E-Commerce

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Chapter 3
Retailing on the Internet
RetailingThen and Now
The E-Tail Experience
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Section 3-1Why Its Important

• To attract customers and win market share,
  retailers develop new strategies to outdo their
  competitors.
• Understanding how the retail business has
  evolved since the 1800s will help you understand
  how retailing and e-commerce became what they are
  today.

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Section 3-1 Key Terms

• retailers
• wholesalers
• e-tailing

• services retailers
• non-store retailers

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Retailing Before E-Commerce

• First and foremost, retailers want your business.

retailers establishments that sell goods and
services to the general public
The retailing process is the final step in the
distribution of products.
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Retailing Before E-Commerce

• Wholesalers supply retailers with products.

wholesalers businesses that sell products to
distributors or retailers and not usually to the
end-user or consumer
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The History of Retailing
Retailing Timeline
1700s
1800s
1920s
1850s
1950s
1970s
1980s
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The History of Retailing

• The most modern innovation in retailing is
  e-tailing.

e-tailing the buying and selling of retail goods
on the Internet
E-tailing enables consumers to choose from an
almost infinite variety of products and purchase
them without leaving their own homes.
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The History of Retailing

• In the 1980s, big-box retailers such as Kmart,
  Target, and Wal-Mart brought about a revolution
  in retailing.
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• Big box retailers have special distribution
  systems that keep operating costs and prices low.

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The History of Retailing

• In the 1980s, category killers became common.
  These large stores specialize in a particular
  type of product, such as toys, hardware, books,
  or sporting goods.
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• They are called category killers because, by
  offering the lowest prices available, they are
  able to kill their competition.

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Retailing Today
Major Categories of Retailers
specialty stores
department stores
discount stores
services retailers
non-store retailers
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Retailing Today

• Specialty stores, such as Toys R Us, Borders,
  Ace Hardware, and REI, are stores that specialize
  in specific kinds of products or product lines
  and offer a wide assortment within their given
  categories.

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Retailing Today

• Sears, Foleys, Macys, and J.C. Penney fall into
  the category of department stores.
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• These stores offer a variety of products and
  choices within each product line and a floor plan
  that provides specialized departments.

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Retailing Today

• Discount stores such as Wal-Mart offer very low
  prices.
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• Some consumers prefer not to shop at discount
  stores because they often drive many small, local
  stores out of business, putting people out of
  work.

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Retailing Today

• Services retailers play an important role in our
  economy by providing specialized skills and
  expertise most consumers lack and need.

services retailers businesses that provide
services
Banks, dental offices, and pet groomers are
examples of services retailers.
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Retailing Today

• Non-store retailers are able to lower costs by
  selling directly to consumers without the cost of
  maintaining a storefront.

non-store retailers businesses that use means
other than traditional storefronts to sell their
products, such as infomercials, catalogs,
door-to-door solicitation, trade shows, and
vending machines
E-tailing is a form of non-store retailing.
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Section 3-1 Review

• How were early retail stores less convenient for
  shoppers than those of today?
• How do category killers kill their competition?
  
• Why might some retail customers prefer not to
  shop at discount stores?

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Section 3-2Why Its Important

• When you understand the complexities of running a
  secure and reputable e-commerce site, you can
  better plan your business and purchases.

Section 3-2
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Section 3-2Key Terms

• hyperlink
• Electronic Funds Transfer
• smart card
• eWallet

• e-cash
• Secure Sockets Layer
• digital certificates

Section 3-2
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The Nature of E-Tailing

• Setting up and maintaining an online business
  comes with a set of unique challenges.
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• To be a successful e-tailer, you have to create
  an engaging e-tail experience and ensure the
  security of information.

