Business to Consumer E-Commerce

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Business to Consumer E-Commerce

• Dogus Madrali
• Shaun Nicholson
• Telesa Nolan
• Chris Saeger

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Topics Being Covered

• Introduction Shaun Nicholson
• Demographics Dogus Madrali
• B2C Revenue Growth Statistics Shaun Nichoson
• Pathways to E-business Leadership Study Telesa
  Nolan
• On-line Gambling Case Study Chris Saeger
• Conclusion Chris Saeger

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Terms

• Pure Plays - are companies without a traditional
  brick-and-mortar firm or strictly internet
  (Amazon.com)
• Brick and Clicks are Brick-and-Mortar companies
  who have implemented e-business in some fashion
  (Barnes Noble.com)
• E- Business model method of doing business that
  contributes to the firms profitability either by
  increasing revenue or decreasing cost

Source Strauss, Judy Frost, R. E-Marketing
Prentice Hall, New Jersey 2001
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E-Business Models

• Content Sponsorship Model companies that create
  valuable content or services on their websites,
  draw lots of traffic and sell advertising (Yahoo,
  Google)
• Direct Selling Model when manufacturers sell
  directly to consumers, eliminating channel
  intermediaries (Dell, Gateway)
• Infomediary Model refers to an organization
  that collects and sells information about
  consumers or businesses (Gator)
• Intermediary Models these are the middlemen as
  in traditional business practices
• 1. Brokers and Agents brings buyers and
  sellers together but neither purchases nor take
  possession of product (Ebay, Carpoint)
• 2. E-Tailers are firms that buy products and
  resell them online (Amazon)

Source Strauss, Judy Frost, R. E-Marketing
Prentice Hall, New Jersey 2001
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Demographics
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Global spread of Internet Hosts

• A host is a computer that acts as a source of
  information that can be obtained over the
  internet
• The total number of hosts is a valuable measure
  of Internet growth.
• Few hosts until the early 1990s, at which point
  the number began to grow at a tremendous pace,
  nearly doubling every year between 1990 and 1996.
• On a hosts per-capita basis, with the exception
  of Finland, the United States leads the world by
  a significant margin

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Global spread of Internet Hosts
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Worldwide Internet Population
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Global Internet Statistics (by language)-Total
619 Million (Sept. 2002)
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US Internet Population

• By 2002 the US internet population is 149 million
  
• 54 of entire US population
• 33 of worldwide internet population

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Breakdown of US Internet Population by Age
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Breakdown of US Internet Population by Gender
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Breakdown of US Internet Population by Education
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Why people are online?
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Total Online Shopping Population in the US
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Who's shopping?

• - 28 percent of Internet users globally have
  either shopped online or plan to do so in the
  next six months.
•  - 16 percent of men using the Internet have
  shopped online compared with 13 percent of women.
  

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Top 15 Shopping DestinationsFor Week Ending
December 1st, 2002 Excluding Travel (U.S. Homes)
Source cyberatlas.internet.com
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Fastest Growing Major E-Commerce Categories
Excluding Travel, Auctions, and Large Corporate
PurchasesPeriod Weeks Ending Nov 8, 2002 to Dec
6, 2002
Source cyberatlas.internet.com
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Top Shopping Categories During the 2002 Holiday
Season, Ranked by Spending(11/2 - 12/27)
Source cyberatlas.internet.com
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View of E-Shopping Concerns
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Revenue Growth Statistics
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Rise of International E-commerce Revenues
Expected

• According to the latest predictions of IDC
  Research e-commerce revenues will amount to a
  staggering 1.6 trillion USD by 2003
• International Internet users have increasingly
  turned to e-commerce and accounted for an
  estimated 52 percent of online transactions in
  2001. In 1999, the international share was only
  38 percent.
• This year will be the last that the majority of
  e-commerce revenues are generated in the US

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E-Commerce is Big Business in US

• B2C E-Commerce refers to all forms of retail
  commercial transactions occurring over an open
  network which includes online selling of goods
  and services directly to consumers
• Business-to-consumer e-commerce in the US
  accounts for almost one-quarter of total
  e-commerce worldwide today
• As total online consumer revenues and the number
  of online buyers continue to climb, the average
  annual online expenditure per buyer, which has
  increased at a rapid yearly pace, was expected to
  reach 976 in 2002

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E-Commerce is Big Business in US
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Consumers Like Buying on the Web

• A recent study shows consumers like to buy of the
  web. The University of Michigan study shows
  that e-commerce displays more customer
  satisfaction, loyalty and prospects for future
  economic growth than any other sector of the
  economy. -www.investors.com

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Consumers Like Buying on the WebSource Univ. of
Michigan Customer Satisfaction Study
source www.investors.com
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Online Spending Increasing According to Goldman
Sachs, Harris Interactive and Nielsen-NetRatings

• U.S. Consumers spent 15.7 billion online during
  the 2002 Holiday Season, up 22 from 2001
• Consumers spent 16 of their holiday budgets on
  online purchases compared with 14 in 2001

Source www.nua.ie
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Size of E-Commerce Market According to the
United States Department of Commerce 2000 Census

• According to the 2000 US Census estimates, 94 of
  E-Commerce is B-to-B and only 6 is B-to-C.
• Estimate assumes manufacturing and wholesale data
  in entirely B-to-B and retail and service data is
  entirely B-to-C
• 2002 Census currently being conducted

Source www.census.gov/estats
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Size of E-Commerce Market According to the
United States Department of Commerce 2000 Census
Source www.census.gov/estats
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Retail E-Commerce Sales According to the United
States Department of Commerce 2000 Census

• Non-store Retailers, in particular Electronic
  Shopping and Mail Order Houses, account for 74
  of retail e-sales.
• This category includes catalog and mail-order
  operations, retail sites selling solely over the
  internet, and e-commerce business units of brick
  and click retailers.

