30 Questions
Which e-tailing business model involves selling products directly to customers through its own website and physical stores?
Bricks and clicks
What is a key aspect of Amazon's business strategy?
Maximizing sales volume, lowering costs and cutting prices
What is an important consideration in the financial analysis of e-commerce firms?
Analyzing revenue growth, profitability, and cash flow
What is the primary theme in online retailing?
Integration of online and offline operations
Which financial statement is most relevant for analyzing a company's revenue, cost of sales, gross margin, and operating expenses?
Income statement
What is a key aspect of Amazon's technology strategy?
Investing heavily in research and development
What percentage of the total GDP does the U.S. retail market account for?
71%
What is the percentage of personal consumption attributed to nondurable goods?
23%
Which of the following is a concern for e-commerce firms like Amazon?
Sales tax
What is a characteristic of mail order/telephone order (MOTO) sector?
Sophisticated order entry, delivery, inventory control systems
What is a key area of strategic analysis for e-commerce firms?
Analyzing competitors, technology, and social and legal factors
What was one of the incorrect assumptions about e-commerce retail?
The structure of the retail marketplace would be revolutionized
What is true about the impact of the internet on the retail industry?
The internet has created new opportunities for multi-channel firms
What is the main difference between general merchandisers and specialty retailers?
General merchandisers sell a wide range of products, while specialty retailers focus on a specific category
What is a common challenge faced by startup ventures in online retailing?
Difficulty in achieving profits
Which of the following is a characteristic of the service sector?
Concerned with performing tasks in and around households, business firms, and institutions
What is a key feature of service industries that makes them suited to e-commerce applications?
They are knowledge- and information-intensive
What is the primary objective of established merchants in online retailing?
To create an integrated shopping experience
What is a characteristic of online retailing that has led to its rapid growth?
It is the fastest-growing channel on a revenue basis
What is a category of service industries that includes doctors, lawyers, and accountants?
Professional services
What is a key feature of the growth of online retailing?
It is characterized by the extraordinary growth of social, local, and mobile e-commerce
What is the primary characteristic of online retail?
Buying goods or services directly from a seller via the Internet
Which of the following trends accelerated e-commerce growth between 2020 and 2024?
The COVID-19 pandemic
What is the primary goal of omnichannel retailing?
To integrate online and offline channels for a seamless shopping experience
What is the result of the integration of multiple retailing channels?
A seamless shopping experience for customers
What is the primary benefit of personalization in online retail?
Providing tailored recommendations and promotions
What is the primary influence of social commerce on online retail?
Gaining prominence through influencer marketing
What is the result of augmented reality and virtual reality in online retail?
Enhancing the online shopping experience
What is the primary trend in online retail from 2020 to 2024?
Focus on mobile shopping and omnichannel retailing
What is the primary influence of sustainability and ethical consumerism on online retail?
Influencing purchasing decisions
Study Notes
Financial Analysis Factors
- Financial statements: Statements of Operations, Balance Sheet
- Statements of Operations: Revenues, Cost of Sales, Gross Margin, Operating Expenses, Operating Margin, Net Margin, Pro forma earnings (EBITDA)
- Balance Sheet: Assets, Current Assets, Liabilities, Current Liabilities, Long-term Debt, Working Capital
E-tailing Business Models
- Virtual Merchant: Amazon
- Bricks and Clicks: Walmart, J.C.Penney, Sears
- Catalog Merchant: Lands' End, L.L.Bean, Victoria's Secret
- Manufacturer-direct: Dell
E-commerce in Action: Amazon
- Vision: Earth's biggest selection, most customer-centric
- Business Model: Retail, Third-Party Merchants, and Amazon Web Services (merchant and developer services)
- Financial Analysis: Continued explosive revenue growth, profitable
- Strategic Analysis/Business Strategy: Maximize sales volume, lower costs and cut prices, acquisitions, mobile shopping, Kindle
- Strategic Analysis/Competition: Online and offline general merchandisers, Web services
E-commerce in Action: Amazon (continued)
- Strategic Analysis/Technology: Largest, most sophisticated collection of online retailing technologies available
- Strategic Analysis/Social, Legal: Sales tax, patent lawsuits
- Future Prospects: 2011 net sales grew 40%, significant gains in 2013, ranks among top five in customer service, speed, and accuracy
The Retail Sector
- Most important theme: Integrating online and offline operations
- U.S. retail market: $11.1 trillion (71% of total GDP)
- Personal consumption: Services (66%), Nondurable goods (23%), Durable goods (11%)
- "Goods" vs. "services" ambiguity
The Retail Industry
- 7 segments (clothing, durable goods, etc.)
- Internet uses differ for each segment: Information vs. direct purchasing
- General merchandisers vs. specialty retailers
- Mail order/telephone order (MOTO) sector: Most similar to online retail sector, sophisticated order entry, delivery, and inventory control systems
E-commerce Retail
- Vision: Reduced search and transaction costs, customers able to find lowest prices
- Assumptions: Lowered market entry costs, lower operating costs, higher efficiency, traditional physical store merchants forced out of business, disintermediation
- Reality: Few of these assumptions were correct, the structure of the retail marketplace has not been revolutionized, Internet has created new venues for multi-channel firms and supported a few pure-play merchants
Common Themes in Online Retailing
- Online retail fastest growing channel on revenue basis
- Profits for startup ventures have been difficult to achieve
- Disintermediation has not occurred
- Established merchants need to create integrated shopping experience to succeed online
- Growth of online specialty merchants, e.g. Blue Nile
- Extraordinary growth of social, local, and mobile e-commerce
The Service Sector: Offline and Online
- Service sector: Largest and most rapidly expanding part of economies of advanced industrial nations
- Concerned with performing tasks in and around households, business firms, and institutions
- Employs 4 out of 5 U.S. workers, 75% of economic activity
Service Industries
- Major service industry groups: Finance, Insurance, Real Estate, Travel, Professional services (legal, accounting, etc.), Business services (consulting, advertising, etc.), Health services, Educational services
- Two categories: Transaction brokers, Hands-on service providers
- Features: Knowledge- and information-intense, personalization and customization, level differs depending on type of service
Online Retail and Services
- Online retail or online shopping: Buying goods or services directly from a seller via the Internet
- Customers visit the company's website, select a product, enter payment information and shipping details, and then order the product
Major Trends in Online Retail
- 2012-2013: Mobile commerce nearly doubles, rapid growth in social commerce, online retail still the fastest growing retail channel
- 2020-2024: E-commerce growth accelerated due to the COVID-19 pandemic, mobile shopping continued to dominate, omnichannel retailing integrated online and offline channels, personalization and customer experience prioritized, social commerce and influencer marketing gained prominence, sustainability and ethical consumerism influenced purchasing decisions, Augmented Reality (AR) and Virtual Reality (VR) enhanced the online shopping experience
This quiz covers financial analysis factors, including revenues, cost of sales, and operating expenses, as well as e-tailing business models, such as virtual merchants.
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