B2C e-Commerce (Course: Digital Marketing & e-Commerce )

1. B2C e-Commerce(Course: Digital Marketing & e-Commerce) Dr. K.B.C. Saxena Fortune Institute of International Business New Delhi July 2, 2015

2. E-Business, E-Marketing & E-Commerce E-business creates the ability to run a business online, and includes E-Marketing and E-Commerce. E-Commerce is primarily the ability to sell or transact on-line. E-Marketing is at the heart of E-Business … …getting closer to customers and understanding them better, adding value to products/services, widening distribution channels and boosting sales using digital media channels. E-Business E-Marketing E-Commerce B2B e-Commerce

3. How digital marketing is unique in marketing? Listening (customer knowledge acquisition) Experience-based Differentiation Co-design (customer collaborative customization) B2B e-Commerce

4. Engage Referral B2B e-Commerce

5. What is E-commerce? • Often thought simply to refer to buying and selling using Internet (e.g. consumer retail purchases from companies such as Flipkart.com). • E-Commerce is the exchange of information across electronic networks, at any stage in the supply chain, whether within an organization, between businesses, between businesses and consumers, or between the public and private sector, whether paid or unpaid. (UK Government, Cabinet Office, 1999) B2B e-Commerce

6. E-business All electronically mediated information exchanges, both within an organization and with external stakeholders supporting the range of business processes. B2B e-Commerce

7. E-business Buy-side e-commerce Sell-side e-commerce Supplier Customer Intermediary Intermediary Digital Processes Business Organization Supplier’s Suppliers Customer’s Customers B2B e-Commerce

8. C2B2C E-business (Exchange) Buy-side e-commerce Sell-side e-commerce Supplier Customer Intermediary Intermediary Digital Processes Business Organization Supplier’s Suppliers Customer’s Customers B2C e-Commerce

9. E-business Opportunities • Reach. Potential number of customers a business can interact with nationally and internationally. It also refers to number of different categories and products a consumer interface can cover. • Richness. Enables detailed information about products, prices and availability. More interactivity and customization to engage customers and provide more up-to-date information. • Affiliation. Effectiveness of links with partners. The more and richer the links with other compatible organizations, the larger the reach and influence. B2B e-Commerce

10. Benefits from e-Commerce & e-Business • Tangible benefits • Increased sales from new sales leads giving rise to increased revenue from: (i) new customers, new markets; (ii) existing customers (repeat-selling as well as cross-selling). • Marketing cost reductions from: (i) reduced time in customer service; (ii) online sales; and (iii) reduced printing and distribution costs of marketing communications. • Supply-chain cost reductions from: (i) reduced level of inventory; (ii) increased competition from suppliers; and (iii) shorter order cycle time. • Administrative cost reductions from more efficient routine business processes such as recruitment, invoice payment, etc. B2B e-Commerce

11. Benefits from e-Commerce & e-Business • Intangible benefits • Corporate image communication • Enhancement of brand • More rapid, more responsive marketing communications including PR • Faster product development life cycle enabling faster response to market needs • Improved customer service • Learning for the future • Meeting customer expectations through a website • Identifying new partners; supporting existing partners better • Better management of marketing and customer information • Feedback from customers on products B2B e-Commerce

12. Models of e-Commerce Transactions From: Supplier of content/ service Consumer Business Consumer-to-Consumer (C2C) • Social networks and blogs • Product recommendations • Peer-to-peer (Skype) • eBay Business-to-Consumer (B2C) • Transactional: Amazon • Relationship-building: BP • Brand-building: Unilever • Media owner: News Corp. • Comparison intermediary: Kelkoo, Pricerunner To: Consumer of content/ service Consumer Business Consumer-to-Business (C2B) • Priceline • Consumer-feedback, communities or campaigns • Business-to-Business (B2B) • Transactional: Euroffice • Relationship-building: BP • Media-owned: Emap business publications • B2B marketplaces: EC21 B2B e-Commerce

13. Models of e-Commerce Transactions From: Supplier of content/ service Consumer Business Consumer-to-Consumer (C2C) • eBay • Quickr Business-to-Consumer (B2C) • Transactional: Amazon • Relationship-building: BP • Brand-building: Unilever • Media owner: News Corp. • Comparison intermediary: Kelkoo, Pricerunner To: Consumer of content/ service Consumer Business Consumer-to-Business (C2B) • Priceline • Consumer-feedback, communities or campaigns • Business-to-Business (B2B) B2C e-Commerce

14. B2C e-Commerce Trade Cycle Pre-Sale Search Order Execution/ Settlement Payment Deliver After Sales After Sales B2C e-Commerce

15. Search (product) in B2C e-Commerce • Search in the product catalogue of the e-Shop • Use a search engine to find an appropriate e-Shop • Follow a link to an e-Shop from another page advertising it. • Select a page featured on an advert or recommended by a friend B2C e-Commerce

