1. E-COMMERCE MARKET
Theoretical Aspects and
Market Research

2. CONTENT:
1. Theoretical Aspects of Ecommerce Market - 4
2. Market Research of US Ecommerce Market with
Examples - 17
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3. THEORETICAL ASPECTS OF US
E-COMMERCE MARKET
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4. THEORETICAL ASPECTS OF ECOMMERCE
MARKET
• Stages of B2C ecommerce;
• Competitive Advantage of ecommerce;
• Advantage of E-Commerce from Advertising costs
perspective
• Drivers for E-Commerce;
• Drivers for E-Commerce from the Low risk
Perspective;
• Mobile E-Commerce;
• E-Business as E- Commerce extension;
• Electronic Data Interchange (EDI);
• Integration of B2B systems.
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5. STAGES OF B2C ECOMMERCE
Organisation’s experience of B2C eCommerce moves
through a number of distinct stages.
The stages are extensions of customer-facing IS include:
 Engaging in information-seeking and communication, via
the search engines and community building;
 Establishing an online marketing presence.
 Creating an online catalogues.
 Conducting online ordering.
 Handling online payment.
 Offering online delivery.
 Performing customer profiling and referencing
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6. COMPETITIVE ADVANTAGE OF ECOMMERCE
Allows businesses to gain competitive advantage in a
number of ways:
 Price competitiveness: Reduced transaction costs in
automated ordering and invoicing systems can lead to
lower prices
 Timeliness: Faster ordering, delivery and invoicing can
reduce the time to market for suppliers
 Knowledge of market: Trading electronically provides
additional methods for companies to acquire knowledge
of the market in which they operate
 Customer information and profiling can improve the
trading relationship and lead to new marketing
opportunities.
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7. ECOMMERCE AS THE TOOL FOR ADVERTISING
COSTS REDUCTION
 Traditional advertising is expensive - newspapers,
magazines, television, radio, and advertising
hoardings;
 Creating an online presence is comparatively
cheap;
 Tablets, laptops allow fast access to any E-
Business platform;
 Once running, a online profile provides 24/7 access
to your company online presence, products across;
 The design of profile page could be customized for
individual needs and adopted the creativity and
quality of television advertising.
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8. DRIVERS FOR ECOMMERCE
Cost: For a business, the entry costs for participating
in eComrnerce are relatively low. Systems can be
designed and implemented and a web presence can
be established relatively cheaply. The systems
therefore offer a potentially fast return on the
investment.
Flexibility: Organizations can select the appropriate
level of participation from simple access to the
Internet through the creation of a Web presence to
full-blown transaction-handling systems. The systems
can be developed incrementally to add this additional
functionality.
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9. DRIVERS FOR ECOMMERCE FROM THE LOW RISK
PERSPECTIVE
 Protecting investment: In the Internet world, many common and
open standards are employed. The switching costs incurred when
a business selects an alternative system are, as a result, relatively
low.
 Connectivity and communications opportunities: Internet
technology brings an accompanying range of opportunities, such
as creating a local intranet or establishing video-conferencing
links.
 Technology perspectives: A critical mass of e-commerce
participants already exists, and the technology, although
constantly developing.
 Government support: There are many government initiatives
aimed at promoting e-commerce, and there is a significant level of
activity in educational institutions to provide additional backup.
 Customer service: Improved customer service promotes relation-
ships at a distance, the Internet does also provide opportunities for
businesses to work more closely with customers.
