Bài giảng E-commerce business, technology, society - Chapter 9: Online Retail and Services

E-commerce Kenneth C. LaudonCarol Guercio Traverbusiness. technology. society.seventh editionCopyright © 2011 Pearson Education, Inc.E-commerce: Business. Technology. SocietyCopyright © 2011 Pearson Education, Inc.Chapter 9: Online Retail and ServicesCopyright © 2010 Pearson Education, Inc.Slide 9-*Chapter 9Online Retail and ServicesCopyright © 2011 Pearson Education, Inc.Copyright © 2011 Pearson Education, Inc.Blue Nile Sparkles For Your CleopatraClass DiscussionWhy is selling (or buying) diamonds over the Internet difficult?How has Blue Nile built its supply chain to keep costs low?How has Blue Nile reduced consumer anxiety over online diamond purchases?What are some vulnerabilities facing Blue Nile?Would you buy a $5,000 engagement ring at Blue Nile?Slide 9-*Copyright © 2011 Pearson Education, Inc.Major Trends in Online Retail, 2010-2011Growth in social shoppingOnline retail remained profitable during recessionOnline retail still fastest growing retail channelBuying online a normal, mainstream experienceSelection of goods increases, includes luxury goodsInformational shopping for big-ticket items expandsSpecialty retail sites show most rapid growthSlide 9-*Copyright © 2011 Pearson Education, Inc.The Retail SectorMost important theme in online retailing is effort to integrate online and offline operationsU.S. retail market accounts for $10 trillion (70%) of total GDPPersonal consumption:Services: 61 %Nondurable goods: 29 %Durable goods: 10 %“Goods” vs. “services” ambiguitySlide 9-*Copyright © 2011 Pearson Education, Inc.The Retail Industry8 segments (clothing, durable goods, etc.)For each, uses of Internet may differInformation vs. direct purchasingGeneral merchandisers vs. specialty retailersMail order/telephone order (MOTO) sector most similar to online retail sectorSophisticated order entry, delivery, inventory control systemsSlide 9-*Copyright © 2011 Pearson Education, Inc.Composition of the U.S. Retail IndustrySlide 9-*SOURCE: Based on data from U.S. Census Bureau, 2010Figure 9.1, p. 579Copyright © 2011 Pearson Education, Inc.E-commerce Retail: The VisionReduced search and transaction costs; customers able to find lowest pricesLowered market entry costs, lower operating costs, higher efficiencyTraditional physical store merchants forced out of businessSome industries would be disintermediatedFew of these assumptions were correct—structure of retail marketplace has not been revolutionized Internet has created new venues for multichannel firms and supported a few pure-play merchantsSlide 9-*Copyright © 2011 Pearson Education, Inc.The Online Retail Sector TodaySmallest segment of retail industry (6%)Growing at faster rate than offline segmentsRevenues expected to resume 10-15% growth between 2010 – 201472% of Internet users bought online in 2010Primary beneficiaries: Established offline retailers with online presence (e.g. Staples)First mover dot-com companies (e.g. Amazon)Slide 9-*Copyright © 2011 Pearson Education, Inc.Online Retail and B2C E-commerce is Alive and WellSlide 9-*SOURCES: Based on data from eMarketer, Inc., 2010a; authors’ estimates.Figure 9.2, p.582Copyright © 2011 Pearson Education, Inc.Multi-Channel IntegrationIntegrating Web operations with traditional physical store operationsProvide integrated shopping experienceLeverage value of physical storeTypes of integrationOnline order, in-store pickupIn-store kiosk or clerk Web order, home deliveryWeb promotions to drive customers to storesGift cards usable in any channelSlide 9-*Copyright © 2011 Pearson Education, Inc.Analyzing the Viability ofOnline FirmsEconomic viability: Ability of firms to survive as profitable business firms during specified period (i.e. 1-3 years)Two business analysis approaches:Strategic analysisFocuses on both industry as a whole and firm itselfFinancial analysisHow firm is performingSlide 9-*Copyright © 2011 Pearson Education, Inc.Strategic Analysis FactorsKey industry strategic factorsBarriers to entryPower of suppliersPower of customersExistence of substitute productsIndustry value chainNature of intra-industry competitionFirm-specific factorsFirm value chainCore competenciesSynergiesTechnologySocial and legal challengesSlide 9-*Copyright © 2011 Pearson Education, Inc.Financial Analysis FactorsStatements of OperationsRevenuesCost of salesGross marginOperating expensesOperating marginNet marginPro forma earningsBalance sheetAssets, current assetsLiabilities, current liabilities and long-term debtWorking capitalSlide 9-*Copyright © 2011 Pearson Education, Inc.E-tailing Business ModelsVirtual merchant AmazonBricks-and-clicks Wal-Mart, J.C. Penney, SearsCatalog merchant Lands’ End, L.L. Bean, Victoria’s SecretManufacturer-direct DellSlide 9-*Copyright © 2011 Pearson Education, Inc.E-commerce in Action: Amazon.comVision: Earth’s biggest selection, most customer-centric Business model: Amazon Retail, Third Party Merchants, and Amazon Web Services (merchant and developer services)Financial analysis: Greatly improved, profitable; still heavy long-term debtStrategic analysis/business strategy: Maximize sales volume, cut pricesStrategic analysis/competition: Online and offline general merchandisersSlide 9-*Copyright © 2011 Pearson Education, Inc.E-commerce in Action: Amazon.comStrategic analysis/technology: Largest, most sophisticated collection of online retailing technologies availableStrategic analysis/social, legal: Antitrust, sales tax, patent lawsuitsToys“R”Us suit settlement, State of New York lawsuitsFuture prospects: In 2009, net sales grew 28%, and significant gains thus far in 2010Ranks among top five in customer service, speed, accuracyHowever, net margins still much narrower than Wal-MartSlide 9-*Copyright © 2011 Pearson Education, Inc.Common Themes in Online RetailingOnline retail fastest growing channel on revenue basisProfits for startup ventures have been difficult to achieveDisintermediation has not occurredMost significant online growth: Offline general merchandiser giants extending brand to online channelSecond area of rapid growth: Specialty merchants with high-end goods, e.g. Blue NileSlide 9-*Copyright © 2011 Pearson Education, Inc.Insight on TechnologyUsing the Web to Shop ’Till You DropClass DiscussionWhat do shopping bots and comparison sites offer consumers? Why are shopping bots more successful with hard goods than soft goods?What is the strategy of Shopping.com?How can shopping bots compare luxury goods?How does adding content to comparison sites help consumers?Slide 9-*Copyright © 2011 Pearson Education, Inc.The Service Sector: Offline and OnlineService sector: Largest and most rapidly expanding part of economies of advanced industrial nationsConcerned with performing tasks in and around households, business firms, and institutions Includes doctors, lawyers, accountants, business consultants, etc.76% of U.S. labor force - 108 million58% of GDP - $7.7 trillionSlide 9-*Copyright © 2011 Pearson Education, Inc.Service IndustriesMajor service industry groups:FinanceInsuranceReal estateTravel Professional services – legal, accountingBusiness services – consulting, advertising, marketing, etc.Health servicesEducational servicesSlide 9-*Copyright © 2011 Pearson Education, Inc.Service IndustriesTwo categoriesTransaction brokersHands-on service providersFeatures:Knowledge- and information-intenseMakes them uniquely suited to e-commerce applicationsAmount of personalization and customization required differs depending on type of servicee.g. medical services vs. financial servicesSlide 9-*Copyright © 2011 Pearson Education, Inc.Online Financial ServicesExample of e-commerce success story, but success is somewhat different from what had been predictedBrokerage industry transformed4 of 5 households use online bankingEffects less powerful in insurance, real estateMulti-channel established financial services firms continue to show strong growthSlide 9-*Copyright © 2011 Pearson Education, Inc.Financial Service Industry TrendsTwo important global trendsIndustry consolidationFinancial Reform Act of 1998 amended Glass-Steagall Act and allows banks, brokerages, and insurance firms to mergeMovement toward integrated financial servicesFinancial supermarket modelSlide 9-*Copyright © 2011 Pearson Education, Inc.Industry Consolidation and Integrated Financial ServicesSlide 9-*Figure 9.3, Page 606Copyright © 2011 Pearson Education, Inc.Online Financial Consumer BehaviorConsumers attracted to online financial sites because of desire to save time and access information rather than save moneyMost online consumers use financial services firms for mundane financial managementCheck balancesPay billsGreatest deterrents are fears about security and confidentialitySlide 9-*Copyright © 2011 Pearson Education, Inc.Online Banking and BrokerageOnline banking pioneered by NetBank and Wingspan; no longer in existenceEstablished brand-name national banks have taken substantial lead in market shareOver 100 million people use online banking; expected to rise to 192 million by 2013Early innovators in online brokerage (E*Trade) have also been displaced by established brokerages (Fidelity, Schwab)Slide 9-*Copyright © 2011 Pearson Education, Inc.The Growth of Online BankingSlide 9-*Figure 9.4, Page 611SOURCE: Based on data from comScore, 2010, eMarketer, Inc., 2010b.Copyright © 2011 Pearson Education, Inc.Multi-channel vs. Pure Online Financial Service FirmsOnline consumers prefer multi-channel firms with physical presenceMulti-channel firmsGrowing faster than pure online firmsLower online customer acquisition costsPure online firmsRely on Web sites, advertising to acquire customersUsers utilize services more intensivelyUsers shop more, are more price-driven and less loyal Slide 9-*Copyright © 2011 Pearson Education, Inc.Financial Portals and Account AggregatorsFinancial portalsComparison shopping services, independent financial advice and financial planningRevenues from advertising, referrals, subscriptionse.g. Yahoo! Finance, Quicken.com, MSN MoneyAccount aggregationPulls together all of a customer’s financial data at a personalized Web siteE.g. Yodlee: provides account aggregation technologyPrivacy concerns; control of personal data, security, etc. Slide 9-*Copyright © 2011 