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Part Three: Chapter 13 Internet Retailing

Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENT THOMSON BUSINESS and ECONOMICS 5109 Natorp Boulevard Mason, OH 45040 Phone: (800) 423-0563.

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Part Three: Chapter 13 Internet Retailing

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  1. Internet Marketing & e-CommerceWard HansonKirthi KalyanamRequests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENTTHOMSON BUSINESS and ECONOMICS5109 Natorp BoulevardMason, OH 45040Phone: (800) 423-0563

  2. Part Three: Chapter 13Internet Retailing “A salesman is got to dream, boy. It comes with the territory.” Arthur Miller, Death of a Salesman

  3. Growth of Online Retail • Quarterly measurement of e-commerce added to U.S. retail activity in 1999 • Grew from $5 billion in Q4 1999 to $23 billion in Q4 2005 • Annual online retail exceeded $84 billion in 2005 • Still, just 2.4 percent of all retail sales

  4. Growth of Online Retail DATA SOURCE: www.census.gov

  5. Growth of Online Retail • Online retail percentages vary greatly across product categories • Key areas for retail sales: • Computer hardware and software • Tickets • Books • Top categories involve digital products or information-rich purchases

  6. Growth of Online Retail Consumer e-commerce penetration by product category SOURCE: The State of Retail Online, 6.0, a Shop.org Survey conducted by Forrester Research

  7. Growth of Online Retail • For Internet retailers, better performance has meant better results • Benefits of higher inventory productivity • Swift response to changes in customer demands and product transformations • Customer satisfaction generally higher

  8. Growth of Online Retail Data Source: American Customer Satisfaction Index, www.theacsi.org American customer satisfaction index scores

  9. iPACE and Online Shopping • Understanding basic consumer needs to find right approach for right channel: • Information • Price • Assortment • Convenience • Entertainment

  10. iPACE and Online Shopping • Information: Quality and features of a product, from initial consideration set through final purchase, shipping and returns

  11. iPACE and Online Shopping • Price: Draw of lower prices and ease of comparison, but consumers also engage in price partitioning – evaluating influence of taxes and shipping costs on bottom line

  12. iPACE and Online Shopping • Assortment: Greater variety and availability online, products are easier to configure and prices easier to adjust

  13. iPACE and Online Shopping • Convenience: Avoiding the hassle of traditional stores, easing repeat purchases

  14. iPACE and Online Shopping • Entertainment: The online thrills of eBay vs. the lost social aspect of shopping excursions with friends

  15. Consumer Shopping Process The consumer shopping cycle

  16. Online Shopping Process The consumer shopping cycle on a web site

  17. Online Shopping Process • Step One: Finding the right product • Influence of search and browsing to find right product in rapidly expanding Web marketplace • Helping shoppers narrow selection

  18. Online Shopping Process • Step Two: Acquiring information • Overcoming the physical limitations of online shopping • Product descriptions through images, zoom, ratings and reviews • Personalized information through virtual models and diagrams • Cross selling and solution selling opportunities

  19. Online Shopping Process Virtual model™ on Lands’ End.com

  20. Online Shopping Process • Step Three: Evaluating alternatives • Two versions of the choice model • Compensatory choice model compares products and services on all attributes • Non-compensatory choice model compares products based on certain attributes, eliminates products without those key features • Shopping tools – such as a comparison matrix or assistant – reduce consumer effort; tools that screen products have strongest impact on consumer accuracy

  21. Online Shopping Process • Step Four: Placing the order • Many Internet shoppers fail to complete attempted purchases • Poor information design, lack of transparency on ship costs • Efficient reordering and repeat purchase systems help track customers and hold marketing campaigns accountable

  22. Online Shopping Process • Step Five: Following up • Post-purchase notifications such as order confirmation, total price, shipping date and expected delivery date • Returns made simpler with prepaid return labels, merchandise pickup

  23. Multi-Channel Retailing • Understanding the hybrid customer (the shopping “centaur”) who is willing to shop online but buy at a traditional store, and visa versa • Customers who shop regularly in traditional stores are least likely to use multiple channels • Online and catalog shoppers more likely to use other channels for some purchases

  24. Multi-Channel Retailing SOURCE: The State of Retail Online, 5.0, Shop.org Customers from one channel who purchased in another

  25. Multi-Channel Retailing SOURCE: Company reports as compiled by Forward Retailing, Inc. Buyers who purchased something in one channel previously seen in another channel

  26. Multi-Channel Retailing SOURCE: The State of Retail Online, 5.0, Shop.org Shopper groups indicating preference for research and buying

  27. Multi-Channel Retailing • Challenges for retailers working across online and traditional channels • Determining what products are sold in the store, online or through catalogs • Communications and logistics • Pricing discrepancies • Planning consistent promotional offerings • Rewarding the right seller: Does the credit go online or off?

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