Retailing in Electronic Commerce: Products and Services
As you read the textbook and go through this lesson, think
about the following questions:
What sells well on the Internet?
·
Travel
·
Computer Hardware and Software
·
Consumer Electronics
·
Office Supplies
·
Sport and Fitness Goods
·
Books and Music
·
Toys
·
Health and Beauty
·
Entertainment
·
Apparel and Clothing
·
Jewelry
·
Cars
·
Services
·
Pet Supplies
·
Digital Products
What are the distribution channels
that we commonly use to classify e-tailing business models?
·
direct
marketing by mail-order retailers that go online
·
direct
marketing by manufacturers
·
pure-play
e-tailers
·
click-and-mortar
retailers
·
Internet
malls.
What issues do the following
businesses face in e-tailing and online services?
- real estate
- insurance
- stock trading
- banking
- personal finances
Learning Objectives
Upon
completion of this chapter, you will be able to:
1. Describe
electronic retailing (e-tailing) and its characteristics.
2.
Define and describe the primary e-tailing
business models.
3. Describe
how online travel and tourism services operate and their impact on the
industry.
4. Discuss
the online employment market, including its participants, benefits, and
limitations.
5. Describe
online real estate services.
6. Discuss
online stock-trading services.
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 for direct online marketing
and e-tailing.
12. Describe
reintermediation, channel conflict, and personalization in e-tailing.
Answers
to Pause/Break Section Review s
Section 3.1 Review s
1. Describe
the nature of B2C EC.
B2C
e-commerce is concerned with businesses selling products to customers.
2. What
sells well in B2C?
A
variety of goods sell well online. These goods include: computers and
electronics, sporting goods, office supplies, books and music, toys, health and
beauty products, entertainment, apparel, services and cars.
3. What
are the characteristics of high-volume products and services?
The
characteristics of high-volume products and services include: high brand
recognition, recognized guarantees, digitized formats, relatively inexpensive
items, frequently purchased items, commodities with standard specifications and
well-known, unopenable packaged items.
4. Describe
the major trends in B2C.
Some
trends include:
·
More
reliance on research
·
Internet
effects on retail sales
·
Increased
incentives for cross-channel sales
·
Increased
rich media
Section 3.2 Review s
1. List
the B2C distribution channel models.
The
B2C distribution channel models include: direct marketing, pure-play e-tailers
and click-and-mortar retailers.
2. Describe
how mail-order houses are going online.
Companies are attempting to leverage their
existing infrastructures by using a new marketing system (online), in addition
to their existing method (catalogs, etc.)
3. Describe
the direct marketing model used by manufacturers.
The
direct marketing model takes place without intermediaries between manufacturers
and buyers.
4. Describe
virtual e-tailing.
These
firms sell to customers over the Internet while not maintaining any type of
physical sales location.
5. Describe the click-and-mortar approach.
With
this approach the firm sells to customers through the Internet and through physical
sales locations.
6. Describe
e-malls.
Electronic malls (e-malls) are
combinations of several online merchants in one location. Some malls are just an aggregation of
merchants, while other malls provide integrated services (like a single
checkout for many merchants).
6. Describe
online wedding and gift services.
These services provide the ability to
create “want” lists that can be accessed and purchased by others for the
recipient.
Section 3.3 Review s
1. What
travel services are available online that are not available off-line?
Some
of the additional services provided include: travel tips, electronic travel
magazines, fare comparisons, currency conversion calculators, fare tracking,
worldwide place locators, a travel products store, expert opinions, travel
news, driving maps, chat rooms, bulletin boards and frequent-flyer deals.
2. List
the benefits of online travel services to travelers and to service providers.
Online
travel services provide the benefits of large amounts of free information, 24/7
availability and the potential for significant reductions in price.
3. What role do software (intelligent)
agents have in travel services? What future applications may be possible?
Intelligent
agents could provide a service to travel customers by providing buyer-seller
negotiations. Future applications would allow greater information flow for
better pricing and decision making.
Section 3.4 Review s
1. What
are the driving forces of the electronic job market?
The
electronic job market is driven by the volatile nature of the employment market
itself and the constant change in available positions and applicants.
2. What are the major advantages of the
electronic job market to the candidate?
To employers?
A
variety of advantages are described in exhibit 3.6.
3. Describe
the role of intelligent agents in the electronic job market.
Intelligent
agents can be used to search and retrieve suitable positions for candidates and
suitable candidates for employer positions.
Section 3.5 Review
s
1. List
the major online real estate applications.
The
major online real estate applications include: advice systems for customers who
are buying and selling homes, directory and new sites, property listings,
commercial property listings, residential property listings, links to realtors,
maps, mortgage information, mortgage comparisons, mortgage brokers, online
lenders, and sites for home sellers and buyers.
2. What
are the advantages of online stock tracking?
The
major advantages of online stock tracking are its ease-of-use, access to large
amounts of information, convenience, and in many cases reduced costs.
3. What
investment information is available online?
Several
different types of information are available including financial news, bond
prices, advice, evaluation tools, IPO information, and financial information.
4. What
are some of the risks of trading stocks online?
In addition to risks of trading stocks in
general, trading stocks online can have the risks of delayed information as
well as the relative ease of trading (increasing the amount of trading
overall).
