merchantile interaction. A merchantile interaction is defined as exchange of information between buyer is defined as exchange of information between buyer & seller followed by the necessary payment.& seller followed by the necessary payment.

A simple merchantile protocol requires following A simple merchantile protocol requires following transections:transections:

Buyer contact to vendor for purchasingBuyer contact to vendor for purchasing Vendor tell priceVendor tell price If satisfied, buyer authorizes encrypted payment to vendorIf satisfied, buyer authorizes encrypted payment to vendor Vendor verify encrypted billing payment of buyerVendor verify encrypted billing payment of buyer Billing service decrypt payment details & checks buyer a/c Billing service decrypt payment details & checks buyer a/c

detailsdetails Billing service gives green light to vendor to deliver productBilling service gives green light to vendor to deliver product On receiving goods, buyer signs & delivers the receipt. On receiving goods, buyer signs & delivers the receipt.

Postpurchse InteractionPostpurchse Interaction

Customer value, price & costCustomer value, price & cost Refunds of paymentsRefunds of payments Affect customer satisfaction & Affect customer satisfaction &

company profile ability for yearscompany profile ability for years

Management Challenges in Management Challenges in Online RetailingOnline Retailing

Retail advertising & marketing issues:Retail advertising & marketing issues: AdvertisingAdvertising Product displayProduct display Brand & categoryBrand & category Pricing & incentivesPricing & incentives

Retail operations issues:Retail operations issues: Inventory managementInventory management Customer service qualityCustomer service quality

Retail management issues:Retail management issues: Location & decision making (site selection)Location & decision making (site selection) Retail policiesRetail policies

Management Challenges in Management Challenges in Online Retailing : Retailing Online Retailing : Retailing

StrategyStrategy Qualifying a customerQualifying a customer Learning the customer needsLearning the customer needs Understanding the customer purchasing processUnderstanding the customer purchasing process Making the presentation based on customer Making the presentation based on customer

interactioninteraction Handling objections, negotiations with the Handling objections, negotiations with the

customercustomer Closing the saleClosing the sale Building an ongoing relationship through the Building an ongoing relationship through the

serviceservice Retailers lifestyle, voice, imageRetailers lifestyle, voice, image

Management Challenges in Management Challenges in Online RetailingOnline Retailing

Manage channel conflictManage channel conflict Learn to price online products/ Learn to price online products/

servicesservices Deliver a satisfying shopping Deliver a satisfying shopping

experienceexperience Design the layout of online storeDesign the layout of online store Mange brandsMange brands Create the right incentivesCreate the right incentives

e retailing

Documents

shopping malls

online retailing

shopping centers

electronic retailing

eretailing retailing

hsnhome shopping network

following issues

online model