synopsis ria (1) final 2 4 riya

8/4/2019 Synopsis Ria (1) Final 2 4 Riya

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THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI

THESIS ON

An analysis on E -Marketing in Retail Sector-

Challenges and solutions

SUBMITTED BY


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AREA OF RESEARCH: Marketing

TITLE OF THE THESIS: An analysis on E -Marketing in Retail Sector -

Opportunities and Challenges

PROBLEM DEFINITON/HYPOTHESIS: To provide answers to some commonquestions which are given below:

The internet marketing in Retail Sector in India?

What is the advantages and limitations of internet marketing in Retail Sector?

What is the traditional advertising ?

How internet marketing important for consumer behaviour?

OBJECTIVES OF THE STUDY :

- To study about the internet marketing in Retail Sector

- To find out about the growing role of internet in marketing of products andservices in Retail Sector.

- To analyze about why retailers prefer marketing online?

- To study about the different ways of online marketing in Retail Sector

LLIITTEERRAATTUURREE RREELLAATTIINNGG TTOO TTHHEE PPRROOBBLLEEMM((IINN BBRRIIEEFF))::

Internet marketing, also referred to as online marketing or E-marketing, is the marketing

of products or services over the Internet. The Internet has brought many unique benefits

to marketing including low costs in distributing information and media to a global

audience. The interactive nature of Internet marketing, both in terms of instant response,

and in eliciting response, are unique qualities of the medium. Internet marketing ties

together creative and technical aspects of the internet, including design, development,

advertising and sales. Internet marketing methods include search engine marketing,

display advertising, e-mail marketing, affiliate marketing, interactive advertising, blog

marketing, and viral marketing. Internet marketing is the process of growing and

promoting an organization using online media. Internet marketing does not simply mean

'building a website' or 'promoting a website'. Somewhere behind that website is a real


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organization with real goals. Internet marketing strategy includes all aspects of online

advertising products, services, and websites, including market research, email marketing,

and direct sales.

Online marketing has become the most successful method of advertising for any kind of

business on the planet during the last decade. It is lightning fast and can promote your

business to thousands of potential customers daily. As marketing is a primary factor for a

long and successful business, the internet facilitates this process in a way that will ensure

the maximum exposure to what you are offering.

Traditional marketing is becoming more expensive and slower to produce results. It also

requires much more time and effort. It often has to be done by many employees and is

restricted by many barriers and regulations which make it hard to get the most beneficial

results. Then along comes the internet as it makes the entire globe seem like a short alley

rather than a large city where you can reach customers overseas in a matter of seconds.

Online marketing is superior to traditional ways of marketing in almost every aspect,

such as:

1. SPEED2. GEOGRAPHICAL RESTRICTIONS3. MARKETING EFFECTS4. HOURS OF OPERATION5. COST OF MEDIA

6. COST PER CUSTOMER

Ways for Marketing online

1. Banner ads

2. Email advertising

3. Pop-up ads

4. Affiliate marketing

5. Blog marketing

6. Viral marketing etc.

What is Retailing

At a basic level, any commercial transaction that involves a direct sale to a consumer at

any point of time may be termed as retailing. It can be the selling of apparel, books,

music, footwear, grocery items or other things. Such a retail trade could take place in a

shopping mall, a mom-and-pop store, a department store, or in a friendly neighborhood

grocery shop. Most of such retail trades that can be done through the brick-and-mortar


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retailing route can be successfully replicated over the Internet as well. In the traditional

sense, the term Retailing referred to the final transaction between a business and a

customer (B2C).

Other business models include:

Business-to-business (B2B) These remain the largest source of commercial

transactions (about 80% of all transactions).

Consumer-to-business (C2B)This is an emerging sector. A good example of the

consumer-to-business model is Priceline

Consumer-to-consumer (C2C) - This model relies on various online communities.

A prominent and hugely successful example of the consumer-to-consumer model

is eBay.

The C2B and C2C sectors are recent phenomena that have emerged taking full advantage

of the various electronic media to evolve into potentially major sectors within the retail

industry. Earlier, the two sectors played a minimal role in the retail industry but they are

gaining momentum with a concurrent rise in the electronic commerce around the world.

