Comparing Electronic Retail Marketplaces and B2B Electronic Marketplaces

Chapter 2

ELECTRONIC RETAIL MARKET AND DISTRIBUTION

Research purpose:

After studying Chapter 2, students should be able to understand:

- Concept of electronic retail market, classification of electronic retail market, components of electronic retail market.

- Characteristics of goods in e-retail, types of goods and services in e-retail.

- Product planning in e-retail.

- Customers of electronic retail: concept, characteristics, classification of customers of electronic retail, online purchasing process of individual customers.

- Electronic retail mix: 4P and 4C.

2.1. Overview of the e-retail market

2.1.1. Concept of electronic retail market

The buying and selling of goods between consumers and electronic retailers takes place on electronic markets - electronic retail markets. Electronic retail markets are similar to traditional retail markets, where buyers and sellers meet to exchange goods and products. In a narrow sense, an electronic retail market is a specific location in cyberspace, but in a broader sense, it also includes the physical location where retail activities take place. Like traditional retail markets, the main function of an electronic retail market is to connect sellers.

with buyers. However, unlike traditional retail markets, e-retail markets are cyberspace, so buyers and sellers do not need to meet each other directly. By using electronic means such as computers, mobile phones with Internet connection and specialized software, the parties can conduct buying and selling transactions remotely.

Electronic retail markets are open to all customers who want to search for, trade and buy goods and services, so electronic retail markets are also called public electronic markets. Customers of electronic retail markets have equal opportunities to participate in the market. However, electronic retail markets are different from electronic wholesale markets - electronic markets between businesses and businesses (B2B) in some points such as participating subjects, types of goods and services, electronic means used, operating mechanism (see Table 2.1).

Table 2.1. Comparison of e-retail markets and B2B e-marketplaces

Criteria

Market - electronic retail market	B2B e-Marketplace
Transaction subject	E-retailer, consumer, intermediary.	Manufacturer, distributor, wholesaler, retailer, intermediary.
Goods and services	Finished products, consumer goods.	Raw materials, fuels, items, work in progress, finished products.
Means of transaction	Mainly over the Internet.	EDI, ebXML, Internet, WANs.
Operating mechanism	The public electronic market is primarily.	Private electronic market and public electronic market.
Transaction value	Small	Big
Number of transactions	Big	Small
Payment method	Cash on delivery, payment cards, e-wallets	Transfer, shopping card

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E-retail markets have grown rapidly in terms of types (market types), number of products and services sold, technologies used, customer participation, related entities, etc. More and more individuals and organizations are participating in e-retail markets. Nowadays, most types of goods and services are sold in e-markets. New technologies are also applied in most e-retail processes, bringing convenience to both e-retailers and consumers.

2.1.2. Classification of electronic retail market

Participating in e-retail markets or e-retail markets, retailers can choose one or use a combination of e-retail markets together. E-retailers can build and operate their own e-retail website, such as Amazon with the website Amazon.com, or open an e-store on an e-retail street (e-commerce platform), or open a store on social networks... Buyers can also choose one or more e-retail markets to shop. Some typical types of e-retail markets used by e-retailers are:

2.1.2.1. Electronic retail website

An e-retail website (webstore or webshop) is an e-commerce website of a business or retailer used for e-retailing activities. It is also known as an online store, online booth or e-marketplace for businesses or retailers to sell online. Note that service providers (such as insurance) can consider their portals as e-retail websites. E-retail websites usually have their own domain name, often have many web pages (thousands or more), and have all the necessary features and tools for buyers to complete online purchases.

2.1.2.2. Electronic retail street

E-malls, like real-world shopping malls, are online shopping venues where many stores display their merchandise. Small vendors

Those who do not want (and sometimes cannot) to build and operate their own e-retail website can open e-stores on online retail streets. By providing technical infrastructure, services and tools to support online retail, e-retail streets attract many sellers and many buyers. Types of e-retail streets are presented in section 1.2.3.4 .

2.1.2.3. Information portal

A portal is a website or web page that is an access point or link to another website. Portals are used in e-marketplaces, online stores, and other types of e-commerce websites (e.g., in e-collaboration, intranet marketing, and e-learning). A portal is an access point, via a web browser, to important business information located inside and outside the organization. This information is aggregated and accessed and presented in a consistent manner. Many web portals provide personalization for users. Web portals provide a number of common services such as electronics, news, stock prices, entertainment, shopping capabilities, etc.

Popular portals provide content for anyone to use. Although they can be customized by the user, they are still intended for an audience and provide fairly generic content, some of it in real time (e.g. stocks and news). Examples of portals are yahoo.com, google.com, and msn.com.

2.1.2.4. Social networks

Social networks are used by businesses and e-retailers, online shoppers. Social networks are growing rapidly and provide many applications such as entertainment, communication, advertising and sales.

A social network is a social entity consisting of nodes (usually individuals, groups or organizations) connected by links such as interests, friendships or occupations. The structures are often very complex. In its simplest form, a social network can be described by the image of nodes and links.

