Turban Ec2012 Im Ch03
Turban Ec2012 Im Ch03
Turban Ec2012 Im Ch03
Instructors Manual
Chapter 3
Retailing in Electronic Commerce: Products and Services
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Describe electronic retailing (e-tailing) and its characteristics.
2. Classify the primary e-tailing business models.
3. Describe how online travel and tourism services operate and their impact on the industry.
4. Discuss the online employment market, including its participants, benefits, and
limitations.
5. Describe online real estate services.
6. Discuss online stock-trading services.
7. Discuss cyberbanking and online personal finance.
8. Describe on-demand delivery of groceries and similar perishable products and services related
to them.
9. Describe the delivery of digital products and online entertainment.
10. Discuss various online consumer aids, including comparison-shopping aids.
11. Describe disintermediation and other B2C strategic issues.
Content
Opening Case: Amazon.com: The Worlds Largest B2C E-Store
3.1 Internet Marketing and B2C Electronic Retailing
3.2 E-Tailing Business Models
3.3 Travel and Tourism (Hospitality) Services Online
3.4 Employment Placement and the Job Market Online
3.5 Real Estate, Insurance, and Stock Trading Online
3.6 Banking and Personal Finance Online
3.7 On-Demand Delivery of Products, Digital Items, Entertainment, and Gaming
3.8 Online Purchasing-Decision Aids
3.9 Issues in E-Tailing and Lessons Learned
Managerial Issues
Closing Case: Walmart Powers Online
Chapter 3
Page 2
Chapter 3
Page 3
The B2C distribution channel models include: direct marketing, pure-play e-tailers, and clickand-mortar retailers.
2. Describe how mail-order firms are going online.
Companies are attempting to leverage their existing infrastructures by using a new marketing
system (online), in addition to their existing method (catalogs, etc.).
3. Describe the direct marketing model used by manufacturers.
The direct marketing model takes place without intermediaries between manufacturers and
buyers.
4. Describe virtual e-tailing.
These firms sell to customers over the Internet while not maintaining any type of physical sales
location.
5. Describe the click-and-mortar approach.
With this approach the firm sells to customers through the Internet and through physical sales
locations.
6. Describe e-malls.
Electronic malls (e-malls) are combinations of several online merchants in one location. Some
malls are just an aggregation of merchants, while other malls provide integrated services (like a
single checkout for many merchants).
7. Describe B2C social shopping models.
These models cater to groups that shop together, or for a particular type of item.
8. Describe shopping in virtual worlds.
In this model, the shopping and e-commerce take place completely inside the virtual world.
9. Describe visual virtual shopping.
Shopping based significantly on the visual inspection and evaluation of products.
Chapter 3
Page 4
Some of the additional services provided include: travel tips, electronic travel magazines, fare
comparisons, currency conversion calculators, fare tracking, worldwide place locators, a travel
products store, expert opinions, travel news, driving maps, chat rooms, bulletin boards and
frequent-flyer deals.
2. List the benefits of online travel services to travelers and to service providers.
Online travel services provide the benefits of large amounts of free information, 24/7 availability
and the potential for significant reductions in price. Service providers are able to reach a broader
potential market, and provide services that may be evaluated on more than just price.
3. How do social networks facilitate travel?
Social networks allow for additional marketing through direct and indirect methods, including
word-of-mouth.
4. Describe corporate online travel services.
Corporations can use all the travel services that individuals do, but in addition may receive extra
services to assist with cost control and authorization.
Chapter 3
Page 5
Chapter 3
Page 6
The major personal finance services available online include: bill paying, electronic check
writing, tracking of accounts, portfolio management, investment tracking/monitoring, stock
quotes, budget organization, cash flow/profit-loss analysis, tax services and retirement services.
Chapter 3
Page 7
Chapter 3
Page 8
Prices need to be competitive, while still providing an adequate margin. EC can allow
companies to segment users into different price groups and test pricing more than was possible
with only brick-and-mortar operations. This may be an issue when the differences are
discovered by customers.
5. Explain personalization and mass customization opportunities in e-tailing.
Personalization is the ability to use technology to create goods that meet the exact specifications
of the consumer. Mass customization is the ability to create personalized goods for a large
number of customers based on their exact specifications.
6. What makes click-and-mortar companies successful?
These firms may be successful because they are able to tap into both online and offline markets,
while providing services for all customers in both arenas and reaping the benefits of larger scale.
Chapter 3
Page 9
1. Visit wayn.com. What options do you find most exciting on the site?
Student opinions will vary, but will most likely be related to social aspects of the site that allow
for unbiased opinions.
2. Why has WAYN been so successful even though the site requires subscription fees?
The site provides a service that is considered very useful and valuable, and provides resources
not available for free.
Chapter 3
Page 10
site. Comparison tools would make vendors more competitive if others in the market are already
doing so, but by placing comparison tools on their site they are creating an environment where
cost may be the primary decision criteria.
2. Discuss the advantages of specialized e-tailors, such as dogtoys.com. Can such a store
survive in the physical world? Why or why not?