Decision

Search

Deliberation

Purchase

EvaluationRecognition of need

of Need

Figure: Consumer Purchasing Process

What is e-tailing

E-tailing or e-retailing refers to the selling of retail goods electronically over the Internet.

The term is a short form for "electronic retailing", and surfaced in the 1990s for being

frequently used over the Internet. The term is an inevitable addition to other similar terms


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such as e-business, e-mail, and e-commerce. E-tailing usually refers to the business-to-

consumer (B2C) transactions.

E-tailing is gaining ground. In the year 2003, clothing and apparel segment clocked

online revenues to the tune of $ 3.6 billion. Online retailing is classified into three main

categories:

1. Click The businesses that operate only through the online channel fall into this

category. Prominent examples in this category include: Dell, Amazon.com and e-Bay.

2. Click and BrickThe businesses that use both the online as well as the offline channel

fall into this category. Common example includes: Barnes and Noble's.

3. Brick and MortarThis is the conventional mode of retailing. The businesses that do

not use the latest retailing channels and still rely upon the conventional mode belong to

this category.

e-tailing offers the consumers huge amounts of information in the form of web sites with

useful links to similar sites that allows consumers to compare products by looking at

individual items. The convenience of online shopping is unmatched indeed. Shopping out

of your home or office reduces the stresses of waiting in lines and dealing with irritatingsales people. However, E-tailing causes problems with fit, since the consumer cannot try

the items on. Return policies may also act as turn offs and items can be difficult to return.

The shipping and handling costs may turn the customers away. e-tailing requires

technology savvy customers and this puts a limit on its potential reach. We can see that E-

tailing is emerging as an interesting phenomenon in the retail industry that is on a rise

despite the disadvantages associated with it.

Early adoption

E-tailing began to be used by major corporations and smaller entrepreneurs as early as

1997 when Dell Computers managed multimillion-dollar orders through its online Web

site. The success of online retailing businesses such as Amazon.com hastened the arrival

of Barnes and Noble's e-tail site. With improvements in technology, the concerns about


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secure order taking slowly started receding. In the same year, Auto-by-Tel announced

selling over one million cars over the Internet and CommerceNet/Nielsen Media

announced that total number of online buyers had reached the ten million mark. Jupiter

research predicted that e-tailing would grow to $318 billion by the year 2010.

e-tailing has resulted in the development of e-tailware a term used to refer to the

software tools that are used for creating online catalogs and managing the business

undertaking e-tailing. A new trend was noticed in the form of the various price

comparison sites that allowed the users to compare prices from a number of different e-

tailers and link them to their portals for the subsequent online purchase.

Multi-Channel Retailing

The distribution of products across multiple sales channels - often referred to as multi-

channel retailing - has become the norm today. According to a recent survey, multi-

channel retailers in the US increased their online market share from 53 % in the year

1999 to 76 % in the year 2003 - in contrast to Internet-only retailers, who lost a

corresponding market share. For the same reason, some pure Internet retailers are

gradually making a transition to multi-channel retailing. The consumer preference for

multi-channel retailing calls for a study of the underlying reasons behind the user-

acceptance and subsequent popularity of the particular business model.

Advantages of e tailing/ Multi-Channel retailing

E-tailing offers unique advantages to the consumer that no other form of retailing can

match. The hypertext nature of the medium allows for more flexible forms of transactions

(growth of C2B and C2C) to flourish. It allows for easier comparisons across broad

product categories with the evolution of shopping bots and similar mechanisms. The

medium also offers flexible/dynamic pricing mechanisms to the consumer. Theseevolutions reduce any friction in the online market place and stimulate the use of the web

as a retail environment. In the long-run, this will benefit the marketers as well as the

consumers. Further, this will penalize the marketers who thrived in market places that had

entry barriers in the form of a lack of freely available information. Earlier, such a

situation restricted the customers in making informed choices and led to inefficient


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pricing and localized monopolies. Reasons for e-tailing coming up as a hot avenue in the

retail sector can be attributed to multiple factors such as:

Minimal investment - e-tailing does not require a retailer to invest in warehouses,

showrooms or other commercial properties at prime locations. They operate

through their web sites and thus save drastically on the real estate costs. The real

estate costs in the metropolitan cities can be prohibitively high. Moreover,

maintenance costs of a virtual store are negligible in comparison to a physical

store.

