Business-to-Consumer E-commerce

1
Business-to-Consumer E-commerce

• Laurie Brader
• Toni Kloepfer
• Justin Potorff
• Kate Turnbaugh
• Jim Will

2
B2C E-Commerce

• Growth Driver or Growth Laggard?

3
Presentation Overview

• Introduction
• Financial Services
• Retail
• Religion
• Automobile
• Conclusion

4
What is B2C E-Commerce?

• Business ? Consumer
• B2C vs. B2B
• Negotiation
• Integration

Source Patton, Susannah. E-Business Research
Center. The ABCs of B2C. August 2001.
www.cio.com.
5
Classifications

• Brick-And-Mortar
• Mom and Pop stores
• Brick-And-Click
• Target, Eddie Bauer, Best Buy
• Pure Internet
• Amazon, Ebay, Dell, Lands End

Source Dembeck, Chet. E-Commerce Times. The
Brick-And-Mortar Backlash? 1999 November 29.
6
Internet Sales vs. Total Sales 2000 (in millions)
Type of Business Total Sales E-Commerce E-Commerce as a of Sales
Manufacturing 4,217,852 776,942 18.4
Merchant Wholesale Trade 2,749,696 212,842 7.7
Selected Service Industries 4,663,061 37,312 0.8
Retail 3,060,748 28,824 0.9
Electronic Shopping and Mail-Order 107,664 21,368 19.8
Source U.S. Census Bureau, 2000 Annual Retail
Trade Survey
7
World Internet Penetration
Percentage of total adult population
Internet users
Source Taylor Nelson Sofres Interactive-Global
eCommerce Report 2002
8
Internet Users Across the World2002

• As a percentage of total adult population

TOP 5 BOTTOM 5
Denmark 63 Romania 12
USA 62 Hungary 10
Netherlands 61 Bulgaria 9
Canada 60 Indonesia 6
Finland 59 Ukraine 4
Source Taylor Nelson Sofres Interactive-Global
eCommerce Report 2002
9
Products Purchased Online2002
Percentage of internet users who buy these
products online
Type of Product Purchased
Source Taylor Nelson Sofres Interactive-Global
eCommerce Report 2002
10
Reasons for Abstaining from Shopping Online - 2002
of survey respondents
Source Taylor Nelson Sofres Interactive-Global
eCommerce Report 2002
11
Euros Spent Online in the Last 4 Weeks
Source Taylor Nelson Sofres Interactive-Global
eCommerce Report 2002
12
Presentation Overview

• Introduction
• Financial Services
• Retail
• Religion
• Automobile
• Conclusion

13
B2C E-CommerceFinancial Industry
14
E-Commerce in the Financial Industry

• Today there are many tasks of a financial nature
  that can be done over the internet

• Banking
• Check account balances
• Pay bills
• Apply for loans and mortgages
• Reorder checks
• Etc.

• Mutual Funds

• Brokerage Services (Stocks)

• 401(k) retirement plans

• Etc.

1 Stephanie Miles, The Wall Street Journal.
Getting Started With Online Banking October
21, 2002, page R5
15
E-Commerce in the Financial Industry

• Why not handle your finances over the internet?
• Quicker, more convenient and easier than going
  through a bank or stock broker

• Overriding concern among potential online users
  continues to be security 1

• online banking never took off, until now
  Consumers just never warmed to the idea of
  putting all that information, and handling all
  that sensitive business, online. 2

• Financials institutions now provide sophisticated
  electronic security systems1

• Most banks provide a guarantee against online
  fraud 1

1 Stephanie Miles, The Wall Street Journal.
Getting Started With Online Banking October
21, 2002, page R5 2 Stephanie Miles, The Wall
Street Journal. Whats a Check? October 21,
2002, page R5
16
E-Commerce in the Financial Industry

• 1 Stephanie Miles, The Wall Street Journal.
  Getting Started With Online Banking October 21,
  2002, page R5

17
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• The Cyber Storefront
• Aggregators
• Product Producers
• Functional Outsourcer

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 1-9
18
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• The Cyber Storefront
• Common starting point for most businesses
  starting a web based system
• Used to provide current and prospective customers
  another channel in which to purchase a companies
  products/services
• Limits the products available to customers to
  company specific developed products
• This concept would lack a compelling value
  proposition lack of choices for the retailer
  and consumer and would certainly fail 1

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 2-3
19
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• The Cyber Storefront
• Aggregators
• Product Producers
• Functional Outsourcer