Section 3.6 Review s
1. List the capabilities of online
banking. Which of these capabilities
would be most beneficial to you?
Student
opinions on the usefulness of features will vary. The capabilities available include: current
account balances, access to statements, pay bills online, download account
transactions, transfer money between accounts, balance accounts, communicate
with the bank, access information anytime and access information anywhere.
2. Discuss
some implementation issues of financial services.
Some
of the implementation issues of online financial services include: securing
financial transactions, using the bank intranet, using imaging systems,
differential pricing of online/off-line services and potential risks.
3. List
the major personal finance services available online.
The
major personal finance services available online include: bill paying,
electronic check writing, tracking of accounts, portfolio management,
investment tracking/monitoring, stock quotes, budget organization, cash
flow/profit-loss analysis, tax services and retirement services.
4. Explain
online bill paying.
In
online bill paying, funds are taken from the user's accounts by an intermediary
who then arranges payments with the user's debtor.
Section 3.7 Review s
1. Explain
on-demand delivery service.
On-demand
delivery service is express delivery that is made quickly after an online order
is received.
2. Describe
e-grocers and how they operate.
These
firms will take orders online and provide deliveries to customers through a
regularly scheduled delivery.
3. Who
are the typical e-grocery shoppers? What
services to they require?
Typical
e-grocery shoppers fall into one or more of the following groups: shopping
avoiders, necessity users, new technologists, extremely busy consumers,
consumers who enjoy online shopping and older individuals who enjoy shopping in
any type of store.
4. What
are the difficulties in shopping online for groceries?
Customers
may be frustrated shopping for groceries online because they cannot physically
examine the goods before purchase.
Section 3.8 Review s
1. Describe
digital goods and their delivery.
Digital
goods are products that can be completely digitized and delivered over the
Internet.
2. What
are the benefits and the limitations of digital delivery?
There
are several advantages to the use of digital delivery including increased speed
of delivery, low product cost and low distribution costs. The major disadvantage is that not all goods
can be digitized.
3. What are the major forms of online
entertainment? Do you think people of different age groups and social classes
might be attracted to different types of online entertainment?
Student
opinions on media attractiveness will vary.
The major types of online entertainment include web browsing, gaming,
sports games, etc. A full list can be
seen on page 130.
Section 3.9 Review s
1. Define
shopping portals and provide two examples.
Shopping
portals are gateways to storefronts and malls that may be either comprehensive
or niche-oriented. Examples would
include gomez.com and aol.com/shopping.
2. What are shopbots? A shopbot is a
shopping robot that scouts the Web looking for goods and services that meet
consumer’s specified search criteria.
3. Explain the role of business rating and
Web site verification tools in the purchase-decision process.
These
tools add to customers’ feelings of security in making an online purchase. They allow the customer to evaluate the
quality of the merchant, and not just the price of the good, before making a
purchasing decision.
4. Why
are escrow services and electronic wallets useful for online
purchases?
The
services are useful for online purchases because they can decrease the amount
of contract risk for the customer during an online purchase.
5 Describe
the role of search agents to support shopping.
These
agents are able to aggregate information from several sources as well as
maintaining information about personal preferences to enhance the shopping
experience.
Section 3.10 Review s
1. Why
are virtual e-tailers usually not profitable?
Most
of these firms are not profitable because they are unable to quickly achieve
the scale to make marginal profits on each marginal sale.
2. Relate
branding to profitability.
Good
branding has historically been tied to profitability in off-line
retailers. Branding is an expensive
process that can create financial difficulties for new firms.
3. Why
are technical performance and dynamic site content important?
These
features are important because they are what the market demands from electronic
commerce sites.
4. What
motivates a brick-and-mortar company to sell online?
Traditional
firms sell online to compete with new e-commerce entrants and to preserve
market share. Additionally, traditional
firms may see e-commerce as a way to expand their existing market share.
5. Read Online File W 3.9. What customer
services are provided by Circuit City on its Web site?
The
Circuit City site provides the following customer service tools: product
information, explanation of terms, product searches and flexible product
comparisons.
Section 3.11
Review s
1. Define
disintermediation.
The
elimination of a component of the traditional value chain.
2. Describe mediation issues, including disintermediation,
reintermediation, cybermediation, hypermediation, and unbundling.
The use of
EC and IT can create changes in a traditional supply chain. These changes can remove existing players
(disintermediation) and can bring them back with different roles and functions
(reintermediation). Cybermediation uses
intelligent agents while hypermediation uses intensive intermediation (both
human and electronic) at all stages of the value chain.
3. Describe channel and
other conflicts that may appear in e-tailing.
Channel conflict can occur when an upstream member of the value
chain begins to sell directly to customers. Channel conflict can also occur
when the online division of an existing company begins to compete with its
off-line division.
4. Describe
price determination in e-tailing.
Prices
need to be competitive, while still providing an adequate margin. EC can allow companies to segment users into
different price groups and test pricing more than was possible with only
brick-and-mortar operations.
5. Explain
personalization and mass customization opportunities in e-tailing.
Personalization
is the ability to use technology to create goods that meet the exact
specifications of the consumer. Mass
customization is the ability to create personalized goods for a large number of
customer goods based their exact specifications.
