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Business to Consumer

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Title: Business to Consumer


1
Business to Consumer
e-Commerce
Presented by Carol Reavey, Kevin Keely and Martha
Harting
2
Who, What, How, When..
  • Who is on the web?
  • Who is the target customer?
  • What vehicles can be used to reach the customer?
  • How to Attract the right customer
  • How to stand out amongst the pack?

3
Demographics
  • Web and E-commerce Users

4
Weve got a new way to talk1
Total World Online Population 619 million
5
Everybodys Doing It!
  • The Internet is in 20 nations
  • E-commerce has 619 million potential customers
  • This number is estimated to reach 948 million by
    2004

6
Who is doing it in the USA(2)
  • The total population of internet users in the US
    is 112 million
  • 94.2 million are White (4 growth vs 01)
  • 7.8 million are black (3 growth vs 01)
  • 7.6 million are Hispanic (13 growth vs 01)
  • 2.4 million are Asian (6 growth vs 01)

7
Frequency vs. Purchase
  • Only 2.8 of all surfers use the net primarily
    for purchasing product. This is an increase over
    2.6 in 4th Qtr 2001.
  • The average purchase increased from 298 to 364
    in the 250 - 501 range.
  • It also increase from 1,298 to 1,668 in the
    1,000 range.

8
E-Commerce Sales(10)
  • E-commerce sales rose in the 2nd Qtr 3.7 over
    first quarter and 24.2 year over year
  • The US Department of Commerce expects record
    e-commerce sales for the holiday season.

9
Doing it with what..(3)
  • Household income is significant in the e-commerce
    game.
  • 72 of the surfers in the gt75k bracket do
    product/service research

10
When Are We Surfing(4)
  • 112 million Americans use the Internet
  • 46 million use it primarily at work 17 higher
    than last year
  • 20.4 million of the workers are women up by 23
  • Men (of course) make up the remaining 25.3
    million surfers 12 increase over 2001

11
Its a mans world
  • Men dominate internet usage in the USA
  • Men view an average of 1900 pages versus 1700
    pages for women
  • 36 of the male usage is for adult entertainment.
    This is 8 for women.

12
Mom is Surfing More(5)
  • American Moms are on-line an average of 16 hours
    and 52 minutes every week.
  • Teens log about 12 hours and 17 minutes per week.
  • Moms and Hispanics are the fastest growing
    groups of surfers.
  • This may change the way companies market and
    target customers.

13
Top 5 Activities(6)
  • The primary reason for logging on is E-mail.
  • Products/Services activities have increased 7
    over last year.
  • Women are sending the greeting cards and entering
    the sweepstakes (61).

E-mail 93
Search Engine 79
Research products/services 63
Local Information 60
Sweepstakes 59
14
Buzz Words(7)
  • To increase strikes the week of October 5th 2002
    web content could have included these
  • Halloween
  • Dragonball
  • KaZaA
  • Costumes
  • NFL
  • Tatoos
  • Hurricane Lilli
  • Britney Spears
  • Yu-Gi-Oh!
  • The Bible

15
What the E-Shopper Wants(8)
Courteous and respectful employees 73
Consistently good merchandise quality 70
A clean and well-maintained store 69
Unconditional return of merchandise 69
Visible prices 68
16
Service versus Price
  • Honest Price is more important than lowest
    price to 64 of the American consumers
  • Consistently good merchandise quality was seen
    as essential to 70 of the consumers

17
Balancing Ethical Issues

18
Mis-Trust(7)
  • Many Consumers wont by on-line because they
    dont trust the process
  • 68 of the consumers trust small business
  • 58 trust the newspapers and television
  • 55 trust financial institutions (banks,
    insurance companies)
  • 54 trust charities and non-profit organizations
  • 47 trust the government
  • 29 trust the e-commerce community!

19
SPAM(8)
  • SPAM is an ever-increasing issue
  • Hotmail estimates that 10 (1.3million) of the
    daily messages sent through Hotmail are SPAM
  • 10 of the working day is spent deleting SPAM

20
The Choice isnt much of a Choice
21
Selling your e-mail info(9)
  • Failed dot.coms have sold private information
  • They follow the letter of the Opt Out law by
    selling their web site and all the names with it.
  • Its a common business practice to rent your
    customer database Cheryl Regan spokesperson for
    Network Solutions Inc.

