Transcript Framework for E-Commerce Analysis • B2C (and C2C/P2P) • B2B

Framework for E-Commerce
Analysis
• B2C (and C2C/P2P)
– Interactive marketing and customization
– Online sales and distribution
– Online service and support
• B2B
– Supply chains
• Distributed
transparent and dynamic virtual and transformed
– Extranets
– E-marketplaces
• B2E
– Knowledge management and decentralization
– Employee training, tracking and productivity support
– Virtual companies and subsidiaries
B2C Business Models
Model
Examples
Portal
and Search Engines
E-Tailer
and “Clicks & Bricks”
Content/Service
Provider
Transaction Broker
Market Maker
Community
Revenues
Yahoo, Google
Ads, subscriptions,
fees, transactions
Amazon
WalMart
Sale of goods, web
services
CNN, WSJ
Weather.com
Ads, subscriptions,
fees, sale of
services/content
PayPal
EBay
Match.com
Transaction fees
Transaction fees,
subsidiary services
Ads, subscriptions,
referral fees
B2C Trends Since 2000
• Consolidation and niche growth
– The largest and the smallest ends of the spectrum are the most
robust
• Hybrid models for leadership
– Multiple businesses, services and revenue sources through
integration, acquisition, and strategic partnerships
• Amazon’s new search engine
• Yahoo’s wireless and media businesses
• Google’s enterprise services
• More acceptance of fee-based models
– The Internet is no longer a “free for all” zone
• Music, mobile and gaming set the pace (and always, sex)
• Business services and personal gratification are core drivers
• Continued expansion in online sales
– BUT still seeing dismal browser conversion and transaction
completion data across all B2C sites; what are the barriers to
growth of E-Commerce?
Consumer Drivers
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•
•
•
•
•
Convenience
Comparison shopping
Product research before purchase decision
Greater selection
Lower prices
And…..
Critical Role of Trust
• Security is a prerequisite but not a substitute for online
trust
– “Security prevents bad things from happening.”
– “Trust enables good things to happen.”
• Online trust is an unnatural act
– Internet lacks traditional “trust markers”
• Personal acquaintance, geographical proximity, physical presence
are how we once instinctively decided who to trust
• Therefore B2C trust must be carefully built and
maintained in every online interaction to maximize the
value of the investment in E-Commerce
Building Online Trust
• Excellent and consistent performance at the Internet and
Web presence technical and security level
– Metrics: Web site speed and reliability; security best practices
and policies
• Excellent Web site design and functionality
– Metrics: Web site best practices implementation
• Business Reputation
– Metrics: Perception and value of brand; responsiveness (answer
your e-mail!)
• Providing Tangible Value to the Customer along with
Protection of Privacy and Personal Information
– Metrics: Privacy policies; valued online services and features
Digital Trust Hierarchy of Needs
Shared
Value
Relationship
Online Performance
Reputation and Responsiveness
Security and Privacy
Typical B2C Approach
Consumer Needs
Web Features That Build Trust
(From 1999 “E-Commerce Trust Study” by Sapient)
• Brand Recognition
• Navigational Consistency and Search Function
• Reliable Fulfillment
– Starting with ease of ordering, clear fulfillment process (explicit
information about what happens once order is placed online, visible
and easy-to-use customer support contacts
• Professional Presentation of Content
– Accurate, current information and links (no error messages)
• Up to Date Technology Especially for Security
• Seals of Approval--External Trust Insignia
– But only if insignia group is recognized by user
What Features Do Consumers Value Most?
Which of the following features would make you
visit/patronize/buy more from a certain site?
Content
Services
Commerce
Pages load quickly
54%
41%
37%
Site was easy to navigate
52%
50%
48%
Ease of registration/check-out/login
28%
44%
42%
Pages are easy to read/not confusing
35%
37%
27%
Search function works well
32%
17%
30%
None
16%
22%
22%
Ability to customize site to my needs
8%
11%
4%
Personalized offers/recommendations
8%
7%
14%
Source: Jupiter Research/Ipsos-Insight
November 2003
Quantifying What Matters: Web
Performance and Transaction Success
The Keynote E-Commerce Transaction
Performance Index shows the total (automated)
web execution time and success rate for logging
into an account, searching for an item, adding it to
the shopping cart, and proceeding to check out on
selected Internet retail sites. Success rate is
aggregate ratio of attempts to successful
completion of all steps.