Answers
to EC Application Case s
EC Application Case 3.1: Lands’ Littlewoods Shop Direct Group: From
Mail-Order Catalogue to High Street to the Web
1. Discuss In rolling back from department
store outlets and relying on catalogue and online shopping, Littlewoods is
adopting a different strategy from other leading direct mail companies, such as
Land’s End. Discuss the advantages and
disadvantages of Littlewood’s approach.
Student
opinions will vary, but will focus on the advantages of the company’s online
focus compared to the disadvantage of limiting its distribution options.
2. If Littlewoods is to remain a
successful catalogue and online retailer, what factors do you believe will be
essential to its success? What will
Littlewoods have to do to survive and prosper in this competitive market space?
Student
opinions will vary, but will focus on the factors of ease of use, combination
with the print catalog, distribution and richness of the online experience.
3. Use the Littlewoods site to select a
gift purchase and some garments for yourself.
Try the same thing with other online retailers. Compare the experience.
Student
responses will vary. Students will
comment on the technical features provided inside the site, including the
ability to assemble outfits based on preferences.
EC Application Case 3.2: Using Intelligent Software and Social
Networking to Improve Recruiting Processes
1. What
are some of the challenges of online recruiting?
One of
the major challenges is the huge number of potential applicants and the
difficulty in sorting through them.
2. How can intelligent recruitment
software and Internet technologies support and improve an organization’s search
for new talent?
Software
systems can help automatically select the best candidates for a position.
3. What role can social networking
approaches to recruitment play? Are there any disadvantages or risks involved
in such approaches?
Social
sites can help suggest possible applicants across a large group of
individuals. It is possible that
job-seekers could attempt to game the system.
EC Application Case 3.3: ING Direct: An Online Banking Success Story
1. What factors have
contributed to ING Direct’s success to date?
ING Direct
has been successful due to aggressive expansion, a focus on a few desired
services, ease of use and desirable financial terms.
2. Visit ingdirect.com. How easy is it to establish a new savings
account? Do you feel confident that your
funds would be safely managed?
Student answers will vary.
3. Visit ING Direct relies on customers
maintaining ATM accounts with traditional banks and having its customers
transfer money regularly from their ING Direct savings accounts to their ATM
accounts. How convenient do you think
this would be? Would it inhibit your willingness to bank with ING? How would you assess higher interest rates
with ING Direct versus this slight inconvenience?
Student answers will vary.
EC Application
Case 3.4: Online Security at a Bank
1. Why
is security so important for a bank?
Security
is important for a bank because they are dealing with large sums of money and
personal customer information.
2. Why
is there a need for two firewalls?
The
two firewalls provide redundancy of security.
One firewall protects the security of the user, and the other firewall
protects the security of the bank's application server.
3. Who is protected by the bank's security
system–the customer, the bank, or both?
Elaborate.
Both
parties are protected by the security system. The system protects the customer
by ensuring that their personal information and accounts cannot be easily
tampered with. The system protects the
bank by protecting the integrity of its transactions and the security of its
information.
4. What
might be the limitations of such a system?
If
passwords and account numbers are compromised, the system can still be
compromised.
EC Application Case 3.5: CompUSA Increases Online Sales with Shopping
Aids
1. Describe YouTubes’s
business model. Is it a sustainable
model?
YouTube allows individuals to upload videos and other users to watch
the videos while being exposed to advertising.
Student responses on sustainability will vary, but may focus on
copyright issues.
2. What complementary capabilities do Google and YouTube offer
to one another? Could this acquisition prove successful for Google?
Google provides the ability to search media, while YouTube provides an audience
for Google’s advertising. Student
responses on the success of the acquisition will vary.
3. What legal and ethical issues might YouTube and Google need
to be aware of in offering a video sharing website?
Both companies would be concerned about copyright issues and the
legality of some user-uploaded content.
Discussion s
1. When
electronic retailing began in the 1990s, everything was an innovation and, by
definition, everything was new an exciting.
Now, there is more consolidation and less innovation. Discuss the proposition.
Student
opinions and responses will vary.
2. Comment
on the proposition that the earlier analyses and predictions regarding
e-tailing by academics, journalists, and other commentators were both hyped and
exaggerated, and further, neglected the psychological and social factors
involved in accepting and embracing a new and innovative way of doing business.
Student
opinions and responses will vary.
3. Comment
on the proposition that e-tailing, with a few exceptions, will simply become
apart of every retail business operation, thus becoming an ordinary part of
retail business rather than a specialist venture of “virtual” firms.
Student
opinions and responses will vary.
4.
What are Amazon.com’s critical
success factors? Is its decision not to
limit its sales to books, music, and movies, but to offer a much broader
selection of items, a good marketing strategy?
With the broader selection, do you think the company will dilute its
brand or extend the value proposition to its customers?
Amazon.com has several success factors including their brand recognition and
well-developed logistics capabilities.
Student answers will vary on the firm's expansion into other goods. Students may argue that the firm is able to
expand on its brand recognition and logistic capabilities by providing a wider
sort of goods. Students may also argue
that the sales of a large variety of goods dilute the firm's position in its
traditional markets.
5. Compare the major e-tail business
models.
