E-Commerce

What is E-Commerce?- considered the buying and selling

of products over the internet

Examples:a. Amazon- sell CDs, videos and

others, and acts as a “host for other suppliers”

b. Lastminute.com- founded an idea in catering people who’d like to do something at the last minute (ex. Buy flight tickets)

c. Boo.com- sell sports goods

Products sold on Internet

Key issues of E-commerce

• Physical delivery of goods

• The future of services- real growth in consumer e-commerce is going to be in services (ex. Travel, hotel bookings)

• The frustration of using e-commerce sites

• Business-to-business e-commerce- happens when suppliers competitively bid for orders

Question

• What are the advantages of E-commerce?• What are the disadvantages?

Group DiscussionDiscuss these questions:• What goods or services do you buy over the Internet? What do you prefer not to buy?

• What problems have you had buying on the Internet?

• What are the kinds of products or services sold on the Net?

• Are there any things which could not or should not be sold on the Net?

• What are the risks of e-commerce for a.) the companies involved b.) their customers

Discuss these questions:• Which search engines do you

use?

• What makes a website easy or difficult to use? Why?

• What do you like about the sites you visit regularly?

• How much time do you spend browsing on the Net?

• How can businesses make sure their websites receive more hits than their competitors?

Group Discussion

CASE STUDY: KGV Europe

KGV Background- Is a traditional high-street

music retailer- Based in Amsterdam, and

has 12 stores in Netherlands. Expanded into the rest of Europe and owns 65 stores

Problem:- Profits have steadily fallen, from

$450 million to $290 million- Sales have risen by 8% only

because of excessive expenditure on advertising and promotions

Problem

- There was fierce competition

- Narrow product range

- Lack of innovation- Not exploiting

opportunities offered by selling through Internet

Market StudyStudy made by KGV produced the ff. findings:1. Estimated in 5 years, 70% of music products will be

bought via Internet2. 65% of consumers under 30y.o will shop via Internet3. KGV’s customers would like stores to provide a wider

product range4. Average spending per month in KGV’s medium-sized

stores is highest among 41-60 years old group.5. Spending on music products by the over 60 age

group will increase significantly in the next 10 years in Europe.

6. The various age groups have clear preferences as to the type of music they enjoy and purchase.

TASK – Future Strategy

1. Should KGV keep some of their stores but sell at least 50% of their goods via the Internet?

2. Should they close all their stores and offer a total online service? If so: a. what are the risks involved? B) how would cost of business change? c.) what organizational changes would the company have to make?

3. Should KGV stay as it is, but follow Hanna’s advice: a. outsource advertising and promotion b. introduce new products c. target new segments

4. What are the consequences of the chosen strategy? How can problems be minimized?