8/24/2021

 Terminology and tools

 Internet
 Worldwide Web
 Web 2.0: users create/edit/contribute/distribute content
 User generated content
 Universal Resource Locator (URL)
 Domain name (94.5 million+)
 Internet Service Provider
 The Internet Corporation for Assigned Names and Numbers
(ICANN)
 Search engines
 Browsers

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 Electronic commerce or e-
commerce is a term for any type
of business, or commercial
transaction, that involves the
transfer of information across the
Internet. It covers a range of
different types of businesses,
from consumer based retail sites,
through auction or music sites, to
business exchanges trading
goods and services between
corporations. It is currently one of
the most important aspects of the
Internet to emerge.

 Types of online business

 B2C (most commonly discussed) Business to
Business to
Consumer
 B2B (largest form) Business (B2B)
(B2C) E-
E-commerce
commerce
 C2C ($80 billion globally in 2010)
Consumer to
 Ups, downs, and current status of e-commerce Consumer
 Worldwide internet usage and sales trends (C2C) E-
commerce
 China = 23%, US = 11.6%
 2013 = $1 trillion
 Impact of economic downturn
 Popular Categories (Clothing, Home, & Sporting)

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 Structures of online and multichannel retailers:

 Pure-play retailers: exclusively on-line
 Dual-channel retailers: bricks-and-clicks
 Multichannel retailers: bricks-clicks-and-slicks
 Electronic spin-offs: [Link]
 Nontransactional sites: Information

 Optional selling formats:

 Online shopping malls: [Link] or [Link]
 Online auctions: eBay

 Advantages of online retailing:

• Customer advantages
• Convenience
• Saving time and money
• Research and compare
• Less shopping hassles
• Broader array of products
• International shopping

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 Disadvantages of online retailing:

• Customer disadvantages
• Relinquished privacy
• Overwhelming choices
• Possible credit fraud
• Inability to authenticate retailers
• Technology problems
• Distribution hassles
• Cannot examine goods
• Time commitment

Disadvantages of online retailing:

• Retailer disadvantages
• Customers cannot physically interact with products
• Technology is still evolving
• Privacy and security concerns
• Product misrepresentation
• Search engine failures
• Internationalal market variables
• Channel conflicts
• Shipping costs
• Difficult return process

 Advantages of online retailing:

• Retailer advantages
• Always open
• Reach mass markets
• Relatively new
• Branding local and global
• Enhances brick-and-mortar
• Personalized
• Cost reductions
• Web sites less expensive
• Expand markets
• Email promotions
• Increased SKUs

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 30% of all products ordered online are returned. Brick-and-mortar

is 8.89%
 Online apparel retailers have the highest return rate in
eCommerce.
 On average, the return rate is 11% for t-shirts; 25-35% for casual
wear; and over 40% for fitted fashions. The return rate is higher for
more expensive items.
 In countries like Germany, the average return rate for clothing is
even higher - around 60 %.
 The returns bear a very high cost for retailers, as the average time
for the item to be placed back into the sales cycle is 1-2 months.
 Summer apparel, sold in August, and returned in October, is difficult to
be resold at any price

 What are the primary reasons for returns?

1. The customer bought the wrong item

2. The product is no longer needed
3. The product did not match its description
4. The customer wasn’t familiar with the product
5. A gift purchase was incorrect
6. The customer didn't’t was the item
7. The product was damaged upon arrival
8. The merchant shipped the wrong item
9. The customer engages in wardrobing

Source: [Link]
consumers-return-products/

 The online shopper

 Gender differences in internet usage
 US = 51.26% Female, 48.36% Male
 Clothing = 70% Female, 29% Male
 Male = brand loyal, impulsive, spend more, return less, simple
 Women = bargain hunters, cautious, social
 Cultural differences
 Multichannel shopping affinity
 Online shoppers = more channels
 More channels = more $$$
 Age-relevant distinctions
 Young = increase during recession

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 Sales revenue model

 Web site that derives revenue by selling goods, information, or
services to customers.

 Affiliate/Advertising revenue model

 Web site that steers business to an “ affiliate” receive a referral
fee or percentage of the revenue from any resulting sales.

 Subscription revenue model

 Web site that offers its users content or services charges a
subscription fee for access to some or all of its offerings.

 Transaction fee revenue model

 Web site that receives a fee for enabling or executing a
transaction.