22
E-Commerce Phase Two
  • What can we expect to see in the sector as the
    second era of e-commerce gathers steam?

23
New Technologies
  • Automating processes
  • Reducing costs in customer service
  • Streamlining replenishment
  • Streamlining aftermarket selling opportunities

24
Spending Mix
  • Initial Phase
  • Computers
  • Brokerages
  • Travel
  • Books and Music
  • Auctions
  • Generated 75 of Sales(1)

25
Spending Mix
  • Current Phase
  • Only 50 of online sales
  • Clothing, pharmaceuticals, groceries,
    communication services and general merchandise
    make up the other 50.
  • Groceries went through a valley last year but may
    rebound this year.

26
Multichannel Selling
  • Systems allow customers to reserve product online
    for in-store pickup.
  • Manufacturers sell direct
  • Retailers fear of channel conflicts has faded.

27
Real-Time rules
  • Investing in real-time capabilities to manage
    orders.
  • Real-time order processing can increase order
    fulfillment accuracy and productivity by 50.(2)
  • Real-time supply chain and inventory lets
    companies know what they have and when its
    coming.
  • Reduce or eliminate stock-outs and overstocks.

28
Improved Profitability
  • Improved profitability spurred by innovations.
  • Analyst predict a 20 year-over-year growth.(3)

29
The Seven Habits of Highly Effective Web Sites(6)
  • Personable
  • Remembrance(4)
  • Flexible Interaction
  • User Profiling
  • Abstract Interaction(5)
  • Context Creation and Use
  • Dialogue Structuring and Management

30
Five E-Commerce Trends to Watch
31
Trends
  • Multichannel Retailing(7)
  • Increased Customer Satisfaction(8)
  • Consumers do their own thing(9)
  • Death of the Mid-Size E-tailer
  • More Profit 70 of the top 40 sites are
    profitable versus 30 last year.

32
Business Models on the Web(10)
  • Business models are perhaps the most discussed
    and least understood aspect of the web.
  • The web changed traditional business models.
  • Little clear-cut evidence of exactly what this
    means.
  • Auctions An old way of doing business
    popularized and broadened.(11)

33
Models Continues
  • Varied Implementation
  • Blended Models
  • Intellectual Patents

34
Categories of Business Models
Brokerage Advertising
Infomediary Merchant
Manufacturer Affiliate
Community Subscription
Utility Utility
35
Brokerage Model
  • Marketplace Exchange Orbitz
  • Buy/Sell Fulfillment CarsDirect
  • Demand Collection System - Priceline.com
  • Auction Broker - eBay
  • Transaction Broker PayPal
  • Bounty Broker BountyQuest
  • Distributor Quest
  • Search agent - Deal time
  • Virtual Mall - ChoiceMall

36
Advertising Model
  • Portal Yahoo
  • Personalized Portal - MyYahoo
  • Niche Portal - iVillage
  • Classifieds - Monster.com
  • Registered Users - Anytime's Digital
  • Query-based Paid Placement Google
  • Contextual - Gator

37
Infomediary Model
  • Advertising Networks DoubleClick
  • Audience Measurement Services Nielson
  • Incentive Marketing - MyPoints
  • Metamediary - Edmunds

38
Merchant Model
  • Virtual Merchant - Amazon.com
  • Catalog Merchant - Lands End
  • Click and Mortar - Barnes Noble
  • Bit Vendor - Eyewire

39
Community Model
  • Content Service - Netflix
  • Person-to-person Networking Services Classmates
  • Trust Services - Truste

40
Subscription Model
  • Voluntary Contributor Model - WCPE.org
  • Knowledge Networks AllExperts
  • Internet Service Provider - AOL

41
Other Models
  • Affiliate Model - Amazon.com
  • Manufacturer Model Dell
  • Utility Model - Slashdot

42
Three Different Business Models
43
(No Transcript)
44
e-Bay is 1
  • e-Bay is the 1 in sales.(12)
  • 1.1 billion in revenues in 2002
  • Earnings .73 - .75 per share.
  • Brokerage model / Auction Broker / Transaction
    Broker.

45
Holiday Strategy
  • Printed Catalogs in 2001
  • Amazon.com is copying the idea.
  • Bidders wait to find out if they won, e-Bay
    instituted a buy it now feature.
  • Also advertised on AOL Time Warner cable and
    network outlets to promote their site for holiday
    gifts. (13)

46
(No Transcript)
47
Amazon.com is 2
  • Amazon.com is 2 with Online sales to U.S.
    consumers estimated between 1.7 1.9 billion.
    (14)
  • Amazon made a profit for the first time, in the
    last quarter. It has not made a profit for a
    fiscal year.
  • Merchant Model / Virtual Merchant

48
Product Offering
  • Free electronic greeting cards
  • On-line auctions
  • Millions of books, CDs, videos, DVDs,
  • Toys and games
  • Electronics
  • Kitchenware
  • Computers and more(15)

