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Consumer To Business Consumer To Business E-Commerce PresentationE-Commerce Presentation

You’re Just a Few Clicks Away...You’re Just a Few Clicks Away...

Joe Statum IIIJoe Statum III

Stacy KelleyStacy Kelley

Jim HughesJim Hughes

MS480 - 2003MS480 - 2003

...From Consumer Bliss...From Consumer Bliss

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OverviewOverview

What and Who is Business-to-What and Who is Business-to-Consumer E-commerce?Consumer E-commerce?

How Big is It, Where is it Headed?How Big is It, Where is it Headed? DemographicsDemographics Tax ImplicationsTax Implications Security & Impact of September Security & Impact of September

11 11 What has it Done for You Lately?What has it Done for You Lately?

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QuizQuiz

Country with Highest Country with Highest percentage of at-percentage of at-home internet usehome internet use

On-Line Industry On-Line Industry Hardest hit by Attacks Hardest hit by Attacks of September 11of September 11

What/who is quixtar.comWhat/who is quixtar.com

Questions

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What is Business-to-What is Business-to-Consumer E-commerce?Consumer E-commerce?

Business-to-Consumer E-Business-to-Consumer E-commerce could be defined as commerce could be defined as transactions and interactions transactions and interactions between consumers and between consumers and businesses where some part of businesses where some part of the exchanges are conducted the exchanges are conducted over the internet. over the internet.

In the broadest terms...In the broadest terms...

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Who Makes up the Business-to-Consumer E-Who Makes up the Business-to-Consumer E-

Commerce Market Segment?Commerce Market Segment?

TraditionalRetailers

HybridE/Retailers

Pure E-Tailers

Borders Pottery Barn ToysRUs Sears Home Depot Kmart Talbot’s Merrill Lynch

Lands’ End Gateway L.L. Bean Grizzley Scwabb

Amazon E-bay Travelocity Dell Martha Stewart Hugger Mugger Datek Online

Et al.

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Top 20 Internet RetailersTop 20 Internet Retailers

eBay (ebay.com)eBay (ebay.com) Amazon.com (amazon.com)Amazon.com (amazon.com) Dell (dell.com)Dell (dell.com) Buy.com (buy.com)Buy.com (buy.com) Egghead.com (egghead.com)Egghead.com (egghead.com) Gateway (gateway.com)Gateway (gateway.com) Quixtar (quixtar.com)Quixtar (quixtar.com) uBid (ubid.com)uBid (ubid.com) Barnes & Noble (bn.com)Barnes & Noble (bn.com) Cyberian Outpost (outpost.com)Cyberian Outpost (outpost.com)

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Top 20 Internet Retailers* Top 20 Internet Retailers* (continued)(continued)

Value America (va.com)Value America (va.com) MicroWarehouse (microwarehouse.com)MicroWarehouse (microwarehouse.com) Office Depot (officedepot.com & Office Depot (officedepot.com &

vikingop.com)vikingop.com) eToys.com (etoys.com & babycenter.com)eToys.com (etoys.com & babycenter.com) Lands’ End (landsend.com)Lands’ End (landsend.com) The Spiegel Group (spiegel.com, The Spiegel Group (spiegel.com,

eddiebauer.com, & newport-news.com)eddiebauer.com, & newport-news.com) Fingerhut (fingerhut.com, Fingerhut (fingerhut.com,

andysauctions.com, & andysgarage.com)andysauctions.com, & andysgarage.com) CDW (cdw.com)CDW (cdw.com) JCPenney (jcpenney.com)JCPenney (jcpenney.com) Gap (gap.com)Gap (gap.com)*Internet.com (9/25/01)*Internet.com (9/25/01)

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How the Internet is used for Shopping

How internet is Used for ShoppingShop Online,Purchase Offline

51%

Shop Online,Purchase Online

40%

Shop Offline,Purchase Online

9%

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How Big is Business-to-How Big is Business-to-Consumer E-commerce?Consumer E-commerce?

Worldwide, Worldwide, GarterG2GarterG2 expects 2001 online expects 2001 online holiday shopping sales to reach $25.3 holiday shopping sales to reach $25.3 billion this year, a 39 percent increase over billion this year, a 39 percent increase over last year, despite an uncertain economic last year, despite an uncertain economic climate.climate.

In the US, more than 106 million people will In the US, more than 106 million people will shop online in December, and they will shop online in December, and they will spend a record $9.9 billion during the spend a record $9.9 billion during the holiday season, an increase over last year's holiday season, an increase over last year's $6.9 billion, according to $6.9 billion, according to Nielsen//Nielsen//

NetRatingsNetRatings and and Harris InteractiveHarris Interactive..