The
major e-tailing business models as described in the text include: direct
marketing, pure-play electronic retailers and click-and-mortar retailers. Each of these different models has several
advantages and disadvantages that are very specific to the industry in which
they are in. Overall, direct marketing
has the advantage of the possible lack of several intermediaries, creating a
larger possible revenue share, while having the disadvantage of the value-added
services provided by a supply chain.
Pure-play electronic retailers have the advantage of being able to fully
use and employ the benefits of EC, while not having the stability of the
physical location. Click-and-mortar
retailers have the benefits of mixing a physical location with an online
presence, but they may not be able to fully utilize the benefits of EC because
of the mixed model.
6.
Will direct marketing of automobiles be a successful strategy? How should the dealers’ inventory and the automakers’
inventory and manufacturing scheduling be coordinated to meet a specific order
with a quick due date?
Student
answers will vary on the success of the strategy. Dealers’ and manufacturers’ inventory and
scheduling should be tightly integrated to ensure that products are delivered
just in time. This integration would be
possible using the EC systems.
7.
Discuss the advantages of established click-and-mortar companies such as
Wal-Mart over pure-play e-tailors such as Amazon.com. What are the disadvantages
of click-and-brick retailers as compared with pure-play e-tailers?
Click-and-mortar
companies have advantages over pure-play businesses because they have
established distribution channels, name recognition, a diversity of income
streams (financial stability), as well as greater experience in the
market. These companies have the
disadvantage of attempting to make existing processes, attitudes and systems
work in an online environment.
8.
Discuss the advantages of an online partnership such as that of
Amazon.com and Toys‘R’Us. Are there any
disadvantages?
There
are many advantages in this relationship. Primarily, the advantage is that both
organizations can leverage their core competencies. For Amazon, this competence is the ability to
sell and ship items online successfully.
For Toys R Us, this competence is the ability to purchase sought after
toys at favorable prices. A disadvantage
of this relationship is that neither company can sell toys independently of the
other if they so decided.
9.
Discuss the advantages of shopping aids to the consumer. Should a vendor provide a comparison tool on
its site that will show that a competitor is cheaper? Why or why not?
Shopping
aides provide a variety of advantages to the customer. The greatest advantage is the ability to find
a variety of products quickly and easily, compare their attributes and
prices. Student answers will vary on
whether or not vendors should provide comparison tools on their site. Comparison tools would make vendors more
competitive if others in the market are already doing so, but by placing
comparison tools on their site they are creating an environment where cost may
be the primary decision criteria.
10.
Discuss the advantages of specialized e-tailor, such as dogtoys.com. Can such a store survive in the physical
world? Why or why not?
Stores
such as this have several advantages specifically that they are able to target
a very specific niche and service that niche very well. Student answers will vary on the ability of
such stores to survive in the real world.
One argument would be that a store such as this could not survive in any
particular physical market because the number of potential clients is so small. The Internet is needed in order to create a
critical mass of potential clients.
11. Do you agree with the proposition that
P2P financial services activities need a regulatory framework for them to
become a successful commercial phenomenon?
Explain your point of view.
Student
opinions and responses will vary.
12.
Discuss the benefits of build-to-order to buyers and sellers. Are there
any disadvantages?
Build-to-order
provides the customer with the advantage of being able to select the exact good
that they desire. Merchants are able to
meet their customers’ exact needs and may not need to carry any inventory. The possible disadvantages would include:
increased time to delivery due to manufacturing time, possible necessity to
carry a wide variety of components for manufacture, and possible higher prices
for customized goods.
13. Why are online travel services such a popular
Internet application? Why do so many Web
sites provide free travel information?
Online
travel services are very popular because they allow customers to perform a
function traditionally performed by an intermediary, while generating a cost
savings. Many of the services are
relatively easy to provide and easy for the customer to use. Many Web sites provide this information as an
added benefit and incentive for users to visit their Web sites.
14.
Compare the advantages and disadvantages of online stock trading with
off-line trading.
Online
stock trading provides the advantage of being able to quickly and easily trade
securities and view your accounts any time of the day from any location. Much of this is at a lower cost than
traditional services. The advantage offered by off-online trading is the
ability to interact directly with a broker who can provide recommendations and
information on trades.
15.
It is said that the service Zuji.com
provides to travel agents will lead to their reintermediation. Discuss.
The system provides a large amount of
information on travel and can help you interactively plan a trip. This system may decrease the need for a
travel agent.
16.
Intelligent agents read resumes that are posted online and forward them
to potential employers without the knowledge of the candidates. What are the benefits of this use of
intelligent agents? Do they violate the
privacy of job seekers?
The
benefit of intelligent agents is that it speeds up the review process for
potential employers. Student answers
will vary on whether or not this violates the privacy of job seekers. It could be argued that job seekers are
interested in employers reviewing their resumes, and therefore the use of
agents is actually a service to job seekers.
17.
Online employment services make it easy to change jobs; therefore,
turnover rates may increase. This could
result in total higher costs for employers because of increased costs for
recruiting and training new employees and the need to pay higher salaries and
wages to attract or keep employees. What
can companies do to ease this problem?
Student
answers will vary.
18.
How can brokerage houses offer very low commissions for online stock
purchases (as low as $4 per trade, with some even offering no commission for
certain trades)? Why would they choose
to offer such low commissions? Over the
long run, do you expect commissions to increase or continue to decrease? Why?
