Online Retailing

Definition

 Online Retailing is defined as the sale of goods and services via the internet or other electronic
channels for individual consumers. This definition includes all e-commerce and related activities
that ultimately result in transactions.
 Online Retailing or E-retailing is the sale of goods through an online platform or internet-based
store. Also known as e-tailing or electronic retailing, e-tailing is a specific type of e-commerce that
deals with physical products as opposed to services.
 Also Called E-tailing, it requires companies to tailor their business models to capture Internet sales,
which can include building out distribution channels such as warehouses, Internet webpages, and
product shipping centers.

To Summarize, E-Retailing refers to retailing over the internet.

Basic Concept

 Electronic retailing is the sale of goods and services through the Internet.
 E-tailing can include business-to-business (B2B) and business-to-consumer (B2C) sales of products
and services.
 Amazon.com (AMZN) is by far the largest online retailer providing consumer products and
subscriptions through its website.
 Many traditional brick-and-mortar stores are investing in e-tailing through their websites.

Types of Electronic Retailing (E-tailing)

Business-to-Consumer (B2C) E-Tailing
Business-to-consumer retailing is the most common of all e-commerce companies and the most familiar to
most Internet users. This group of retailers includes companies selling finished goods or products to
consumers online directly through their websites. The products could be shipped and delivered from the
company's warehouse or directly from the manufacturer. One of the primary requirements of a successful
B2C retailer is maintaining good customer relations.

Business-to-Business (B2B) E-tailing

Business-to-business retailing involves companies that sell to other companies. Such retailers include
consultants, software developers, freelancers, and wholesalers. Wholesalers sell their products in bulk
from their manufacturing plants to businesses. These businesses, in turn, sell those products to consumers.
In other words, a B2B company such as a wholesaler might sell products to a B2C company.

Components / Features of E-Retailing

Electronic retailing or e-tailing refers to the direct sale of products, information and service through virtual
stores on the web which is designed around an electronic catalogue format and auction sites.

There are certain essential ingredients for an electronic retailing business to be successful. You must
consider these components well in advance before setting up an electronic storefront. Let us learn the
components of E-Retailing. These are as follows:
● Attractive business-to-consumer (B2C) e-commerce portal: The interfaces and navigation should
be user friendly and pleasing. The site should have a strong sense of branding.
Color scheme: A website that's hard on the eyes will turn off some users. Make sure the text is clearly
visible in contrast to the background and the colors reflect your brand — in a good way.
Navigation: No matter how informative the content or attractive the products, consumers need to find it.
Simple navigation that clearly points users in the right direction is essential for maximizing the hard work
you put in to assemble inventory and
Layout: Much like navigation, the page itself needs to be presented in an attractive manner. Don't clutter
the page with too much info: use tabbed menus if necessary so browsers aren't overwhelmed.
● Right revenue model: Revenue model should be accurate and there is transparency in terms of
service levels and pricing.
Example of a revenue model is :
Advertising revenue model. Following this model, innovators put up a digital platform where advertisers
could post their ads for a commission based on traffic density and other factors. With this model in place,
the customers will come to a website to shop, see ads, and access the advertiser's website. Examples of
companies using this model are Google Adwords, Adsense, Facebook, New York Times. To attract users,
these platforms typically offer internal advertising tools. 
● Penetration of the Internet: As the e-commerce portal is in addition to the existing brick-and-
mortar infrastructure aimed to bring in customer loyalty. The retailer should keep in mind the local
internet penetration for better success.
The potential that E commerce provides to the Retail industry is to establish themselves in new emerging
markets through online selling. Amazon has created history by providing online sales globally and targeting
the new markets besides its UK & US markets. Online selling enables Retail firms to start selling in new
markets with negligible operational, selling and distribution costs as compared to setting up an
establishment in the new region.

● E-Catalogue: It is a database of products with prices and available stock. The retailer can provide
value added service by giving price and feature comparison between products. This would enhance the
value of the e-commerce portal for the customers. The retailer can indicate special benefits available to
customers under the loyalty programme thus making the customer feel special.
An eCatalogue, digital catalogue or online catalogue depending on your preference, is the cornerstone of
successful companies’ marketing and growth strategies with good reason.

The main benefits of an eCatalogue are as follows:

 Convenience and accessibility

 Easily shareable online
 Easy to update and maintain
 They reduce admin, print, and distribution costs
 They another level of professionalism
 They integrate with your eCommerce and your ERP
 You can collect key customer data
 Catalogues are easily scalable
  They offer fast, smart product search
 They offer an advantage over competitors

● Shopping Cart: The customers can select the products that they wish to purchase and fill their
shopping cart. The Shopping Cart can be designed in a way that it could allow the customer to store their
preference and previous purchase history for easy selection. This adds value to the shopping experience
and save time. Finally, as in a real store, at the time of checkout, the system calculates the price to be paid
for the products. The experience should be seamless and without errors.

 Safer & Convenient shopping. 