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 1-9
20
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• Aggregators
• Aggregators sell multiple brand names of the same
  or similar products.
• Aggregators focus on one of two core disciplines
• Customer Intimacy (service based approach)
• Operational Excellence (price competition
  approach)

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 3-5
21
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• Aggregators Customer Intimacy
• The customer-intimate aggregator will provide
  exceptional service to the client by knowing
  the client having the clients complete
  financial picture available across all of its
  channels (Web, call center, branch offices and
  through individual advisors1
• Companies set themselves apart by their Service
  quality
• Revenues are generated through asset management
  fees, commission fess, transaction fees and fees
  for product originators.

• Example Vanguard who provide superior service to
  their clients

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 3-5
22
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• Aggregators Operational Excellence
• The operationally excellent aggregator will
  address the needs of the independently minded,
  cost-conscious market segment.1
• Geared toward customers who feel confident in
  their decision making.
• Companies must control costs in order to compete
  for price.1
• Volume is the Key to success in this Business
  Model

• Example Ameritrade who provide low transaction
  costs for their customers

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 3-5
23
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• The Cyber Storefront
• Aggregators
• Product Producers
• Functional Outsourcer

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 1-9
24
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• Product Producers
• It is possible that the aggregators will get out
  of the business of producing products to focus on
  the distribution of other companies products
• The firms that decide their core discipline is
  the creation will become what is know as Product
  Producers
• These firms will require a recognizable and
  trusted brand name, so that the consumer can
  relate to them
• They will also need to provide these
  products/services at premium prices to compete
  with the competition.

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 5-6
25
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• The Cyber Storefront
• Aggregators
• Product Producers
• Functional Outsourcer

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 1-9
26
E-Commerce in the Financial Industry

• Four Financial Industry Business Models
• Functional Outsourcer
• Members of this business model will establish
  themselves as low-cost, large scale providers of
  the operational aspects of the product support
  function1
• Functional Outsourcers can provide a variety of
  services such as Web hosting, application service
  providers and content management providers
• As the financial industry continues to grow in
  the e-commerce channel, functional outsourcing
  can be expected to grow as well.

1 Jim Powell, Changing Business Models and
Roles How e-commerce Is Changing Financial
Service Institutions Computer Sciences
Corporation white paper. February 2000, pages 6
27
Financial E-Commerce Case Study

• The Vanguard Group began operations May 1, 1975
  with 11 mutual funds and approximately 1.8
  billion in assets
• As of the second quarter of 2001, Vanguard had
  more than 550 Billion in assets
• Vanguard has grown from just a mutual fund
  provider to a provider of comprehensive
  investment management services, including more
  than 100 domestic funds, brokerage services,
  variable and fixed annuities and life insurance.
• Vanguard is recognized as a technological leader
  in providing e-business strategies and alliances
  to meet the growing needs of customers.

28
Financial E-Commerce Case Study

• Vanguard has won several Awards in the realm of
  E-Commerce
• PC Magazine named Vanguard.com one of he top 100
  websites in its February 2002 issue
• The magazine highlighted their on-line account
  access and educational articles about the market
• The article states Set up an account on the
  site, complete with customizable windows for the
  following funds youve invested in, or just
  browse through the various articles about
  investing in the current market
• Forbes Listed Vanguard.com as Best of Web
  Favorite in December 2001
• For the fourth consecutive time Vanguard.com was
  listed as the best mutual fund family category
  for investing websites
• The king of fund families has a web site to
  match.

29
Financial E-Commerce Case Study
Example of how to effectively use the
Vanguard.com Web Site
30
Presentation Overview

• Introduction
• Financial Services
• Retail
• Religion
• Automobile
• Conclusion

31
B2C E-commerceRetail Industry
32
Electronic Retailing Definition

• Involves the selling of goods and services to the
  consumer market via the internet.
• Also known as
• E-retailing
• Electronic commerce involving the business to
  consumer market

Source E-tailing An analysis of web impacts on
the retail market, October 24,
2002 http//proquest.umi.com/pdqweb?Did0000001206
29498Fmt4Deli1Mtd1Idx
33
The retail industry has changed due to the
internet

• Obliterates national borders to expand customer
  base
• Reshape the service perspective of retailing
• Real time information exchange to encourage more
  market participation
• Omits middleman via channel integration