49
Holiday Strategy
  • Free Shipping

50
(No Transcript)
51
Quixtar.com is 7
  • 400-450 million in sales in the U.S. (16)
  • Privately Held
  • Believed to be profitable.
  • No marketing expenses
  • Company world-wide sales for fiscal 2002 where
    4.5 billion. (17)
  • Unique Merchant Model could be Virtual Merchant
    / Catalog Merchant

52
  • Amway - Person-to-person multilevel marketing.
  • In business since 1959
  • Manufacture items for nutrition, wellness, beauty
    and home products. Vitamins, food supplements and
    cosmetics are among the company's leading global
    brands.
  • Manufacturers pay to have products sold.
  • Order a car direct from the manufacturer
    delivered to the nearest dealership.
  • Bass Pro, Chevrolet, Ford, IBM, are just a few
    companies that allow direct selling from Quixtar.

53
Pay to Use and Earn
  • Pay to use this site.
  • IBO to purchase from this site.
  • Earn bonuses or cash based on product sales.
  • Currently 3.3 million distributors that teach
    their people how to shop the site.
  • Infrequent catalog distribution.

54
  • Could other models be used to describe this
    e-tailer? Which models?

55
e-Commerce Steps to Success
  • Gain Trust
  • Personalization
  • Multi-channeling

56
Gaining Trust Online1
  • Why dont consumers trust cyberspace?
  • No close physical presence
  • Incomplete, ambiguous physical location
  • No people to talk to
  • Reputation, size, and background unknown
  • History of security and privacy problems
  • Privacy invasion and abuse of customer
    information
  • Potential for misrepresentation and fraud
  • On the Internet nobody knows that you are a dog

57
  • How to gain trust online
  • Similar backgrounds
  • Translate into customers language
  • References regarding adherence to local
    regulations and business practices
  • Promotional campaigns to stimulate repeat
    business
  • Personalization
  • Photos and video clips of store owners
  • Order confirmation
  • Stronger product warranties
  • Customer support
  • Reputation
  • Trust can be transferred link site to other
    reputable sites
  • Easier to obtain when part of a large chain

58
Level of Trust Online2
Financing/banking has successfully gained trust
online, while other uses have declined in overall
trust.3
59
The Personal Touch4
  • Benefits
  • Forms a relationship with the customer
  • Increases trust
  • Increases sales and repeat business
  • Difficulties
  • Gathering data
  • Analyzing data
  • Utilizing data
  • Expense

60
Personalization on the Web5
  • Virtual 3D models Lands End
  • Live chat feature Lands End
  • E-mail reminders Drugstore.com
  • Suggestions for visitors American Greetings and
    1-800-Flowers.com
  • One-click shopping Amazon.com
  • Records of previous purchases Office Depot
  • Smart recommendation engines Amazon.com6

61
Multi-channeling
  • The Future of E-Commerce?

62
The Channels
  • Web Site Click and Mortar Store
  • Brick and Mortar Store
  • Catalog
  • The more channels a customer uses, the more
    valuable they are to a business.7
  • (e.g., JC Penney found their 3-channel customers
    are worth 1000/year 2-channel customers
    700/year 1-channel customers only 300/year.)

63
The New Customer8
  • Customers want old-fashioned service with all the
    new tools and convenience
  • According to Brylane e-commerce, web sites have
    to Sail the Seven Cs
  • You must Combine Customized Content, Community
    and Commerce to provide Control and Convenience.

64
Benefits of Multi-Channel Integration9
  • Capture sales regardless of channel
  • Build and strengthen customer loyalty
  • Improve direct marketing efforts
  • Seamless service experience
  • Improved demand planning and product distribution
  • Increased revenue and gross margin

65
Disadvantages of Multi-Channeling9
  • Costs (specialty or medium-sized department
    store)
  • Brick and mortar costs range from an average of
    8 to 28 million for startup and can expect to
    break even in about two years
  • E-commerce sites cost 73 million to 1.2 billion
    break-even volume
  • May not generate positive returns quickly
  • May distract from core business
  • Active shoppers may prove to be a liability10
  • More deal driven
  • Look for costly site features such as live help

66
Tier 1 - Multi-Channel Functionality Low Risk9
  • Accept returns in physical store without
    exception
  • Offer store pickups
  • Accept retail store credit card online
  • Provide basic customer service
  • Frequently asked questions, how-to guides,
    warranty information, etc.
  • Retail store locator information
  • Coordinate logo, information, graphics, etc.
  • Consistent messaging across all channels
  • Use e-mail campaigns to reinforce marketing
    efforts along with direct mail, billing inserts,
    and other promotional advertising

