E-Commerce and Small Business - Finding the Right Products to Sell on the Internet
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E-Commerce and Small Business - Finding the Right Products to Sell on the Internet Robert T. Chi Information Systems Department College of Business Administration California State University, Long Beach
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E-Commerce and Small Business - Finding the Right Products to Sell on the Internet. Robert T. Chi Information Systems Department College of Business Administration California State University, Long Beach. Motivation. - PowerPoint PPT Presentation
Transcript of E-Commerce and Small Business - Finding the Right Products to Sell on the Internet
E-Commerce and Small Business - Finding the Right Products to Sell on the Internet
Robert T. Chi
Information Systems Department
College of Business Administration
California State University, Long Beach
Motivation
The Internet has provided a rare opportunity especially for small to medium sized enterprises.
The potential of the Internet as a commercial medium and market.
Both successful and unsuccessful cases of Internet marketing have been reported.
In this research, we focus on the use of the Internet as a virtual storefront.
we identify the factors that impact the use of on-line marketing approach.
Introduction
The Internet matches buyers and sellers in a more cost-effective manner, compared with traditional advertising and marketing.
It breaks through the physical barriers and moves firms to a new commercial marketplace.
The opportunity for buyers to examine or test the product or service and interact with the seller to receive additional information or support.
Pros and Cons of E-Marketing ApproachAdvantages of Internet Marketing: Communication Channel: Exchange
information between sellers and buyers. (1) the ability to store vast amounts of information
that can be searched and disseminated in a cost-effective manner which is accessible by virtually everyone on the Net,
(2) interactivity and the ability to provide information on demand, and
(3) provide perceptual experiences that are superior to a printed catalog.
Continued:
Transaction Channel: Generate sales activities.
small companies that play in niche markets (i.e., sell specialized or unique products or services) in which buyers and sellers are small and geographically dispersed, can use the Internet to reach a much bigger customer base
The Internet can also ease transaction processing, especially for handling complex orders
Continued:
Distribution Channel: Physical exchange of products/services.
On-line marketing offers more choices and flexibility and, at the same time, eliminates huge inventories, storage costs, utilities, and space rental, etc.
Using the Internet as the distribution channel can reduce the delivery cost substantially, and also ensures instant delivery of products/services.
Communication Improved product information
Improved price information
Availability of service, 24 hours a day, 7 days a week
Lower cost of communication
Interactivity and the ability to provide information on demand
Real-time inventory update
On-line technical support
Quick response of inquiries
Customized orders
Post-sale service
Transaction Virtual storefront can be reached by all Internet users
Lower cost of transaction
Allow microtransactions
Reduce human errors
Reduce procurement cycle time
Lower inventory level and other related overhead
Possible to customize promotion and sales to individual customers
Flexible pricing
Distribution Reduced waiting time to receive product for digital products/services
Channel Functions Advantages
No personal contact
Relatively low entry and establishment costs
Lower cost of delivery for digital products/services
Dimension 1Value Proposition
Dimension 2Degree of Differentiation
Dimension 3Frequency of Purchase
Examples of Products and Services
Category
Digital High Frequent On-line newspapers and Magazines DHF
Infrequent Software packages DHI
Low Frequent Stock market quotes DLF
Infrequent Automobile financing, insurance DLI
Tangible High Frequent
Wines, soft drinks, cigarettes THF
Infrequent
Stereo systems, Automobiles THI
Low Frequent Milk, eggs TLF
Infrequent Precious metal ingot of Known weight and purity
TLI
Channel Functions
Advantages DHF DHI DLF DLI THF THI TLF TLI
Communication Improved product information X X X X
Improved price information x x X X x x X
Availability of service X X X X X X X X
Lower cost of communication X X X X X X X X
Interactivity X X X X
Real-time inventory update X X X X
On-line technical support X X X X X X
Quick response of inquiries X X X X X X X X
Customized orders X X X X
Post-sale service X X X X
Transaction Virtual storefront x X x X
Lower cost of transaction X X X X X X X X
Allow microtransactions X X X X
Reduce human errors X X X X x X x X
Reduce procurement cycle time X X X X
Lower inventory level x x x x x x x X
Customize promotion and sales x x x x
Flexible pricing x x X X x x X X
Distribution Reduced waiting X X X X
No personal contact ? ? ? ? ? ? ? ?
Low entry costs X X X X X X X X
Lower cost of delivery X X X X
Limitations and Future Research limited the scope to focus only on the product
characteristics and their effects on the success of Internet marketing.
Other factors that may impact the performance of Internet marketing include: 1) the firm’s current distribution structure and channel relationships, 2) the size of the company, 3) the promotion strategies, and 4) the pricing structure, etc.
Study the cases of individual companies to evaluate and design channels that would help with the successful launch of new products.
Goal
Pprovide a framework to identify factors that influence consumer buying behavior on different product/service categories over the Internet.
Table 1. Characteristics of Products sold on the Internet and Corresponding Key Factors
Tangibility
Price
Competition
Convenience
Shopping
Enjoyment
Quality
Info.
Comm. Cost
Comm.
Time
Transaction Cost
Trans. Ti
me
Distribution Cost and
Time,
Post-Sales
Services
Tangible or physical goods
High outlay
Highly competitive
M M M H H H L M H
Less competitive
H H H L M L L M M
Low outlay
Highly competitive
L L L H H H H H H
Less competitive
M M M L L L H H M
Intangible or informa-tional goods
High outlay
Highly competitive
M M M H H H L L M
Less competitive
H H H L M L L L L
Low outlay
Highly competitive
L L L H H H H L M
Less competitive
M M M L L L H L L
Product category
Conve-
nience
Enjoy
Qual.