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Product Merchandising

• Online merchandisers use hyperlinks as
  merchandising cues to present their products and
  motivate consumers.

hyperlink also called a hypertext link, or
simply a link connects the current Internet
document with another location in the same
document, another document on the same Web site,
or another document somewhere else on the Web a
blue, underlined font identifies hypertext links
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Product Merchandising
Hyperlinks
cross-sell hyperlink
Takes the user to an item associated with the
item the user is currently viewing.
upsell hyperlink
Refers the user to a similar but more upscale and
expensive item.
recommendation hyperlink
Takes the user to a product that might interest
the user based on products the user has purchased
before.
promotion hyperlink
Refers the user to a hot product or sales item
the site is currently offering.
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Product Merchandising

• A company can offer photos, color change
  interfaces, and video clips to enhance the
  presentation of its products on its Web site.
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• When customers are able to see more details of a
  product, they are more likely to buy.

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Setting Up an Online Purchasing Process

• Before you can sell goods to customers, you must
  either have them available in stock or have the
  ability to get them from a manufacturer quickly
  once youve received orders.
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• The Web allows new forms of online collaboration
  between retailers and their suppliers.

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Payment Options
Online Payment Options
credit cards
debit cards
Electronic Funds Transfer (EFT)

smart cards
eWallets
e-cash
e-checks
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Payment Options

• Consumers use credit cards to pay for
  approximately 95 percent of all purchases on the
  Internet.
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• When customers use debit cards for their online
  purchases, they are authorizing the withdrawal of
  money from their bank accounts.

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Payment Options

• When you purchase a product online using
  Electronic Funds Transfer (EFT), you can pay for
  it by having money transferred from your checking
  account to the checking account of the seller.

Electronic Funds Transfer (EFT) provides
electronic payments and collections for online
sales
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Payment Options

• A smart card can be used to make financial
  transactions over the Internet.

smart card credit card with an embedded
microchip, which is loaded with data that can be
programmed for various applications
More than a billion smart cards are currently in
use, mostly in Europe.
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Payment Options

• Much like a smart card, an eWallet can be used to
  make online purchases.

eWallet a software application that stores a
customer's data for easy retrieval during online
purchases
The eWallet utility encrypts your personal
information.
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Payment Options

• E-cash provides rapid, secure, and reliable
  real-time payment processing worldwide.

e-cash a legal form of computer-based currency
that allows for the purchase of items by credit
card, check, or money order
One of the global leaders in online e-cash
payments is PayPal.
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Payment Options

• E-checks, or electronic checks, provide a handy
  way to get payment from customers who do not own
  or use credit cards.

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Order Fulfillment and Customer Service

• Part of your customers e-tail experience
  consists of receiving the goods they ordered
  quickly and efficiently.
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• You need to consider how to warehouse your
  products and what methods to use to deliver them.

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Security Issues and Concerns

• One issue that may keep customers from making
  purchases on your Web site is security.
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• It is important to protect customers personal
  information and have proof that you are a
  legitimate business.

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Security Issues and Concerns

• Secure Sockets Layer (SSL) encrypts customers
  personal information, keeping it safe from
  hackers.

Secure Sockets Layer (SSL) helps encrypt and
protect the information that customers enter into
Web pages when making a purchase this protocol
is built into most browsers and is supported by
most Web servers
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Security Issues and Concerns

• To help your customers feel confident that you
  run a reputable business, purchase a digital
  certificate.

digital certificate computer file used to
verify to customers that a company is what it
claims to be
Digital certificates are issued by a trusted
third party.
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Advantages and Disadvantages of E-Tailing

• Advantages
• A great Web site can attract new customers,
• Customers can shop 24/7.
• Disadvantages
• Customers concerned about security may be
  reluctant to release personal information.
• Customers are not able to examine merchandise.

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Section 3-2 Review
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• What is a cross-sell? What product might be
  cross-sold to a customer purchasing a
  coffeemaker? Why?
• How could a company enhance the presentation of
  its products on its Web site? How would this
  influence its sales?
• Why might a Web sites sales suffer if it only
  permits customers to pay using smart cards and
  EFTs?
• How can a Web site assure customers of security?

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