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.