Stores such as this have several advantages, specifically that they are able to target a very
specific niche and service that niche very well. Student answers will vary on the ability of such
stores to survive in the real world. One argument would be that a store such as this could not
survive in any particular physical market because the number of potential clients is so small.
The Internet is needed in order to create a critical mass of potential clients.
3. Use Google to find the benefits of travel-related social networking sites. Discuss five of them.
(Start with hotels.megawn.com/benefits-of-travel-relatedsocial-networking-sites-2.)
Student research will vary, but will show advantages such as better recommendations, reduced
costs and socialization.
4. Discuss the benefits of build-to-order to buyers and sellers. Are there any disadvantages?
Build-to-order provides the customer with the advantage of being able to select the exact good
that they desire. Merchants are able to meet their customers exact needs and may not need to
carry any inventory. The possible disadvantages would include: increased time to delivery due
to manufacturing time, possible necessity to carry a wide variety of components for manufacture,
and possible higher prices for customized goods.
5. Why are online travel services such a popular Internet application? Why do so many Web
sites provide free travel information?
Online travel services are very popular because they allow customers to perform a function
traditionally performed by an intermediary, while generating a cost savings. Many of the
services are relatively easy to provide and easy for the customer to use. Many Web sites provide
this information as an added benefit and incentive for users to visit their Web sites.
6. Compare the advantages and disadvantages of online stock trading with off-line trading.
Online stock trading provides the advantage of allowing traders to quickly and easily trade
securities and view their accounts any time of the day, from any location. Much of this is at a
lower cost than traditional services. The advantage offered by off-online trading is the ability to
interact directly with a broker who can provide recommendations and information on trades.
7. Compare the advantages and disadvantages of distributing digitizable products electronically
versus physically.
Chapter 3
Page 11
Student answers will vary. Some disadvantages include: ability to package as a selling tool,
greater ability to control the product after purchase (copying, etc.) and ability to use existing
sales channels. Some advantages include: decreased cost per item, decrease in distribution cost
and decrease in sales cost (from an existing sales channel).
8. Do you trust your personal data on social networks such as LinkedIn or Facebook? How do
you protect your privacy?
Student opinions will vary, but will focus on security and use of personal details.
9. Many companies encourage their customers to buy products and services online, sometimes
pushing them to do it. Why?
In many cases it is less expensive, and allows for tracking and research.
10. Would you use monster.com or linkedin.com for recruiting or would you rather use a
physical office of a traditional agency? Why?
Student opinions will vary.
Chapter 3
Page 12
Student opinions will vary. The debate will focus on the benefits of disintermediation and reintermediation.
5. Debate: Competition between pure play e-tailers (e.g., Amazon.com, Blue Nile) and
traditional e-tailers that add the Web as a part of a multichannel (e.g., Walmart, HP, department
stores) (e.g., see OConnell 2009).Who may win? Under what assumptions?
Student opinions will vary. The debate will center on the advantages of a streamlined pure-play
operation versus the scale benefits of a combined operation.
6. Debate: Should online sales be an independent division in a click-and-mortar firm?
Student opinions will vary. The debate will have pros and cons of each model, and may be
industry/company specific.
7. Debate:What is the future of Amazon.com?
Student opinions will vary. Students will be evaluating the overall business model of Amazon.
Internet Exercises
(Note: URLs may change over time; please check the Internet Exercises on the Turban
Web site for possible updates: www.pearsonhighered.com/turban.)
1. Many consumer portals offer advice and ratings of products or e-tailers. Identify and examine
two separate general-consumer portals that look at other sites and compare prices or other
purchase criteria. Try to find and compare prices for a digital camera, a microwave oven, and
an MP3 player. Visit clusty.com. How can this site help you in your shopping? Summarize your
experience. Comment on the strong and weak points of such shopping tools.
Student answers will vary. Possible options include Gomez.com and consumernow.com.
2. Visit landsend.com and prepare a customized order for a piece of clothing. Describe the
process. Do you think this will result in better-fitting clothing? Do you think this personalization
feature will lead to greater sales volume for Lands End?
Student answers will vary. Perceptions will be based on choices and preferences.
3. Make your resume accessible to millions of people. Consult asktheheadhunter.com or
careerbuilder.com for help in rewriting your resume. See jobweb.com for ideas about planning
your career. Get prepared for a job interview. Also, use the Web to determine what salary you
can get in the city of your choice in the United States.
Student answers will vary. Perceptions will be based on choices and preferences.
Chapter 3
Page 13
4. Visit move.com, decisionaide.com, or a similar site and compute the mortgage payment on a
30-year loan at 7.5 percent fixed interest. Also check current interest rates. Estimate your
closing costs on a $200,000 loan. Compare the monthly payments of the fixed rate with that of an
adjustable rate for the first year. Finally, compute your total payments if you take the loan for 15
years at the going rate. Compare it to a 30-year mortgage. Comment on the difference.
Student answers will vary. Rates change frequently and are also location-dependant.