Comfortable and easy to use - The Internet offers easy and comfortable access to

all the required information by a customer. Over the Internet, product information

is just a few clicks away, easily accessible from the comfort of a home.

Traditional retailing is quite cumbersome in contrast to e-tailing. It involves

frantic search for the required product, running up and down the retail store,

asking the poorly trained store assistants for help. The process involves significant

wastage of valuable time. Simply put, shopping on the Internet for fifteen minutes

is equivalent to a two-hour trip to the mall. Consumers prefer to save their

precious time so that they can better utilize it.

Customer interaction - The greatest benefit of online commerce is its ability to

interact with the customers. Such an interaction allows the retailers to reach theindividual customers and react appropriately to their responses. Interaction acts as

a vital tool for mass customization. The common examples include online

marketing of books, flowers, software and education. This has also led to greater

satisfaction among the online buyers. According to a research agency, 81% of the

buyers were found to be highly satisfied with their online purchases.

Mass Media - A supermarket is limited in its area of operation. It caters to a

specific geographical location such as a city and/or its suburbs. However, a web

site is globally accessible leading to a worldwide reach and an increased potential

customer base.

Search option - With web search capabilities (which need further development) it

is easier to find the particular types of goods required by a customer. The


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consumer decides what he wants to buy rather than the retailer offering what he

wants to sell. This ultimately translates into consumer empowerment.

User friendly - Customers can execute transactions via the same medium the

information is provided, so there is no disconnect between the desire to purchase

and the ability to purchase. (Payment schemes are still evolving and therefore this

advantage is likely to become more apparent in the future.)

Effective price discrimination - E-tailers can use price discrimination in an

effective and efficient manner. E-tailers can use previous transactions to identify

the likelihood of products being purchased at certain price points and use this

information for price discrimination

Customized product placement - E-tailers can change the online

placement/display of a product based on the previous transactions so to increase

the visibility of goods that the user is more likely to buy based on the previous

encounter at the time purchase. This allows a contextual design of placement to

ensure conversion of a visit/hit to the web site into a sale

Global reach - Customers have a much wider choice at their fingertips (a variety

of e-tail sites to choose from etc.) In this way, the web creates a global market

place that brings together multiple consumers and retailers.

Disadvantages of e tailing/ Multi-Channel retailing

Most of the e-tailing ventures have not been as profitable as they were expected to be, the

primary reasons were:

Security issues - Security issues hold the center stage when it comes to consumer

concerns while shopping through the online media. A lack of trust and privacy

concerns prevents a lot of consumers from making online purchases. Consumers

are also concerned with the use of their personal data provided during the online

transactions Customer retention - In e-tailing, an increase in the customer retention by 5%

leads to a corresponding increase in profits by 25%. Most of the people buying on

the Internet do so out of curiosity and this makes a repeat purchase highly

unlikely.


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Unsuitable for certain product categories In case of product categories that

require relatively higher customer involvement, the e-tailing route is found to be

grossly inadequate in providing sufficient information to the customers. Examples

include retailing of products like clothes, cosmetics etc. Most customers are

comfortable buying books and music on the Internet because the information

required for making a purchase and the customer involvement is low. However, in

case of a blue Trouser, the customer may want to know things such as: Which

shade of blue is it? How does it feel on the skin? How easily does it crease? The

traditional retailing does not suffer from such a problem. In the non-standard

product categories, the Internet offers limited amounts of crucial information to

the customer. In such cases, only the seller knows about the true quality of the

trouser and this leads to an information asymmetry.

Shopping is still a touch-feel-hear experience - some do not suffer from 'time-

poverty' and shopping is still considered to be a family outing. Hence this type of

an environment creates a problem of customer retention.

Complicated medium - Ease of use is a problem, as the web design may suffer

from high complexity bordering on total chaos in some cases.

Navigation hiccups - E-tail stores do not have standardized designs in comparison

to the physical retail stores and product catalogs. Therefore different userbehaviors (navigation schemes) need to be learned for each e-tail store. This is a

temporary issue as the evolution of the web continues.