 Characteristics of effective online retailers

 Larger assortments online
 Highly defined market segments
 Products that don’t require inspection
 Creativity
 Finding the products
 According to the National Retail Federation, almost 89% of
consumers research products online before buying them in a
store.
 Showrooming? Reverse showrooming?
 Recommendation systems
 Online reviews

 Recommendation System
 Online recommendation
systems, also called
collaborative filter systems, used
data gathered from one online
realm to predict what a user
would like in another
 Suggestive Selling
 Up-sells: a sales technique where
a seller induces the customer to
purchase a comparable but more
expensive items or upgrades.
 Cross-sell: a sales technique
where a seller induces the
customer to purchase
complementary or related items
to the original product being
purchased.

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 [Link] pioneered in 1997

 The software sends e-mails to customers who have made purchases and
invites them to submit reviews.
 90% of customers read online reviews
 88% of customers trust online reviews as much as personal
recommendations.
 72% say that positive reviews make them trust a local business more.

Source: [Link]

 A form of online targeted advertising by which online advertising is

delivered to consumers based on previous Internet actions that did not
in the past result in a conversion

 What do you think about retargeting? Are you willing to give up

your privacy to get retargeted ads?

 How would you feel if your ISP shared your emails? Shared the
websites you visited?

The US Congress passed a bill in 2012 to allow

Internet companies to share confidential
customer data with selected government offices.

Cyber Intelligence Sharing and Protection Act (CISPA)

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 Setting up online stores

 Web site design
 Convey brand image
 Aesthetics
 Usability
 Design format: 2/3, 1/3 page breakdown (Golden Ratio or
rule of thirds)
 Web 2.0 features: Interactivity (3D cameras: 33% more time,
20% more $$$)
 Use of avatars

 Navigation and transaction capabilities

 Shopping carts, site-maps, drop-down menus, checkout,
search capabilities, & contact points

 Customer communication tools

 Product reviews
 Blogs, vlogs, and pods
 Widgets (PinIt button)
 Microsites (ex. Arizona Jeans)
 Chat (click-to-call, click-to-chat, live chat)
 Tweet
 Snapchat
 Instagram
 E-mail communication (young vs. old)

The power of search

 External Search
 Search Engine Optimization (SEO): the process of affecting visibility of a
website in the search engine results page (SERPs) with unpaid results-
often referred to as “natural”, ”organic” or “earned” results. Focuses on
national searches and uses algorithmic formulas.
 Local SEO: Similar to SEO however it differs in that it is focused on
optimizing a business’ website so that it will be displayed when users enter
local services for its products or services.
 Search Engine Marketing (SEM): Paid searches (advertisements &
pay/click)
 Amazon #1 paid
 Google #1 paid search spending

 Internal Search
 Color: 42%
 Size: 29%
 Customer ratings: 23%
 New merchandise arrivals: 22%
 Sales/Promos: 16% [Link]

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Most Popular Online Payment Methods

 Web analytics
 Traffic counts
 Conversion
 Avg. order size
 Returning customers
 Effectiveness of customer service
 Level of brand awareness
 Receptiveness to use new features
 Page impressions

Web analytics
 Product impression
 Shopping cart
abandonment
 Click-through
 Basket insertion
 Click-to-basket rate
 Stickiness
 Basket-to-buy rate

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 Types of assessment tools

 Results-oriented metrics
 Website hits, conversion
rates, branding
impressions
 Split testing
 Compare results (i.e.,
color schemes)
 Multivariate testing
 Multi-variable testing
 Cognitive measures Eye-tracking
 Human reaction to Source: Pantech Solutions
marketing stimuli (i.e.,
pattern of clicks, eye-
tracking)

 Types of visualizations
 Heatmaps: A view of where participants look based on
fixations. Fixations are places where participants look
for 100 to 500ms (.1 to .5 of a second). Similar to a
weather map.

 Focus Maps: Inverse of a heatmap. Darker areas

indicate fewer fixations.

 Gaze Plots: Provides the path and the time the

participant scanned the image. Larger circles represent
longer fixations.

 Aggregated Gaze Path Plots: Combination of gaze

plots, fixations, and time. Can be overwhelming for
analysis.

Focus Maps Heatmaps

Gaze Path Plots Aggregated Gaze Path Plots

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 M-commerce is the buying and

selling of goods and services
through wireless handheld devices.

 M-Commerce is the process of

paying for services using a mobile
phone or personal organizer.

 M-Commerce is the use of mobile

devices to communicate, inform
transact and entertain using text and
data via a connection to public and
private networks.

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Value-added
Characteristics attributes
Product and service
localization
Mobility
Product
personalization
Mobile
Commerce Ubiquity enhancement

Instant connectivity
Reachability
Convenience

 Forrester showed in a
recent survey of tablet
owners that they spend
more time browsing the
web via a tablet web
browser than they do
using apps.

 Retailers will be under

increasing pressure to
ensure that it’s as easy to
navigate their e-
commerce sites on tablets
as on PCs.