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Where has it been Where has it been and…?and…?

Forrester Online Retail Index http://www.forrester.com/NRF/1,2873,0,00.html

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……. Where is it headed?. Where is it headed?

Projected Projected Worldwide Worldwide E-E-Commerce Commerce Growth* Growth*

http://www.forrester.com/ER/Press/ForrFind/0,1768,0,00.html

*Both B2B and B2C

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E-Commerce SalesE-Commerce Sales

US retail E-commerce sales for the US retail E-commerce sales for the second quarter of 2001 were $7.5 second quarter of 2001 were $7.5 billionbillion

An increase of 24.7% from the An increase of 24.7% from the second quarter of 2000second quarter of 2000

Total retail sales increased 3.8% Total retail sales increased 3.8% from the second quarter of 2000from the second quarter of 2000

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What Makes up the Business-What Makes up the Business-to-Consumer Market Segment to-Consumer Market Segment in USin US

Top Online Spending Top Online Spending Categories Categories November and November and December 2001December 2001

Online SpendingOnline Spending(in millions)(in millions)

CategoryCategory EstimatedEstimated

ApparelApparel $2,445 $2,445

Books/Music/VideoBooks/Music/Video $1,696 $1,696

AuctionsAuctions $1,364 $1,364

ToysToys $1,053 $1,053

Computer HardwareComputer Hardware $973 $973

Source: Nielsen/NetRatings and HarrisSource: Nielsen/NetRatings and Harris

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US E-Commerce Retail US E-Commerce Retail Quarterly ResultsQuarterly Results

$0.000

$1.000

$2.000

$3.000

$4.000

$5.000

$6.000

$7.000

$8.000

$9.000

$10.000

Year/Quarter

Bill

ion

s o

f D

olla

rs

Series1 $5.266 $5.526 $5.982 $6.898 $8.881 $7.592 $7.458

1999-4th Qtr 2000-1st Qtr 2000-2nd Qtr 2000-3rd Qtr 2000-4th Qtr 2001-1st Qtr 2001-2nd Qtr

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Total Spent on US On-Line Retail Total Spent on US On-Line Retail Sales-June, July, August & Sales-June, July, August & September September (1000s)(1000s)

June July August SeptemberApparel $217,611 $224,743 $262,642 $288,420Books $136,567 $151,561 $202,494 $183,288Music $107,484 $118,318 $124,185 $136,408Software $101,288 $112,759 $121,727 $136,031Office Supplies$119,704 $82,716 $108,375 $109,059Videos $91,207 $109,814 $92,582 $100,636Linens/Home Décor$62,376 $72,479 $82,344 $97,013Jewelry $84,339 $88,198 $76,999 $97,671Footwear $51,317 $67,656 $71,880 $86,589Flowers $40,168 $38,777 $37,922 $52,753

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Retail Sales Graphic Comparison (June, July, August & September) 1000s

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000Ju

ne

July

Aug

ust

Se

pte

mbe

r

ApparelBooksMusicSoftwareOffice SuppliesVideosLinens/Home DécorJewelryFootwearFlowers

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Size of Business-to-Consumer Market Size of Business-to-Consumer Market Segment WorldwideSegment Worldwide

Notes: Figures in millions and exclude travel-related purchases and movie and Notes: Figures in millions and exclude travel-related purchases and movie and event ticket sales. Source: GartnerG2 event ticket sales. Source: GartnerG2

Q4 2001 Q4 2000

Region Revenue MarketShare

Revenue MarketShare

PercentGrowth

NorthAmerica

11.86 46.9 9.13 50.1 30.0

Europe 8.58 33.9 6.15 33.7 39.6

Asia-Pacific

2.46 9.7 1.60 8.8 53.4

Japan 1.40 5.5 0.83 4.6 68.0

Rest ofWorld

0.99 3.9 0.52 2.9 90.1

Total 25.29 100.0 18.23 100.0 38.7

Worldwide Internet Retailing Sales Forecast

Estimate for Fourth Quarter 2001 Billions of U.S. Dollars)

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Worldwide Internet Retailing Sales ForecastEstimate for Fourth Quarter 2001

Billions of U.S. Dollars)

Notes: Figures in millions and exclude travel-related purchases and movie Notes: Figures in millions and exclude travel-related purchases and movie and event ticket sales. Source: GartnerG2and event ticket sales. Source: GartnerG2