Companies
are able to offer very low commissions because of the efficiencies provided by
electronic systems, and the desire to attract new customers with low
prices. One of the major points of
differentiation for online stock trading firms is the low cost of their
commissions. Student answers will vary
concerning increases or decreases in commission prices in the future.
19.
Explain what is meant by the statement, "Intermediaries will become
knowledge providers rather than transaction providers.”
The
use of PC systems is automating and streamlining the processes that used to be
provided by intermediaries.
Intermediaries also provided value-added services, specifically
knowledge of products and their uses. In
order for these intermediaries to survive, they must concentrate on this
service (providing knowledge), because their traditional transactional roles
are being disintermediated.
20. YouTube allows the upload of personal
videos. Already some of the videos have
caused considerable comment. Some have violent and sexual content that offends
some viewers. Others involve content
that may compromise the legal rights of the persons involved, such as the
recent situation of a video of what seems to be an overly violent arrest. Comment on the legal and social issues
involved, including the issue regarding the responsibilities of the Web site
management.
Student
opinions and responses will vary.
21. Compare the advantages and
disadvantages of distributing digitizable products electronically versus
physically.
Student
answers will vary. Some disadvantages
include: ability to package as a selling tool, greater ability to control the
product after purchase (copying, etc.) and ability to use existing sales
channels. Some advantages include:
decreased cost per item, decrease in distribution cost and decrease in sales
cost (from an existing sales channel).
22. How can a sports-related merchant
target fantasy game players.
Student
answers will vary. One potential option
is to advertise on a Web site frequented by that demographic.
Internet Exercises
(Note: URLs may change over time; please
check the Internet Exercises on the Turban Web site for possible updates:
www.prenhall.com/turban.)
1. Visit the following e-grocers:
stopandshop.com, freshdirect.com, Albertsons.com and netgrocer.com. Compare the
products and services offered by the two companies and evaluate their chances
for success. Why do you think "unattended delivery" e-grocers like Shoplink.com failed?
All firms appear to offer a wide
variety of groceries and other products through an online store. Stop and Shop focuses on local delivery in
large cities, while netgrocer.com focuses on non-perishable products with a
wider selection of non-food items.
Student responses on the failure of shoplink.com will vary, but could include
customer’s lack of comfort with that type of system.
2. Many consumer portals offer advice and
ratings of products or e-tailers. Identify and examine two separate
general-consumer portals that look at other sites and compare prices or other
purchase criteria. Try to find and compare prices for a digital camera, a
microwave oven, and an MP3 player. Summarize your experience. Comment on the
strong and weak points of such shopping tools.
Student
answers will vary. Possible options include Gomez.com and consumernow.com.
3. Design a trip to Kerala, India (use stayfinder.com to start). Find
accommodations, restaurants, health clubs, festival information, and art. Arrange
a tour for two people for 7 days. How much will it cost?
Student
answers will vary.
4. Almost all car manufacturers allow consumers
to configure their car online. Visit a major automaker's Web site and configure
a car of your choice (e.g., jaguar.com).
Also visit one electronic intermediary (e.g., autobytel.com). After you decide what car you want, examine the
payment options and monthly payments. Print your results. How does this process
compare to visiting an auto dealer? Do you think you found a better price
online? Would you consider buying a car this way?
Student
answers will vary.
5. Visit amazon.com
and identify at least three specific elements of its personalization and
customization features. Browse specific books on one particular subject, leave
the site, and then go back and revisit the site. What do you see? Are these
features likely to encourage you to purchase more books in the future from Amazon.com? List the features and
discuss how they may lead to increased sales. Now visit Amazon zShop (go to amazon.com, and click on zShops) to
identify and compare three sellers of food and beverages. Can you find items
not normally available in your local grocery store?
Student
answers will vary. Some examples of
personalization at Amazon.com
include remembering customer names, creating recommendations based on
preferences and storing recently viewed items.
6. Use a statistics source (e.g., shop.org, emarketer.com, or clickz.com/stats/)
and look for recent statistics about the growth of Internet-based
consumer-oriented EC in your country and in three other countries. Where is the
greatest growth occurring? Which countries have the largest total e-tail sales?
Which countries have the highest per-capita participation (i.e.,
"penetration rate")? What are the forecasts for continued growth in
the coming years?
Student
answers will vary. Emarketer.com provides a wide
variety of information about trends and the successful use of the Internet in
marketing. Information can be very
specific and vary across countries and customer demographics.
7. Visit landsend.com
and prepare a customized order for a piece of clothing. Describe the process.
Do you think this will result in better-fitting clothing? Do you think this
personalization feature will lead to greater sales volume for Lands’ End?
Student
answers will vary.
8. Make your resume accessible to millions of
people. Consult asktheheadhunter.com or careerbuilder.com for help in
rewriting your resume. See jobweb.com
for ideas about planning your career. Get prepared for a job interview. Also,
use the Web to determine what salary you can get in the city of your choice in
the United States.
Student
answers will vary.
