E-commerce versus conventional retail

Team Members

 * Online Shoppers
 * Andrew Renaux
 * Justin Woo
 * Rose Safai Assadzadeh
 * Oluwadamilola Rosanwo
 * Donya Tehrani

Team Contacts

 * Andrew Renaux - arenaux@hotmail.com
 * Justin Woo - justinchwoo@hotmail.com
 * Rose Safai Assadzadeh - rosesafai@hotmail.com
 * Oluwadamilola Rosanwo - orosanwo@ucalgary.ca
 * Donya Tehrani - donya64@hotmail.com

What is E-commerce
Shopping online is what consumers do when they either want to stick with an environmentally friendly activity, save money, or simply because of laziness. Some would rather stay home on their day off, whether stormy or sunny, purchasing wants or necessities with a couple of clicks rather than to spend the time and effort to get ready and drive, walk, or take the bus/taxi to the nearest mall. To some, the time spent inside of their own homes shopping over the net is more beneficial than spending the unnecessary time making a trip to a local mall to purchase what can be bought over the net, in less than half the amount of time. While some individuals choose to prioritize online shopping, others may find that making the trip to the mall may be more beneficial in the long run. We look at the pros and cons of each later on in this presentation. How does online shopping work? The answer to that is quite simple. Products bought online are shipped from the warehouse where they’re stored after they’ve been manufactured and are directly sent to the address of the buyer via air, truck, or delivery service companies such as FedEx and UPS. The majority of sales made over the holiday season are made online, as many like to avoid the rush and crowds of local malls. The “click and mortar” retailers that provide online shoppers with easy-to-use features are increasing their online profit as it is an easy way to shop. To many, E-commerce is known as “a greener way to buy.”

Statistics

 * According to the National Retail Federation, surveys of 2007 holiday shoppers indicated that, on average, consumers planned to do 30.2 percent of their shopping online (up from 28.9 percent in 2006).
 * Holiday season: In 2006 from November 1 to December 26th online shopping soared to $23.1 billion dollars, increasing by 26% from the previous year.
 * 34% of consumers shop online before they ever get to the store, while 39% go directly to a retailer's Web site without any prior online research. ComScore also says that 36% of shoppers have bought online and picked up in-store.
 * 40% of consumer will avoid buying from small online retailers due to identity fraud issues according to TRUSTe
 * 40% of online shoppers report a lack of satisfaction with item return process, says PriceRunner.
 * According to NPD WORLD, 45% of consumers buy computers and consumer electronics to directly in stores.
 * 64% of women and 60% of men shop online.
 * According to Sweeney Research, 76% of consumers believe online shopping is becoming safer. In a similar study conducted 18 months ago, that figure was 66%.

History
Electronic commerce has changed over the last 40 years. Originally, in the 1960s businesses were using computer networks to conduct electronic transactions such as Electronic Data Interchange (EDI) AND Electronic Funds Transfer (EFT). These networks were used by companies to share business documents, send invoices, order forms and send shipping confirmations. Online shopping became existent in 1979 by Michael Aldrich in the UK. This service was used mostly by auto manufacturers such as General Motors and Nissan. In the 1980s CompuServe became an increasingly popular networking service for home PC users which had a service called Electronic mail, where users could purchase items directly from 110 online merchants but this was not a huge success. During this period there was a growth in the approval of credit cards and telephone banking which are also forms of electronic commerce. In 1990, a researcher named Tim Berners-Lee from the European Organization for Nuclear Research anticipated a hypertext-based web in which could be navigated using a simple interface called a browse. He called this the “Worldwide Web”. And in 1991, the National Science Foundation removed the ban on commercial businesses operating over the internet. From this period onwards web based e-commerce evolved including “enterprise resource planning systems (ERP), data mining and data warehousing”. It took about five years to introduce DSL and security protocols in order to allow constant internet connection. Since this time a lot of business companies have offered their services through Worldwide Web and people can then purchase various goods through the internet which is now called ecommerce.

Time Line



 * 1990- Tim Berners-Lee writes the Worldwide Web browser using a NeXT computer.
 * 1991- The National Science Foundation permitted commercial businesses to operate over the internet.
 * 1994- “Netscape released the Navigator browser in October under the code name Mozilla”. SSL encryption was also released by Netscape 1.0 in late 1994 which made transactions secure. Pizza Hut made pizza ordering available on their web page and the first online bank opened.
 * 1995-Amazon.com was launched by Jeff Bezos who sold books to online shoppers in all 50 US states and 45 countries. The first internet only radio stations that was 24 hour commercial free started to broadcast (RadioHK) AND NetRadio. Pierre Omidyar, a software programmer founded eBay which was first called AuctionWeb.
 * 1996- With two full time employees, eBay sold $7.2million worth of goods. Both eBay and Amazon paved the way for ecommerce today.
 * 1998- The web allowed “Electronic Postal Stamps” to be purchased and downloaded for printing.
 * 1999- eCompanies bought Business.com for US $7.5million, which was originally purchased in 1997 for US $149,000. Napster was launched as a peer to peer files sharing software.
 * 2000- “The dot-com bust”.
 * 2001- The largest form of ecommerce, Business-to-Business (B2B) model, had around $700 billion in transactions.
 * 2002- eBay acquires PayPal for $1.5billion.
 * 2003- First yearly profit posted by Amazon.com
 * 2008- The US ecommerce and Online Retail sales has an increase of 17 percent from 2007 and it is projected to reach $204 billion.