0

2

4

6

8

10

12

Q4 2000 Revenue Q4 2001 Revenue

Worldwide Projected Online E-commerce

North America

Europe

Asia-Pacific

Japan

Rest of World

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DemographicsDemographics

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DemographicsDemographics

In US there are over 168 million In US there are over 168 million Internet UsersInternet Users

Expanding online population is an Expanding online population is an opportunity and threat to E-opportunity and threat to E-commerce vendorscommerce vendors

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Internet Universe by CountryAt-home users, July 2001

Current InternetUniverse Estimate

Active InternetUniverse, July 2001

Sessionsper Month

Time Spentper Month

Global 426,491,303 236,258,612 18 9:36:12

United States 165,180,807 102,077,288 20 10:19:06

Japan 45,659,923 20,061,849 19 9:27:04

Germany 27,914,911 15,144,455 17 7:49:23

South Korea 26,590,004 13,098,235 13 19:20:17

United Kingdom 23,870,341 13,098,235 13 6:22:21

Italy 18,697,197 8,321,314 12 5:48:17

Canada 14,445,047 8,754,653 19 9:36:12

Brazil 11,937,559 6,038,867 13 8:10:48

Taiwan 11,602,523 5,021,109 13 8:04:21

France 11,107,974 5,468,447 15 6:58:58

Australia 9,674,157 5,640,427 13 7:41:43

Netherlands 8,671,316 4,526,370 15 6:44:11

Sweden 5,543,193 3,048,001 12 5:29:16Source: Nielsen//NetRatings

World’s Online PopulationWorld’s Online Population

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Percent Home Internet Users of Total Population

0%

10%

20%

30%

40%

50%

60%

70%

Sw

ed

en

Unite

d S

tate

s

Hon

g K

ong

Norw

ay

Sou

th K

ore

a

Den

ma

rk

Neth

erla

nds

Taiw

an

Sin

gap

ore

Au

stra

lia

Sw

itze

rland

Can

ada

New

Zeala

nd

Unite

d K

ing

dom

% Users of TotalPopulation

World’s Home Online World’s Home Online PopulationPopulation

Top 30 CountriesTop 30 Countries

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World’s Home Online PopulationWorld’s Home Online PopulationTop 30 Countries cont.Top 30 Countries cont.

Percent Home Internet Users of Total Population

0%

5%

10%

15%

20%

25%

30%

35%

40%

Me

xico

So

uth

Afr

ica

Bra

zil

Glo

ba

l

Arg

ent

ina

Sp

ain

Fra

nce

Isra

el

Italy

Irela

nd

Ge

rma

ny

Be

lgiu

m

Jap

an

Aus

tria

Fin

land

% Users ofTotalPopulation

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World’s Online World’s Online Gender DistributionGender Distribution

Uni

ted

Sta

tes

Can

ada

Aus

tral

ia

UK

Bra

zil

Net

herla

nds

Bel

gium

Spa

in

Italy

Fra

nce

Ger

man

y

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Percent Females

Percent Males

Internet Audiences by GenderAt-home users, June 2001

CountryPercent

MalePercentFemale

Germany 63.40 36.60

France 61.88 38.12

Italy 60.91 39.09

Spain 60.88 39.12

Belgium 60.60 39.40

Netherlands 59.81 40.19

Brazil 59.71 40.29

UK 57.17 42.83

Australia 51.57 48.43

Canada 49.00 51.00

United States 47.28 52.18Source: Nielsen//NetRatings

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Race Does MatterRace Does Matter

US Department of Commerce found:US Department of Commerce found:

A child in a low-income White family A child in a low-income White family is three times more likely to have is three times more likely to have web access than a low-income web access than a low-income Black child and four times more Black child and four times more likely than a low-income Hispanic likely than a low-income Hispanic familyfamily

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Race (cont.)Race (cont.)

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IncomeIncome

The average The average online online household household annual annual income is income is 50% higher 50% higher than than average average nonusernonuser

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AgeAge

65% of those under age 30 have 65% of those under age 30 have internet access.internet access.