Info
Comm
CostComm Time
Tran Cost
Tran Time
Security
Deli Cost
Deli Time
Service
1 (HHT) 8.41 6.958.94 8.16 7.97 8.62 8.21 9.36 8.62 8.42 8.50
2 (HLT) 8.81 7.368.97 8.32 8.02 8.68 8.27 9.23 8.71 8.29 8.57
3 (LHT) 6.64 6.657.11 7.59 7.75 8.39 8.16 8.59 8.55 8.21 6.82
4 (LLT) 8.41 7.328.33 8.06 8.02 8.43 8.26 9.05 8.55 8.27 8.07
5 (HHI) 8.75 7.388.81 8.53 8.36 8.75 8.65 9.15 8.72 8.70 8.25
6 (HLI) 9.04 7.399.14 8.42 8.24 8.30 8.24 9.08 8.31 8.70 8.68
7 (LHI) 7.43 7.657.88 7.76 7.95 8.25 8.30 8.50 8.11 8.04 7.49
8 (LLI) 8.89 7.258.59 8.28 8.19 8.13 8.07 8.84 8.02 8.21 8.31
Average 8.30 7.248.47 8.14 8.06 8.44 8.27 8.98 8.45 8.36 8.09
std 0.84 0.310.68 0.32 0.19 0.22 0.17 0.31 0.27 0.24 0.63
Figure 1 Charting of the survey results
6
6.5
7
7.5
8
8.5
9
9.5
10
1 (HHT)
2 (HLT)
3 (LHT)
4 (LLT)
5 (HHI)
6 (HLI)
7 (LHI)
8 (LLI)
Product category
Conve-
nience
Enjoy
Qual.
Info
Comm
CostComm Time
Tran Cost
Tran Time
Security
Deli Cost
Deli Time
Service
1 (HHT) 7 11 2 9 10 3 8 1 3 6 5
2 (HLT) 3 11 2 7 10 5 9 1 4 8 6
3 (LHT) 11 10 8 7 6 3 5 1 2 4 9
4 (LLT) 4 11 5 9 10 3 7 1 2 6 8
5 (HHI) 3 11 2 8 9 3 7 1 5 6 10
6 (HLI) 3 11 1 6 9 8 9 2 7 4 5
7 (LHI) 11 9 7 8 6 3 2 1 4 5 10
8 (LLI) 5 11 2 8 10 4 7 1 3 6 9
Average 5 11 2 8 10 4 7 1 3 6 9
Table 4 Product category 3 Low cost, High competition, Tangible vs. 6 High cost, Low competition, Intangible
Product category
Conve-nience*
*
Enjoy*
*
Qual.
Info**
Comm
Cost**
Comm Time**
Tran Cost
Tran Time
Security*
Deli Cos
tDeli
Time**Servic
e**
3 (LHT) 6.646.65 7.11 7.59 7.75 8.39 8.16 8.59 8.55 8.21 6.82
6 (HLI) 9.047.39 9.14 8.42 8.24 8.30 8.24 9.08 8.31 8.70 8.68
•* 1 standard deviation apart ** 2 standard deviation apart
Figure 2 Comparison chart for product categories 3 (LHT) and 6 (HLI)
6.00
7.00
8.00
9.00
10.00
3 (LHT)
6 (HLI)
Table 5 High vs. Low Outlay goods
Product category
Conve-nience* Enjoy Info*
Comm
Cost*
Comm
TimeTran Cost*
Tran Time
Security*
Deli Cost*
Deli Time*
Service*
H Outlay 8.75 7.27 8.97 8.36 8.15 8.59 8.34 9.21 8.59 8.53 8.50
L Outlay 7.84 7.22 7.98 7.92 7.98 8.30 8.20 8.75 8.31 8.18 7.67
•* 1 standard deviation apart
Table 6 High vs. Low Competition goods
Product category
Conve-nience* Enjoy Info
Comm Cost
Comm Time
Tran Cost
Tran Time
Security
Deli Cost
Deli Tim
eServic
e*
H Comp 7.81 7.16 8.19 8.01 8.01 8.50 8.33 8.90 8.50 8.34 7.77
L Comp 8.79 7.33 8.76 8.27 8.12 8.39 8.21 9.05 8.40 8.37 8.41
•* 1 standard deviation apart
Table 7 Tangible vs. Intangible goods
Product category
Conve-nience
Enjoy*
Info
Comm
Cost
Comm
Time*
Tran Cost
Tran Time
Security
Deli Cost
*
Deli Tim
eServic
e
Tangible 8.07 7.078.34 8.03 7.94 8.53 8.23 9.06 8.61 8.30 7.99
Intangible 8.53 7.428.61 8.25 8.19 8.36 8.32 8.89 8.29 8.41 8.18
•* 1 standard deviation apart
Figure 3 Charting the importance of different factors between high and low outlay products
6.00
7.00
8.00
9.00
10.00
H Outlet
L Outlet
Figure 4 Charting the importance of different factors between high and low competitive products
6.00
7.00
8.00
9.00
10.00
Conve
nien
ce
Enjoy
Info
Comm
Cos
t
Comm
Tim
e
Tran
Cost
Tran
Time
Secur
ity
Deli C
ost
Deli T
ime
Servic
e
H Comp
L Comp
Figure 5 Charting the importance of different factors between tangible and intangible products
6.00
7.00
8.00
9.00
10.00
Tangible
Intangible