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10. MOBILE E-COMMERCE
Mobile e-commerce is a large opportunity for e-Commerce, but mobile
browser sites and poor apps leave several unmet needs open
 Today, e-commerce is not a popular activity on tablets (even less on
mobile phones), rated as one of the lowest use cases in surveys
 Tablet usage is still in early stages, and consumers are focusing on core
use cases (e.g., reading, gaming) over other use cases more prevalent
on PC
 E-commerce companies are not investing heavily in mobile, and so the
experience on tablets is subject to poor browser experience or
uninventive one-off apps, and the lack of a hard keyboard makes the
check-out process cumbersome
In the current app-heavy environment, the need to download multiple apps
from each e-commerce retailer a user likes is cumbersome
To help solve the problems in mobile e-commerce, a few companies have
quietly released early-stage apps in 2011. They aggregate several
retailers’ offline catalogs into one downloadable app, and users can
peruse catalogs, click-through to buy on retailers’ sites, and bookmark
favorite products
Source: http://www.slideshare.net/joshyang/ecommerce-landscape-2012#btnNext
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11. EBUSINESS
 Internet technology has fundamentally changed the
environment and structure of business. The
marketplace for all vendors has become potentially
global;
 Execution and settlement of transactions can easily
be automated for small as well as large
organizations. The trading model has moved from
'normal business opening hours' to a 24 hours a
day, seven days a week trading model;
 The interconnections throughout the supply chain
are being reconfigured.
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12. EBUSINESS AS ECOMMERCE EXTENSION
Organizational activity within electronic hierarchies,
markets or networks normally referred to as
eBusiness or eCommerce.
 eBusiness can be seen as a Superset of
eCommerce.
 eBusiness can be seen as the application of ICT in
support of all activities undertaken by a commercial
organization.
 eCommerce focuses on the use of ICT to enable
the external activities and relationships with
individuals, groups and other businesses.
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13. ELECTRONIC DATA INTERCHANGE (EDI)
 Companies, in their regular dealings with other
trading partners, such as suppliers and retail
outlets, might establish electronic communications
to process the volume of transactions carried out;
 EDI provides a standard protocol for encoding this
data exchange;
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14. INTEGRATION OF B2B
 SystemsB2B eCommerce is an extension of the
informatics infrastructure of commercial organizations
- Such information systems are supplier-facing
 Purchase order processing and payment processing
systems handle the settlement and execution stages of
the commerce cycle
- These information systems are an established part of
the IS infrastructure of most medium to large
organizations,
 Could be established and standardized for all
organizations. Such standardized system can enrich
and simplify the majority of B2B interrelations.
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15. INTEGRATION OF B2B SYSTEMS
 Pre-sale and after-sale stages of the commerce cycle have
been the most open to innovation in B2B eCommerce
 Requisitioning, request for quote and vendor selection are
part of a supplier relationship management information system
 Area in which most of the discussion of B2B eCommerce
occurs.
 Procurement is the pre-sale activity of search, negotiate and
order in the supply chain Sometimes the term is used to refer
to all the activities involved in the supply chain
 It is an important business process in the value chain and
involves the purchasing of goods and services from suppliers
at an acceptable quality and price and with reliable delivery
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16. MARKET RESEARCH OF US ECOMMERCE
MARKET WITH EXAMPLES
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17.  US E-Commerce Market;
 U.S. E-Commerce Market (2012-15) Chart;
 US E-Commerce Shopping Data (2011-13);
 Shift from physical stores to online stores;
 New Business Models;
 Planned purchases vs Impulse purchases business models;
 Survived eCommerce business models;
 New E-Commerce businesses;
 Not many new businesses are applied for Mass Market;
 UI features enrich customer experience and drive sales;
 Recent Trends in E-Commerce Business models
• Social Commerce;
• The Group buying / Couponing space;
• Flesh Sales;
• Recommendations;
• Personalization;
• Customization;
 C2C MarketPlaces
 C2C MarketPlaces Difficulties;
 Online Brands. Online Retail Models;
 Start-ups examples of Online Brands.
CONTENTS:
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18. US E-COMMERCE MARKET
The U.S. e-commerce market is big ($200B+), getting bigger
(9% CAGR through 2015), and still early (only 9% of total retail) .