Age 18 to 30 age group is the most Age 18 to 30 age group is the most active online users.active online users.– By 2004 almost 91% of this group will By 2004 almost 91% of this group will

be onlinebe online

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Age –The Senior YearsAge –The Senior Years

87% of those 65 and over do not have 87% of those 65 and over do not have internet accessinternet access

Seniors that are active on the Internet Seniors that are active on the Internet spend more time onlinespend more time online

Adults 55 and older represent the Adults 55 and older represent the fastest growing group of Internet usersfastest growing group of Internet users

Ages 45-64 years old is one of the most Ages 45-64 years old is one of the most desired Internet marketsdesired Internet markets

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Internet Tax Freedom ActInternet Tax Freedom Act

Internet Tax Freedom Act- passed Internet Tax Freedom Act- passed by Congress October 1998 by Congress October 1998

Establishes a moratorium on direct and indirect state or local taxes on the Internet or interactive computer services or the use of those services.

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State Revenues that could be State Revenues that could be generated from an Internet generated from an Internet tax tax

This year State and local This year State and local governments will lose $13.3 billion governments will lose $13.3 billion

An estimated $45.2 billion loss in An estimated $45.2 billion loss in annual revenue in 2006 and $54.8 annual revenue in 2006 and $54.8 billion by 2011billion by 2011

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Reasons for Internet TaxReasons for Internet Tax

Toll on State RevenueToll on State Revenue

Government should not be in position of Government should not be in position of

creating incentives to buy onlinecreating incentives to buy online

Uneven Playing Field for Offline retailersUneven Playing Field for Offline retailers

E-commerce has advancedE-commerce has advanced

Based on what you buy not where you buyBased on what you buy not where you buy

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Other Interesting FactsOther Interesting FactsAbout E-Commerce SalesAbout E-Commerce Sales

Average amount spent per personAverage amount spent per person– June: $247.00June: $247.00– July: $270.00July: $270.00– August: $273.00August: $273.00– September: $262.00September: $262.00

Number of households shopping on-lineNumber of households shopping on-line– June: 13.1 millionJune: 13.1 million– July: 14.7 millionJuly: 14.7 million– August: 14.8 millionAugust: 14.8 million– September: 15.2 millionSeptember: 15.2 million

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September 11 and September 11 and SecuritySecurity

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September 11, 2001September 11, 2001Impact on Business-to-Consumer E-Impact on Business-to-Consumer E-

Commerce SalesCommerce Sales

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News Traffic vs. E-News Traffic vs. E-CommerceCommerce

Visitors to news sitesVisitors to news sites– 1 week prior to attacks: 6 million daily1 week prior to attacks: 6 million daily– 1 week after attacks: 11.7 million daily1 week after attacks: 11.7 million daily

ABCNews.com- 360% daily increase in ABCNews.com- 360% daily increase in daily visitors to news sitedaily visitors to news site

Sales volume before and after attackSales volume before and after attack– Immediately following attack-complete haltImmediately following attack-complete halt– As of 9/24/01-97% of normal sales volumeAs of 9/24/01-97% of normal sales volume

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Top News Sites in Wake of Top News Sites in Wake of September 11 AttacksSeptember 11 Attacks

CNN.comCNN.com MSNBC.comMSNBC.com ABC NewsABC News CBS.com sitesCBS.com sites NYtimes.comNYtimes.com WashingtonPost.comWashingtonPost.com Slate.comSlate.com USAToday.comUSAToday.com

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For E-Commerce: A return For E-Commerce: A return to to Normalcy!Normalcy!

Week ending 10/21/01: Internet Week ending 10/21/01: Internet sales sales 7% below7% below average week average week observed during the 5 months prior observed during the 5 months prior to the September 11to the September 11thth attacks. attacks.– Entirely attributable to the continued Entirely attributable to the continued

softness in one area…………..softness in one area…………..

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Hardest Hit: Travel SectorHardest Hit: Travel Sector

Travel Sector Sales remain

approximately 17% Below Pre-Attack

Levels

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Travel Sector NewsTravel Sector News

Priceline.com expected $341 million Priceline.com expected $341 million 2001 revenues - changed to $280-$300 2001 revenues - changed to $280-$300 million.million.

Expedia.com-travel bookings had Expedia.com-travel bookings had declined 60-65% as of 9/19/01.declined 60-65% as of 9/19/01.

Travelocity-travel bookings had declined Travelocity-travel bookings had declined approximately 50% as of 9/19/01.approximately 50% as of 9/19/01.

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Analysts’ PredictionsAnalysts’ Predictions

2001 Online Travel Industry forecast 2001 Online Travel Industry forecast lowered to 25% growth from 35-40% lowered to 25% growth from 35-40% previous to attacks.previous to attacks.

2002 forecast lowered to 15-20% growth 2002 forecast lowered to 15-20% growth from 25-30% previous to attacks.from 25-30% previous to attacks.

