24 Questions
What is a primary challenge faced by startup ventures in online retailing?
Maintaining profitability
Which of the following is NOT a characteristic of the service sector?
Concerned with manufacturing tasks
What is the primary goal of integrating online and offline operations in online retailing?
To provide a seamless customer experience
What is a major category of service industries?
Transaction brokers
What percentage of the total GDP does the U.S. retail market account for?
71%
What is a key feature of services that makes them suitable for e-commerce applications?
Knowledge-intensity
What is the primary advantage of e-commerce over traditional retail?
Reduced search and transaction costs
What is a major driver of growth in online retailing?
Social, local, and mobile e-commerce
What is the primary characteristic of a multi-channel firm?
Operates through multiple channels, including online and offline
What is the percentage of personal consumption accounted for by services in the U.S. retail market?
66%
What is a characteristic of services that requires personalization and customization?
Type of service, e.g., medical vs. financial
What is a challenge faced by established merchants in online retailing?
Creating integrated shopping experiences
What is the primary advantage of multi-channel integration for retailers?
Improved customer experience and increased efficiency
What is a category of service industries?
Professional services
What is the primary difference between general merchandisers and specialty retailers?
General merchandisers offer a wide range of products, while specialty retailers offer a narrow range of products
What is the primary characteristic of the mail order/telephone order sector?
Sophisticated order entry, delivery, and inventory control systems
What is the primary focus of Amazon's business strategy?
Maximizing sales volume and lowering costs
Which of the following e-tailing business models is characterized by selling products directly to customers through a physical store and online platform?
Bricks and clicks
What is the primary metric used to evaluate a company's financial viability in the context of e-commerce?
EBITDA
Which of the following statements is true about Amazon's strategic analysis?
Amazon is a leading provider of web services
What is the primary benefit of multi-channel integration in e-commerce?
Improving customer satisfaction
Which of the following e-commerce companies is characterized by its direct sales model?
Dell
What is a key aspect of Amazon's strategic analysis in terms of technology?
Maintaining a large collection of online retailing technologies
What is a key challenge faced by Amazon in terms of its strategic analysis?
All of the above
Study Notes
Financial Analysis Factors
- Financial statements used for analysis include Statements of Operations and Balance Sheets
- Key components of Statements of Operations: Revenues, Cost of Sales, Gross Margin, Operating Expenses, Operating Margin, Net Margin, and EBITDA
- Key components of Balance Sheets: Assets, Current Assets, Liabilities, Current Liabilities, Long-term Debt, and Working Capital
E-tailing Business Models
- Four types of e-tailing business models: Virtual Merchant, Bricks and Clicks, Catalog Merchant, and Manufacturer-Direct
- Examples of each type:
- 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: Strategic Amazon
- Strategic analysis/technology: Largest, most sophisticated collection of online retailing technologies available
- Strategic analysis/social, legal: Sales tax, patent lawsuits
- Future prospects: Net sales growth, significant gains 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.
- Each segment uses the Internet differently
- Information vs. direct purchasing
- General merchandisers vs. specialty retailers
- Mail order/telephone order (MOTO) sector is most similar to online retail sector
E-commerce Retail: The Vision
- 4 key points:
- Find lowest prices
- Reduced search and transaction costs
- Lowered market entry costs, lower operating costs, higher efficiency
- Traditional physical store merchants forced out of business
Common Themes in Online Retailing
- Online retail is the fastest-growing channel on a revenue basis
- Profits for startup ventures have been difficult to achieve
- Disintermediation has not occurred
- Established merchants need to create integrated shopping experiences 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, Business services, Health services, Educational services
- Two categories: Transaction brokers and Hands-on service providers
- Features: Knowledge- and information-intense, Personalization and customization, Level differs depending on type of service
This quiz covers financial analysis factors including statements of operations, balance sheets, and e-tailing business models.
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