Published on February 4, 2008
16. Consumer-Oriented E-Commerce : 16. Consumer-Oriented E-Commerce Department of Computing School of Informatics Aims: Aims This topic seeks to: compare traditional and electronic retailing; identify the benefits of electronic retailing (e-retailing); examine the key successes and factors; introduce models & features of e-retailing; discuss the PASS Model. Outcomes: Outcomes At the end of this topic you should be able to: describe the differences between retailing and e-retailing; identify new concepts and unique features of e-retailing; Advantages and disadvantages of e-retailing; Technical issues to creating an e-retailing site. Goods for consumers: Goods for consumers Perishable Tangible Intangible (services) “Goods” Digital Physical Non-perishable Traditional retailing: Traditional retailing Selling to a final customer through a physical outlet or through direct communication e.g.: Malls – collection of individual stores, individually managed. Mall management provides physical location where a retailer can create an outlet; Generalised stores – have a unified management but carry different product lines; Specialised stores – sell a specific product line; Traditional retailing (cntd): Traditional retailing (cntd) Franchise stores – a single marketing and brand, but individual store may be run by a different management, with a fee paid back to franchisee. Direct mailing – catalogue is sent to customer, who then send a mail order. Other forms: telemarketing; door-to-door sales; vending machines; have moved away from physical outlet to virtual retailing. Retailing to E-retailing: Retailing to E-retailing E-retailing results from mapping traditional retailing to the new medium of the internet: Specialised stores -> specialised e-stores; Generalised stores -> generalised e-stores; Malls -> E-malls; Franchise stores -> ? New Classes of E-retailing: New Classes of E-retailing E-brokers - bring together customers and suppliers. do not sell directly; match customers’ requests to e-retailers; search is based on attributes supplied by the consumer e.g. cheapest price; important now (name-your-price) & in the future. New Classes of E-retailing (cntd): New Classes of E-retailing (cntd) Supplementary distribution channels to traditional stores: respond to aggressive strategies of e-stores; additional sales-ordering mechanism; service enhancement; drawing people to the physical store. New Classes of E-retailing (cntd): New Classes of E-retailing (cntd) Direct selling by manufacturer: permits mass customisation; reduced costs; new specialised products. Benefits of E-retailing: Benefits of E-retailing To the customer: convenience; better information; competitive pricing; customisation; shopping anywhere, anytime. Benefits of E-retailing (cntd): Benefits of E-retailing (cntd) To the e-retailer: global reach; better customer service; low capital cost; mass customisation; targeted marketing; more value added services; new forms of specialised stores and niche marketing. Features of E-retailing: Features of E-retailing Important features of an e-shop: On-line catalogue for goods, linked to the order process ; Provision of a search engine for products; Shopping cart, for good selection and automatic price update; Personalisation of store layouts, promotions and marketing; An online contact person; Order status checking facility; Use of forums and customer communities. E-retailing Models: E-retailing Models Specialised e-store; Generalised e-store; E-mall; Direct Selling by the manufacturer; Supplementary distribution channel; E-broker; E-services. E-retailing Sites: E-retailing Sites Examples include: Amazon.com; Walmart; Yahoo!Store; dell.com; ba.com; Priceline.com Exercise: Match examples to categories of models summarised in the previous slide. Development issues: Development issues To develop an e-commerce system we need: An emergent business model if “old economy” model exists, then fusion of old model with the new e-commerce processes is needed and may require BPR (Business Process Re-engineering), and more; if “start-up”, then it is important to be clear about the emergent business model. A software engineering methodology with tools for analysing the domain of application to model, specify, and implement the resulting system. Business model issues: Business model issues Extending an old economy model goes beyond BPR: Addition of new products/services, such as sale of info; New sales and marketing modes; Automation and streamlining of back-end processes; Move from mass production to mass customisation; Linking marketing to ordering; Targeted marketing; An electronic payment system; Customisation and personalisation. Business model issues (cntd): Business model issues (cntd) For an emergent business model we need to have: A clear definition of type of system; A clear definition of the market mechanisms that will adopted e.g. direct selling or intermediary; A clear specification of the type of goods/services to be traded (and how they relate to the key profit drivers); The mechanism for order fulfilment and distribution for the goods. Steps in Development Methodology: Steps in Development Methodology The steps of the development can be summarised as: Develop description of existing business model; Develop e-business model; Develop requirements statement through analysis (conceptual model); Choose system architecture and implementation platform(s); Design & develop software structure model and architecture; Detailed design including web UI, databases, legacy aspects; Implementation and customisation; Testing and piloting the e-commerce system. Revenue Model for B2C: Revenue Model for B2C Most widely used model is the PASS* model: Publicity – a company sets up a web-site for publicity reasons; Advertisement – for web-sites with a significant number of visitors advertisements can be a good source of income; Sale of goods/services – direct way to make money by carrying out the transactions of selling on the internet. Subscription – certain parts of the web-site are open to the public but certain others are accessible by subscribing. Further Reading: Further Reading Chapter 11 from Chan, Lee, Dillon, and Chang, (2001) E-Commerce: Fundamentals and Applications, Wiley. Review Questions: Review Questions Explain the different kind of goods in B2C E-commerce. What are new classes of business models result from e-retailing? What are the benefits of e-retailing to the customer? What are the benefits of e-retailing to the e-retailer? Outline the important features of an e-shop. List the e-retailing models. What are the business model issues in developing an e-retailer web-site? What are the development steps for building an e-shop? What is the most widely used revenue model for B2C e-commerce? Describe its main characteristics.