 Bluetooth wireless connectivity

 Used to connect mobile phones to other devices (such
as a headset) without a cable. Bluetooth allows
shoppers to be “hands-free.”
 Still or video camera
 Useful for taking pictures of products, receipts, QR &
bar codes.
 Compass
 Useful for directing a person to a store, or for
recognizing in which direction a person is facing. This
feature is currently available only on the newest
mobile devices.

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 Two-way e-mail messaging

 Useful for delivering receipts and coupons.

 Interactive display
 A larger display than that available on a traditional
mobile phone that includes the ability to run a
browser. Some phones include touch screens or
screen-addressable keys.
 Internet access
 To be useful, a mobile device must be connected to
the Internet either though the cellular network or Wi-
Fi.
 Location recognition
 The ability to determine location using GPS satellites,
cell tower triangulation, or Wi-Fi reference.

Mobile Web access currently suffers from interoperability and usability problems.
These problems stem from the fragmentation of mobile device platforms and mobile
operating systems and the variety of Web browsers found on different devices.
Challenges are raised by screen resolution, screen size, speed of content delivery,
and the wide variety of user input methods, which cover the map from touch screen
to stylus to buttons.

 Browser-Based Applications  Downloaded and Native Applications

 Computer tools and  a ready-to-run (compiled) application
applications which run on a web built for a specific mobile device is either
browser via the Internet without downloaded to the device or preloaded
accessing the operating system and present when the device is
of an individual computer. purchased
 These applications are
accessed through web pages.  generally affords the user a better
 Infor downloaded from a experience, because they can take full
website. advantage of the particular mobile
device’s unique capabilities.

 Since these applications are device-

specific, a separate application is
required for every different type of
device, thus increasing development
costs exponentially.

 Full-sized browser site:

 Handles transactions
 Weekly ads
 Do-it-yourself videos
 Deep product content
 Both on-line and brick and mortar
assortments ”
 Advanced search
 Store locator
 Shopping list

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 Digital displays that advertise products

and promotions can facilitate in-place
interaction with customers.

 QR includes product tracking, item

identification, time tracking, document
management, and general marketing.

 QR is popular due fast readability and

greater storage capacity than UPC
barcodes

 For example, scanning a food display

might show recipes using that food.) This
interaction is typically accomplished
using NFC tags or quick response (QR)
codes that allow the phone to “read
context.”

 Advantages
 Customized, relationship-based, timely, and location-specific services
 Hyper-connectivity between marketers and consumers and anytime
anywhere access to services
 Easy to set up

 Disadvantages
 The inefficiencies within the device and the system
 Security, privacy
 Device proliferation
 Slower speeds
 Smaller screens
 Expensive costs

 “Social commerce and social shopping are forms

of Internet-based ‘social media’ that allow people
to participate actively in the marketing and
selling of products and services in online
marketplaces and communities” (Stephen, 2010)

 A merger of online shopping and social

networking
Social
Media

Social
Commerce

Electronic
commerce

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• The “Social Commerce IQ: Fashion”

• 100% Fashion Retailers had a Facebook Page
• 91% have a YouTube channel
• 93% have a Twitter account

 Content: Body of material published on the web

 Community: Build sustainable relationship by providing

value

 Commerce: Transactional web presence

 Context: Mobility

 Connection: Documenting relationships between people

 Conversation: “All conversations are markets”

 Drive traffic to online and brick-and-mortar stores

 New channel to reach customers

 Building trust

 Need recognition

 Reach a larger target market

 Customer interaction

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 Lack of feedback control

 Time intensive

 Mainly attracts current customers

 Difficulty measuring ROI

 Electronic kiosks
 Television retailing
 Home shopping channels
 HSN, QVC, HSE24
 Direct Response Television
(DRTV): infomercials
 Internet video and
interactive television
 Video datacasting
 Viral videos
 YouTube channels

 Strengths
 Diversity of target audience
 Information richness: the product can be
manipulated, demonstrated etc.
 Test Marketability
 Real-time data: call volume, number of
calls on hold, inventory…
 Entertainment value: Resembles talk
shows, host, audience call in, live
audience shows
 24/7

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 Limitations
 When a product is presented, at what
time within the hour, the guest, the host
and what type of demonstration is given
are all factors that contribute to sales
success.
 The cable broadcast can highlight only a
limited number of products during a day.
 The cable broadcast can promote only
one item at a time

 These include:
 More access to more merchandise
 Growth in brick-and-mortar stores arise with online
selling channels
 Unlimited access from computers, smartphones and
tablets
 Technological advances in service and
personalization
 Digital video communication and interactive
shopping
 Expanding to more shoppers, more frequently

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