Technology
There are many technologies involved in e-Commerce. The primary technology behind e-Commerce is the internet as it facilitates online banking, online shopping, and is a means of communication (email, instant messaging and net meetings). Coupled with fast shipping networks, the Internet enables users to send and receive goods and services in a speedy and efficient manner. The adoption of the internet in the home, workplace, schools and on the go through mobile devices has permitted the widespread implementation of e-Commerce in all aspects of society. Companies create web sites to share information about the products and services they offer. These websites allow consumers to view and order the products and/or services they require. Through advanced security measures, consumers are able to provide online merchants with personal information in a safe and secure fashion. The internet has also enabled companies to reach an enormous consumer base through advertising and marketing.

Quick Facts

 * As of 2008 e-Commerce is a $204 billion industry in the US
 * e-Commerce includes, electronic funds transfer, Internet marketing, online transaction processing, etc.
 * originally e-Commerce meant facilitation of commercial transactions electronically using different technologies including:
 * Electronic Data Interchange (EDI) - The transfer of structured data, by agreed message standards, from one computer system to another without human intervention. EDI is a pre-Internet form of doing e-Commerce and is still widely used today
 * Electronic Funds Transfer (EFT) – Method by which financial transactions are performed electronically i.e.) Debit/Credit Cards
 * At present, the Internet is the primary technology behind e-Commerce as it facilitates online banking, online shopping, communication (email, instant messaging and net meetings)

Trends
All technology goes through a series of phases denoted as the “S curve.” The S curve depicts the life phases of the featured technology. During the first stage, the technology is introduced to the public, and attains little support. Certain issues such as mobility and price become barriers for the technology to expand. During the second phase, the technology gets improved to where 10% of the population uses the technology. When this happens, “Critical Mass” is said to happen, and the product explodes in the public sector. The third stage is known as the maturity stage, where minor tweaks and adaptations are made to the technology.

When the concept of E-Commerce was first introduced, not all companies picked up trend. During its first stages, it was effective, however many limitations still prevented all companies from picking up the concept. Credit Card security, and internet browser speeds were barriers preventing E-Commerce from exploding. In the first stages of E-Commerce, companies thought that the fanciest and most expensive websites would prove to bring the most traffic to their business. However as E-Commerce evolved, companies started to outsource their advertising to websites with the most viewers or “digital loyalty customers.” Companies would pay the websites based on the amount of clicks on the banners, or views on the website. This quickly proved to be an ineffective way of advertising, and thus gave birth to commission payment. For every product sold derived from traffic coming from the host website, a small (or big) commission was paid to the site providing the traffic. In The future, technology will allow consumers to order products online from their cell phones from anywhere in the world, which will bring E-Commerce to the next level.

Pro's and Con's
There are many benefits to e-commerce. The most notable it’s the salvation of time and money during the shopping process. Instead of spending time driving to a store, finding a parking spot, looking for what you want to purchase, waiting in line and then getting back home you can just shop from the comfort of your own home. Also with e-commerce you can shop from several stores at once and without having to travel from store to store. There are also programs that exist that allow you to generate a shopping list for each month of the year so that consumable products will be purchased automatically. At the same time you can budget what your monthly expenses will be to allow you to save and allocate your money more affectively. Shopping online also allows the customers so shop any time they want 24 hours a day 365 day a year. One of the ways that shopping online allows people to save money is because having a website over a conventional brick and mortar store is that there is a lot less overhead expenses and the savings that this results in by having an online store is passed onto the customer. Another notable way that people can save money by shopping online is that it cuts down on spontaneous purchases that happen when you shop in a store. Another major benefit to e-commerce is the reduction of impact shopping online has compared to shopping in a store. Less energy is used in several areas. The customers no longer have to drive their gas powered car to the store. The store doesn’t have to have all of its lights on and all of the heating and cooling that is required in a regular store. As well as no stores have to be built so less land is used up and less nature is destroyed.

Pro's


 * Save time
 * Save money
 * Preserve the environment
 * 24-7 365 day shopping
 * Reduces spontaneous spending
 * Allows for monthly budgeting
 * Automatic shopping lists
 * Much more Convenient

Some of the disadvantages dealing with e-commerce are credit card security which has been improved to the point that online transactions from certified websites are actually safer than offline purchases. The sale is not instant. When you purchase something online it will take a few days for it to arrive at your home so you cannot enjoy it instantly. Everything that you buy online must come in some sort of packaging and that means more waste but many companies are shipping with 100% biodegradable shipping materials. When you are shopping online you cannot try clothes on or smell a perfume so you have to wait to test out a product before you can decide if you want to keep it and if no you have to return it, but there is no store to return it to so you must send an email and wait for a response or phone a help line. Now most returns are done with no questions asked over the phone and the payment is automatically reimbursed and the company will get a courier to pick the product up from your home. Those are some of the downfalls of e-commerce but as time progresses we will see several improvements in all of these categories.

Con's


 * Security
 * Delayed acquisition
 * More packaging
 * Cannot test products
 * Returns are more difficult