Chapter 8 - Online Retailing Flashcards
Factors contributing to growth in online sales
Growth in South Africans who have smartphones
Growth in number of middle income consumers
Key drivers of online sales
Lower product costs
Faster delivery
Flexible delivery options
Safer ways to pay
Most popular online shopping category?
Digital goods because they offer instant gratification
ADVANTAGES OF ONLINE RETAILING
- Less costly to set up
- Open 24/7
- Increase national and international reach
- Require fewer employees
- Access to real time customer insight
- Offer more items
- They can promote product more easily online
DISADVANTAGES OF ONLINE RETAILING
- Less customer contact online
- More competition online
- Online products cannot be touched
- Delivery costs
- The internet is “pull’ marketing
- Less impulse buying
- Online retIl shopping is perceived to be risky
Internet business models
Merchant model
Manufacturer direct model
Affiliate retail model
Community model
Merchant model
- most common
- Wholesaler/retailer that sells/auctions products to buyers
Pure play/bricks and clicks
Digital vendor - pure play retailers that only sell digital products or services and both sales and distribution are online . Eg iTunes Store, showmax
Manufacturer direct model
When a manufacturer opens an online retail store and sells directly to buyers.
They bypass intermediary supply chains
Affiliate retail model
When a principle business rewards the affiliate financially for each visitor or customer bought by the affiliates own marketing efforts .
An online retailer can also act as an affiliate for another.
Community model
This is a social network that uses computer support as the basis of communication instead if face-face interaction. Used for empathetic support or common interest information sharing. Eg Travbuddy.com
Types of online shoppers
Directed information seekers Undirected information seekers Directed buyers Bargain hunters Entertainment seekers
Directed information seekers
- Internet users who are looking for information on p/s. They are potential customers.
Undirected information seekers
-Internet users who like to browse and change sires using hyperlinks. Not in the process of finding specific product information.
Directed buyers
They are on the Internet to purchase a specific product online. They are committed to buying a product. Retailers must offer information and must be in stock. Purchasing process must be easy
Bargain hunters
- Internet users who want to purchase a good deal.
Retailers should attract bargain hunters with promotions. Secondly the promotions should be supported by appropriate search marketing strategy, thirdly users should easily be able to find promoted product on the website itself.
Entertainment seekers
Website users that use the Internet for enjoyment. They utilise quizzes, puzzles or interactive games online that retailers can provide to potentially turn these people into customers.
Entertainment seekers
Online shopping motives
Shopping convenience Information seeking Immediate possession Social interaction Variety seeking
Shopping convenience Information seeking Immediate possession Social interaction Variety seeking
Promotion techniques of online stores
Display advertising Search marketing Affiliate marketing Social media Viral marketing
Display advertising
Using small static or dynamic banner ads that may contain hyperlinks, sold at cost per 1000 impressions. Click through rates is 0.1 %
Search marketing
Via organic search or paid search.
Affiliate marketing
Social media
Viral marketing
The
Point of purchase advertising
Websites use browsing and buying information of customers to make product recommendations
Key steps in starting an online store
Drawing up a business plan
Registering a domain name
Building the online retail store
Building inventory
Launching of the online store
Maintaining the online store
