Transcript Document 7138376

Business to Consumer
Presented by Carol Reavey, Kevin Keely and Martha Harting
Who, What, How, When…..
 Who is on the web?
 Who is the target customer?
 What vehicles can be used to reach the
customer?
 How to Attract the right customer
 How to stand out amongst the pack?
Demographics
Web and E-commerce
Users
We’ve got a new way to talk1
Total World Online
Population: 619 million
Other
17.4%
French
3.5%
English
36.4%
Italian
3.8%
Korean
4.5%
Spanish
7.2%
German
6.7%
Chinese
10.9%
Japanese
9.7%
Everybody’s Doing It!
 The Internet is in 20
nations
 E-commerce has
619 million potential
customers
 This number is
estimated to reach
948 million by 2004
Who is doing it in the USA(2)
 The total population of internet users in the
US is 112 million
 94.2 million are White (4% growth vs ‘01)
 7.8 million are black (3% growth vs ‘01)
 7.6 million are Hispanic (13% growth vs ‘01)
 2.4 million are Asian (6% growth vs ‘01)
Frequency vs. Purchase
 Only 2.8% of all surfers use the net primarily
for purchasing product. This is an increase
over 2.6% in 4th Qtr 2001.
 The average purchase increased from $298 to
$364 in the $250 - $501 range.
 It also increase from $1,298 to 1,668 in the
+1,000 range.
E-Commerce Sales(10)
11
E-commerce sales10
rose in the 2nd Qtr 9
3.7% over first
quarter and 24.2% 8
year over year
7
The US
6
Department of
5
Commerce expects
record e-commerce 4
sales for the
holiday season.
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002
Doing it with what…..(3)
 Household income
is significant in the
e-commerce game.
 72% of the surfers in
the >$75k bracket
do product/service
research
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
<35k
$35$50k
$50$75k
$75- >$100k
100k
When Are We Surfing(4)
 112 million Americans use the
Internet
 46 million use it primarily at work –
17% higher than last year
 20.4 million of the workers are
women up by 23%
 Men (of course) make up the
remaining 25.3 million surfers – 12%
increase over 2001
It’s a man’s world
 Men dominate internet usage in the USA
 Men view an average of 1900 pages
versus 1700 pages for women
 36% of the male usage is for adult
entertainment. This is 8% for women.
Mom is Surfing More(5)
 American Moms are on-line an average of 16
hours and 52 minutes every week.
 Teens log about 12 hours and 17 minutes per
week.
 Mom’s and Hispanics are the fastest growing
groups of surfers.
 This may change the way companies market
and target customers.
Top 5 Activities(6)
 The primary reason for
logging on is E-mail.
 Products/Services
activities have increased
7% over last year.
 Women are sending the
greeting cards and
entering the sweepstakes
(61%).
E-mail
93%
Search Engine
79%
Research
63%
products/services
Local Information
60%
Sweepstakes
59%
Buzz Words(7)
 To increase strikes the week of October 5th 2002
web content could have included these:
–
–
–
–
–
–
–
–
–
–
Halloween
Dragonball
KaZaA
Costumes
NFL
Tatoos
Hurricane Lilli
Britney Spears
Yu-Gi-Oh!
The Bible
What the E-Shopper Wants(8)
Courteous and respectful employees
73%
Consistently good merchandise quality
70%
A clean and well-maintained ‘store’
69%
Unconditional return of merchandise
69%
Visible prices
68%
Service versus Price
 “Honest Price” is more important than “lowest
price” to 64% of the American consumers
 “Consistently good merchandise quality” was
seen as essential to 70% of the consumers
Balancing Ethical Issues
Mis-Trust(7)
 Many Consumers won’t by on-line because they
don’t trust the process
• 68% of the consumers trust small business
• 58% trust the newspapers and television
• 55% trust financial institutions (banks, insurance
companies)
• 54% trust charities and non-profit organizations
• 47% trust the government
• 29% trust the e-commerce community!
SPAM(8)
 SPAM is an ever-increasing issue
 Hotmail estimates that 10% (1.3million) of
the daily messages sent through Hotmail
are SPAM
 10% of the working day is spent deleting
SPAM
The Choice isn’t much of a Choice
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000
2001
2002
Required
Choice
Opt-Out
Selling your e-mail info(9)
 Failed dot.coms have sold private
information
 They follow the letter of the “Opt Out” law
by selling their web site and all the names
with it.