5. Access the Virtual Trader game at citycomment.co.uk and register for the Internet stock game.
You will be bankrolled with 100,000 in a trading account every month. You can also play
investment games at investorsleague.com, fantasystockmarket.com, and etrade.com.
Student answers will vary. Choices and preferences will drive student perceptions and results.
6. Compare the price of a Sony digital camera at shopping.com, mysimon.com,
bottomdollar.com, bizrate.com, and pricescan.com. Which site locates the best deal? Where do
you get the best information?
Student answers will vary. Content changes frequently.
7. Enter xing.com and identify its job-related offerings. Prepare a list of support activities
offered.
Student responses will vary, but will include support services on job-hunting, career decisions,
salary expectations, and resume creation.
8. Enter Bazaarvoice (bazaarvoice.com) and find how consumers can engage in a dialog. Look
at its Ask & Answer service. How is quality of content maintained. Write a report based on your
findings.
Student answers will vary. Perceptions will be based on choices and preferences. The model
allows for user-based answers to user submitted questions. Quality is controlled by user voting
on answer quality. This is very similar to the Yahoo! Answers system.
9. Enter vivente.com/resumix/Web site, examine the capabilities of the tools, and write a report.
Student answers will vary. The site provides an interesting suite of services.
10. Enter lockerz.com and compare its feature with that of gilt.com and ideeli.com. What are the
similarities? What are the differences?
Student research will vary. Student preferences and feature selection will drive the report.
11. Enter tripit.com and dopplr.com. How can these sites help travelers? How do they relate to
social networks?
Chapter 3
Page 14
Student opinion will vary. Both sites provide consumer information on travel services.
12. How can LinkedIn and Facebook help job seekers? How can they help employers?
Student opinion will vary. Both sites can help connect employees with employers.
13. Compare the sites yelp.com and epinions.com.
Student research will vary. Perceptions will be based on choices and preferences. Both sites
solicit user opinions, but Yelp focuses on business while Epinions focuses on products.
14. Visit hayneedle.com. What kind of a mall is this?
The site focus is home furnishings.
15. Compare the offering of JobServe to that of Aspire Media Group regarding solutions for
recruitment. Distinguish services to employees from those to employers.
Student research will vary. Content changes frequently.
Chapter 3
Page 15
2. Each team will investigate the services of two online car-selling sites (from the following list
or other sites).When teams have finished, they should bring their research together and discuss
their findings.
a. Buying new cars through an intermediary (autobytel. com, carsdirect.com,
autoweb.com, or amazon.com)
These sites allow users to evaluate and select a car through a third party, then helps
broker the sale with a dealer.
b. Buying used cars (autotrader.com)
This site allows users to search listings of used cars.
c. Buying used cars by auto dealers (manheim.com)
This site allows dealers to select cars for resale.
d. Automobile ratings sites (carsdirect.com and fueleconomy.gov)
These sites provide unbiased information on cars to aid in the selection process.
e. Car-buying portals (thecarportal.com and cars.com)
These sites allow for the select of cars, and link to dealers that sell them (in general or
for a specific car).
f. Buying collectors cars (classiccars.com and antiquecar.com)
This site allows users to search listings of classic cars.
Student answers will vary. Report content will be driven by site selection, and which features
are compared.
3. Each team (or team member) will review two or three travel-oriented, social-oriented
networks (e.g., Zimbio,World 66, Virtual Tourist, BootsnAll, Eezeer, Trip Advisor, TrekCafe,
Lonely Planet Thorn Tree, WAYN, and Budget Globetrotting). Compare their
functionalities.
Student answers will vary. Report content will be driven by site selection, and which features
are compared.
4. Each team will represent a broker-based area (e.g., real estate, insurance, stocks,
employment). Each team will find a new development that has occurred in the assigned area
over the most recent three months. Look for the site vendors announcement and search for more
information on the development with google.com or another search engine. Examine the
business news at bloomberg.com. After completing your research, as a team, prepare a report on
disintermediation in your assigned area.
Student answers will vary. Content changes frequently, and reports will vary greatly based on
topic selection.
5. Plan a wedding entirely online (geek-style). First, make a chart of the process. Do not forget
the proposal itself, buy the ring, get music, use Twitter, and use a self-managed DJ. You want to
save money and to use guest-generated content. You may start by looking at
itworld.com/offbeat/68244/wedding-20-when-weddings-go-geek and by searching Google for
geek wedding.
Chapter 3
Page 16
Chapter 3
Page 17
Student answers will vary based on preferences related to the processes involved.
6. Visit walmart.com, target.com, marksandspencer.com, and sears.com. Identify the common
features of their online marketing and at least one unique feature evident at each site. Do these
sites have to distinguish themselves primarily in terms of price, product selection, or Web site
features?
Student answers will vary. There is a great amount of diversity, and students will focus on
different aspects.
7. Investigate the options for international customers on the Wal-Mart Web site.
Student answers will vary. Content changes over time.
8. Study Walmarts affiliate program. Compare it to that of Amazon.com.
The programs are similar, but it appears Amazons model provides more flexibility.