160701 Internet Retailing - indepth interview with Robin Phillips
Part Three: Chapter 13 Internet Retailing
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Transcript of Part Three: Chapter 13 Internet Retailing
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Internet Marketing & e-CommerceWard HansonKirthi Kalyanam
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Part Three: Chapter 13Internet Retailing
“A salesman is got to dream, boy. It comes with the territory.”
Arthur Miller, Death of a Salesman
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Growth of Online Retail
• Quarterly measurement of e-commerce added to U.S. retail activity in 1999
• Grew from $5 billion in Q4 1999 to $23 billion in Q4 2005
• Annual online retail exceeded $84 billion in 2005
• Still, just 2.4 percent of all retail sales
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Growth of Online Retail
DATA SOURCE: www.census.gov
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Growth of Online Retail
• Online retail percentages vary greatly across product categories
• Key areas for retail sales:– Computer hardware and software– Tickets– Books
• Top categories involve digital products or information-rich purchases
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Growth of Online Retail
Consumer e-commerce penetration by product categorySOURCE: The State of Retail Online, 6.0, a Shop.org Survey conducted by Forrester Research
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Growth of Online Retail
• For Internet retailers, better performance has meant better results– Benefits of higher inventory productivity– Swift response to changes in customer
demands and product transformations – Customer satisfaction generally higher
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Growth of Online Retail
American customer satisfaction index scores
Data Source: American Customer Satisfaction Index, www.theacsi.org
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iPACE and Online Shopping
• Understanding basic consumer needs to find right approach for right channel: – Information– Price– Assortment– Convenience– Entertainment
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iPACE and Online Shopping
• Information: Quality and features of a product, from initial consideration set through final purchase, shipping and returns
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iPACE and Online Shopping
• Price: Draw of lower prices and ease of comparison, but consumers also engage in price partitioning – evaluating influence of taxes and shipping costs on bottom line
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iPACE and Online Shopping
• Assortment: Greater variety and availability online, products are easier to configure and prices easier to adjust
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iPACE and Online Shopping
• Convenience: Avoiding the hassle of traditional stores, easing repeat purchases
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iPACE and Online Shopping
• Entertainment: The online thrills of eBay vs. the lost social aspect of shopping excursions with friends
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Online Shopping Process
The consumer shopping cycle
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Online Shopping Process
The consumer shopping cycle on a web site
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Online Shopping Process
• Step One: Finding the right product– Influence of search and browsing to find
right product in rapidly expanding Web marketplace
– Helping shoppers narrow selection
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Online Shopping Process
• Step Two: Acquiring information – Overcoming the physical limitations of
online shopping– Product descriptions through images,
zoom, ratings and reviews – Personalized information through virtual
models and diagrams– Cross selling and solution selling
opportunities
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Online Shopping Process
Virtual model™ on Lands’ End.com
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Online Shopping Process
• Step Three: Evaluating alternatives– Two versions of the choice model
• Compensatory choice model compares products and services on all attributes
• Non-compensatory choice model compares products based on certain attributes, eliminates products without those key features
– Shopping tools – such as a comparison matrix or assistant – reduce consumer effort; tools that screen products have strongest impact on consumer accuracy
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Online Shopping Process
• Step Four: Placing the order– Many Internet shoppers fail to complete
attempted purchases• Poor information design, lack of transparency
on ship costs
– Efficient reordering and repeat purchase systems help track customers and hold marketing campaigns accountable
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Online Shopping Process
• Step Five: Following up– Post-purchase notifications such as order
confirmation, total price, shipping date and expected delivery date
– Returns made simpler with prepaid return labels, merchandise pickup
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Multi-Channel Retailing
• Understanding the hybrid customer (the shopping “centaur”) who is willing to shop online but buy at a traditional store, and visa versa – Customers who shop regularly in
traditional stores are least likely to use multiple channels
– Online and catalog shoppers more likely to use other channels for some purchases
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Multi-Channel Retailing
Shopper
Classification
Percent Purchasing in Channel
Online Store Catalog
Online 100% 78% 45%
Store 6% 100% 22%
Catalog 23% 36% 100%
Customers from one channel who purchased in another
SOURCE: The State of Retail Online, 5.0, Shop.org
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Multi-Channel Retailing
Shopper
Classification
% Reporting a Purchase Influenced By
Online Store Catalog
Online 100% 25% 68%
Store 22% 100% 26%
Catalog 39% 26% 100%
Buyers who purchased something in one channel previously seen in another channel
SOURCE: Company reports as compiled by Forward Retailing, Inc.
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Multi-Channel Retailing
Shopper groups indicating preference for research and buying
SOURCE: The State of Retail Online, 5.0, Shop.org
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Multi-Channel Retailing
• Challenges for retailers working across online and traditional channels– Determining what products are sold in the
store, online or through catalogs– Communications and logistics– Pricing discrepancies – Planning consistent promotional offerings– Rewarding the right seller: Does the credit
go online or off?