Online shoppers in the United States will spend $327 billion in
2016, up 45% from $226 billion this year and 62% from $202
billion in 2011, according to a projection released today by
Forrester Research Inc. Market growth has been driven by
consumers becoming increasingly Internet-connected and credit
card holding, and these consumers being increasingly open to
purchasing online:
 In the last two years, several new business models have garnered VC
attention and begun to scale (e.g., group buying, flash sales,
subscription, online brands);
 Consumers have shown willingness to test new e-commerce business
models (such as Fancy, ShoeDazzle, RenttheRunway, Gilt), but these
are targeted primarily to wealthier consumers;
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19. U.S. E-COMMERCE MARKET (2012-15) CHART
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20. US E-COMMERCE SHOPPING DATA (2011-13)
More internet users are using internet for shopping.
Frequency per user is expected to increase.
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21. CONSUMERS ARE SHIFTING FROM
PHYSICAL STORES TO ONLINE STORES
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22. NEW BUSINESS MODELS
The only new e-commerce business model that has gained
significant traction with the mass consumer is group buying, -
Groupon, LivingSocial ; many existing well established
companies have started to offer group buying.
There is also room for companies to clone or apply existing
business models as well as for new business models:
 Clones models are creating new product categories, and/or target to
different customer segments (e.g., low-end vs. high-end, male vs.
female);
 New business models are customer personalization, companies like
Trunk Club and online brands like Warby Parker continue to bring
offline models into existence online.
Start-ups often take existing business models and apply a
marketing pivot or alternate strategy.
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23. DIFFERENT BUSINESS MODELS
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24. 1. Planned purchases business models make up the
majority of retail spend historically, older companies like
Amazon seems to have locked up planned purchasing on
the web, as this revolves more around search and catalog
layouts than email digests.
2. Impulse E-commerce business models usually don’t
provide real long-term value to consumers. These models
do not meet consumer disenchantment and end up as just
a passing trend. In general, the newer business models
that have emerged are subscription, C2C marketplaces,
flash sales. They are tend to be focused on impulse
purchases. Impulse purchases generally have higher
rates of regret after purchase and more returns.
PLANNED PURCHASES VS IMPULSE PURCHASES BUSINESS
MODELS
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25. TWO NEW BUSINESS MODELS WHICH
SURVIVED
1. Online brands are simply new brands/ or existing
ones that have chosen online as the marketing
channel of choice over offline. Barriers to entry in
online brands includes the expertise required to
build a vertically integrated supply chain, e-
Commerce platform, and user friendly interface.
2. Crowdsourced demand start-ups (e.g.,
Modcloth) also rely less on impulse purchases, as
do social bookmarking start-ups like Pinterest,
where users create product wishlists for “buy
later”.
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26. NEW E-COMMECE BUSINESSES ARE APPEARING IN THE SECTION OF
HIGHER MARGINS AND WEALTHIER CUSTOMERS
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27. NOT MANY NEW BUSINESSES ARE APPLIED
FOR MASS MARKET
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28. UI FEATURES ENRICH CUSTOMER
EXPERIENCE AND DRIVE SALES
Forrester Research report says that much of the growth
in U.S. e-commerce sales comes from improved,
advanced online retailers web sites and services: “This
is particularly true of categories such as apparel and
jewelry, which have integrated rich selling tools such as
zoom, color switching, and configurations, as well as
office supply stores, which have broader payment
options (e.g., small business purchase orders online)
and subscription plans for their buyers” (1)
(1) www.forrester.com
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29. RECENT TRENDS IN E-COMMERCE BUSINESS
MODELS
 Social Bookmarking, Analytics, Seeds, Commerce;
 Group Buying;
 Flesh Sales;
 Recommendations;
 Personalization;
 Customization;
 C2C MarketPlace;
 Online Brands;
 Mobile E-Commerce
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30. SOCIAL COMMERCE
 eBay is working on product recommendations based on Facebook data
(acquired Hunch) and a feature allowing users to solicit feedback from
Facebook friends prior to purchase; (1,2)
 Walmart makes an effort in social E-Commerce. Walmart has 22 million
Facebook fans and an innovative social media contest called "Get on the
Shelf," that allowed Facebook fans to vote for products they wanted to see
