E-Commerce and Retailing in Details.pptx

Ecommerce retailing

1. E- COMMERCE AND RETAILING C HAPTER 8 Bipin B. Naik Assistant Professor, Information Technology Department , Goa College of Engineering 1

2. F OLLOWING ISSUES NEEDS TO BE CONSIDER BY RETAILER IN DEVELOPING A BUSINESS MODEL 2 Product / content issues: what kind of product are suited for online retailing? Software interface issues: what features make it easy to find and select items for online purchase? Process issues: what are the specific steps in shopping process from consumer perspective and what kind of process the companies should develop to fulfill orders efficiently.

3. Pricing issues: how much will consumer be willing to pay? Payment issues: what payment methods would consumers use for online purchase. Market penetration issues: would an online channel be popular with consumers? How long will such a system take to attract a critical mass and become profitable? 3

4. 8.1 CHANGING RETAIL INDUSTRY DYNAMICS 4 Factors affecting retailing industry dynamics are: overbuilding and excess supply with online retailing, constraint of time and space disappears. overbuilding also result in growing shortage of low cost, entry level workers because retailers are using undertrained workers who are less able to empathize with shopper needs resulting in less quality service.

5. 2) Demographic changes value and time management are consumers concerns driving interest. shopping trip requires consumer to decide what family needs, bare traffic, hunt place for parking ,wait in line to pay. 5

6. 3) Consumer Behavior Consumer behavior is volatile. C o mpa n ies n e e ds n e w w a y s o f r e sp o n din g to consumer needs and satisfying demands. Discount, malls, discount stores are one solution for monitoring consumer needs and reacting to them. Retailer focus on providing value - best price, service and selection. 6

7. T ECHNOLOGY IMPROVEMENT IN E - RETAILING - 7-10 days. 7 3 dominant form of e-retailing channels. Television Retailing Home shopping network – broadcast e- retailing. television based retail and online retailers. target- moderate income households and women. provide information about price, quality, features, benefits. engage callers in on air discussion. viewers place orders for products by calling toll free telephone numbers.

8. 2 ) CD –ROM based shopping Inexpensive to produce and distribute. Build name and brand recognition for stores and manufacturers. help determine store expansion plans. de v el o p in v entory contr o l m ech a n i sm t h a t reduce excess capacity by alternative distribution. allow merchant to add sound, photos, video to product presentation. Disadvantages : everyone may not have CD ROM drive. static content on CD’s. 8

9. 8.3 M ERCANTILE M ODELS FOR C ONSUMER ’ S P ERSPECTIVE 9 Each consumer has distinct way of doing business. Some g e n era l i z at i on c a n b e m a d e a b out h o w they shop. These generalization are essential for understanding consumer dynamics. These models create consistency and increase consumer convenience by eliminating the need to figure out a new business process for every single vendor.

10. M ERCANTILE MODEL HAVE 2 PERSPECTIVE : 10 1) Consumer - Model specifies the sequence of activities a shopper takes in purchasing a product or service. 2) Retailer - Model defines the OMC, which specifies the activities within an organization that must take place in fulfilling the customer’s order.

11. D ISTINCT PHASES OF CONSUMER MERCANTILE MODEL 11 Pre purchase preparation Purchase consummation Post purchase interaction

12. Pre purchase preparation Includes search and discovery for set of products in larger information space capable of meeting customers requirements and product selection. Purchase Consummation Specifies the flow of information and documents associated with purchasing and negotiation with merchants for suitable terms such as price, availability and delivery date. 12

13. Post purchase interaction Includes customer service and support to address customer complaints, product returns and product defects. 13

14. 14 Product/service search and discovery in information space. Comparison shopping and product selection based on various attributes Negotiation of terms. Eg. Price, delivery time Placement of order Authorization of payment Receipt of product Customer service and support Pre purchase preparation Purchase C on s u m ma ti o n Post purchase interaction

15. T YPES OF CONSUMERS 15 Impulsive buyers: who purchase products quickly. Patient buyers: who purchase products after making some comparisons. Analytical buyers: who do research before making the decision to purchase products or services.

16. T YPES OF PURCHASES 16 Specifically planned purchases: where the need was recognized on entering the store and the shopper bought the exact item planned. Generally planned purchases : where the need was recognized, but the shopper decided in store on the actual manufacture of the item to satisfy the need.

17. Reminder purchases: where the shopper was reminded of the need by some store influences. Entirely unplanned purchases: where the need was not recognized upon entering the store. 17

18. P RE - PURCHASE PREPARATION Pre purchase deliberation Defined as the elapsed time between a consumer’s first thinking about buying and the actual purchase itself. Questions about deliberation how much time buyers are allocating and purchase decision. what factors account for difference decision time. spending in i n cons u mer w h a t techn olo g y c a n b e u s e d o r d e s i g n e d t o redu c e decision time. what environment keeps customer happy. 18

19. P RE - PURCHASE COMPARISON AND 19 NEGOTIATION PROCESS Search can be classified as: Consumer search degree of care, effort directed toward obtaining data or information. is focused on price comparison. Organisation search. process through which organisation adapts to changes in its external environment as new suppliers, new products and new services.

20. P URCHASE CONSUMMATION 20 Exchange of information between the buyer and seller followed by the necessary payment. Software framework for purchase consummation: order fulfilment and delivery. payment settlement and funds transfer. transaction authentication / authorization. web server with merchant services. content and products.

21. P OST PURCHASE INTERACTION 21 Plays an important role. As long as there is payment for services. There will be refunds, disputes and other service issues that needs to be considered. Post purchase service can affect customer satisfaction and company profitability for years.

22. 8.4 M ANAGEMENT CHALLENGES IN ONLINE RETAILING Manage channel conflict - all firm use a channel of distribution to get their products or services into hands of customer. Learn to price online products / services 2 types of pricing access pricing is analogous to store charging people money just for the right to enter and shop. product pricing merchant picks up the access charges and burden on customer is reduced. 22

23. Deliver a satisfying shopping experience being online there are no hassle, no waiting in line, no time waste. but will customer be able to find products he or she want quickly? man ag eme n t ne e d s to le a rn how to m onitor or deliver a satisfying shopping experience. most successful retailers will be those who use the new media capabilities to reach customer and let them shop the way they wanted. 23

24. Design the layout of an online store. layout of the store depends on manufacturer incentive to retailers such as slotting allowances. slotting allowances are lump sum advance payments made by manufacturers to retailers for stocking their new products. in exchange the retailer makes agreement with manufacturer to place the product in a high traffic area for promotional purposes. 24

25. Manage brands. retailers knows that consumers adopt a brand and make it part of their lifestyle, they remain loyal and purchase the brand again and again. adoption decision depends on number of steps like aware, unaware, interested, knowledgeable, positive attitude, experience, trial. Create the right incentives. right incentives can influences consumer acceptance. coupons, discounts or other incentives. - r e tail e r s nee d s to thi n k a b out d i ff e r ent in c enti v e s strategies for different types of online products / services. 25