1© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce1Chapter 3Retailing in Electronic Commerce: Products and ServicesJason C. H. Chen, Ph.D.Professor of MISSchool of Business AdministrationGonzaga UniversitySpokane, WA 99223 [email protected]://barney.gonzaga.edu/~chen© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce2Learning Objectives1. Describe e-tailing and its characteristics.2. Define and describe the primary business models of electronic retailing (“e-tailing”).3. Describe how online travel and tourism services operate and their industry impact.4. Discuss the online employment market, including its participants, benefits, and limitations.5. Describe online real estate transactions.6. Discuss online stock trading services.© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce3Learning Objectives (cont.)7. Discuss cyberbanking and online personal finance.8. Describe on-demand delivery by e-grocers.9. Describe the delivery of digital products and online entertainment.10. Discuss various e-tail consumer aids, including comparison-shopping aids.11. Identify the critical success factors and failure avoidance tactics for direct online marketing and e-tailing.12. Describe reintermediation, channel conflict, and personalization in e-tailing.© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce4OPENING VIGNETTE : Amazon.com: The King of E-Tailing• The opportunity (Problems)– July 1995, e-tailing pioneer Amazon.com, offered books via an electronic catalog from its Web site (amazon.com)– The company has continually enhanced its business models and electronic store by:9expanding product selection9improving the customer’s experience9adding services and alliances9recognizing the importance of order fulfillment and warehousing© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce5Amazon.com: The King of E-Tailing (cont.)• Technology used (Solutions)– Amazon.com has expanded in a variety of directions: 9offers specialty stores (professional and technical store)9expands its editorial content through partnerships with experts in certain fields9increases product selection with the used and out-of-print titles9expands its offerings beyond books (June 2002 became an authorized dealer of Sony Corp. selling Sony products online)9today: a diversified retailer of products and services© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce6Amazon.com: The King of E-Tailing (cont.)– Key features of the Amazon.com superstore are:9easy browsing, searching, and ordering 9useful product information, reviews, recommendations, and personalization 9broad selection9low prices9secure payment systems9efficient order fulfillment9personalization2© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce7Amazon.com: The King of E-Tailing (cont.)– Enjoyable features:9“Gift Ideas” section features seasonally appropriate gift ideas and services9“Community” section provides product information and recommendations shared by customers9 “E-Cards” section, free animated electronic greeting© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce8Amazon.com: The King of E-Tailing (cont.)– Marketplace services:9hosts and operates auctions 9zShops service hosts electronic storefronts for a monthly fee9allowing small businesses the opportunity to have customized storefronts supported by the richness of Amazon.com’s order-fulfillment processing© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce9Amazon.com: The King of E-Tailing (cont.)– Amazon.com is recognized as an online leader in CRM9informative marketing front ends9one-to-one advertisements 9free posting of restaurant menus from thousands of restaurants9“Welcome back, Sarah Shopper” with recommendations of new books from the customers preferred genre based on previous purchases9 Sends purchase recommendations via e-mail to cultivate repeat buyers9Efficient search engine and other shopping aids9Customers can personalize their accounts and manage orders online with the patented “One-Click” order feature including an electronic wallet© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce10Amazon.com: The King of E-Tailing (cont.)– In 1997, Amazon.com started an extensive affiliates program9by 2002, the company had more than 500,000 partners that refer customers to Amazon.com9Amazon pays a 3 to 5% commission on any resulting sale9alliances with major “trusted partners” provide knowledgeable entry into new markets9Carsdirect.com allows it to sell cars online9Drugstore.com connects to health and beauty aids9AT&T, Nextel and others suggest service plans for wireless phones© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce11Amazon.com: The King of E-Tailing (cont.)– September 2001 Amazon signed an agreement with Borders Group Inc9allows Amazon.com’s users to pick up books, CDs, and other merchandise at Borders’ physical bookstores– It is becoming a Web fulfillment contractor for national chains such as: 9Target 9Circuit City© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce12Amazon.com: The King of E-Tailing (cont.)• The Results– Is the number one e-tailer since 2001 generated $3.12 billion ($3,12 billion –Italian way)– Is becoming very successful in reducing its costs and increasing its profitability– Annual sales for Amazon.com have trended upward (over $5 billion in 2003)3© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce13Amazon.com: The King of E-Tailing (cont.)– $15.7 million in 1996 to $600 million in 1998 to about $4 billion by 2002– In 2003 the site offers over 17 million book, music, and DVD/video titles to some 20 million customers– Offers several features for international customers– In January 2002, Amazon.com declared its first ever profit—for the 2001 fourth quarter© Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce14Amazon.com: The King of E-Tailing (cont.)• What can we learn…– demonstrates the evolution of e-tailing– some of the problems encountered by e-tailers– solutions employed by Amazon.com to expand its business– the opportunities for e-tailing– Affiliate marketing© Prentice Hall & Dr. Chen, Dr. Chen,