Source E-tailing An analysis of web impacts on
the retail market, October 24, 2002 http//proques
t.umi.com/pdqweb?Did000000120629498Fmt4Deli1
Mtd1Idx
34
Evolution in the Retail Industry

• Source e-business vision in the retail industry
  October 23, 2002
• Http//www-3.ibm.com/software/info/websphere/pdf/e
  retailvision.pdf

35
Lands End

• On-line demonstration
• www.landsend.com

36
Rules for eRetail success

• Save customer shopping carts for later visits
• Offer a promotion or incentive to purchase
• Show shipping prices early
• Consider a charitable donation tie-in
• Keep products in stock
• Provide order tracking
• Shorten the checkout process
• Be clear about delivery time
• Provide paper gift certificates
• Source eshopability October 23, 2002
• Http//www.eshopability.com/archives/2002-2/emetri
  cs.htm

37
Presentation Overview

• Introduction
• Financial Services
• Retail
• Religion
• Automobile
• Conclusion

38
Religious Surfing Another E-Commerce Market
39
B2C E-Commerce

• Financial
• Retail
• Automotive
• Travel
• Fundraising
• .Religion?? What is the connection?

40
MEMBERSHIP/ATTENDANCE

• Over the past twenty years, traditional
  religions such as the Roman Catholic church have
  struggled to attract and more importantly retain
  members!!

41
The Online Religious Market

• Christian Baptist, Roman Catholic, Lutheran,
  Episcopal
• Jewish Reform, Conservative, and
  Reconstructionist.
• Unitarian
• Others

www.pewinternet.org, Wired Churches, Wired
Temples, Dec 01
42
What are Surfers Looking For?

• Two Primary Goals
• To take an individual spiritual or religious
  information journey.
• To interact with an existing religious community.

www.medialifemagazine.com, Webs a Big Draw for
Believers and Curious, Dec 01
43
Size of Market

• 28 Million Americans have gone online seeking
  religious and spiritual information.
• 2-3 Million Americans go online everyday for a
  wide variety of reasons including to chat, to
  purchase religious gifts, to find a new religion,
  to further their involvement with their faith,
  etc.

www.churchbusiness.com, Internet Resources Are
Aids For The Deeply Devout, Oct 02
44
Internet Surfers Have Sought Religion Online More
Than.

• Traded Stocks
• Individual Banking
• Online Auctions
• Dating Services

www.pastornet.net, Internet and Religion, Sept
02
45
The 9/11/2001 Effect

• 41 of Internet users and sent or received an
  email prayer request.
• 23 of surfers gathered information online
  regarding Islam.
• 7 of Internet users contributed to relief
  charities online!!!

www.pastornet.net, Internet and Religion, Sept
02
46
How Religious Congregations Use Their Web Site!

• Text Comm Money

www.pewinternet.org, Wired Churches, Wired
Temples, Dec 01
47
The Impact of the Web!

• 83 of church leaders believe the Internet has
  helped their congregation!
• 81 say email has assisted the spiritual life of
  the congregation!
• 63 believe the web has helped their
  congregations connect to their communities better!

www.pewinternet.org, Wired Churches, Wired
Temples, Dec 01
48
What spiritual leaders do online

• Find resources for worship- 81
• Search for educational programs- 72
• Research other denominations- 57
• Find prayer material- 40
• Join faith discussion groups- 33

www.pewinternet.org, Wired Churches, Wired
Temples, Dec 01
49
Impact on E Commerce

• Most religious organizations, churches,
  synagogues, and fund raising organizations have
  just began to embrace the web as a source for new
  members and eventually funding!

50
Presentation Overview

• Introduction
• Financial Services
• Retail
• Religion
• Automobile
• Conclusion

51
B2C E-CommerceAutomobile Sales
52
B2C E-CommerceAutomobile Sales

• 1999 2000 Source www.cyberdialogue.com
• 2001 Source JD Power Associates, www.jdpa.com

53
B2C E-CommerceAutomobile Sales

• What do manufacturers offer online?
• Information
• Allow customers to comparison shop by gathering
  information online1
• Convenience
• Online access 24/7
• 1 Source Consumer Federation of America,
  www.consumerfed.org

54
B2C E-CommerceAutomobile Sales

• Who utilizes the Internet to drive automobile
  sales?
• Automobile manufacturers
• Toyota, Honda, Acura, Saturn, Ford, Jeep, etc.
• Automobile dealers
• Third party sellers
• CarSoup.com, AutoTrader.com

