Question

1. Why were so many entrepreneurs drawn to start businesses in the online retail sector initially?

2. What frequently makes the difference between profitable and unprofitable online businesses today?

3. Which segment of the offline retail business is most like online retailing? Why?

4. Can you name two assumptions e-commerce analysts made early on about consumers and their buying behavior that turned out to be false?

Answer 1

Online Business or e-business is any kind of business or commercial transaction that includes sharing information across the internet. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses, while e-business refers to business with help of the internet.

Answers

1.Many entrepreneurs were drawn to start businesses in the online retail sector initially because it was one of the largest market opportunities in the U.S. economy. Many believed that the Internet would revolutionize the retail industry because: Search costs and transaction costs would both be dramatically reduced.

Entrepreneurs drawn to start businesses in the online retail sector because they can have more advantages such as:

• lower cost of distribution using web sites rather than physical stores
• ability to reach and serve a much larger geographically distributed group of customers.
• ability to lower consumers overall market transaction costs
• lower capital costs in establishing a business in the market.

In 2009, it is estimated that around 70% of Internet users over the age of 14 (around 123 million people) bought an online retail store, generating about $132 billion in online retail sales. While the number of new Internet users in the United States is not growing as rapidly as it was, with around 71% of the U.S. population over 14 years of age already on the internet, this slowdown will not necessarily slow the growth in online retail e-commerce because the average shopper is spending more on the Internet each year, and finding many new categories of items to buy. For instance, in 2003, the average annual amount spent online by users was $675, but by 2009, it had jumped to $1,069

2.it is determined by how consumers view the brand

Profitable

• lower supply chain costs; demand is concentrated at a single point (the website), so this increasing purchasing power of the retailer
• change prices instantly
• presenting visual content giving companies the ability to to deliver information and knowledge to the customer
• avoiding direct mailing costs
• efficient inventory systems

3.mail order and telephone order retail businesses

similarities:

• the customer is remote from the store/producer
• order is placed using a visual image or a tv ad without actually seeing the product physically
• little human-to-human interaction between buyer and seller
• goods are dispatched through logistics service
• payment is received electronically; credit
• since goods are purchased without physical examination; return policy is usually strong and robus​​​​​

​​​​​​4.Assumption.

1) they assumed that consumers were rational and driven by cost and not by value and brand
- consumers had emphasis on attributes such as brand name, perceived value, trust, reliability, delivery etc

2) movement toward integrated financial services
3) indistry consolidation; smaller companies turning into larger ones.

Technology has made significant progress over the years to provide consumers a better online shopping experience and will continue to do so for years to come. With the rapid growth of products and brands, people have speculated that online shopping will overtake in-store shopping.