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SecuritySecurity of E-Commerce of E-Commerce KPMG surveyed 1250 Large Companies In 12 KPMG surveyed 1250 Large Companies In 12

Countries*Countries*

When a security breach occurred 83% When a security breach occurred 83% reported no legal action was pursued reported no legal action was pursued because:because:– Inadequate Legal Remedies AvailableInadequate Legal Remedies Available– Loss Not QuantifiableLoss Not Quantifiable– No possibility of recoveryNo possibility of recovery– Lack of evidenceLack of evidence– Other reasonsOther reasons

* KPMG 2001 Global e.fr@ud Survey

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SecuritySecurity of E-Commerce of E-Commerce KPMG surveyed Large CompaniesKPMG surveyed Large Companies In 12 In 12

Countries*Countries*

Less than 35 % had security audits performed on their e-Less than 35 % had security audits performed on their e-commerce systemscommerce systems

Only 12% reported their web site bears a seal identifying their Only 12% reported their web site bears a seal identifying their web site has passed a security audit.web site has passed a security audit.

88% reported the public perceives the “brick and mortar” 88% reported the public perceives the “brick and mortar” businesses to be were more secure and less prone to fraud than businesses to be were more secure and less prone to fraud than e-commerce dot.com companies, yet only 9% reported a security e-commerce dot.com companies, yet only 9% reported a security breach had occurred in the last 12 month. (There is evidence breach had occurred in the last 12 month. (There is evidence these events are under reported.) these events are under reported.)

National and Geographic Boundaries are non-existent in e-National and Geographic Boundaries are non-existent in e-commerce - Security related risks affect businesses in all regionscommerce - Security related risks affect businesses in all regions

* KPMG 2001 Global e.fr@ud Survey

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What has it Done for You What has it Done for You Lately?Lately?

DemonstrationsDemonstrations– Lands’ End / Virtual ModelLands’ End / Virtual Model– StaplesStaples– E-bayE-bay

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landsend.comlandsend.commyvirtualmodel.commyvirtualmodel.com

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Lands’ End SummaryLands’ End Summary

RevenuesRevenues $1.5$1.5 Billion IncomeIncome $$52.8 Million % Margin% Margin 3.30% ModelModel Direct MerchantDirect Merchant EmployeesEmployees 4,7004,700 $/Associate $319,150

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48

49

50

staples.comstaples.com

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Staples SummaryStaples Summary

RevenuesRevenues $$10.674 Billion IncomeIncome $$60 Million % Margin% Margin .50% ModelModel Traditional Traditional

MerchantMerchant EmployeesEmployees 48,458 $/Associate $361,836

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ebay.comebay.com

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ebay Summaryebay Summary

RevenuesRevenues $$582.4 Million IncomeIncome $$84.7 Million % Margin% Margin 14.50% ModelModel AuctionAuction EmployeesEmployees 11,927 $/Associate $302,023

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QuizQuiz

Country with Highest Country with Highest percentage of at-percentage of at-home internet usehome internet use

On-Line Industry On-Line Industry Hardest hit by Attacks Hardest hit by Attacks of September 11of September 11

What/who is quixtar.comWhat/who is quixtar.com

Philips Color Philips Color PrinterPrinter

Questions Prize

Washer & DryerWasher & Dryer

DishwasherDishwasher

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Questions?Questions?

59

ReferencesReferences

ComScore Networks-Reston, VA (10/26/01)ComScore Networks-Reston, VA (10/26/01) Internet.com (9/24/01 & 9/27/01)Internet.com (9/24/01 & 9/27/01) Goldman Sachs Analysts-Internetnews.com (9/19/01) Internet.com Goldman Sachs Analysts-Internetnews.com (9/19/01) Internet.com

(9/25/01)(9/25/01) Cyberatlas.internet.com (10/02/01)Cyberatlas.internet.com (10/02/01) E-commerce.times (11/05/01)E-commerce.times (11/05/01) emarketer.com (5/28/00)emarketer.com (5/28/00) emarketer.com (5/22/00)emarketer.com (5/22/00) cyberatlas.internet.com (10/29/01)cyberatlas.internet.com (10/29/01) cyberatlas.internet.com (10/29/01)cyberatlas.internet.com (10/29/01) U.S. Department of Commerce News (8/30/01)U.S. Department of Commerce News (8/30/01) Russell Reynolds Associates (10/27/01)Russell Reynolds Associates (10/27/01)

– www.stores.orgwww.stores.org