55
B2C E-CommerceAutomobile Sales

• Additional features now offered by manufacturers
  websites
• Detailed vehicle feature information
• Accessory options
• Interior exterior colors
• Modification of high quality visual images
• 42 of visitors to automobile websites were
  interested in detailed product information1
• Dealer Locators
• 1 Source Jupiter Media Matrix, www.TechNews.com

56
B2C E-CommerceAutomobile Sales

• Additional features now offered by manufacturers
  websites
• Side-by-side comparison
• Comparison of features and prices
• Selection of comparable models
• 23 of visitors looked for the added feature of
  side-by-side comparison1
• Regional availability
• 1 Source Jupiter Media Matrix, www.TechNews.com

57
B2C E-CommerceAutomobile Sales

• Online Demonstration
• www.buyatoyota.com

58
B2C E-CommerceAutomobile Sales

• Controversy exists over manufacturer-direct sales
  via the internet.

59
Internet Automotive Sales Controversy

• State laws prohibit anyone from selling a new car
  to a consumer unless it is a franchised dealer.
• The number of states with restrictive laws have
  increased from two in 1970 to 41 today.1
• 1 Source Consumer Federation of America,
  www.consumerfed.org

60
Internet Automotive Sales Controversy

• Debate has spiked over the laws
• Critics claim that these laws
• Limit customer choice
• Limit customer convenience
• Limit the ability of the customer to save money
• Source Consumer Federation of America,
  www.consumerfed.org

61
Internet Automotive Sales Controversy

• A Consumer Federation of America study of price
  savings resulting from Internet purchases
  estimated that savings could be in the range of
  10 to 15 percent.
• Critics of the restrictive laws claim that cost
  savings could be gained by consumers through
• Increasing competition, thereby lowering prices
• Streamlining marketing a distribution, resulting
  in price savings
• Source Consumer Federation of America,
  www.consumerfed.org

62
Internet Automotive Sales Controversy

• By opening up purchasing capabilities over the
  Internet, consumers could save money by
  eliminating the cost of dealer margins.

Dealer Margins in 20011 Dealer Margins in 20011 Dealer Margins in 20011
Manufacturer Model to Dealer
Chevrolet Silverado 4WD Cab-Long 12.1
Honda Odyssey EX 4 dr. Van 10.8
Acura Integra Type R 2 dr. 9.6
Hyundai Sonata 4 dr. Sedan 7.5
Mercedes-Benz E430 4 dr. Sedan 6.9
Ford Crown Victoria LX 4 dr. Sedan 5.4
63
Internet Automotive Sales Controversy

• Surveys revealed
• 78 of respondents disagreed with laws that
  require all car sales to go through dealerships.
• The same percentage also believed that consumers
  should have the ability to purchase cars directly
  from manufacturers or third parties using the
  Internet.
• 89 of respondents with internet access believe
  that consumers should be able to buy cars
  directly from the manufacturers via the Internet.
• Source Consumer Federation of America,
  www.consumerfed.org

64
Presentation Overview

• Introduction
• Financial Services
• Retail
• Religion
• Automobile
• Conclusion

65
Top Websites in 2002

• As reported by PC World
• Amazon www.amazon.com
• Internet Archive www.archive.org
• Annoyances.org www.annoyances.org
• Electronic Privacy Information Ctr www.epic.org
• Ebay www.ebay.com
• Google www.google.com
• Yahoo www.yahoo.com

Source PC World. Greatest Hits. August 2002.
66
Best Practices

• Focus on Purpose
• Secure Sites
• Simple Navigation
• Product Descriptions
• Easy Ordering
• Adequate Delivery
• Verification Page

Sources Langnau, Leslie. Material Handling
Management. B2C E-commerce What Works, What
Doesnt. May 2002. www.compaq.com
67
Challenges of B2C E-Commerce

• Converting shoppers into buyers
• Building customer loyalty
• Fulfillment
• Disintermediation

Sources Patton, Susannah. E-Business Research
Center. The ABCs of B2C. 27 August 2001.
www.cio.com. Byrd, James H. Doing Business on the
Web. Building a Loyal Customer Base.
68
Advantages to Expanding Online

• Increased revenues
• Increased market penetration
• Little capital needed
• Cheaper marketing

Source Web Wise Advisors. http//webwiseadvisors
.com
69
B2C E-Commerce
Growth Driver or Growth Laggard?
70
Thank You

• Any Questions?