offered at Walmart. The company is leveraging advanced analytics to glean
new insights from Twitter and Facebook data streams. (3)
 The latest in-depth report from Nielsen concluded that: “Consumers continue
to spend more time on social networks than on any other category of sites—
roughly 20% of their total time online via personal computer (PC), and 30%
of total time online via mobile. Additionally, total time spent on social media
in the U.S. across PCs and mobile devices increased 37% to 121 billion
minutes in July 2012, compared to 88 billion in July 2011.” (4)
(1) http://techcrunch.com/2011/05/15/connecting-the-dots-on-ebays-local-shopping-strategy/
(2) http://techcrunch.com/2011/06/15/milo-fetch-allows-local-retailers-to-upload-their-inventory-to-ebay/
(3) http://www.retailingtoday.com/article/walmart-touts-e-commerce-moves-annual-meeting
(4) Nielsen Consumer report for 2012
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31. THE GROUP BUYING / COUPONING SPACE
Now, the group buying industry is facing rising disenchantment,
both from customers and merchants:
Reasons -
 Merchants complain that the long-term economics of doing group buying is not favorable, as Groupon
does little for customer retention;
 Groupon takes 50% of companies’ profit for their service of presenting deals online;
 Customers buying impulsively often don’t end up using the coupons, resulting in ~20% breakage
upon expiry;
 Some customers buy and sell in second-hand markets, but 75% either breakeven or lose money on
these deals
Daily deals sites have struggled to organically retain customers, and many have spent enormous
amounts on customer acquisition and are now struggling with profitability:
 According to Yipit, one-third of tracked daily-deal sites (170 of 530) have been shut down or sold so
far in 2011
 Facebook launched a daily deals service in April of 2011, and then shut down it in August;
 Yelp cut its daily deals product team by half in August, citing users being unhappy with Yelp Deals;
Source: http://online.wsj.com/article/SB10001424053111904491704576575233025971542.html
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32. FLESH SALES
 The flash sales model is under pressure on the supply
side, as remnant inventory levels are decreasing;
 While todays flash sales leaders (e.g., Gilt, Hautelook,
Vente Privee) have grown their businesses by selling
luxury retailers remnant inventory, today they are looking
to change business models as unsold inventory supplies
are lower;
 Gilt and competitors rode the wave of obscenely high
inventory levels during the recession (up to 10x normal
levels, according to a former executive of Nieman
Marcus), but retailers have adjusted and inventory levels
are going down – Therefore, as flash sales supply is
decreasing, supplies prices are increasing and flash
sales discounts are decreasing (Gilts average discount
has decreased from 70% to 40-50%. 32

33. RECOMMENDATIONS
 Product recommendation works particularly well in the fashion
category as it recognizes shopper behavior, patterns and
recommends items of interest not only by product type, but by
brand as well;
 Recommendations could be integrated into social media, so
recommendations can take into account what the customer's
friends have bought or viewed;
 This takes into account not only what the individual customer
is doing on the site at that moment in time, but what other
shoppers who are similar in product views have done before;
 Personal recommendations are the number one driver of
consumer purchase decisions at every stage in the purchase
cycle across 10 product categories studied, from banking to
vacation travel and from subscription entertainment to retail
categories, such as apparel and personal are products.
(1) Source: http://econsultancy.com/us/blog/8904-recommendations-help-drive-27-9-holiday-sales-growth-at-john-lewis
(2) Source: http://www.forbes.com/sites/kellerfaygroup/2012/07/25/recommendations-are-what-drives-your-business-
remember-to-ask-for-them/
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34. PERSONALIZATION
Source: http://www.slideshare.net/joshyang/ecommerce-landscape-2012#btnNext
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35. CUSTOMIZATION
Customization has slowed as a trend, as the model has generally failed to gain traction and prove scalability
 Co-creation e-commerce isn’t new but has begun to enter the mainstream recently
 Co-creation sites allow consumers to design their own products for purchase and/or buy products others
have
 Co-creation companies typically become cash-flow positive quickly because customized products sell at a
premium and are sold on-demand (i.e., there is no excess inventory)
 To date, start-ups riding the co-creation wave have primarily been e-commerce destination sites focused
on a particular product category (or group of categories), and employ one or more of several business
models:
Several models exist:
1. Consumers design, then buy their own products (e.g., NikeID, BlueNile, Chocri, Blank-Label,
Shirtsmyway, etc.)