Available weekly on E-Commerce Times
http://www.ecommercetimes.com/ectpi/
Execution Time Rankings
10/11/04
Success Rate in Transactions
Seconds
%
Rank
(& last 1
week)
Office Depot
9.68
(2)
1
Office Depot
99.73
(2)
2
Eddie Bauer
9.75
(1)
2
Eddie Bauer
99.55
(1)
3
JC Penny
10.96
(3)
3
JC Penny
99.37
(7)
4
Wal-Mart
12.98
(5)
4
Best Buy
99.10
(4)
5
Amazon
13.18
(4)
5
Office Max
98.84
(5)
6
Costco
15.67
(6)
6
Costco
98.66
(3)
7
Best Buy
16.65
(7)
7
Target
98.46
(9)
8
Target
18.71
(8)
8
Wal-Mart
98.10
(6)
9
Office Max
21.62
(9)
9
Amazon
97.96
(10)
10
Sears
22.59
(10)
10
Sears
93.85
Who Do We Really Trust?
• Survey (2004) by Ponemon Institute and TRUSTe asked
6,300 consumers to name 5 companies across all
industries that they trusted the most to protect their
privacy and the personal information provided online
• Top 5 companies in order of rank
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–
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eBay
American Express
Proctor & Gamble (all brands)
Amazon
Hewlett Packard
• Also in top 10
• US Post Office, IBM, Earthlink, Citibank, Dell
What Do We Worry About Most?
• The same survey asked respondents what worried them
the most when buying or interacting online (including email, web browsing and general Internet activities)
• Majority worried about:
– Identity theft (76%)
– SPAM
(58% -- twice as high as in 2003 survey)
• Some minority worries
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–
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Legal problems, surveillance, loss of civil liberties
Financial problems, stolen credit card or loss of payment made
Public embarrassment
Stalking or spying activities
Quantifying the Value of Trust
• DoubleClick 2004 consumer study
– 81% of US consumers surveyed send and receive e-mail daily
• Consumers consider an e-mail as SPAM when it comes from an unknown sender (93%) or comes too frequently from a known source
(58%)
• Despite irritation with SPAM, consumers continue to respond to
permission-based e-mail and offers (which account for less than 8%
of total e-mail)
– Permission marketing drives sales (and requires trust)
• 32% of respondents have made made immediate online purchase in
response to e-mail offer
• 30% have clicked for more info and made online purchase later
• 12% have clicked for more info and made purchase offline
• 79% have redeemed e-mailed coupons for online purchases
• 59% have redeemed e-mailed coupons for offline purchases
Potential B2C “Trust Dividend”
• Raise browser-to-buyer conversion rate from
under 10% to 50%
– Estimated added sales revenue:
• Increase the completion rate for transactions
already at the shopping cart check out from 47%
to 80%
– Estimated added sales revenue:
• Boost the online percentage of all US retail sales
from under 10% to 50%
– Estimated aggregate E-Commerce dollar increase:
Best B2C Practice Overview
• Go to the Buyers – Bring in traffic through effective online marketing
(and affiliate programs)
• Optimize Home Page Design – Provide clear navigation, site overview,
search and support options
– Content Partnerships – Keep content relevant and current
– Supporting Images and Content – Product details
• Persistent Shopping Cart – Let customers browse and then pick up cart
as they left it when they come back to site
• Promote Online and Offline Synergies – Offer in-store pick up and
returns; provide store locator
• Excellent Search Engine Capabilities – Most frequently used
navigation tool
• Clear Customer Support Options
• Strong and Relevant Cross Selling - Solid product recommendation
logic and tight inventory integration is critical
One Persistent Worst Practice
• 2004 study by BenchmarkPortal found that 41%
of the largest US and Canadian companies on
the Web are not responding promptly or
personally to e-mails, even those that indicate a
consumer interest in making a purchase
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–
–
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41% did not respond
39% send response within 24 hours
15% sent an immediate acknowledgement
17% responded with an accurate and complete
answer
– 6% of online companies don’t even provide an e-mail
contact address
Sign of Immaturity of B2C:
Still More Focus on Finding Than Keeping
Customers
2001
2002
Acquisition 63%
55%
Retention
19%
28%
Branding
18%
17%
Overall retailer digital marketing spending
Source: The State Of Retailing Online 5.0
Tracking cross-channel customers
is elusive
“Do you know how many of your Web site visitors
come into your stores and make a purchase?”
