e-Tailing

Retailing in Electronic Commerce: Products and Services

Ajay Ojha 81 Parampreet S Baweja 119 Mohan Kumar 184 Ranjeet S Sodhi 228 Abhishek Sharma 229 Gaurav Bhagat - 230

e-Tailing: Introduction
Electronic retailing, also known as e- Tailing, deals with selling products and services online via the World Wide Web E tailing is synonymous with business-to- consumer (B2C) transaction E-tailing began to work for some major corporations and smaller entrepreneurs as early as 1997* E-Tailers, also known as Electronic Retailers are the ones that sells goods or commodities to consumers electronically, as over the Internet e-Tailing is considered the subset of e-Commerce

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e-Tailing: How it works?

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e-Tailing: Key Stats

B2C eCommerce Sales Worldwide
$trn
2.5 2.345

UK is one of the most mature markets Largest market in EU 39m out of 63.3m of UK population already buy online 2013 year of the mobile Twice as much spent on mobile devices in December 2013 compared to December 2012 Growth in 2013, supported by: Increase in services such as click/reserve and collect US retailers fail to capitalize on overseas market Over 1/3 of US retailers have not expanded internationally In 2014, consumers in APAC will spend more online than those in North America APAC will claim more than 46% of digital buyers, onlly16.9% of population Growth in 2014 will come from: Expanding online and mobile user bases in emerging markets Increasing mCommerce sales Advancing shipping and payment options Push into new international markets by major brands

2.043
2 1.5 1.248 1.763

1.5

1.058
1

0.5

0 2012 2013 2014 2015 2016 2017

B2C eCommerce Sales Worldwide in 2014, by region

2% 4% 4%

35%
23%

APAC
North America

Wesern Europe
Central & Eastern Europe

Latin America
Middle East & Africa

32%

Sources: eConsultancy (January 2014), IMRG (January 2014), International Business Times (October 2013), eCommerce week (January 2014), bpost international (January 2014)

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Article Review: e-Tailing trends: 7 predictions for 2014

1. 2. 3. Tablet first design default for responsive websites is still desktop with tablets overtaking PCs in 2016 it is likely that responsive websites will be designed for tablet first Cross-channel purchase journeys currently cross-channel purchase journeys are being enabled by location and identification tools / solutions, i.e. iBeacons, and wearables such as Galaxy gear Mobile payments wont take off until 2015 consumers still need a convincing reason on why they should use mwallets and until then retailers are unlikely to invest in this technology. A large number of different mwallet technologies have come to market recently still not known which of these will make the biggest impact Consumers learning value of data and privacy consumers are becoming more savvy about their digital presence and the value of their data to advertisers. Needs to be a clearer value exchange so consumers are incentivised to provide etailers with data about themselves and are aware on where that data is going Mobile and tablet purchase points according to some sources one in five store checkouts will take place on a mobile / tablet by 2015 Reduce high return rates etailers currently face high return rates, on average return rates are 25% but some etailers face return rates of >50%. Customers need to have enough information to make an informed purchase and there is too much inconsistency in sizing solutions such as virtual changing rooms are attempting to combat this Learn how to accelerate growth for bricks & mortar retailers it was easy to accelerate growth by opening a new store online retailers need to master how to continue growth of their online stores, by both attracting new customers and retaining existing customers

4.

5. 6.

7.

Sources: The Drum (February 2014), Talk Business Magazine (December 2013),

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Internet Marketing and Electronic Retailing

What Sells Well on the Internet?
Travel Computer Hardware and Software Consumer Electronics Office Supplies Sport and Fitness Goods Books and Music Toys Health and Beauty Entertainment Apparel and Clothing Jewelry Cars Services Pet Supplies

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Internet Marketing and Electronic Retailing

Characteristics of Successful E-Tailing
High brand recognition A guarantee provided by highly reliable or wellknown vendors Digitized format Relatively inexpensive items Frequently purchased items Commodities with standard specifications Well-known packaged items that cannot be opened even in a traditional store
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E-Tailing Business Models

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E-Tailing Business Models

Classification by Distribution Channel
Mail-order retailers that go online Direct marketing from manufacturers Pure-play e-tailers Click-and-mortar retailers Internet (online) malls

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E-Tailing Business Models

direct marketing Broadly, marketing that takes place without intermediaries between manufacturers and buyers; in the context of this book, marketing done online between any seller and buyer virtual (pure-play) e-tailers Firms that sell directly to consumers over the Internet without maintaining a physical sales channel click-and-mortar retailers Brick-and-mortar retailers that offer a transactional Web site from which to conduct business brick-and-mortar retailers Retailers who do business in the non-Internet, physical world in traditional brick-and-mortar stores multichannel business model A business model where a company sells in multiple marketing channels simultaneously (e.g., both physical and online stores) Retailing in Online Malls Referring directories Malls with shared services

