UNIT 5

E-Retailing
INTRODUCTION

E-shopping or Online Shopping is the process of buying goods and services from merchants who sell
their products on the Internet. Finding a product online is much easier than looking for it in the local
store. Electronic retailing (E-tailing) is the sale of goods and services through the Internet. It can include
business-to-business (B2B) and business-to-consumer (B2C) sales of products and services. It requires
companies to tailor their business models to capture Internet sales, which can include building out
distribution channels such as warehouses, internet webpage, and product shipping centres. Notably,
strong distribution channels are critical to electronic retailing as these are the avenues that move the
product to the customer. It includes a broad range of companies and industries. However, there are
similarities between most E-tailing companies that include an engaging website, online marketing
strategy, efficient distribution of products or services, and customer data analytics.

Successful e-tailing requires strong branding. Websites must be engaging, easily navigable, and regularly
updated to meet consumers' changing demands. Products and services need to stand out from
competitors' offerings and add value to consumers' lives. Also, a company's offerings must be
competitively priced so that consumers do not favour one business over another on a cost basis only. E-
tailers need strong distribution networks that are prompt and efficient. Consumers cannot wait for long
periods for the delivery of products or services. Transparency in business practices is also important, so
consumers trust and stay loyal to a company

E-TAILING

Retail is the process of selling consumer goods or services to customers through multiple channels of
distribution to earn a profit. Retailers satisfy demand identified through a supply chain. The term
"retailer" is typically applied where a service provider fills the small orders of many individuals, who are
end-users, rather than large orders of a small number of wholesales, corporate or government clientele.
Thus, Retail is the sale of goods on a physical location where the seller and the buyer meet in person.
Whereas etail is the sale of goods on the internet where the transaction happens in a digital
environment. Various popular players of E-tailing are Amazon, Flipkart, Zomato, Swiggy, MakemyTrip
etc, and for retailers are Walmart, Mcdonalds, Big Bazaar etc.

E-tailing stands for E-retailing also known as e-retail as “sales of goods and services via the internet or
other electronic sources, for personal and household use by consumers”.

The term E-Retailing was first developed in the European countries. It has both passive and interactive
retail system while all e-tailing is generally limited to passive, air ticketing and other entertainment
booking is designed in interactive system mostly.

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E-tailing has various features as stated below:

● Saves time and efforts.

● Convenience of shopping at home.

● Wide variety/range of products.

● Good discounts / lower prices.

● Get detailed information about the product.

● Easy comparison of various models/brands.

There are many types of E-tailers most popular of these two are:

1. Pure Play (Virtual) e-retailers- Retailers that only do the electronic transactions and do not have any
physical outlet for the customers. For example- Amazon & Flipkart

2. Brick and click (Click-and-mortar) e-retailers- Retailers who do the both online and offline transactions
i.e. through internet and physical outlets. For example, Dell.

E-tailing has various advantages as well as disadvantages both for there tailers as well as buyers as
explained below:

Advantages of E-tailing for retailers:

1. Location utility: Location is utmost important for the conventional retailing process to provide
convenience utility to its consumers. However, in e-tailing location is not important. Retailers and
customers need internet for e-tailing and transaction can happen from anywhere from within the
country or overseas.

2. Less expensive: As compare to organised retailing, e-tailing is less expensive as it saves wages of
salesmen and premises cost and maintenance. These expenditures are low as compare to internet cost.

3. High Reach: Integration with customers is high in e-tailing as customers can be local, national and
international. Through internet, e-tailers can reach to large audience.

4. 24*7 businesses: The time utility for customers is high in e-tailing as customers can buy the products
and services from anywhere and anytime.

5. Feedback: It’s easy to manage customer relationship management in etailing on the basis of feedback
of consumers.

Disadvantages of E-tailing for retailers

1. Lack to infrastructure: The issues of accessibility and connectivity of internet causes problems in
functioning of e-tailing activities. Also, the initial investment cost is very high in e-tailing.

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2. Lack of technological expertise: To start an online retailing project it is important to have
technological expertise and not all retailers have it.

3. Complex logistic management: Intrinsic and extrinsic challenges increase the complexities in e-tailing
logistics. Like cash on delivery increases the operational cycle, managing high rates of returns, poor
logistic management in rural areas and problems in cross-nation shipments.

4. Customers’ expectations: In terms of flexibility in delivery, detailed product descriptions, cost and
security of delivery, flexible payment options sets high expectations of customers.

5. Lack of personal touch: The lack of face-to-face interaction, persuasion and handling the customers’
query is a major disadvantage in e-tailing.

6. High competition: E-tailers have to compete with other e-tailers as well as the organised and
unorganised retailers in the market that increase the competitions for them.

Advantages of E-tailing for buyers

1. Time utility as consumers can shop 24*7

2. Place utility as consumers can shop from anywhere

3. Convenience utility as consumers can shop from any mode via computer, laptops or mobile

4. Option utility as consumers can get wide range of option via e-tailing

Disadvantages of E-tailing for buyers

1. Customers may be uncertain regarding the quality of the products and services offered online

2. Fear regarding online fraud and loss of money

3. Every time not every product is available.

4. Lack of technological know-how

E-tailing Models

Two models of E-tailing are explained below:

1. Inventory based model: According to the FDI policy in India, “Inventory model of e-commerce
means an e-commerce activity where inventory of goods and services is owned by e-commerce
entity and is sold to the consumers directly.” It includes the e-tailing activities where inventory
of products and services is owned by e-tailers and it is directly sold to customers. The main
feature of this model is end to end process i.e., from initiating from product purchase to
managing logistics and finally dispatching the products. Example- Alibaba, Jabong.
2. Marketplace based model: According to the FDI policy guideline, “Marketplace model of e-
commerce means providing of an information technology platform by an e-commerce entity on

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 a digital and electronic network to act as a facilitator between buyer and seller.” This model
provides a platform where buyers and sellers do the transactions in efficient, transparent and
trusted environment. Here, buyers can compare the prices and accordingly place the orders to
the authorized sellers on the website. Majorly, e-tailers like Amazon, Patym mall and Flipkart
practice the marketplace-based model. For example, when buyer login to Amazon India and
place an order to a registered seller, Amazon India act as a mediator here. Subsequently, the
registered seller takes care of logistics and dispatching of the products to the customers.

Department of Management, BIT, Durg