Website design flaws - Graphic presentation and aesthetics may not be as

compelling for a web site as in case of a physical retail store or a product catalog.

This is a temporary issue that may resolve with the evolution of the web design.

Limited access to the Internet - Not all customers have access to the web, as they

do to the postal system. This is a temporary issue as the evolution of the web

continues.

Barriers to Growth in etailing

1. Issues related to Customer Service, Distribution and Logistics - E-tailing tends to

facilitate the business transactions, but unless the transaction involves a digital product

such as software or music etc., due emphasis should be given on prompt and smooth


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delivery of the products. Majority of e-tailers focus on significant marketing efforts to

attract customers in order to execute transactions, but tend to ignore the important aspect

of customer satisfaction through a flawless delivery. It is important to follow through and

ensure a smooth delivery to the customer. The companies can also use the web to enhance

the customer experience by allowing the customers to track the status of the transaction.

So it is not simply a case of allowing for delivery, but enhancing the delivery experience

with the web. Once this relationship is formed (via the transaction), the e-tailer can

follow up with a solicited marketing program to keep the customers engaged. Customer

service should be considered a high priority as it impacts the long-term relationship

between the customer and the e-tailer. Customer service should be proactive to ensure

prompt delivery leading to satisfaction with the product and subsequently offer a medium

of dialog to the customer with the e-tailer. Recently, more attention has been paid to the

delivery aspect of the entire transaction

2. Issues related to the mode of payment In the online medium, credit card

transactions are fast becoming the preferred mode of payment. Credit card providers take

a percentage of the transaction, and this may be higher for the web, than for a traditional

retail store. The high transaction cost is perceived as a risk premium because the e-tailer

cannot capture the signature of the purchaser to remove any possibility of credit cardmisuse in the online environment.

Other emerging payment media include:

a. Smart Cards: Smart Cards are a more accepted form of payment across Europe, but

due to the high penetration of credit cards in the US, Smart Cards have had a limited

global impact .Much discussion has taken place with regards to the development of

"smart cards" to facilitate online transactions. Smart cards allow for smaller transactions

and provide anonymity (ensuring privacy) to the consumer while making the purchase.

American Express is developing a smart card that would include a chip to allow the

storage of digital data (transaction history and monetary values). The use of Smart Cards

also requires a "reader" be placed on a consumer's machine for accessing the web

(whether a PC or a mobile device). This additional need of infrastructure acts as a barrier


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in its mass adoption by all the parties involved in the transaction be it the consumer, the

e-tailers or the payment providers.

b. PayPal: Paypal is a tool that facilitates person 2 person (P2P) transactions in an online

environment such as the eBay (eBay now owns Paypal). This payment option allows the

web sites and individuals who do not accept credit cards to process online transactions in

an effective and efficient manner. Both the transacting parties are required to have their

own Paypal accounts. However, compared to a credit card, Paypal is a much secure

online payment service since credit cards numbers are not transmitted over the internet.

c. VeriSign: VeriSign provides secure online payment options to facilitate online

commerce. It purchased Cybercash that offered multiple payment solutions to its

customers.

For the online retail markets to grow to their full potential, a standard and secure medium

of exchange needs to evolve so as to reduce friction in the virtual global market place.

With respect to the web, we need to develop a medium that becomes a standard to

increase the participation rates of e-tailers and consumers. Since credit cards have taken a

lead, they may become the standard. They do not facilitate micro transactions, which

clearly would open up new markets that will be exclusive to the web. This is an areawhere we not only need to develop a medium to facilitate exchange, but also determine

the likely goods (web content, music etc.) that will become viable for an online exchange.

2. Personalization vs. Privacy Issues In an online environment, there is a conflict

between the need for privacy on the part of the consumer, and the need to be able to

personalize the offering on the part of the e-tailer (aimed at providing a better experience

to the consumer). Finding equilibrium between the two is tricky. E-tailing solutions that

can simultaneously address both the issues can make a significant impact on the growth

of this segment. This also ties in with new payment systems that are developed, as the

payment (transaction) involves an exchange of the critical data. Issues relating to the

ownership of that data (after the transaction) and the rules governing the use of that data

are important.