 A single hub for data management. 
 An official storefront for your business
 Easy payments. 
 Shopping analytics & performance management. 
● A payment gateway:
A payment gateway is an online payments’ service that, when integrated with the e-commerce platform, is
devised as the channel to make and receive payments.
The procedure to receive payments includes the customer requiring to fill in some details, like credit/debit
card number, expiry date, and CVV. Post this, the customer proceeds to make a payment, which then, gets
transferred from the buyer’s account to the seller’s (merchant’s) account.
Customer makes payments through his/her credit card or e- cash. The payment mechanism must be fully
secure.
● Support Services in E-Retailing: The electronic retail business requires support services, as a
prerequisite for successful operations. These services are required to support the business, online or
offline, throughout the complete transaction- processing phases. The following are the essential support
services:
● Communication backbone: A network backbone connects multiple networks together,
allowing them to communicate with each other.
● Payment mechanism: An e-payment system is a way of making transactions or paying for
goods and services through an electronic medium
● Order fulfilment & Logistics : Order fulfillment is the process of storing inventory, picking
and packing products, and shipping online orders to customers. This process can be completed in-
house by an ecommerce company or outsourced to a third-party logistics (3PL) provider.
Logistics refers to the overall process of managing how resources are acquired, stored, and
transported to their final destination. 
Advantages of E-Retailing
Whether it is conventional brick and mortar retail store or extension of the existing business or a new start-
up, there are many advantages from e-tailing. E-tailing provides lots of opportunities to all types of
retailers. Let us learn advantages of E-Retailing. These are as follows:
i) Price and selection: Online shopping provides quick deals for many items with many different
vendors. E-tailing provides the facilities of online price comparison which makes selection quite easy and
fast.
ii) Opportunities to reach new markets: E-retailing gives retailers an opportunity to reach new markets
which is physically not possible.
iii) Provides home shopping experience: E-Retailing overcomes some limitations of the traditional
formats. For instance the customers can shop with the ease and comfort of their homes
iv. Extension to leverage: For the existing retailers, it is an extension to leverage their skills and grow
revenues and profits without creating new business. They can explore new markets, New Special / Limited
edition products can be launched online without much investment. Companies can use existing resources
in order to achieve something new or better:.
v. Valuable insights: E-commerce software also traces the customers’ activities on the internet. It
enables e-retailers to gain valuable insights to the customers shopping behaviour.
vi. 24 hours shopping: Online stores are usually available 24 hours a day. Moreover, increasing fuel
costs, large mall crowds and time constraints are motivating buyers to shop online. Retailers can get the
order from any customer living any place at any time of the day. E-tailing removes the barriers of time and
space.
vii. Reasonable cost: E-Commerce channels are definitely efficient and they are highly cost-effective
retailers. Retailers do not have to pay a heavy price (rent) for shops in costly shopping malls.
Shortcomings of E-Retailing
The online retailing (e-retailing) process suffers from various drawbacks. There are some drawbacks of E-
Retailing. Let us learn them one by one.
i) It lacks an emotional shopping experience that the customer can get in a personal shopping store.
ii) It is exposed to intangible merchandise (i.e., virtual display of merchandise). Therefore, it does not
provide sensory support to the customer. The customer cannot hold, smell, feel, or try the product.
iii) Online customers are reluctant to part with their credit card debit cards or net banking details on
net, fearing they may be misused. It arises security issues. Customers are not yet convinced about the
foolproof status of this method.
iv) It provides impersonal services which the Indian customers are not exposed to. They are rather
used to the tangible personalised services which they may miss in online retailing services.
v) It is lacking in family shopping experience. The Indian customers enjoy shopping at the weekends,
and particularly during festive seasons and marriage occasions.
vi) There is always a sense of fraud in the mind of customers while shopping online as customers are
unable to inspect the product before purchase.
The advantages of e –Retailing out weighs its drawbacks. Thus it is showing a positive inclination rate
across the boundary.
Requirements for ONLINE RETAILING
There are some very important points which should be kept in mind while deciding to go for online for retail.
Let us discuss the essential points one by one.
a) The Commerce Platform: It is very important to select appropriate platform for digital commerce
foray. The choice a retailer makes at the beginning will have a long term impact. The choices one
needs to make are:
a) Service Model vs. Owning the platform
 b) Using a standard platform vs. building your own platform
c) Using Open source vs. proprietary platforms
b) Logistics Partner: It is very important that orders received get executed within the promised time
window. The logistics partner should be able to integrate his systems with retailers’ systems so that
orders flow through uninterrupted and supply chain visibility is available to the customers. In certain
payment options such as Cash-on-Delivery (COD), the partner should be able to collect the payment.
Reverse logistics includes handling customer returns and non-delivered goods.
c) Payment Gateway: Retail store should be able to accept the customer payments using various
methods. Most common include:
a) Credit Card and Debit Card Payments
b) Net banking
c) Using Digital Gift vouchers
d) Cash on delivery
e) Payment at Store in cash and delivery there
f) UPI/ W- Wallets
d) Digital Marketing Agency: In order to drive customer traffic to retail online store, retailer needs to
engage a Digital Marketing Agency. The scope of work for such agency includes:
a) Content Creation for catalogue including photographs, videos and detailed product specifications
b) Writing reviews, blogs
c) Search Engine Optimisation to make easier for customers to find retail store and merchandise
d) Managing the loyalty programme
e) Running campaigns on leading portals using advertising networks such as MSN, Google, etc.
f) Engaging with customers on social media platforms such as Facebook, Twitter, Google+ etc.