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E-Tailing Business Models

Other B2C Models and Special Retailing
Representative special B2C services
Postal services Services and products for adults Wedding channels Gift registries

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On-Demand Delivery Systems and E-Grocers

e-grocer A grocer that takes orders online and provides deliveries on a daily or other regular schedule or within a very short period of time on-demand delivery service Express delivery made fairly quickly after an online order is received
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Online Delivery of Digital Products, Entertainment, and Media

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Online Delivery of Digital Products, Entertainment, and Media

Online Entertainment
Examples of online entertainment
Web browsing Internet gaming Fantasy sports games Single and multiplayer games Adult entertainment Card games Social networking sites Participatory Web sites Reading Live events

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Online Delivery of Digital Products, Entertainment, and Media

Entertainment-related services
Event ticketing Restaurants Information retrieval Retrieval of audio and video entertainment

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Online Delivery of Digital Products, Entertainment, and Media

Developments in the Delivery of Digital Products
CD customization sites The disintermediation of traditional print media Digital delivery may replace or enhance traditional delivery methods for various types of digital content

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Online Purchase-Decision Aids

shopping portals Gateways to e-storefronts and e-malls; may be comprehensive or niche oriented shopping robots (shopping agents or shopbots) Tools that scout the Web on behalf of consumers who specify search criteria Spy services Wireless Shopping comparisons Business Ratings Sites Trust Verification Sites Other Shopping Tools Amazon.coms A9 Search Engine Answers.com
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Issues in E-Tailing
disintermediation The removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain reintermediation The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles
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Issues in E-Tailing

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Issues in E-Tailing
cyber mediation (electronic intermediation) The use of software (intelligent) agents to facilitate intermediation hyper mediation Extensive use of both human and electronic intermediation to provide assistance in all phases of an e-commerce venture Unbundling channel conflict Situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition Determining the Right Price Personalization Fraud and Other Illegal Activities How to Make Customers Happy

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Methodology Demographics
Online survey of 1,34 adults who shop online 4+ time annually, spending Rs 500 or more via the Internet
Gender
63% 37% Female Male

Age range
12% 28% 30% 30% 25-34 35-44 45-54 54+

HH with or w/o Children

62% 38% None Presence of Children

HH Income 4% Under Rs25,000 4% Rs25,000 - Rs35,000 10% Rs35,001 - Rs50,000 23% Rs50,001 - Rs75,000 21% Rs75,001 - Rs100,000 5% More than Rs100,000 5% Prefer not to respond Education 8% High school graduate 23% Some college; no degree 35% College graduate 9% Some graduate school 25% Post-graduate degree

Overview- Consumer Feedback

Shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior Personalized product recommendations are convenient, save time and help shoppers make better choices Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations yet merchants do not know shoppers as well as they should

Shoppers are significantly to somewhat more loyal to a retailer that provides them with a personalized online experience
Personalized product recommendations are valued throughout the online shopping experience By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales

The Consumer Point-of-View

For greater convenience and time savings, shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior
Which of the following best describes your feelings about personalization online? Check all that apply.
I expect that my shopping cart would be saved for future visits so that I dont have to go to all the trouble to find the products I had previously selected. I expect that my shopping experience online would be personalized based on past purchases. Greeting me by name is nice, but I would like to see more of a personalized shopping experience based on past purchases and behavior when I visit a website. I want my shopping experience online to be more personalized so it saves me time when making purchase decisions. I would be willing to provide personal information in exchange for a more personalized shopping experience.

66%

39%

30%

30%

19%

The Consumer Point-of-View

75% will trade privacy for personalization. 40% of shoppers have no privacy concerns; 35% enjoy receiving personalized recommendations although they consider them somewhat invasive but still enjoy PPR
How would you rate your feelings regarding any potential privacy concerns when receiving personalized product recommendations? I have no privacy concerns. It feels somewhat invasive but still enjoy seeing the personalized recommendations. It feels invasive and would prefer not to see such recommendations. I am somewhat turned off from shopping at that retailer. I am completely turned off from shopping at that retailer. 40% 35% 14% 7% 3%

The Consumer Point-of-View

Merchants do not know shoppers as well as they should as 39% scored favorite merchants 5 or less on a ten-scale
On a scale of one-to-ten how well do your favorite merchants know you as a customer where ten implies they know you extremely well?