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Many upcoming companies are offering intermediary services focusing on certification of

e-tailers and their use of the personal data collected from the customer during an online

transaction.

Most current personalization solutions focus on personalization based on the user

experience with the individual web-site. Systems need to be developed that allows for

personalization across multiple web-sites or the entire web and the connection between

the e-tailer and its physical presence in case the customer visits both.

Other risks associated with e-tailing include the security of the transaction and the

integrity of the business with which the customer transacts. The customer is justified in

being concerned with the security of the transaction data provided in an online

transaction. Since the e-tailing environment does not provide the same assurance as the

physical world in terms of the integrity of the business, e-tailers with an unknown brand

name need to make extra efforts to make sure the customer has confidence in the outcome

of the transaction and their integrity.

Table: Multi-Channel Retailing - Challenges and Responses

Challenges Response

Inventory and order management systemsare not integrated across all channels

Internally prioritizing integrated, multi-channeldata management strategies

Customer data is not integrated or sharedacross all channels

Bringing in outside expertise to drive internalbusiness process change

The dominant channel fears salescannibalization

Creating an ROI-based case to gain moreresources to integrate business processes

There are budgetary constraints to createintegrated processes

Changing the organizational structure to bebrand rather than channel - specific

Channel specific, instead of brand-specific, merchandising organization

Changing compensation incentives to be brand rather than channel specific

Cannot change fast enough to keep up

with customer expectations

Outsourcing programming to improve system

integration

(Source: Aberdeen Group)

3. Issues related to the portal designPortal design plays a critical role in e-tailing.

The overall design of the portal has been an issue as web designers often fall short of


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understanding this medium and its capabilities. Amazon has understood the importance of

design, throughout the transaction, and went so far as patenting its "one-click" transaction

rule. It is critical to focus on the transaction process flow.

Presently, the customer is unable to view the entire transaction process without

experiencing it first hand. It is observed that if the flow of the transaction creates a

possible disconnect between the customer's needs to complete the transaction, the

customer will abort. (approximately 20 - 30% of transactions are aborted by the

customers) A common problem with transaction flow design is the surprise shipping costs

that e-tailers often do not calculate until the transaction is about to be finalized. Shopping

cart technology is used to facilitate the online transaction process.

Design also plays an important role in selling goods that require experience. Since the

web cannot facilitate experience for non-digital goods, other means need to be developed

to encourage such transactions. For example, liberal return policies and risk-free return

facilities encourage online shoppers to go for non-digital goods.

4. Issues related to the Ease of AccessA majority of consumers still find the medium

of internet difficult to access and use. The adoption of broadband has been slowed down

due to the last-mile connectivity issues. This has put a limitation on the ability to design

the right e-tailing environment to encourage online transactions. Once online accessextends beyond the PC, and mobile commerce (m-commerce) gains popularity, e-tailing

access may see an exponential growth coupled with capabilities for contextual

transactions developing an entirely new role for the e-tailing domain.

5. Legal Issues in a Global business environment - E-tailing extends beyond the

national boundaries and connects a global audience. Rules for commerce, and its legal

framework, have evolved within the geographically limited national and state borders. To

facilitate the growth of e-tailing, a legal framework needs to evolve that makes sense for

a global marketplace. This is perhaps the most challenging aspect to overcome in order to

help the growth. Currently there is a moratorium on taxes (sales taxes) for e-tail

transactions with businesses that have no physical presence. This puts the traditional

retailers at a disadvantage and leads to the loss of a major source of revenue for the states

and countries where such transactions take place.


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Other issues, besides the taxes, that need to be addressed include the legal positions with

respect to the use of data and the rules for conducting business in an online environment.

While there are imbalances between these rules, around the world, it will limit the

potential for a truly global market place that the web, as a medium, potentially develops.

The World Trade Organization (WTO) is working on developing standards in these areas.

Legal standards, across states and countries, are as important as business and technology

standards in terms of allowing the online markets to thrive.