9. Visit homeowner.com, decisionaide.com or a similar site
and compute the mortgage payment on a 30-year loan at 7.5 percent fixed
interest. Also check current interest rates. Estimate your closing costs on a
$200,000 loan. Compare the monthly payments of the fixed rate with that of an
adjustable rate for the first year. Finally, compute your total payments if you
take the loan for 15 years at the going rate. Compare it to a 30-year mortgage.
Comment on the difference.
Student
answers will vary.
10. Access the Virtual Trader game at citycomment.co.uk
and register for the Internet stock game. You will be bankrolled with £100,000
in a trading account every month. You can also
play investment games at investorsleague.com, fantasystockmarket.com,
and etrade.com.
Student
answers will vary.
11. Enter etrade.com and boom.com
and find out how you can trade stocks in countries other than the one you live
in. Prepare a report based on your findings.
Student answers will vary.
12. Examine the consolidated billing
process. Start with e-billingonline.com, and
intuit.com. Identify other consolidators in the field. What standard
capabilities do they all offer? What capabilities are unique to certain sites?
Student
answers will vary.
13. Compare the price of a Sony digital camera
at shopping.com, mysimon.com, bottomdollar.com,
bizrate.com and pricescan.com. Which
site offers you the best deal? Where do you get the best information?
Student
answers will vary.
14. Enter
dice.com and see how it can
assist technically oriented job seekers and employers. Compare the services offered with those at
monster.com.
Dice provides a more specific service over that
provided at monster.com. By focusing on
IT, it can narrow the field of candidates and provide more specific search
criteria and fields.
15.
Enter xing.com and identify its job-related offerings. Prepare a list of support activities offered.
Student
responses will vary, but will include support services on job-hunting, career
decisions, salary expectations, and resume creation.
16.
Compare the “build-your-own” at Nike (nike.com) with Timberland’s Boot Studio.
Student answers may vary. Both services provide a variety of
customizations for shoes. Students will
differ on the importance of the interface in each option and the needed
selection of possible selections.
17.
Enter scene7.com and review their on-demand rich media offerings.
Student
responses will vary, but will include information on the various media
streaming and presentation solutions available.
Answers to End-of-Chapter Real-World Case s:
Wal-Mart Goes Online
1.
Compare walmart.com with amazon.com. What features do the sites have in common? Which
are unique to Wal-Mart.com? To Amazon.com?
Student
answers will vary. Both stores have a
wide variety of products available and span several different categories. Both sites have a variety of customer service
and shopping features.
2.
Will Wal-Mart.com become the dominant e-tailer in the world, replacing
Amazon.com, or will Amazon.com dominate Wal-Mart online? What factors would contribute to Wal-Mart’s
success in the online marketplace? What
factors would detract from its ability to dominate online sales the way it has
been able to dominate physical retail sales in many markets?
Student
answers will vary. The dominant factor
that will help Wal-Mart is their ability to purchase in bulk and their
understanding of purchase-side logistics.
Amazon.com has the benefit of understanding online sales and order
fulfillment online.
3.
Check the shopping aids offered at walmart.com. Compare them with those
at Amazon.com.
Student
answers will vary. Both sites provide a
variety of robust aids.
4.
What online services can be purchased at walmart.com?
Student
answers will vary. Examples include: B2C sales, photos, gift cards and other
services.
5.
Compare buying a song from walmart.com versus buying it from Apple’s
iTunes.
Student
answers will vary.
6.
Walmart.com sells movies online for a monthly fee. How do similar sellers compare?
Student
answers will vary. This model is quite
similar to netflix.com and blockbuster.com.
7. Visit walmart.com,
target.com, marksandspencer.com, and sears.com. Identify
the common features of their online marketing and at least one unique feature
evident at each site. Do these sites have to distinguish themselves primarily
in terms of price, product selection, or Web site features?
Student
answers will vary.
1.
Investigate the options for international
customers on the Wal-Mart Web site.
Student
answers will vary.
Practice Quiz
1) The amount and percentage of goods and
services sold on the Internet is increasing rapidly, despite the failure of
many dot-com companies.
Answer:
TRUE
2) When comparing retailing to e-tailing,
e-tailing has a lower cognitive shopping overhead due to easy-to-establish
mutual trust.
Answer:
FALSE
3) Commodities with standard
specifications (e.g., books, CDs, airline tickets) are expected to facilitate
higher sales volumes.
Answer:
TRUE
4) A business model is a description of
how an organization intends to generate revenue through its business
operations.
Answer:
TRUE
5) Marketing done online between any
seller and buyer is indirect marketing.
Answer:
FALSE
6) Direct marketers are firms that sell directly
to consumers over the Internet without maintaining a physical sales channel.
Answer:
FALSE
7) A click-and-mortar retailer is a
combination of both the brick-and-mortar retailer and an online transactional
Web site.
Answer:
TRUE
8) Competition among online travel
e-tailers is fierce, with low margins, little customer loyalty, and increasing
commoditization of products and services.
Answer:
TRUE
9) The electronic job market can create
high turnover costs for employers by accelerating employees' movement to other
jobs.
Answer:
TRUE
10) When compared to the traditional job
market, an advantage of the online job market is its long life cycle.
Answer:
TRUE
11) An advantage of the electronic job
market for job seekers is that they can assess their market value.
Answer:
TRUE
12) Many insurance companies use a dual
strategy, keeping human agents but also selling online.
