C3 Consumer E-C3 Consumer E-CommerceCommerce
3.1 – Online Shopping3.1 – Online ShoppingEffects of E-Commerce
◦Fast Growth In 1999, business-to-consumer e-
commerce totaled over $20 Billion. By 2004 it was $184 Billion.
◦Slim Profits E-Commerce has taken away profits from
traditional stores. For Example: Traditional Travel Agencies
By 2000, had lost over 2% of their business to online shoppers. A 5% loss would put most of them out of business.
Effects Cont.Effects Cont.More Effects
◦Changing Rules Funding was switched from traditional
retailers and put into online resources, even though profits were not expected for years.
As the newness of e-commerce wore off, investor pressure to make a profit increased
EconomicsEconomicsTraditional Store
◦Pay for the store itself (“called bricks and mortar”)
◦Utilities (Electricity, Water)◦ Insurance
E-Commerce◦Minimizes the cost of renting or owning a
building◦Many times still need a warehouse for
inventory◦Traditional companies are doing both
Example: Barnes and Noble (“Clicks and Mortar”)
BankingBankingA typical transaction with a live
bank teller costs around $1.14The cost for the same transaction
at an ATM is 29 centsOn the Internet the transaction
on costs a pennyOffer a variety of services to save
time and money online.
Capital and Offsetting Capital and Offsetting CostsCostsOnline business need less working
capital◦Working Capital – money available to buy
more goods or services to resell◦The distributor can ship the product
directly to the consumer (instead of it going to the store first).
Other Costs◦Operate and maintain website that is
reliable◦Equipment and software◦Personal to keep the site running
PricelinePricelineConsumers who visit the site are
told they are setting the price of an airline ticket.
However, this is not the way it works.◦The airline enters the minimum
prices before the bids are received. So the bid is only filled if it meets or exceeds the airlines price.
Different types of SalesDifferent types of SalesB2B = Business to BusinessB2C = Business to Consumer C2B = Consumer to Business
sales (Priceline)C2C = Consumer to Consumer
(Ebay)
DifferencesDifferencesWhat are the differences
between online B2C and traditional retailing?
Answer:◦B2C – Products delivered later, you
can customize order◦Traditional – can touch items, try on,
take home right away.
3.2 Information 3.2 Information ManagementManagementGathering Data
◦Every purchase online leaves “footprints” of personal information Credit Card Phone Number Mailing/shipping address
◦Online stores use that info to track trends (who, what, when, etc) Software called Predictive and descriptive
analysis does this for them
Customer Profiles and Customer Profiles and TrafficTraffic
◦People do not like answering lots of questions when they first visit a site
◦Online retailers have to be careful about what and how much to ask
◦Result: If not careful people will not come back to site
Segmenting and TrackingSegmenting and TrackingSegmenting
◦Based on your demographic information and the web sites you visit, your ads are personalized to fit your interests.
Tracking◦Traffic info includes the number of new
visitors compared to repeat visitors◦Whether the visit resulted in a sale,
which pages were most popular, and how they got to the site
CookiesCookies◦Most websites place a cookie on your
computer◦Cookie = A file created when you
visit a website You can stop these from being put on
your computer or delete them
◦It allows the company to identify you and your preferences. A company can only access the cookie
they placed on your computer not others
Your Web Address (Domain Name) Unique name Easy to remember
.com - commercial institutions or businesses .edu – educational institutions .gov - Government sites .net – Network gateways .org – non-profit organizations
Avoid names that are to challenging to remember Example: www.dv2u.com
Avoid long and complicated domains from 3-rd party hosting www.viaweb.com/muesumcompany/
Register related items and common typos Mcdonalds.com, bigmac.com,
goldenarches.com, macdonalds.com
75% of all online transactions are done through one of five portal sites: amazon.com, ebay, AOL, Yahoo, and Buy.com
Advertising Online is similar to traditional advertising
Difference is its interactive Banner Ads
Account for 60% of all online advertisements Least likely kind of ad to get a customer
response
Superstitials Ads that pop-up on your monitor between
web pages Expanding Banners
Combine video, audio, animation, and photographs
Visitors can click on without leaving original page.
Communicate directly with the customer
Selling products or services to people through email is one of the least expensive methods
The response rate to email is 5-25%
Offering an incentive to special reason to buy a product or visit a website
A good place to find Coupons, Discounts, and samples of products.
Example: John Hancock (insurance company) provides a
place for parents to figure the cost of college at different universities
In doing so, parents must enter personal data on the website. Later the can sell products like life insurance that will pay for college
Banner ads that flash “Click here to win money” or “Enter this contest to win a i-pod” In order to enter you must give personal
information that the company can use
Sponsorships When an advertiser places a banner ad on
the home page of a website, the advertiser becomes the sponsor.
The advertiser pays a fixed amount based on time. Impressions
The number of times that viewers visit a web site that has a banner ad on it is counted.
The cost of the ad is figured as a cost per 1,000 impressions.
Results Base the payment on results
The website must draw in visitors to make sure that advertisers are paid for their advertisements.
Affiliates Can receive payment by linking with the
websites of affiliates. Affiliates have similar products or services The hosting site receives a % of all of the sales
made by the affiliates. Amazon.com is an example.
The main goal is brand building Getting the company name and products
known to potential customers. In the future their will be an increase in
how people are rewarded for viewing ads.
The answers are not easy, you will have to do some critical thinking and research for this assignment.
Make up your own online store. Describe what types of products you would sell. Use this store to compare similar website and traditional stores. (Slide 1 in your PowerPoint)
Look at advertisements on 3 Websites and describe what they have in common, and what is different. (Slide 2)
Broken down into 4 Parts You must complete this assignment by
yourself Part 1 - Spreadsheet or Table to Compare (Slide
3) Examples of sites: Amazon, buy.com, yahoo shopping,
etc. Examples of traditional: Target, Meijer, JC Penny, Best
Buy (Use ones that are similar to yours) What things are the same, what things are different?
Part 2 – What info do they collect when you try to buy something? (Slide 4)
Company Compare Products
Sales, Discounts
Website 1 Yes
Website 2 No
Website 3 Yes
Traditional Retail 1 Yes
Traditional Retail 2 No
Traditional Retail 3 NoWhat makes a E-commerce website effective? What makes it ineffective?
Part 3 (Slide 5) With the things you have found so far, how
would you use that data and e-commerce advertising to attract young people age 13-22 to your website.
Part 4 (Slide 6) Make a list of promotional activities you
could use to further advertise your website.
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