67
Tier 2 Multi-Channel Functionality Some Risk9
  • Install in-store kiosks for online ordering
  • Integrate loyalty and registry programs
  • Implement ERMS (e-mail response management system)

68
Tier 3 Multi-Channel Functionality
Substantial Risk9
  • Web-enable point of sale (POS) systems to bring
    the Internet into the store (very expensive)
  • Use hand-held/wireless devices process web/store
    orders.
  • Implement guided merchandising use customer
    relationship information and blend with product
    descriptions and merchandising rules

69
Multi-Channel Leaders9
  • Office Supply Retailers
  • Office Depot
  • OfficeMax
  • Staples
  • Consumer Electronic Retailers
  • Circuit City
  • Best Buy
  • CompUSA
  • Others
  • Department Stores-Sears, JC Penney
  • Pharmacies-Walgreens
  • Discount Stores WalMart, K-Mart, Target

70
Multi-Channel Challenges8
  • Plan promotions as a single company with multiple
    channels, not separately
  • Integrate online into offline
  • Promote web benefits and URLs in all
    communications
  • Promote offline into online
  • Mention in-store promotions, store locators
  • Provide catalog requests
  • Pay attention to time-sensitivity
  • Just because e-mails can be sent quickly, this
    does not guarantee that your target market will
    be accessed immediately or that it will even be
    read at all.

71
Keys to Multi-Channel Success9
  • Integrate in stages
  • Evaluate the organizational impact
  • Implement the right multi-channel approach for
    your business
  • Get the organization ready
  • Collect customer data determine target
    customers
  • Focus on customer incentives
  • Pricing
  • Return policies
  • Support

72
Most Popular Web Sites11
  • Nielsen Net Ratings for Week Ending 10/13
  • Top Sites Overall

73
Most Popular Web Sites11
  • Sports
  • Entertainment
  • Music
  • Movie
  • TV
  • News

74
Sources for Demographics
  1. Global Internet Statistics (by Language)
    www.global-research.biz/globstats/index.php3
    (9/30/02)
  2. Saunders, Christopher, Latinos Outpace Other
    Groups On-line growth www.cyberatlas.internet.com
    /big_picture/demographics/article/0,,5901_1428231,
    00.html 10/20/02.
  3. Greenspan, Robyn, High-Speed Connects
    High-Income Homeswww.cyberatlas.internet.com/marke
    ts/article/0,,10099_1467471,00.html9/20/02.
  4. Cyberatlas staff, Traffic Patterns for August
    2002 www.cyberatlas.internet.com/big picture.com
    (9/12/02).
  5. Saunders, Christopher, Moms, Hispanics
    Increasing Web Use www.cyberatlas.internet.com/big
    _picture/demographics/article/0,,5901_1041581
    (05/08/02).
  6. Greenspan, Robyn, American Surfers Keep It Simple
    www.cyberatlas.internet.com/big_picture/geographic
    s/article/0,,5901_1466661.html 9/19/02

75
Demographics Cont.
  • 7.     Greenspan, Robyn, Consumers Rank Trust
    Above Low www.cyberatlas.internet.com/marketing/r
    etailing/article/0,60611014831.html4/23/02.
  • 8.    Staff, Spam poses threat to privacy BBC
    News World Edition, Technoligies 10/16/02
  • 9. Greg Sandavol, Failed dot-coms may be
    selling your private information
    www.news.com/2100-1017-242649.html 06/29/00
  • 10. U.S. Commerce www.uscomerce.gov 10/20/02

76
Sources for the Second Phase
  1. LeClaire, Jennifer, Phase Two for E-Commerce,
    E-Commerce Times 8.1 (2002), 26 Oct 2002,
    http//www.ecommercetimes.com/perl/story/18840.htm
    l
  2. LeClaire, Jennifer, Phase Two for E-Commerce,
    E-Commerce Times 8.1 (2002), 26 Oct 2002,
    http//www.ecommercetimes.com/perl/story/18840.htm
    l
  3. LeClaire, Jennifer, Phase Two for E-Commerce,
    E-Commerce Times 8.1 (2002), 26 Oct 2002,
    http//www.ecommercetimes.com/perl/story/18840.htm
    l
  4. Martin, Mike, The Seven Habits of Highly
    Effective Web Sites, CRM Daily.com, 9.3 (2002),
    26 Aug. 2002, http//www.crmdaily.com/perl/story/1
    9270.html
  5. Martin, Mike, The Seven Habits of Highly
    Effective Web Sites, CRM Daily.com, 9.3 (2002),
    26 Aug. 2002, http//www.crmdaily.com/perl/story/1
    9270.html