Answer:
TRUE
13) The major risk of online trading is
security.
Answer:
TRUE
14) Both online banks and click-and-mortar
banks carry some risks and problems, especially in international banking,
including hackers and liquidity risk.
Answer:
TRUE
15) A major problem in B2C is the
increasing rate of online fraud.
Answer:
TRUE
3.2
Multiple Choice
1) Each of the following describes
retailing except:
A) A
retailer is a sales intermediary.
B)
Many manufacturers sell directly to consumers and through wholesalers and
retailers.
C)
E-tailing makes it easier for a manufacturer to sell directly to customers by
cutting out the intermediary.
D)
Companies that produce a larger number of products, such as Proctor &
Gamble, do not need retailers for efficient distribution.
Answer:
D
2) Retailers who sell over the Internet
are called
A)
cyber marketers.
B)
e-tailers.
C)
B2B commerce marketers.
D)
brick-and-mortar operations.
Answer:
B
3) What is the primary advantage of
catalog sales?
A)
Catalogs eliminate the constraints of space and time.
B)
Customers prefer catalog shopping to e-tailing.
C)
Catalogs increase interest in products that are then bought online.
D)
Products and services can both be sold via catalogs.
Answer:
A
4) With all else being equal in the online
environment, goods with any of the following product characteristics are
expected to facilitate greater online sales except:
A)
relatively expensive items.
B)
high brand recognition.
C)
digitized format.
D)
frequently purchased items.
Answer:
A
5) Dell's distribution strategy is best
described as
A) a
brick-and-mortar strategy.
B) a
shared service mall strategy.
C) a
click-and-mortar strategy.
D)
direct marketing from a manufacturer.
Answer:
D
6) A marketer that uses e-mail to
advertise to potential customers is called a
A)
market maker.
B)
transaction broker.
C)
content disseminator.
D)
viral marketer.
Answer:
D
7) Each of the following is a revenue
model for online independent travel agents except
A)
direct competition revenues.
B)
direct revenues from commissions.
C)
subscription or membership fees.
D)
revenue sharing fees.
Answer:
A
8) Compared to the traditional job market,
the online job market
A)
has a shorter life cycle.
B)
is usually specialized and local in scope.
C)
tends to be less reliable.
D)
tends to be much less expensive.
Answer:
D
9) Which of the following parties use the
Internet job market?
A)
employers seeking employees
B)
classified ads
C)
job agencies
D)
all of the above
Answer:
D
10) Advantages of the electronic job
market for employers include each of the following except
A)
charging online processing fees.
B)
providing greater equal opportunity for job seekers.
C)
learning how to use their voice effectively in an interview.
D)
conducting interviews online.
Answer:
A
11) Advantages of the electronic market
for job seekers include each of the following except
A)
assessing their market value.
B)
competing with less qualified applicants.
C)
marketing themselves directly to potential employers.
D)
communicating quickly with potential employers.
Answer:
B
12) E-banking
A)
saves time and money.
B)
is more expensive for banks.
C)
is primarily done using wireless devices.
D)
is done by less than 40 percent of U.S. adult Internet users.
Answer:
A
13) Which of the following is not an
online banking application category?
A)
informational
B)
delivery
C)
administrative
D)
transactional
Answer:
B
14) Gateways to storefronts and e-malls
are
A)
shopping portals.
B)
shopbots.
C)
shopping browsers.
D)
intelligent search engines.
Answer:
A
15) Tools that scout the Web on behalf of
consumers who specify search criteria are
A)
shopping portals.
B)
shopbots.
C)
shopping browsers.
D)
intelligent search engines.
Answer:
B
3.3
Fill in the Blank
1) Broadly, marketing that takes place
without intermediaries between manufacturers and buyers describes ________.
Answer:
direct marketing
2) ________ are firms that sell directly
to consumers over the Internet without maintaining a physical sales channel.
Answer:
Virtual (pure-play) e-tailers
3) ________ are brick-and-mortar retailers
that offer a transactional Web site from which to conduct business.
Answer:
Click-and-mortar retailers
4) The ________ is the online B2C business
model where a manufacturer sells to a business, but delivers to individual
customers.
Answer:
B2B2C
5) ________ is the online B2C business
model where manufacturers customize their products and services via online
orders.
Answer:
Make (build)-to-order
6) Various banking activities conducted
from home or the road using an Internet connection describes ________.
Answer:
electronic banking
7) Gateways to e-storefronts and e-malls
describes ________.
Answer:
shopping portals
8) Tools that scout the Web on behalf of
consumers who specify search criteria describes ________.
Answer:
shopping robots
9) The process whereby intermediaries take
on new intermediary roles describes ________.
Answer:
reintermediation
10) ________ is the situation in which an
online marketing channel upsets the traditional channels due to real or
perceived damage from competition.
Answer:
Channel conflict
3.4 Essay
1)
List five business models by distribution channel.
Answer:
The five business models are direct marketing by mail-order retailers that go
online, direct marketing by manufacturers, pure-play e-tailers,
click-and-mortar retailers, and Internet malls.
2)
What are virtual (pure-play) e-tailers? Give an example. List one advantage and
one disadvantage of this model.
