Page 35 - Introduction to Electronic Commerce and Social Commerce

12 1 Overview of Electronic Commerce and Social Commerce

• Developed superb inventory and sales tracking systems Questions
based on dashboards 1. Why would you buy (or not buy) from Net-a-Porter?
• Offered an online fashion magazine 2. Watch the video “The Future of Shopping” (youtube.
• Discovered what customers really want via social net- com/watch?v=_Te-NCAC3a4). How would you inte-
works (Chapter 7) and fulfilled their needs grate this development with Net-a-Porter?
• Offered large discounts 3. List both the advantages and disadvantages of the Net’s
• Developed a presence on Facebook and app for iPhone physical stores.
• Has 630,000 followers on Google+ (February 2016) 4. It is said that the Net is playing a significant role in trans-
• Has five million visitors each month (February 2016) forming how designers reach customers. Explain why.
• Experiences 750,000 downloads per month on iPhone 5. Read the benefits of EC to customers (Section 1.3). Which
• Started augmented reality shopping windows in several ones are the most relevant here?
global cities as of 2012 (see digitalbuzzblog.com/net-a- 6. What EC capabilities are helping the Net and its designers?
porter-augmented-reality-shopping-windows). At this 7. Analyze the competition in the high-end fashion market.
same site, you can watch the video “Window Shop” and 8. What is the importance of globalization in this case?
download the Net-a-Porter iPhone/iPad app. 9. Imitators are springing up on all sides. Even eBay and
Amazon.com are expanding their fashion e-tailing efforts.
In 2010, the company started taking advantage of the social What strategy do you suggest for the Net?
media environment that is changing the fashion industry.

SECTION 1.2 REVIEW QUESTIONS
The Results

1. List the major components of the EC framework.
Customers now come from over 170 countries and revenue 2. List the major transactional types of EC.
and profits are increasing rapidly. Several million visitors
3. Describe the major landmarks in EC history.
come to the site every week. The “Net” became profitable 4. List some EC successes and failures.
after 1 year, a very rare case in e-tailing. During the eco-
nomic crisis of 2009, the Net’s total sales were up 45%, ver-
sus a 14% decrease for one of its major competitors (Neiman
Marcus; Web and paper catalog sales). The company was so 1.3 DRIVERS AND BENEFITS
successful that luxury goods company Richemont Corp. pur- OF E-COMMERCE
chased a 93% stake in the business. In October 2015, the
company merged with the YOOX Group (yooxgroup.com). The tremendous explosion of EC can be explained by its
In June 2010, when the company celebrated its 10th anni- drivers and characteristics, benefits, and by changes in the
versary, it opened a new website dedicated to menswear. With business environment.
success comes competition, and the Net’s competitors include
Bluefly (low prices), Shopbop (an Amazon.com company, but
it lacks the Net’s prestige), and high-end department stores The Drivers of E-Commerce
with their own online stores (Nordstrom, Neiman Marcus).
However, the Net has the highest prestige and growth rate. A Although EC is only about 23 years old, it is expected to
major threat may come from eBay, which has been reaching have non-stoppable growth and it expands consistently into
out to high-end designers about creating their own virtual new areas of our life. The question is why. What drives EC?
stores (hosted by eBay) where they can sell at fixed prices and EC is driven by many factors depending on the industry,
also use auctions. Finally, note that in late 2010, Amazon.com company, and application involved. The major drivers are
created MYHABIT that offers designer brands at a discount. shown in the self-explanatory Figure 1.4, together with the
To stay on top of the competition, the Net is planning new section and/or chapter where details are presented.
ventures and expanding its business model to include chil-
dren’s clothes. Net-a-Porter is an example of the revolution
that is occurring in the fashion industry. Another example is The Benefits of E-Commerce
Polyvore, whose case is presented in Chapter 7. For details on
these new business models, see businessoffashion.com/2012/ There are many benefits of EC and they continue to increase
01/e-commerce-week-the-rise-of-new- business- models.html. with time. We elected to organize them in three categories:
Sources: Based on Pressler (2015), en.wikipedia.org/wiki/ EC provides benefits to organizations, individual custom-
YOOX_Net-a-Porter_Group (accessed March 2016). ers, and society. These benefits are summarized in Table 1.2.