Table: PACE (Pressures, Actions, Capabilities, Enablers)

Priorities Prioritized Pressures Prioritized Actions Prioritized

Capabilities

Prioritized Enablers

1

Customer expectation ofseamless purchase anddelivery options across

channels, continuedpressures to improve

operational performance

Improve operationalexcellence across all

channels

Ensure productinformation and

pricing is up to date

and consistent acrosschannels

Cross-channel contentmanagement and

product information

management

2

Increased cross-channelconsumer research and

shopping patterns

Allow customer topurchase, take

delivery, or return aproduct through the

channel of theirchoice

Synchronizecustomer and

inventoryinformation across

channels

Real-time inventoryand customer updates

3

Leveraging brand equityto acquire and retain

todays less loyal

customer

Create single brandidentity across all

channels

Enable cross-channelfulfillment

Enable real-timeviews of cross-

channel inventory

Single operationaldata stores and data

warehouses across allchannels

4

Hyper-competitive multi-channel sellingenvironment

Create customizedservice offerings to

focus on micro-market segments

Cross selling andpersonalizedpromotions

Advanced web andin-store analytics

available in real-time

5

Price is no longer a validmeans of differentiation

Offer customized andunique product

offerings

Consistentperformance metrics

across channels

Transportationmanagement systems,returns management

systems

Source:www.dmsretail.com

Understanding Consumer Behavior in E-tailing and Multi-Channel RetailingThe consumer behavior towards the e-tailing and Multi-Channel Retailing is influenced

by a variety of factors. Consumers often quote the channel, the organization, the product,

and the consumer characteristics - to explain their preferences for using certain channels.

The mixture of multiple factors that influence their patterns of channel use is complex

and dynamic. The consumers actively consider the channels that will suit them the best,
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and how they can achieve a maximum outcome for a minimum of costs. In doing this,

they often do not use the channels in the way its providers had originally intended.

Perceived PrivacyPerceived ReputationPerceived SizeABCEDTrustRisk PerceptionWillingness to Buy

Figure: Consumer behavior in online retail environment

The various factors that determine the consumer behavior in an online retail environment

comprising of e-tailing and Multiple-Channel Retailing are discussed below:

A - A consumers trust in an Internet shop varies in proportion to the perceived size of its

physical store network. An online consumer is more likely to trust a large sized business

in comparison to a small sized business owing to the trust.

B - A consumers trust in an Internet shop varies in proportion to the perceived reputation

of its physical store network. Reputation is defined as the extent to which buyers believe

a company is honest and concerned about its customers. Consumers may have more trust

in a retailer with high reputation because a trustworthy retailer is less likely to jeopardize

his reputation assets.


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C - A consumers trust in an e-shop of a multi-channel retailer varies in proportional to

the perceived privacy at the e-shop. Concerns of online privacy have increased

considerably and are a major impediment to e-commerce. Consumer privacy assumes

significant importance on the Internet. The consumers are concerned about how their

personal data is collected and used by a marketer

D - The quantum of risk perceived by a consumer at an e-shop of a multi-channel retailer

reduces the consumers trust levels. Trust is closely related to risk in the consumers

mind.

E - While buying from an e-shop of a multi-channel retailer, the perceived risk is

inversely proportional to the consumers purchase intentions of shopping at the particular

e-shop. The theory of planned behavior suggests that a consumer is more willing to buy

from an Internet store that is perceived as low risk.

Business Implications

While the loose ends of the retail sector are being tied up, e-tailing has emerged as a

promising avenue and caught the attention of many entrepreneurs. This could very well

be the beginning of an e-tail revolution. As the new phenomenon emerges, it should be

understood that retailing is a serious business.

With an increasing popularity and acceptance of Internet around the world, e-tailing is

assuming increasingly greater significance. A number of products and services are on e-

tail offer and novel plans are being worked out by many e-tailers. So, the dilemma

continues: to retail or to e-tail?

However, if we dig deeper, the comparison and contrast between retailing and e-tailing,

and the differences in the way business is conducted in both the segments should become

clearer.

While the conventional retail is location-specific and the retailer is restricted to aparticular location, an e-tailer operates on a global scale. Being local in nature, a brick-

and-mortar retailer has to identify a good location for his operations and wait for the

customers. On the other hand, an e-tailer has to virtually attract a customer to his site and

offer him exemplary services. In fact, location is no longer the key to success if e-tailing


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is what we are talking about. Thus, while the target customer remains the same in both

the categories, the mode of conducting business is changing dramatically.