2. Consumers buy products designed by other consumers or indie designers (e.g., MyFab, ModCloth,
Threadless, etc.)
3. Consumers connect with manufacturers and co-design offline
Two problems the co-creation market faces today are scalability and design-manufacturing accuracy :
1. Scalability. Companies will need to be creative about how to scale their businesses as consumer
demand increases, since it will be harder for manufacturing to benefit from economies of scale
2. Design-manufacturing accuracy. Despite strong user interfaces allowing users to design their own
products, a fraction of users will be dissatisfied with how the product actually turns out (i.e., requires
stronger, more accurate UIs)
Source:
1) http://www.readwriteweb.com/start/2010/03/is-america-on-the-verge-of-a-co-creation-invasion.php
2) http://www.crunchgear.com/2010/07/21/new-wave-of-web-services-brings-customization-to-commerce
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36. C2C MARKETPLACES
Online C2C marketplaces can be broadly segmented into
three buckets:
 Hard good purchases (e.g., eBay),
 Hard good rentals (AirBnB), and
 Services (Skillshare)
Traditionally, eBay is the preeminent online C2C marketplace
and facilitated transactions on hard good purchases. There
are not major direct competitors doe eBay while niche players
like Etsy targeted only hand-crafted goods.
Meanwhile, Craigslist has traditionally served as the go-to portal
for consumers looking for hard good rentals/purchases and
services online, but it does not offer money transactions, which
make the purchase process more complex.
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37. C2C MARKETPLACES DIFFICULTIES
Traditional models of online marketplaces (or intermediate
solutions like Craigslist) leave many unmet needs, which
many start-ups are tackling but few have perfected.
Reasons:
1) Seller’s time spent uploading product information;
2) Trust in sellers shipping on- time (or at all);
3) Inaccurate representation of product quality / condition;
4) Rentals: Trust in both buyers and sellers, ease of working
with insurance companies;
5) Services: safety and trust in sellers, ability of relationships
to be taken offline after initial transaction.
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38. ONLINE BRANDS. ONLINE RETAIL MODELS.
“Online brands” have grown in recent years, as consumers become more
comfortable discovering new products online. Online brands are start-up product
brands (typically apparel) that have decided to leverage the Internet as a channel
over traditional offline retail.
1. Brands have only recently been able to grow a large enough presence and scale
quickly using online as the channel instead of offline, due to the proliferation of
social media;
2. Key benefits for brands going online include ability to get consumer feedback
prior to production and better margins than offline retail, but requires marketing
and production competency;
3. Bonobos, ModCloth, 20x200, and Warby Parker are brands that have largely
begun online and gone mainstream.
Sources: http://www.slideshare.net/joshyang/ecommerce-landscape-2012#btnNext
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39. OFFLINE VS ONLINE RETAIL MODELS
Source: http://www.slideshare.net/joshyang/ecommerce-landscape-2012#btnNext
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40. START-UPS EXAMPLES OF ONLINE BRANDS
 Net-a-Porter just partnered with Karl Lagerfeld to launch a
new online fashion brand called Karl
 Everlane has not even launched publicly (as of Nov 2011) and
has generated a lot of hype in Silicon Valley
 Betabrand is trying to bring the H&M model online, iterating
quickly on new 4-6 new SKU’s per month and introducing
them in small batch sizes. They also crowdsource design
ideas
 WildFox, Nau, and Eliza Parker are just a few in a long list of
smaller up-starts
There is also opportunity for influential online content
producers (e.g., bloggers, Youtube celebs) to pivot into
manufacturing products, but many of these creative people
are scared off by the complexity of manufacturing operations
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