Yes
2%
No
98%
Courtesy of Forrester Research
Most offline retailers have not
integrated their channels
Percent of
retailers using
Process to measure revenue and
cost impact across channels
42%
Costs allocated across channels
42%
Offline channels get revenue
credit for online sales
26%
Online channel gets revenue for
offline sales influenced by Web
9%
Courtesy of Forrester Research
Creating an Information Gap in All Channels
About What Happens to the Dropouts
Online researchers
who buy in
another channel
Online buyers
and researchers
Dropouts?
Courtesy of Forrester Research
Best Buy: A basic cross channel best practice
• What they did: implemented
the ability to buy online and
pick up offline
• What they learned: the Web
influences 19% of store
purchases
• Impact: higher budgets for new
developments like online
circulars, DVD rentals, etc.
Sears.com: A multichannel best practice
Sears.com influences $500
million of in-store appliance
purchases a year
WalMart Overview
• End to end strategy starts with online
management of all supplier relationships
• Dynamic sales and inventory update reports
via the web
• Customer facing sales and support online,
including new digital products and services
– Music downloads, DVD rental services
• Innovations with RFID tagging for enhanced
inventory control
Standardized
Navigation Bars
Detailed Content
Online Service
Offerings
How does the
world’s “big store”
retail giant rate in
end-to-end ebusiness practice?
Two cross
selling
pitches for
relevant items
Detailed product
descriptions
Anticipating and
responding to
customer support
questions
Offering alternative
contact options and
multi-channel support
Still cross-selling!
WalMart in Europe: Extending the Brand With Localization
Global branding and
localized web
presence
WalMart International Web Sites
Canada: www.walmartcanada.ca
China: www.wal-martchina.com
Germany: www.walmartgermany.de
Mexico:www.walmartmexico.com.mx
Korea: www.walmartkorea.com
United Kingdom: www.asda.com
Another Web Site for Outdoor Furniture
How Many “Best Practices” Can You Spot?
Well-known best
practices mean
that start-ups
have a running
start
In fact, smaller
companies reap
proportionately
more benefits from
an exemplary web
presence
Evolution of B2B E-Commerce
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EDI ancestors
Early appearance of supplier webs
E-procurement software tools
Net exchanges and marketplaces
Value webs
Private industry and VPN platforms
B2B Business Models
Model
Examples
E-Procurement
Ariba
E-Marketplace Provider
Industry Consortia
Exchanges
Hosted Services
E-Learning, E-CRM
E-Accounting, etc
Covisent
RubberNetwork
Web Services
Fees, software
licenses
Fees and
commissions
on transactions
Salesforce.com
Supportforce.com
Licenses, fees
for hosted
services
Cisco
Sale of goods,
software
licenses, fees
Internet Enablers
Hardware, software,
payment systems, etc
Revenues
IBM
Software, fees
B2B Trends
• Consolidation
– Many start up business failures as well as acquisitions
– E-Marketplace integration along with industry-specific survivors
• Survival based on demonstrating ROI
– Reach for higher-level management customers
• Spend management focus by Ariba
• Executive Dashboards from multiple vendors
• Data integration and channel synchronization issues
loom equally large in B2B
• Security is relatively more robust
• Critical component is the degree of information
transparency