e retailing final

8/3/2019 e Retailing Final

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All business activities carried on with the use of electronic media.

Conducting business - help of the electronic media & making use of the IT

such as EDI (Electronic data interchange).

Buying and selling of goods and services over the World Wide Web. Click of a mouse - Buy product.

Shipping method - Used for the delivery of the goods ordered.

E-commerce in India.

Scope of E-commerce -2007 - 30.32 million and 2011 - 71 million total

internet users in India by 2011.

E-commerce and the Government of India - Information and Technology Act &

Impose service tax on E-Commerce transaction.


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27%

15%

14%

14%

30%

Retail E-Commerce

Leisure Travel Books, Music, Videos & Software

Computers & Electronics Apparel

Consumables & Others


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For Buyer

Opportunity cost of time

Associate expenditure.

For Seller

Identifying qualified buyers for their products.

Help in monitoring consumer behavior for most desirable prices and

product offerings without requiring them to take specific action.

Example- EBay

Communication Cost.

New ways to reach buyers through targeted advertising and one-on-onemarketing.


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Online retailers can use technology to increase product differentiation.

This will lead to an increase in seller profits, which may partially or

completely offset the decrease caused by lower search costs.

No physical shelf space constrain.

Advantages of Profiling to have better control & knowledge about the

target customer :

Product offerings can be customized and recommendations can

be made based on a consumer's attitudes, past behavior and

demographic characteristics.

High Switching Costs.


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Retail Ecommerce

Disintermediation Eliminating role of intermediaries like

wholesalers, distributors, etc.

Intermediaries play role of search agents, provide trustrelationships, ensure integrity of the market, match suppliers and

customers and provide marketing information to suppliers.


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E Commerce provides more choices and lower prices to

customers.

Savings on search cost for both buyers and sellers.

Customization and versioning can be provided at very low marginal

cost.

Price discrimination and bundling both increases the number of

buyers and thus reducing the deadweight loss.

Increased efficiency.


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Advantages

on the BasisOf Benefits

Company Consumers Society


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Due to global reach of internet, companies are able to explore new

segments and markets.

Company can offer wider range of choices , information to customers.

Some build-to-order companies such as Dell can even provide a

competitive advantage by inexpensive customization of products and

services.

In terms of cost reduction, E-retail helps in decrease costs in creating,

processing, distributing, storing and retrieving information.

Extended trading hours is another benefit, the 24 hours a day, 7 days a

week in 365 days allows business always free to open on the Internet

without overtime and extra cost. Other advantages includes the up-to-date company material, current

inventories, improved customers service, better customers

communication, increased operating and trading flexibility.


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For customers, the advantages occur in the buying process, product

research, evaluation and execution.

With the ubiquity in accessing the Internet, consumers are able to

search for shops or perform other transactions anytime in almost

locations.

Cheaper goods and services is one of the benefits for consumers who

purchase online.

Delivery time and costs can be saved by buyers when they purchasedigital goods and services.


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By telecommuting, individuals can nowadays work and do their

purchasing at home rather than by travelling around. This will result in less

traffic and air pollution.

For people in Third World countries, many services and products are now

available which were unavailable in the past.

Opportunities and higher education services are more achievable for

students.

Non-profit organizations, including government services, also benefit fromE-retail by the online payment system which supports the payment of tax

refunds and pensions quickly and securely.


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Disadvantages

Technological NonTechnological


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For the E-retail system itself, there is no universally acceptedstandard for quality, security and reliability.

The software of e-retail development tools are always evolving, andhave difficulties in integrating the Internet and E-retail software withparts of the existing applications & database.

For general users of E-retail, the accessibility to Internet, is unstable,expensive and insufficient in particular areas.

If a business system's scalability is not sufficient and upgradeable, itwill result in degradation, slowdown, and eventually loss ofcustomers.


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The lack of trust is one main reason why customers are unwilling toaccept E-retail due to privacy and security concerns.

For some customers, it is hard to change their habit of viewingmerchandise online; those customers resist traditional ways ofpurchasing physical goods in actual shops and have difficulties inchanging from a real to a virtual store.

Another drawback is that there are some products that people willnot buy online. For some high-cost and unique item businesses suchas those involved with jewelry or antiques which have difficulties inoffering the items in the E-commerce mode.

Most customers still want to feel and touch the item before theymake a decision.

Different expectations of goods and services from customers aretypical of the online purchasing environment. An example is in theperception of color. Due to different monitor settings, inaccurateinformation about color makes it difficult for customers to make anaccurate decision when purchasing online.


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The main disadvantages of E-retail are :

Lack of a business model.

Lack of trust and key public infrastructure.

Slow navigation on the Internet.

The high risk of buying unsatisfactory products.

Most of all lack of security.


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Very low margins (You need high volumes)> Amazon Nett Profit of $1.1B on Revenues of $34B> Google Nett Profit of $8.5B on Revenues of $29B> Infosys Nett Profit of $1.5B on Revenues of $6B

- Profitability takes a lot of time> Amazon turned in minimal profits in Q4 2001 (7th year)

- But then this is what all other businesses run around

> P/E ratio: Infosys 24.5 ; Google 20.1; Amazon 82.2.

* All numbers are for the year 2010.


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Top 10 online travel sites in India April 2010 data :

1. Indian Railways (IRCTC) : 7.75 million2. MakeMyTrip : 2.37 million

3. Yatra Online : 1.93 million4. Expedia : 1.64 million5. ClearTrip : 1.19 million6. TravelAdNetwork : 872,0007. Travelocity : 812,000

8. IndiaRailInfo : 647,0009. Jet Airways : 585,00010. eRail.In : 464,000


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ChangingDemographics

(youthfulIndia)

ChangingLifestyle

Exposure todevelopmarkets

Soaring Realestate cost


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Compete with international markets.

Bright future.

Connection with the field of IT.

IT sector has to face acute shortage of skilled person in the year to come.


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Intermediaries play an important role because of large distance

between production units and consumer units.

Now through e-commerce it is possible for the consumer to

conduct and place an order with the manufacturer instantly and

directly.

Intermediaries cannot be eliminated completely due to nature of

products.


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Internet is unlikely gathering a sizable slice of market. And that could be several

years to come, especially in businesses where margins are thin.

Cheap labor thanks to easy availability of domestics at an affordable wage bill, quite

a few of the rich customers hire them for doing domestic chores, which include

shopping.

Indian aversion to use credit cards as low penetration of credit cards and the lack of

popularity of debit cards, e-tailing might find it an uphill task to catch on.

Mounting competitive pressures : The turnover of the sector is relatively small and

many players have already entered into it. Thus many e-retailers are eyeing a small

market, exerting more pressure on operating margins.

Shopping is still a touch--feel--hear experience. In e-retail, customer retention by 5% leads to increase in profits by 25%. Most

people buying on the net do it out of curiosity and a repeat purchase is unlikely.

Inadequate information provided when the customers discerns it, certain products

like clothes, cosmetics etc. involve higher customer involvement.


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The most important cost advantage of e-retailing comes from whittled down shop

front costs and elimination of intermediaries and economical distribution. For

example, book e-retailing means giving out with big shops replete with slow-moving

stock. The implication: need for lower working capital.

Collaborative commerce (E-commerce) :: An e-retailer may collaborate with some

manufacturers and suppliers.

Create economic value: E-retailers should create economic value for the customer

rather than a curiosity value. They should find out reasons, as to why customers

should buy from a web site rather than a brick and mortar store and try to

communicate this reason effectively.


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Kunal Nagrani

Harminder Kaur

Parth Mehta

Ashesh Trivedi

Saloni Soni


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Thank You

e retailing final

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