77
Phase Two Cont.
  • 6. Martin, Mike, The Seven Habits of Highly
    Effective Web Sites, CRM Daily.com, 9.3 (2002),
    26 Aug. 2002, http//www.crmdaily.com/perl/story/1
    9270.html
  • 7. Regan, Keith, Five E-Commerce Trends to
    Watch. E-Commerce Times, 3.3 (2002), 26 Aug
    2002, http//www.ecommercetimes.com/perl/story/169
    67.html
  • 8. Regan, Keith, Five E-Commerce Trends to
    Watch. E-Commerce Times, 3.3 (2002), 26 Aug
    2002, http//www.ecommercetimes.com/perl/story/169
    67.html
  • 9. Regan, Keith, Five E-Commerce Trends to
    Watch. E-Commerce Times, 3.3 (2002), 26 Aug
    2002, http//www.ecommercetimes.com/perl/story/169
    67.html 10. Rappa, Michael, Business Models on
    the Web Managing the Digital Enterprise, 27 Aug
    2002, http//www.digitalenterprise.org/models/mode
    ls_text.html
  • 11. Rappa, Michael, Business Models on the Web
    Managing the Digital Enterprise, 27 Aug 2002,
    http//.digitalenterprise.org/models/models_text.h
    tml

78
Phase Two Cont.
  • 12. Top 100 Internet Retailers, Russell
    Reynolds Associates, 7.6 (2002), 24 Aug 2002,
    http//www.stores.org/archives/ootop100int_.html
  • 13. Saunders, Christopher, e-Bay Taps Catalogs
    for Holiday Push Ecommerce News, 11.27 (2001),
    26 Aug 2002, http//ecommerce.internet.com/news/ne
    ws/print/0,,10375_929661,0... 14. Top 100
    Internet Retailers, Russell Reynolds Associates,
    7.6 (2002), 24 Aug 2002, http//www.stores.org/arc
    hives/ootop100int_.html
  • 15. About Amazon.com, Amazon.com, 27 Aug 2002,
    http//www.amazon.com/exec/obidos/subst/misc/compa
    ny-info.html
  • 16. Top 100 Internet Retailers, Russell
    Reynolds Associates, 7.6 (2002), 24 Aug 2002,
    http//www.stores.org/archives/ootop100int_.html
  • 17. Alticor Inc, 26 Aug 2002,
    http//www.alticor.com/news/pop_alticor_fact.html

79
Sources Step to Success
  1. Jarvenpaa, S., and Grazioli, S. Surfing among
    sharks how to gain trust in cyberspaceMastering
    Informational Management. Prentice Hall, London,
    2000. pgs 197-201.
  2. Greenspan, Robyn. More Users, Less Trust.
    http//www.cyberatlas.internet.com/markets/retaili
    ng/print/0,,6061_1483061,00.html, 10/24/2002.
  3. Taylor, Charlie. Banking on success
    http//www.nua.ie/surveys/analysis/weekly_editoria
    l/archives/issue1no316.html, 10/30/2002.
  4. Walsh, John. Websites with a personal touch
    Mastering Informational Management. Prentice
    Hall, London, 2000. pgs 201-204.
  5. Regan, Keith. The Best of E-Commerce E-Commerce
    Times http//www.ecommercetimes.com/perl/story/193
    23.html, 11/5/2002.
  6. Hirsh, L, and LeClaire, J. Kings of Repeat
    E-Business E-Commerce Times http//www.crmdaily.c
    om/perl/printer/19137/, 10/30/2002.

80
Step for Success Cont.
  1. Bartram, Michelle. Multi-Channel Secrets to
    Success http//www.webpractices.com/slideshows/Mu
    ltichannel20Success/multi_2Tech.pdf, 10/30/2002.
  2. Bartram, Michelle. Multi-Channel Secrets to
    Success http//www.webpractices.com/slideshows/Mu
    ltichannel20Success/multi_2Tech.pdf, 10/31/2002.
  3. Multi-Channel Integration, A Retailers
    Perspective Escalate http//www.escalate.com/whit
    epaper3.html, 10/31/2002.
  4. Cox, Beth. Are Multi-Channel Shoppers a
    Liability? http//www.internetnews.com/ec-news/ar
    ticle.php/1442631, 11/5/2002.
  5. Internet Nielsen Net Ratings Nielsen Net
    Ratings for Week Ending 10/13. http//alliance.zap
    2it.com/zap2it/zp_int_nielsen_net_ratings/1,1648,1
    73__,00.html, 10/30/2002.
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