16. Essential Elements of a B2C E-Business Supplier Organ. Customer Network (website) Cata-logue Shop Front Settlement Fulfill-ment (Search) (Sale) (Payment) (Delivery) Financ. Institut. B2C e-Commerce

17. Essential Elements of a B2C E-Business Supplier Organ. Customer Network (website) Cata-logue Shop Front Settlement Fulfill-ment (Search) (Sale) (Payment) On-line/ Off-line Delivery Financ. Institut. On-line Sale B2C e-Commerce

18. Electronic Shops (Storefronts) • ‘Look and feel’ of the screen in front of the buyers. • Physical layout replaced by menus, product indices, and search features. • Sales advice people replaced by Help/ Reviews button. • Requirements: • Customers find what is in the store. • Customers are aware what products are available. • Ease of browsing. • Helpful advice. • Good response. B2C e-Commerce

19. Technical Requirements for E-Shops • Ability to connect to existing product catalogues or importing them into a new catalogue. • Capability to track customers to know which goods a customer has chosen for finding his/her preferences in one-to-one business. • Capability for internationalisation: currency conversion and local currency accounting and taxation; integration with logistics companies for shipment. • Availability of auto-responders, chat rooms, news groups, and automatic search engines. B2C e-Commerce

20. Customer Tracking Technologies • Basic authentication through a login. • Cookies: (storing personal information on customer’s computer and retrieving it next time). • Domain name. • IP address. • Personalised URL (every customer gets another URL) • Strong authentication, e.g. digital certification. B2C e-Commerce

21. Features of an E-Shop Solution • Electronic product catalogue (EPC) • Interface to other applications (e.g. inventory, logistics, etc.) • Payment systems linkage. • Reporting to know what customers want. • Search engine for customers. • Shopping basket (for collecting the products for ordering) • Terms and conditions for making contract legal. • Web design templates (for shop design). B2C e-Commerce

22. Factors Affecting Consumer Behaviour in E-Shops • Merchandise • Promotion • Convenience • Checkout • Store Navigation B2C e-Commerce

23. Functional Components of E-business Systems • Take advantage of general purpose applications. • Customer components and clients: • Web client (browser) • Special applications for payments: Wallets • Seller components and servers • Transaction processing systems: What was ordered? Who ordered it? How much it cost? Status of payment? Status of fulfillment? Etc. • Payment processors • Fulfillment systems (logistics) B2C e-Commerce

24. B2C e-Commerce Digital Platform Web Server with Order Database Merchant server Internet Financial network `EPC + Order database Buyer (client browser) B2C e-Commerce

25. Merchant Server: Logical View Credit Card Information Order Capture Forms Catalogue database Order database Catalogue Page Generation Static Content Web Server B2C e-Commerce

26. Open Market e-Commerce Software Architecture Catalogue Servers with SecureLink Financial Network Internet Shared Transaction Server Buyer with Browser B2C e-Commerce

27. E-Commerce Transaction:A Sales Example • Debit buyer’s account • Credit seller’s account • Record event for business records • Transmit order to fulfillment centre • Issue receipt to buyer Transaction processing must ensure that (a) all of these steps happen if any of them do, (b) that the activities of multiple buyers do not interfere with each other, and (c) that records are not lost. B2C e-Commerce

28. Characteristics of E-Commerce Transactions • Atomicity: Either all the steps of the transaction must be taken, or it must seem to all observers that the transaction never happened at all. • Consistency: The state of the transaction environment must not be inconsistent. For example, accounts must balance both before and after the transaction. • Isolation: Because there may be a number of transactions taking place concurrently, the activities of one buyer must not interfere with those of another buyer. • Durability:Once a transaction is complete or committed, it should be impossible for its effects to come undone due to a system or component failure. B2C e-Commerce

29. Transaction Processing in E-Commerce 1. Customer selects items from EPC. 2. Customer securely enters credit card and shipping information. 3. Product, tax and shipping charges are calculated. 4. Customer accepts the resulting total amount. 5. A credit card authorization is obtained. 6. An advice of order message is sent to a fulfillment centre. 7. The customer receives a receipt. Browsing + ordering Transaction processing B2C e-Commerce

30. Transaction Failure Possibilities • Seller’s computer crashes or there is a power failure. • Buyer’s computer crashes or there is a power failure. • Credit card authorisation fails. • Credit card network fails between the time the authorisation request was sent and the time the response is received. B2C e-Commerce

31. Evolution of E-retail • Online retail is one of most prominent sectors of e-commerce, and while it has and is still experiencing remarkable growth, its course has been tempestuous during the past decade. • A large percentage of the pioneers in the new retail market failed because they underestimated the complexity of the novel industry. B2C e-Commerce

32. Errors in First Phase of e-Retail • Assumption 1: E-customers would be very price-conscious because of the high cost of information search. • Assumption 2: Entering the e-retail market was easy. • Assumption 3: Rapid development in falling prices would push the traditional physical store out of business. • Assumption 4: Manufacturers will contact the e-customers directly and physical retailers will not be required. B2C e-Commerce