 “It’s a common business practice to “rent”
your customer database” Cheryl Regan
spokesperson for Network Solutions Inc.
E-Commerce
Phase Two
What can we expect to see in the
sector as the second era of ecommerce gathers steam?
New Technologies
 Automating processes
 Reducing costs in customer service
 Streamlining replenishment
 Streamlining aftermarket selling
opportunities
Spending Mix
Initial Phase
 Computers
 Brokerages
 Travel
 Books and Music
 Auctions
Generated 75% of
Sales(1)
Spending Mix
Current Phase
 Only 50% of online sales
 Clothing, pharmaceuticals,
groceries, communication services
and general merchandise make up
the other 50%.
 Groceries went through a valley last
year but may rebound this year.
Multichannel Selling
 Systems allow customers to reserve
product online for in-store pickup.
 Manufacturers sell direct
 Retailers fear of channel conflicts has
faded.
Real-Time rules
 Investing in real-time capabilities to manage
orders.
 Real-time order processing can increase order
fulfillment accuracy and productivity by 50%.(2)
 Real-time supply chain and inventory lets
companies know what they have and when it’s
coming.
 Reduce or eliminate stock-outs and overstocks.
Improved Profitability
 Improved profitability spurred by
innovations.
 Analyst predict a 20% year-over-year
growth.(3)
The Seven Habits of Highly
Effective Web Sites(6)







Personable
Remembrance(4)
Flexible Interaction
User Profiling
Abstract Interaction(5)
Context Creation and Use
Dialogue Structuring and Management
Five E-Commerce Trends
to Watch
Trends





Multichannel Retailing(7)
Increased Customer Satisfaction(8)
Consumers do their own thing(9)
Death of the Mid-Size E-tailer
More Profit – 70% of the top 40 sites are
profitable versus 30% last year.
Business Models on the Web(10)
 Business models are perhaps the most
discussed and least understood aspect of
the web.
 The web changed traditional business
models.
 Little clear-cut evidence of exactly what
this means.
 Auctions – An old way of doing business
popularized and broadened.(11)
Models Continues
 Varied Implementation
 Blended Models
 Intellectual Patents
Categories of Business Models
Brokerage
Advertising
Infomediary
Merchant
Manufacturer
Affiliate
Community
Subscription
Utility
Brokerage Model









Marketplace Exchange – Orbitz
Buy/Sell Fulfillment – CarsDirect
Demand Collection System - Priceline.com
Auction Broker - eBay
Transaction Broker – PayPal
Bounty Broker – BountyQuest
Distributor – Quest
Search agent - Deal time
Virtual Mall - ChoiceMall
Advertising Model







Portal – Yahoo
Personalized Portal - MyYahoo
Niche Portal - iVillage
Classifieds - Monster.com
Registered Users - Anytime's Digital
Query-based Paid Placement – Google
Contextual - Gator
Infomediary Model
 Advertising Networks – DoubleClick
 Audience Measurement Services –
Nielson
 Incentive Marketing - MyPoints
 Metamediary - Edmunds
Merchant Model
 Virtual Merchant - Amazon.com
 Catalog Merchant - Land’s End
 Click and Mortar - Barnes &Noble
 Bit Vendor - Eyewire
Community Model
 Content Service - Netflix
 Person-to-person Networking
Services – Classmates
 Trust Services - Truste
Subscription Model
 Voluntary Contributor Model - WCPE.org
 Knowledge Networks – AllExperts
 Internet Service Provider - AOL
Other Models
 Affiliate Model - Amazon.com
 Manufacturer Model – Dell
 Utility Model - Slashdot
Three Different Business
Models
e-Bay is #1




e-Bay is the #1 in sales.(12)
$1.1 billion in revenues in 2002
Earnings .73 - .75 per share.
Brokerage model / Auction
Broker / Transaction Broker.
Holiday Strategy
 Printed Catalogs in 2001
 Amazon.com is copying the idea.
 Bidders wait to find out if they won, eBay instituted a “buy it now” feature.
 Also advertised on AOL Time Warner
cable and network outlets to promote
their site for holiday gifts. (13)
Amazon.com is # 2
 Amazon.com is # 2 with Online sales to
U.S. consumers estimated between 1.7 –
1.9 billion. (14)
 Amazon made a profit for the first time, in
the last quarter. It has not made a profit for
a fiscal year.