Answer:
Virtual (pure-play) e-tailers are firms that sell directly to consumers over
the Internet without maintaining a physical sales channel. Amazon.com is a
prime example of this type of e-tailer. Virtual e-tailers have the advantage of
low overhead costs and streamlined processes. One disadvantage is a lack of
established infrastructure or back office to support the online front-office
activities.
Chapter
Test
1. The TRUSTe seal is an example of
A. a trustmark.
B. an intermediary.
C. a business rating.
D. a B2B exchange.
2. Each of the following is a characteristic
of WAYN except:
A. It enables its users to create a personal profile and
upload and store photos.
B. It is not aimed at any particular age group.
C. When it introduced
fees for its premier travel membership service, it lost most of its new subscriptions.
D. It is a popular social networking Web site.
3. A marketer that uses e-mail to advertise
to potential customers is called a
A. content disseminator.
B. market maker.
C. transaction broker.
D. viral marketer.
4. Which of the following is not an online banking
application category?
A. delivery
B. administrative
C. informational
D. transactional
5.
Competitive advantages of a "pull" vehicle
distribution process include
A. improved customer satisfaction and pricing.
B. large cost savings in finished vehicle inventory carrying
costs.
C. virtually real-time market feedback.
D. all of the above.
6. Conducting e-commerce where the online
channel of a business is integrated with the physical retail business as
opposed to being a separate channel best defines
A. referral economy.
B. click-and-mortar retailers.
C. considered
commerce.
D. direct marketing.
7.
Retailers who sell over the Internet are called
A. cyber marketers.
B. e-tailers.
C. brick-and-mortar operations.
D. B2B commerce marketers.
8.
Both online banks and click-and-mortar banks carry some
risks and problems, especially in international banking, including hackers and
liquidity risk.
A. True
B. False
9.
Business rating sites can aid consumer purchase decisions.
A. True
B. False
10.
A click-and-mortar retailer is a combination of both the
brick-and-mortar retailer and an online transactional Web site.
A. True
B. False
11.
Advantages of the electronic job market for employers
include each of the following except
A. conducting interviews online.
B. learning how to use their voice effectively in an
interview.
C. charging online
processing fees.
D. providing greater equal opportunity for job seekers.
12.
Compared to the traditional job market, the online job
market
A. tends to be much
less expensive.
B. has a shorter life cycle.
C. tends to be less reliable.
D. is usually specialized and local in scope.
13.
Gateways to storefronts and e-malls are
A. shopping portals.
B. intelligent search engines.
C. shopping browsers.
D. shopbots.
14.
E-banking
A. is done by less than 40 percent of U.S. adult Internet
users.
B. is primarily done using wireless devices.
C. is more expensive for banks.
D. saves time and
money.
15.
Tools that scout the Web on behalf of consumers who
specify search criteria are
A. shopping browsers.
B. shopbots.
C. intelligent search engines.
D. shopping portals.
16.
Amazon.com experienced each of the following except
A. maintaining its position as the number one e-tailer in
2008.
B. attracting at least 615 million visitors in 2009.
C. establishing a
grocery delivery service called AmazonConnect.
D. declaring its first profit in January 2002.
17.
Each of the following is a characteristic of WAYN except:
A. It enables its users to create a personal profile and
upload and store photos.
B. It is not aimed at any particular age group.
C. When it introduced
fees for its premier travel membership service, it lost most of its new
subscriptions.
D. It is a popular social networking Web site.
18.
An advantage of the electronic job market for job seekers
is that they can assess their market value.
A. True
B. False
19.
The major risk of online trading is security.
A. True
B. False
20.
The top 500 e-tailers accounted for 65 percent of all
online sales in 2009.
A. True
B. False
21.
When comparing retailing to e-tailing, e-tailing has a
lower cognitive shopping overhead due to easy-to-establish mutual trust.
A. True
B. False
22.
Direct marketers are firms that sell directly to
consumers over the Internet without maintaining a physical sales channel.
A. True
B. False
23.
Commodities with standard specifications (e.g., books,
CDs, airline tickets) are expected to facilitate higher sales volumes.
A. True
B. False
24.
The Sears marketing strategy is best described as
A. a shared service mall strategy.
B. a brick-and-mortar strategy.
C. a click-and-mortar
strategy.
D. direct marketing by a manufacturer.
25.
Advantages of the electronic market for job seekers
include each of the following except
A. assessing their market value.
B. marketing themselves directly to potential employers.
C. communicating quickly with potential employers.
D. competing with
less qualified applicants.
26.
A type of online mall that is basically a directory
organized by product type best describes
A. brick-and-mortar retailer.
B. mall with shared services.
C. referring
directory.
D. cyber directory.
27.
A company that creates and manages many-to-many markets
is called a
A. viral marketer.
B. transaction broker.
C. content disseminator.
D. market maker.
28.
An online seller of travel services that generates
revenue by charging fees for its services is an example of a
A. content disseminator.
B. transaction
broker.
C. viral marketer.
D. market maker.
29.
Which of the following parties use the Internet job
market?
A. job agencies
B. employers seeking employees
C. classified ads
D. all of the above
30.
Compared to the traditional job market, the online job
market
A. tends to be much
less expensive.
B. has a shorter life cycle.
C. tends to be less reliable.
D. is usually specialized and local in scope.