20%

19%

18%

14%

8% 5% 3% 3% 5% 4%

one

two

three

four

five

six

seven

eight

nine

ten

The Consumer Point-of-View

Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations
Comparing online to store-based selling, which of the channels where you shop typically knows you best? Rank 1-4 where 4 is the channel that knows you best and makes recommendations tailored for you. Knows you best 4 3 2 Knows you least 1

CHANNELS

Internet Store Catalog TV Shopping Network

45% 18% 6% 31%

17% 37% 37% 9%

13% 30% 48% 10%

25% 16% 9% 50%

The Consumer Point-of-View

81% of these shoppers find value in truly personalized products on a site because they are convenient, save time and help them make better choices
How do you typically react when you see products that are truly personalized for you on a website? Check all that apply. Personalized product recommendations are convenient and save me time. Personalized product recommendations allow me to make better choices. I never notice products that are personalized during my web shopping experience. I find them helpful and often make a purchase. I find them valuable and make a purchase once in a while. I find them valuable but dont typically make a purchase. 24% 21% 19% 13% 37% 34%

The Consumer Point-of-View

77% of the time a merchants personalized recommendations result in additional product purchases
Beyond the product you bought, how often do you purchase an additional product based on a merchant's personalized recommendations? 56%

19%

18% 6%

2%
All the time Some of the time Once in a while Never Never noticed

The Consumer Point-of-View

Over 1/3 (36%) of shoppers are significantly to somewhat more loyal to a retailer that provides them with a personalized online experience
When receiving a personalized experience from an online retailer how much impact does that have on your loyalty to that particular retailer? 40%

27% 24%

9%

Significantly more loyal

Somewhat more loyal

Mixed bag depending on current needs

Not necessarily more loyal

The Consumer Point-of-View

89% of these shoppers feel that products suggested on a site are specifically tailored for them only some of the time or once in while
How often do you feel that the products suggested on a website are tailored specifically for you?

49% 38%

2%
All the time Some of the time Once in a while

5%

5%

Never

Never noticed

The Consumer Point-of-View

Shoppers indicate it is very to somewhat valuable to receive personalized product recommendation in each of these website locations
Personalized Product Recommendations Ranked Very Valuable, Valuable & Somewhat Valuable (5-3) Product pages Personalized home page Category page Shopping cart Order confirmation Shipping confirmation Brand page Email with product recommendations specific to past purchase Email after purchasing a product asking for a rating and reviews Thank you page after checkout 76% 75% 74% 70% 67% 65% 63% 62% 61% 55%

The Consumer Point-of-View

Post-order, shipping and order confirmations are where shoppers most value receiving personalized recommendations
Post-order, how valuable is it for you to receive personalized recommendations within each of the following communications?
COMMUNICATIONS Very valuable Valuable Som ew hat valuable Not very valuable Not at all valuable

Shipping confirmation Order confirmation Thank you page after checkout Email after purchasing a product asking for a rating and reviews Email with product recommendations specific to past purchase

40% 39% 11% 10% 9%

12% 14% 16% 16% 15%

13% 14% 28% 35% 38%

17% 17% 25% 21% 22%

17% 16% 20% 17% 16%

The Consumer Point-of-View

Personalized email alerts are powerful tools that can broaden perceptions and increase sales
What is your perception when receiving an email alert to let you know about products/ promotions tailored for you or for backordered products you previously attempted to purchase? Check all that apply. I believe this kind of communication is much more valuable than a generic promotion likely sent to all customers. I sometimes respond to these emails purchasing one or more of the products. I respond the same as general communications. I always open these kinds of communication. This retailer is customer-centric and truly provides a service. I always respond to these emails purchasing one or more of the products. 37% 34% 30% 24% 17% 3%

The Consumer Point-of-View

Shoppers want personalized experiences across channels, yet 78% are only encountering them some of the time or once in a while
How often do you encounter retailers who provide personalized experiences in their stores, online and/or from their call centers?

49%

29%

14% 4%
Most of the time Some of the time Once in a while Never

5%

Indifferent

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The Technology Has Matured

While these tools have been around for several years, I feel that they have only started to mature in the past 12-18 months. I strongly believe that they can affect the end user experience by directing more relevant product. At the end of the day, the data is there, those who execute will monetize

Optimal Merchant Criteria Larger SKU counts Broad assortment

High turn

Better Customer Experience & Increased AOV

I like the idea of technology helping us increase the average order size while
simultaneously creating a better customer experience. An accessory may make the difference in our low margin business and we need a service in place.

The Bottom-Line Larger basket size Overall site revenue

Customer loyalty

79% of Personalization is Done Manually

Current Personalization Strategies
100%

% Merchants

79% 62% 21%

80% 60% 40% 20% 0% Manual hard coded Internal, Top Sellers

12%

Other Internal Strategy

Technology Provider

We take a manual approach where recommendations are hand-selected by the

merchant team for each product; applying our own business rules to these merchandising efforts based on internal know-how. Despite such a manual approach, we have good success with average orders containing 3-4 units.

Our process is to load product until the next season, which is typically six to eight weeks. We dont really go in and make adjustments because for us theres a point of no return.

Top Retention Tactics

Email Catalog and direct mail Customer service as a differentiator Assortment Promotions Loyalty programs Paid search Affiliate programs