Source www.census.gov/estats
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E-Sales for Electronic Shopping and Mail Order
Houses by Merchandise Line According to the
United States Department of Commerce 2000 Census
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E-Commerce Still Small Piece of Pie
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Web Commerce Has Room To Grow

• The convenience B2C E-Commerce currently only
  benefits certain parts of world
• North America, Europe, and Asia Pacific made up
  94 of all worldwide e-commerce in 2000
• It is predicted that by the end of 2003 the
  business-to-consumer transactions in North
  America, Europe, and Asia Pacific combined will
  have multiplied by over seven times the 2000
  amount

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What is the present outlook on e-commerce?
As established business-to-consumer (B2C)
companies set out to take advantage of the
Internet, many have found the task far more
difficult and potentially destabilizing than they
had anticipated. No mere business tool, the
Internet goes to the heart of the corporation,
challenging its existing business models and
customer relationships. ---Willcocks Study---
Gartner Group predicts continued strength in B2C
spending over the next three years, with revenue
seen at 3.24 trillion in the United States and
2.58 trillion in Europe -----MacVittie Article---
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Pathways to E-Business Leadership
Study by Leslie Willcocks and Robert Plant
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Pathways to e-business leadership

• Study by Leslie Willcocks and Robert Plant
• Studied 58 major B2C corporations from three
  continents and a wide range of industries.
• Study found of the 58 15 leaders, 25
  laggards and 18 medium-performing
  organizations
• Of the Leaders group all shared genetic
  characteristics that distinguished them from
  other companies.

Source Willcocks, Leslie P. Plant, Robert,
Pathways to e-business leadership Getting from
bricks to clicks Mit Sloan Management Review,
Cambridge, Spring 2001 vol. 42 issue 3 pp. 50-59
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E-Strategic Grid Technology

• First to Technology
• Intelligent Management of Technology
• Technology as an Asset

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E-Strategic Grid Brand

• Brand Reinforcement
• Levis
• Brand Repositioning
• Yahoo!
• Brand Creation
• Prudential Assurance - Egg.com
• Brand Followership
• Amazon

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E-Strategic Grid Service

• Value Added Practices include
• Personalization
• Tiered service levels
• Keeping it simple
• Responding to what customers do not like doing or
  do badly
• Providing a one stop shop for service
• Balancing customer self-service with support

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E-Strategic Grid Market

• Concern with Market Growth
• Integrating processes
• Integrating technology
• Integrating skills

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E-Strategic Grid

• The Low Performers or Laggards
• The IT department was made responsible for
  e-business developments
• Senior business managers underfunded and
  undervalued IT and e-business developments
• IT and Web-based technologies were treated as a
  cost center rather than a profit center
• The CIO was positioned as a specialist functional
  manager
• Believed E-commerce was a passing fad or silver
  bullet

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E-Strategic Grid

• E-Business Leaders shared similar attributes
• Integrated Web technologies into their core
• Used information gathered online to gain insight
  into the customer
• Augmented service and focus intensively on
  customers and marketing
• Recognized that competition opportunities and
  customer expectations evolve quickly

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Maslow The InternetWhat would he think?

• Abraham Maslow, born April 1, 1908 and his theory
  of human motivation based on hierarchy of needs
  has made him well known. How does this relate to
  the Internet you say? If he were alive today what
  would he think of the Internet. The Internet has
  been found to be able to satisfy all our needs
  with just a CLICK.

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Maslow vs. Ecommerce
Maslows Hierarchy of Needs
Self actualization - being all that you can be
Self Esteem - strength,achievement self respect

Social Needs - affection, belonging, acceptance,
friendship
Safety Needs security, protection from harm
Physiological Needs hunger, thirst, shelter, etc
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Physiological Needs hunger, thirst, shelter, etc
Brick Click
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Safety Needs security, protection from harm
Personal Safety Sales Pure Play
Investments Brick Click
Insurance Pure Play
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Social Needs (affection, belonging, acceptance,
friendship)
Brick Click
Pure Plays
Urbancity.com
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Self Esteem strength, achievement, and self
respect
Brick and Click

Pure Plays
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Self actualization (being all that you can be)
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Online Gambling
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Online Gambling History

• Worlds first online casino opened in August 1995
  with 18 casino games, located offshore (Turks and
  Caicos Islands.)
• Internet Casinos Inc developed their virtual
  casino for only 1.5 million compared to cost of
  300 million to open a casino resort.
• According to founder Warren B Eugene, ICI house
  cut averages 24 compared to 8 to 16 for a
  typical US casino.