 Merchant Model / Virtual Merchant
Product Offering







Free electronic greeting cards
On-line auctions
Millions of books, CD’s, videos, DVD’s,
Toys and games
Electronics
Kitchenware
Computers and more(15)
Holiday Strategy
 Free Shipping
Quixtar.com is # 7





400-450 million in sales in the U.S. (16)
Privately Held
Believed to be profitable.
No marketing expenses
Company world-wide sales for fiscal
2002 where $4.5 billion. (17)
 Unique Merchant Model – could be
Virtual Merchant / Catalog Merchant
 Amway - Person-to-person multilevel marketing.
 In business since 1959
 Manufacture items for nutrition, wellness, beauty
and home products. Vitamins, food supplements
and cosmetics are among the company's leading
global brands.
 Manufacturers pay to have products sold.
 Order a car direct from the manufacturer
delivered to the nearest dealership.
 Bass Pro, Chevrolet, Ford, IBM, are just a few
companies that allow direct selling from Quixtar.
Pay to Use and Earn
 Pay to use this site.
 IBO to purchase from this site.
 Earn bonuses or cash based on product
sales.
 Currently 3.3 million distributors that
teach their people how to shop the site.
 Infrequent catalog distribution.
Could other models be used to describe this
e-tailer? Which models?
e-Commerce: Steps to Success
Gain Trust
Personalization
Multi-channeling
Gaining Trust Online1
Why don’t consumers trust cyberspace?
– No close physical presence
Incomplete, ambiguous physical location
No people to talk to
Reputation, size, and background unknown
– History of security and privacy problems
Privacy invasion and abuse of customer
information
– Potential for misrepresentation and fraud
“On the Internet nobody knows that you are a dog”
How to gain trust online:
– Similar backgrounds
Translate into customer’s language
References regarding adherence to local regulations and
business practices
Promotional campaigns to stimulate repeat business
– Personalization
Photos and video clips of store owners
Order confirmation
Stronger product warranties
Customer support
– Reputation
Trust can be transferred – link site to other reputable sites
Easier to obtain when part of a large chain
Level of Trust Online2
35.00%
30.00%
25.00%
Communication
Purchases
Playing Games
Finances/Banking
20.00%
15.00%
10.00%
5.00%
0.00%
Q4 2001
Q3 2002
Financing/banking has successfully gained trust online, while
other uses have declined in overall trust.3
The Personal Touch4
Benefits:
– Forms a relationship with the customer
– Increases trust
– Increases sales and repeat business
Difficulties:
– Gathering data
– Analyzing data
– Utilizing data
– Expense
Personalization on the Web5
Virtual 3D models – Lands’ End
Live chat feature – Lands’ End
E-mail reminders – Drugstore.com
Suggestions for visitors – American Greetings
and 1-800-Flowers.com
One-click shopping – Amazon.com
Records of previous purchases – Office Depot
Smart recommendation engines – Amazon.com6
Multi-channeling
The Future of E-Commerce?
The Channels
Web Site –Click and Mortar Store
Brick and Mortar Store
Catalog
The more channels a customer uses,
the more valuable they are to a
business.7
(e.g., JC Penney found their 3channel customers are worth
$1000/year; 2-channel customers
$700/year; 1-channel customers only
$300/year.)
The New Customer8
Customers want old-fashioned service with all
the new tools and convenience
According to Brylane e-commerce, web sites
have to “Sail the Seven C’s”
“You must Combine Customized Content,
Community and Commerce to provide Control
and Convenience.”
Benefits of Multi-Channel
Integration9
Capture sales regardless of channel
Build and strengthen customer loyalty
Improve direct marketing efforts
Seamless service experience
Improved demand planning and product
distribution
Increased revenue and gross margin
Disadvantages of MultiChanneling9
Costs
(specialty or medium-sized department store)
– Brick and mortar costs range from an average
of $8 to $28 million for startup and can expect
to break even in about two years
– E-commerce sites cost $73 million to $1.2
billion break-even volume
– May not generate positive returns quickly
May distract from core business
Active shoppers may prove to be a liability10
– More deal driven
– Look for costly site features such as live help
Tier 1 - Multi-Channel Functionality
– Low Risk9
Accept returns in physical store without exception
Offer store pickups
Accept retail store credit card online
Provide basic customer service
– Frequently asked questions, how-to guides, warranty
information, etc.