2.1.3. Factors of the electronic retail market

There are many elements of the e-retail market such as retailers, customers, goods, infrastructure, operating mechanisms, support services... Figure 2.1 outlines some elements of the e-retail market.

E-retailer : An e-retailer is someone who sells goods through the Internet and electronic media. An e-retailer can be a pure e-retailer or a mixed e-retailer. Today, there are millions of e-retail stores, millions of e-commerce websites that advertise and provide a variety of products. These stores are owned by businesses or individuals. Every day, more organizations and individuals join the e-retail market and many businesses leave the market. E-retailers can use e-retail websites, open stores on e-commerce platforms, use smartphone apps, or social networking sites... to sell goods. E-retailers can sell only over the Internet, or both over the Internet and in stores.

Figure 2.1. Diagram of the elements that make up the electronic retail market

Consumers : Customers of the e-retail market are individuals, households, who buy goods for consumption purposes. In principle, any individual, traditional customer can become an e-customer or consumer. However, only Internet users have the opportunity to buy e-retail and become e-customers. Nowadays, as the number of Internet users in the world is increasing and the awareness of the benefits of online shopping is becoming clearer, the number of traditional shoppers has switched to online shopping is increasing. It is not necessary to distinguish an individual, a customer as an e-customer or a traditional customer. For them, buying online or buying traditionally, or combining different stages of the purchasing process to complete the transaction with convenience and low cost is important.

Intermediaries : Are third parties that facilitate the activities between sellers and buyers. Intermediaries of various types provide services through websites or are integrated into the retailer's website. Some intermediary activities are performed manually, some are performed electronically. For example, online intermediaries create and manage online marketplaces, help connect buyers and sellers, provide escrow services and help customers and/or sellers complete transactions, payment services, security services, safety, etc.

Goods and services : Goods are the result of labor, which can satisfy certain human needs through exchange or purchase and sale. Goods in e-retail can be tangible products or services, digital products. Unlike goods and services in traditional trading, in e-retail there is the appearance of digital goods and electronic services. Digital goods are tangible products or services converted into digital form and distributed over the Internet. For example, e-books are digital goods. Electronic services are understood as a type of service but distributed and used on the Internet or communication networks. For example, online teaching and learning is an electronic service in the field of education.

One of the main differences between the traditional market and the e-market is the ability to digitize products and services. In the e-market, buyers can buy digital products online, anytime and from anywhere in a matter of seconds and receive the purchased goods instantly. Digital products have a different cost curve than physical products. In digital, most of the costs are fixed and the variable costs are very low. Therefore, profits increase rapidly as the volume increases because the costs are already paid.

Technological and technical infrastructure: In a broad sense, infrastructure for the electricity retail market includes physical infrastructure such as factories, workshops, warehouses, stores, means of transport, goods storage equipment, goods display equipment... and electronic means, technological equipment such as servers, computers, Internet lines, e-commerce websites...

In traditional retail, retailers need warehouses, display stores, checkout counters, cash registers, etc. These factors make it convenient for shoppers to choose, pay for, and receive goods.

In e-retailing, depending on the e-retailer model, it is possible to retail through a website and warehouse without maintaining a store, or sell through a website and combine it with a store. Retailers use e-retail websites to post product information, electronic catalogs to display products, electronic shopping cart software to help buyers choose products, search engines to help buyers search for products... An e-commerce platform with an e-retail store and electronic catalog tools, electronic shopping carts, payment gateways, Mobile Apps... is always necessary for e-retailers. All of the above technological and technical infrastructure elements help buyers and sellers conduct online transactions, also known as frontends .

When a buyer visits an e-store or storefront, the buyer performs transactions with the seller such as searching for products, placing orders, making payments, etc. E-retailers also have to build inventory.

The back-end activities (in the warehouse, order processing, packaging, etc.) that an e-retailer must perform to fulfill customer orders are called the back-end. The back-end includes physical elements, processes, people, solutions, etc. It is likened to the “kitchen” of a restaurant. The back-end and front-end are connected through human activities, information systems, technological solutions, and processes such as logistics information systems, order processing software, warehouse management software, payment gateways, shipping tracking software, customer relationship management software, etc.

Operating mechanism : Participants in the electronic retail market via the Internet. Electronic retail markets are public markets. Most information about goods, services, and prices of goods are publicly provided on electronic retail markets. Buyers are treated equally in most franchises, services, and even after-sales services.

In addition to e-stores that use a fixed price policy, some e-stores may use a variable price policy, for example online auction stores, daily deals stores. Prices are determined by competing buyers in the case of online auctions, or prices drop sharply over a certain period of time.

Even with products sold on e-marketplaces, there are differences. E-stores are run by manufacturers who sell directly to customers who design their own products according to their needs, and product prices can also vary.

During the transaction process, many tools are used by e-retailers and buyers. These tools can be integrated in e-stores. For example, price comparison tools, product feature comparison tools can influence customers' purchasing decisions.

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