Source Gambling on the Internet by Cynthia R
Janower of Boston Consulting Group
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Online Gambling History

• According to the Justice Department, existing
  laws make all Internet gambling illegal for
  Americans.
• 1961 Wire Wager Act specifically prohibits the
  use of telephone lines for the purpose of placing
  a bet.
• Despite these laws, offshore casinos have grown
  from 2 dozen sites in 1995 to almost 2,000 in
  2002.
• Americans will gamble more than 2 billion
  through these sites in 2003.

Source Internetnews.com/ec-news/article.php/21685
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Online Gambling Greenfield Study

• 2001 survey of 1000 users who had visited an
  online gambling site.
• Only 13 of users opened an account.
• 50 of those polled said they were concerned
  about the safety of their money and whether they
  would actually receive their winnings.
• 4 were willing to gamble 100 online while 24
  were willing the gamble that amount at an offline
  casino.
• From our research, its evident that users are
  crying out for a name-recognized casino. If they
  were to enter the area, I think they would have
  great success. - Gail Janensch, Greenfield VP

Source www.ecommercetimes.com
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Online GamblingAdvertising increasing according
to Jupiter Media Metrix

• Online advertising by virtual casinos increased
  170 between December 2000 and December 2001,
  from 911 million ad impresions to 2.5 billion.
• The sector has become the fifth largest
  advertiser online, while moving its ad-buys to
  main-stream sites.
• Traffic increasing, 13.6 million people visited
  online gambling sites in December 2001 alone.

Source Internetnews.com/ec-news/article.php/21685
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Online GamblingGrowth Projections

• In 2001, analysts estimated the online gambling
  market at 2 billion.
• Cristiansen Capital Advisors projects that the
  online gambling market will reach 6 billion in
  2003 and as much as 10 billion by 2005
• Informa Media Group claims that the revenue from
  online gambling will reach 14.5 billion by 2006.

Source Internetnews.com/ec-news/article.php/21685
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Casino Games

• Blackjack
• Baccarat
• Carribbean Poker
• Pai Gow Poker
• Video Poker
• Deuces Wild
• Craps
• Slots
• Roulette
• Keno
• Multiplayer Chat

Top Casinos - Dec 2001

• Kcasino.com - 2.3 M visitors
• Webstakes.com - 2.3 M visitors
• Aceshigh.com - 2.1 M visitors
• Luckynugget.com - 1.7 M visitors

Source www.ecommercetimes.com
Source SwissCasino.com
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Source www.goldentigercasino.com
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Online Sportsbooks

• Golf
• Soccer
• Tennis
• Hockey
• Horse Racing

• Football
• Baseball
• Basketball
• Auto Racing
• Boxing

Source www.sportingbetusa.com
Other Betting

• Just about anything you can think of
• Start date of war with Iraq
• Number of Super Bowl Commercials

Source www.internetnews.com
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Online GamblingLegal Controversy

• Internet Gambling has grown from a nuisance to a
  booming e-commerce empire fueled in great part by
  Americans.
• As of March 2003 Congress was debating the issue.
• Ban it? Sen. Jon Kyl (R. Ariz.) wants to cut
  off American access to offshore casinos and
  sportsbooks by prohibiting U.S. banks, credit
  card companies and other internet payment systems
  from making payments to gambling sites.

Source www.internetnews.com/ec-news/article.php/2
168531
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Online GamblingLegal Controversy

• Legalize it? Rep. John Conyers (D. Mich.) likens
  attempts to ban gambling with the national effort
  to ban alcohol in the 1920s. Conyers says a
  federal prohibition will create gambling
  speakeasies controlled by organized crime or
  crooked operators. His answer? Legalize it,
  regulate it and tax it.
• Stated risks include child welfare, rigged games
  and money laundering.
• Antigua, home to only 68,000 people, has over 100
  licensed online casino operators has plans to
  challenge any US law to criminalize online
  betting with the WTO.

Source www.internetnews.com/ec-news/article.php/2
168531
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Internet Society

• Researchers at Carnegie Mellon University have
  found that people who spend even a few hours a
  week online experience higher levels of
  depression and loneliness than they would have if
  they used the computer network less frequently.
• Netaddiction.com - Internet addiction is a
  clinical disorder.
• Self assessments offered for
• Internet Addiction
• Cybersexual Addiction
• Obsessive Online Traders
• Online Auction Addiction
• Parent-Child Addiction Test

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Conclusion

• E-Commerce is Big Business Globally and in the
  U.S.
• B2C E-Commerce continues to grow at an impressive
  rate. New markets continue to develop within
  e-commerce
• If a company is to exploit the Internet to
  achieve business goals, its journey through the
  e-business strategic grid has to be guided by
  both new management thinking and certain
  perennial principles and practices. Strategy has
  to stay flexible because even leading companies
  find they cannot assume that their market
  position on the Internet will remain constant.
  It changes 24 hours a day, seven days a week,
  time zone to time zone, and market segment to
  market segment.

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View of E-Shopping Concerns
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ANY QUESTIONS?