Pearson Education, Inc.Online Mortgage and Lending ServicesEarly entrants hoped to simplify and speed up mortgage value chainDifficulties in branding and simplifying mortgage generation processThree kinds of online mortgage vendor todayEstablished online banks, brokerages, and lending organizationsPure online mortgage bankersMortgage brokersOnline mortgage industry has not transformed process of obtaining mortgageComplexity of processSlide 9-*Copyright © 2011 Pearson Education, Inc.Online Insurance ServicesOnline term life insurance: One of few online insurance with lowered search costs, increased price comparison, and lower pricesCommodityMost insurance not purchased onlineOnline industry geared more towardProduct information, searchPrice discoveryOnline quotesInfluencing the offline purchasing decisionSlide 9-*Copyright © 2011 Pearson Education, Inc.Online Real Estate ServicesEarly vision: Local, complex, and agent-driven real estate industry would transform into disintermediated marketplaceHowever, major impact is influencing of purchases offlineImpossible to complete property transaction onlineMain services are online property listings, loan calculators, research and reference materialDespite revolution in available information, there has not been a revolution in the industry value chainSlide 9-*Copyright © 2011 Pearson Education, Inc.Insight on SocietyHotel Tax Battle: The Online Travel Industry vs. Local Government Class DiscussionWho do you think is right in this tax battle – the online travel industry or local governments? What do you think will happen if local governments are successful in this fight?What is the Internet Travel Tax Fairness Act?Slide 9-*Copyright © 2011 Pearson Education, Inc.Online Travel ServicesOne of the most successful B2C e-commerce segments2007: First year online bookings greater than offline2009: Online travel bookings declined slightly due to recession but expected to grow to $118 billion by 2013For consumers: More convenience than traditional travel agentsFor suppliers: A singular, focused customer pool that can be efficiently reached through onsite advertisingSlide 9-*Copyright © 2011 Pearson Education, Inc.Online Travel Services (cont.)Travel an ideal service/product for InternetInformation-intensive productElectronic product—travel arrangements can be accomplished for the most part onlineDoes not require inventoryDoes not require physical offices with multiple employeesSuppliers are always looking for customers to fill excess capacityDoes not require an expensive multi-channel presenceSlide 9-*Copyright © 2011 Pearson Education, Inc.Online Travel Services RevenuesSlide 9-*SOURCE: Based on data from eMarketer, 2010c.Figure 9.5, Page 617Copyright © 2011 Pearson Education, Inc.The Online Travel MarketFour major sectors:Airline ticketsHotel reservationsCar rentalsCruises/toursTwo major segments:Leisure/unmanaged business travelManaged business travel – expected to offer greater growth opportunitiesCorporate online-booking solutions (COBS)Slide 9-*Copyright © 2011 Pearson Education, Inc.Projected Growth of Online Travel Market SegmentsSlide 9-*SOURCES: Based on data from eMarketer, Inc., 2010cFigure 9.6, Page 623Copyright © 2011 Pearson Education, Inc.Insight on BusinessZipcarsClass DiscussionWhat is the Zipcar business model? How does it make money?How does Zipcar use the Internet?Does Zipcar compete with traditional car rental firms?Will Zipcar work only in urban markets? Can it expand to the suburbs?Slide 9-*Copyright © 2011 Pearson Education, Inc.Online Travel Industry DynamicsIntense competition among online providersPrice competition difficultIndustry consolidationStronger, offline established firms purchasing weaker online firms to create multi-channel travel sitesIndustry impacted by meta-search enginesCommoditize online travelSlide 9-*Copyright © 2011 Pearson Education, Inc.Online Career ServicesTop sites generate over $1 billion annuallyTwo main players: CareerBuilder, MonsterTraditional recruitment:Classified, print ads, career expos, on-campus recruitment, staffing firms, internal referral programsOnline recruitingMore efficient, cost-effective, reduces total time-to-hireEnables job hunters to more easily distribute resumes while conducting job searchesIdeally suited for Web due to information-intense nature of processSlide 9-*Copyright © 2011 Pearson Education, Inc.It’s Just Information: The Ideal Web Business?Recruitment ideally suited for Web Information-intense processInitial match-up doesn’t require much personalizationSaves time and money for both job hunters and employersOne of most important functions: Ability to establish market prices and terms (online national marketplace) Slide 9-*Copyright © 2011 Pearson Education, Inc.Online Recruitment Industry TrendsConsolidation Diversification: Niche employment sitesLocalizationLocal vs. national, CraigslistJob search engines/aggregators:“Scraping” listings: Indeed.com, JobCentralSocial networking: LinkedIn; Facebook appsSlide 9-*Copyright © 2011 Pearson Education, Inc.All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice HallCopyright © 2011 Pearson Education, Inc.