There is another distinct challenge thrown in by e-tailing. An e-tailer has to invest

significant resources in retaining a customer who has shopped through his site. In the

conventional retailing, almost half of the initial investment could go towards acquiring

the real estate. Afterwards, a retailer has to spend considerable money, effort and time in

setting up his shop, stocking inventory and creating display patterns. However, customer

retention is not such an issue in conventional retail as compared to the e-tailing mode.

Source:www.indianmba.com

www.123eng.com

Customer retention: The holy grail of e-tailing

Customer retention poses a significant challenge to the e-tailers. The primary aim of

every e-tailer is to attract a prospective customer to his e-tail site. This requires

significant resources in terms of the ad spend. Naturally, there has been a surge in online

advertising in countries such as the United States. Online ad spends have grown so large

that as much as two-thirds of the capital raised by online companies go towards

advertising. Ad spends by online companies have grown do large that all the savings

achieved in the areas of real estate and inventory are more than offset by a manifold

increase in the marketing and promotional ad spend.

After considerably large ad-spend, will the customer remain loyal to the e-tailing site?

The question still remains answered. We can see that retaining an e-tail customer is an

expensive proposition. The underlying reason is that in the online world, customer loyalty

does not exist.

Changing economics

In the US, it has been observed that the traditional retailers, despite the strength of theirbrand equity and their existing relationships with suppliers and customers, find it

extremely hard to compete online. This phenomenon is attributed to the vast difference

between the conventional retailing and the e-tailing segments.

The online media offers a host of advantages that may tilt the economics in its favor. The

online medium could transform much of the traditional economics of conventional
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retailing. While a physical store caters only to a particular locality, the Internet reaches

out to the world. The obvious fallout is that the e-tailer can go for a bigger and wider

audience and still be in touch with individual preferences.

The e-tailing route calls for a re-examination of the conventional retail value chain. The

electronic media such as the Internet and the mobile phones make it possible to do away

with a significant portion of the traditional value chain altogether, replacing it with direct

sales by manufacturers to the consumers. There is another side to the story. According to

retail analysts, online retailing also creates new points in the conventional value chain.

The economics of the Internet also offers a powerful first mover advantage to the retailer.

An e-commerce operation on the web can be scaled up at a low cost in such a way that is

almost impossible for its physical equivalent. And even among the different e-tailers there

is the first mover advantage. If the first mover gets everything right - its website, its order

fulfillment and distribution - a newcomer might find it much harder to beat an established

player at the game. For example, Amazon.com got the first mover advantage in the online

book retailing segment.

What will work?

The million dollar question is: what kind of retailing model will deliver in the online

sphere? To arrive at an answer, consider the following. The most important cost

advantage of e-tailing comes from minimal costs on the physical infrastructure and the

elimination of intermediaries leading to an economical distribution.

In case of book e-tailing, it allows doing away with big shops stuffed with slow-moving

stock. Consider the case of Amazon.com, where the orders are routed straight to the

wholesaler. This implies that the working capital costs are cut down drastically.

Moreover, an e-tailer is paid before he makes payment to his distributor. This

significantly reduces the working capital requirements.

However, one has to compare these gains against certain web-related costs that have to be

borne by a retailer. Setting up and maintaining a website requires considerable

investments both in terms of the money as well as the time. The logistics and distribution

parts of an e-business are of utmost importance and that is where many e-tailers go

wrong.


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While it is true that many e-tailers have been able to cut costs, they have lost large sums

of money in the process of offering goods at low prices. A few of them who have made

profits have ploughed them back for financing customer acquisition or retention.

The emergence of the unconventional retail media does not pose any threat to the

traditional retailing. Alternate retail channels will have to co-exist with the traditional

retailing channels. E-tailers will have to work in combination with the traditional

retailers.

Even the large and successful e-businesses such as Amazon.com have accepted this fact

and are setting up distribution warehouses for the same reason.