Retail store locator information
Coordinate logo, information, graphics, etc.
Consistent messaging across all channels
Use e-mail campaigns to reinforce marketing efforts
along with direct mail, billing inserts, and other
promotional advertising
Tier 2 – Multi-Channel Functionality
– Some Risk9
Install in-store kiosks for online ordering
Integrate loyalty and registry programs
Implement ERMS (e-mail response
management system)
Tier 3 – Multi-Channel Functionality
– Substantial Risk9
Web-enable point of sale (POS) systems to
bring the Internet into the store (very expensive)
Use hand-held/wireless devices process
web/store orders.
Implement “guided merchandising” – use
customer relationship information and blend with
product descriptions and merchandising rules
Multi-Channel Leaders9
Office Supply Retailers
– Office Depot
– OfficeMax
– Staples
Consumer Electronic
Retailers
– Circuit City
– Best Buy
– CompUSA
Others
– Department Stores-Sears,
JC Penney
– Pharmacies-Walgreens
– Discount Stores – WalMart,
K-Mart, Target
Multi-Channel Challenges8
Plan promotions as a single company with
multiple channels, not separately
Integrate online into offline
– Promote web benefits and URLs in all
communications
Promote offline into online
– Mention in-store promotions, store locators
– Provide catalog requests
Pay attention to time-sensitivity
– Just because e-mails can be sent quickly, this does
not guarantee that your target market will be
accessed immediately or that it will even be read at
all.
Keys to Multi-Channel Success9
Integrate in stages
Evaluate the organizational impact
Implement the right multi-channel approach for
your business
Get the organization ready
– Collect customer data – determine target customers
– Focus on customer incentives
Pricing
Return policies
Support
Most Popular Web Sites11
Nielsen Net Ratings for Week Ending 10/13
Top Sites Overall:
Most Popular Web Sites11
Sports
Entertainment
Music
Movie
TV
News
Sources for Demographics
1.
2.
3.
4.
5.
6.
Global Internet Statistics (by Language) www.globalresearch.biz/globstats/index.php3 (9/30/02)
Saunders, Christopher, “Latinos Outpace Other Groups’ On-line growth
www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1
428231,00.html 10/20/02.
Greenspan, Robyn, “High-Speed Connects High-Income
Homeswww.cyberatlas.internet.com/markets/article/0,,10099_1467471,0
0.html9/20/02.
Cyberatlas staff, “Traffic Patterns for August 2002”
www.cyberatlas.internet.com/big picture.com (9/12/02).
Saunders, Christopher, “Moms, Hispanics Increasing Web Use
www.cyberatlas.internet.com/big_picture/demographics/article/0,,5901_1
041581 (05/08/02).
Greenspan, Robyn, American Surfers Keep It Simple
www.cyberatlas.internet.com/big_picture/geographics/article/0,,5901_146
6661.html 9/19/02
Demographics Cont.
Greenspan, Robyn, “Consumers Rank Trust Above Low”
www.cyberatlas.internet.com/marketing/retailing/article/0,60611014831.html
4/23/02.
8. Staff, “Spam poses threat to privacy” BBC News World Edition, Technoligies
10/16/02
9. Greg Sandavol, “Failed dot-coms may be selling your private information”
www.news.com/2100-1017-242649.html 06/29/00
10. U.S. Commerce www.uscomerce.gov 10/20/02
7.
Sources for the Second Phase
1.
2.
3.
4.
5.
LeClaire, Jennifer, “Phase Two for E-Commerce”, E-Commerce
Times 8.1 (2002), 26 Oct 2002,
http://www.ecommercetimes.com/perl/story/18840.html
LeClaire, Jennifer, “Phase Two for E-Commerce”, E-Commerce
Times 8.1 (2002), 26 Oct 2002,
http://www.ecommercetimes.com/perl/story/18840.html
LeClaire, Jennifer, “Phase Two for E-Commerce”, E-Commerce
Times 8.1 (2002), 26 Oct 2002,
http://www.ecommercetimes.com/perl/story/18840.html
Martin, Mike, “The Seven Habits of Highly Effective Web Sites”, CRM
Daily.com, 9.3 (2002), 26 Aug. 2002,
http://www.crmdaily.com/perl/story/19270.html
Martin, Mike, “The Seven Habits of Highly Effective Web Sites”, CRM
Daily.com, 9.3 (2002), 26 Aug. 2002,
http://www.crmdaily.com/perl/story/19270.html
Phase Two Cont.