33. E-commerce in India • India han internet user base of about 243.2 million as of January 2014. • India’s e-commerce market was worth $3.8 billion in 2009, which went up to $2.6 billion in 2013 (the retail segment was worth $2.3 billion). • 35 million online shoppers in 2014 and is expected to cross 100 million mark by end of 2016. • Six companies in India have managed to achieve Billion-Dollar valuation: Flipkart, Snapdeal, InMobi, Quikr, OlaCabs, and Paytm. B2C e-Commerce

34. Key Drivers in Indian e-Commerce • Large percentage of broadband Internet users • Explosive growth of Smartphone users • Rising standards of living in urban areas • Availability of much wider product range compared to what is available at brick-and-mortar retailers. • Competitive prices compared to brick-and-mortar retail driven by disintermediation and real estate costs. B2C e-Commerce

35. Services Provided under Various Modes of e-Commerce • Online travel. Customers buy tickets, book hotels, and purchase tour packages online. The ticketing service can be for airlines, railways or buses. • Online retail/ e-tailing. Online sale of products such as books, mobiles, electronics and home and kitchen appliances among others. • Digital downloads. Paid music, videos and games download. • Financial services. Online sale of insurance, loans and mutual funds. • Online classifieds. Portals connecting buyers and sellers (C2C) by providing classified space where the sellers can advertise their product. B2C e-Commerce

36. 1. Do you think the growth of B2C e-Commerce industry is slower in India compared to western countries?2. What do you think could be the major reasons for this? B2C e-Commerce

37. Major Reasons for Slower Growth of e-Commerce Industry in India • Low penetration of broadband: low Internet speed results in slow download of images and makes payment difficult. • Many customers still don’t trust the online payment systems through credit cards, etc. • Indian customers would like to touch and feel the product before buying. This is the most important reason why only travel and other booking portals have been able to grow until now. Very often Indian customers use e-commerce portals to compare prices and then make the purchase offline. • Supply chains have not yet achieved economies of scale resulting in high costs. Also, lack of coordination results in unnecessary delays and errors during delivery. B2C e-Commerce

38. 1. Suggest the profiles of Internet users in India (e.g. IT professionals, business executives, school-going children, non-working woman, etc.).2. Can you guess what percentage of these also use Internet for e-Commerce? What is the basis/assumption for this guess? B2C e-Commerce

39. Profile of Internet Users in India Age Group Active Internet Users e-Commerce Users School-going children 14% 3% College students 30% 5% Young men 28% 5% Older men 13% 7% Working women 8% 9% Non-working women 7% 8% TOTAL 100 4% (Other uses: e-mail: 40%; Chat: 8%; Information: 29%; Entertainment: 11%; Others: 8%) B2C e-Commerce

40. Specific Demands of Indian e-Customers • Return process should be seamless and convenient. • Free door-to-door shopping. • Low prices compared to brick-and-mortar stores • Availability of ‘cash on delivery’ (COD) B2C e-Commerce

41. Characteristics of e-Retail • High Customer Acquisition Cost (CAC) [includes advertising and search engine optimization] • Low value of a sale transaction • The CAC ranges from Rs 800 to 1500. By contrast, the average price of a book sold is Rs 300. B2C e-Commerce

42. Profitability in e-Retailing • Though e-retailers may make a profit per transaction level, but they may not do so for the sake of investing heavily in technology and supply chain resulting in losses. B2C e-Commerce

43. Current Players on e-Retail Field • Virtual retailers (pure play, single channel) • Clicks-and-bricks (multichannel) • Marketplaces B2C e-Commerce

44. Virtual Retailer Web Server with Order Database Merchant server Internet Financial network `EPC + Order database Buyer (client browser) B2C e-Commerce

45. Click and Brick • Use physical channel for customization. • Needs innovative value proposition • Localised services for fast delivery B2C e-Commerce

46. Marketplace Suppliers ` Warehouse-1 Warehouse-2 e-Customers Shopfront Direct Sellers B2C e-Commerce

47. Critical Processes for Marketplace • Stockkeeping • No. of suppliers critical • Snapdeal 100000 suppliers • Flipkart 50000 suppliers • Amazon 25000 suppliers • Supply chain management B2C e-Commerce

48. Profitability in e-Retailing • Customer Acquisition Cost (CAC) • Cost of fulfillment (ease of distribution) • Customer retention rate • Shopping cart abandonment rate B2C e-Commerce

49. How the supply chain management quality affects the service quality of Internet Retailers? B2C e-Commerce

50. Supply Chain Management Issues in e-retailing • No. of warehouses and their locations • No. of SKU sourced; no. of Suppliers • Average lead time to procure • Distribution agencies/network • Average delivery time Sourcing Distribution B2C e-Commerce