As the combination of retailing and e-tailing set to deliver the goods, the trend of using

the Internet as another service medium will gradually catch up with the masses.

eTailing market in India

e-tailing or e-retailing refers to the selling of retail goods electronically over the Internet.

The term is a short form for "electronic retailing", and surfaced in the 1990s for being

frequently used over the Internet. The term is an inevitable addition to other similar terms

such as e-business, e-mail, and e-commerce. E-tailing usually refers to the business-to-consumer (B2C) transactions.

The total market size of B2C and C2C E-Commerce industry in India was around Rs.

7080 crores at the end of 2006-07. It rose to Rs. 9210 crores by the end of 2007-08.

Within E-Commerce industry, the size of eTailing Market for the year 2006-07 was

computed to be Rs. 850 crores. eTailing contributed around 12% to the total E-Commerce

Market size in the year 2006-07 and in the year 2007-2008.

The electronic retail growth of Indian market as estimated by Euro-monitor report stands

close to 48% CAGR and in value term it is going to touch INR 27 billion(Rs 2700 crores)

by 2010 from INR 4 billion in 2005. The report also predicts that the contribution of

internet retailing to non-store retailing is likely to be 46% by 2010.

Consumers decision-making process has considerably changed with the introduction of

the Internet as an alternative channel for shopping. The new wave of consumerism


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coupled with increasing urbanization and burgeoning middle class with paradigm shifts

in their demographic and psychographic dynamics have driven consumers frequently to

use retail websites to search for product information and/or make a purchase of products.

Since electronic retailing is becoming an ever increasing channel for shoppers, in my next

article I would examine the factors which encourage or hinder e-tailing adoption among

the Indian consumers.

Source: www.economywatch.com

www.money.cnn.com

SCOPE OF THESIS WORK:

Internet marketing in retail sector is inexpensive when examining the ratio of cost

to the reach of the target audience

Companies can reach a wide audience for a small fraction of traditional

advertising budgets

The nature of the medium allows consumers to research and to purchase products

and services conveniently

Therefore, businesses have the advantage of appealing to consumers in a medium

that can bring results quickly

The strategy and overall effectiveness of marketing campaigns depend on

business goals and cost-volume-profit (CVP) analysis

RESEARCH METHODOLOGY:

The methodology would be:-

1.

Primary research- Questionnaire, Interviews of prominent personalities who arein a process of doing online marketing.

Sample segment: Online marketers, Experts and Online customers

2. Secondary research-With the help of Secondary data collection sources likeinternet, journals, magazines, and case studies etc.
http://www.economywatch.com/#_blankhttp://www.economywatch.com/#_blankhttp://www.money.cnn.com/#_blankhttp://www.money.cnn.com/#_blankhttp://www.money.cnn.com/#_blankhttp://www.economywatch.com/#_blank


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Sample size: 100 people


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JUSTIFICATION FOR CHOOSING THE RESEARCH PROPOSAL:

Internet marketers have the advantage of measuring statistics easily and inexpensively;

almost all aspects of an Internet marketing campaign can be traced, measured, and tested.

The advertisers can use a variety of methods, such as pay per impression pay perclick, pay per play, and pay per action. Therefore, marketers can determine which

messages or offerings are more appealing to the audience. The results of campaigns can

be measured and tracked immediately because online marketing initiatives usually

require users to click on an advertisement, to visit a website, and to perform a targeted

action.

SUMMER TRAINING TOPIC (IN BRIEF):

To analyze the Indian Stock Market and understand the concept of Derivatives inFirst Global Securities Ltd.

We analysed the entire procedure of client servicing and the ways trading occurs inNSC and BSC. Derivatives, Futures and Options were studied in detail.

Gained experience in the field of Advertising, Content Development, Marketingand Client Servicing in AD5 Advertising

In AD5 Advertising I interacted with several big companies like MTAB, CAPEGEMINI, CHENNAI FASHIONS, etc. The entire advertising strategies andmarketing concepts were studied and incorporated for our clients.

DETAILS OF THE EXTERNAL GUIDE:

Name of the guide: DEBASISH MUKHERJEE

Qualification: B.sc., C.A.

Designation: Group Financial Officer

Primlaks Nigeria Limited


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synopsis ria (1) final 2 4 riya

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