6. Martin, Mike, “The Seven Habits of Highly Effective Web Sites”, CRM
Daily.com, 9.3 (2002), 26 Aug. 2002,
http://www.crmdaily.com/perl/story/19270.html
7. Regan, Keith, “ Five E-Commerce Trends to Watch”. E-Commerce
Times, 3.3 (2002), 26 Aug 2002,
http://www.ecommercetimes.com/perl/story/16967.html
8. Regan, Keith, “ Five E-Commerce Trends to Watch”. E-Commerce
Times, 3.3 (2002), 26 Aug 2002,
http://www.ecommercetimes.com/perl/story/16967.html
9. Regan, Keith, “ Five E-Commerce Trends to Watch”. E-Commerce
Times, 3.3 (2002), 26 Aug 2002,
http://www.ecommercetimes.com/perl/story/16967.html 10. Rappa,
Michael, “ Business Models on the Web” Managing the Digital
Enterprise, 27 Aug 2002,
http://www.digitalenterprise.org/models/models_text.html
11. Rappa, Michael, “ Business Models on the Web” Managing the Digital
Enterprise, 27 Aug 2002,
http://.digitalenterprise.org/models/models_text.html
Phase Two Cont.
12. “Top 100 Internet Retailers”, Russell Reynolds Associates, 7.6 (2002),
24 Aug 2002, http://www.stores.org/archives/ootop100int_.html
13. Saunders, Christopher, “e-Bay Taps Catalogs for Holiday Push”
Ecommerce News, 11.27 (2001), 26 Aug 2002,
http://ecommerce.internet.com/news/news/print/0,,10375_929661,0...
14. “Top 100 Internet Retailers”, Russell Reynolds Associates, 7.6
(2002), 24 Aug 2002, http://www.stores.org/archives/ootop100int_.html
15. “About Amazon.com”, Amazon.com, 27 Aug 2002,
http://www.amazon.com/exec/obidos/subst/misc/company-info.html
16. “Top 100 Internet Retailers”, Russell Reynolds Associates, 7.6 (2002),
24 Aug 2002, http://www.stores.org/archives/ootop100int_.html
17. “Alticor Inc”, 26 Aug 2002,
http://www.alticor.com/news/pop_alticor_fact.html
Sources Step to Success
1.
Jarvenpaa, S., and Grazioli, S. “Surfing among sharks: how to gain
trust in cyberspace”Mastering Informational Management. Prentice
Hall, London, 2000. pgs 197-201.
2.
Greenspan, Robyn. “More Users, Less Trust”.
http://www.cyberatlas.internet.com/markets/retailing/print/0,,6061_148
3061,00.html, 10/24/2002.
3.
Taylor, Charlie. “Banking on success”
http://www.nua.ie/surveys/analysis/weekly_editorial/archives/issue1no
316.html, 10/30/2002.
4.
Walsh, John. “Websites with a personal touch” Mastering
Informational Management. Prentice Hall, London, 2000. pgs 201-204.
5.
Regan, Keith. “The Best of E-Commerce” E-Commerce Times
http://www.ecommercetimes.com/perl/story/19323.html, 11/5/2002.
6.
Hirsh, L, and LeClaire, J. “Kings of Repeat E-Business” E-Commerce
Times http://www.crmdaily.com/perl/printer/19137/, 10/30/2002.
Step for Success Cont.
7.
Bartram, Michelle. “Multi-Channel Secrets to Success”
http://www.webpractices.com/slideshows/Multichannel%20Success
/multi_2Tech.pdf, 10/30/2002.
8.
Bartram, Michelle. “Multi-Channel Secrets to Success”
http://www.webpractices.com/slideshows/Multichannel%20Success
/multi_2Tech.pdf, 10/31/2002.
9.
“Multi-Channel Integration, A Retailers Perspective” Escalate
http://www.escalate.com/whitepaper3.html, 10/31/2002.
10. Cox, Beth. “Are Multi-Channel Shoppers a Liability?”
http://www.internetnews.com/ec-news/article.php/1442631,
11/5/2002.
11. Internet: Nielsen Net Ratings: Nielsen Net Ratings for Week Ending
10/13.
http://alliance.zap2it.com/zap2it/zp_int_nielsen_net_ratings/1,1648,
173__,00.html, 10/30/2002.