The Social Shopper: A Lens into the future of Retail Experiences
The Impact and Role of Cybermediaries in Retailing:
1. THE IMPACT AND ROLE OF
CYBERMEDIARIES IN RETAILING:
IMPLICATIONS FOR GLOBAL COMPETITION.
Madhury Khatun
MBA in International Business
Auckland, New Zealand
Date: October 26, 2011
2. AREA OF RESEARCH & PROBLEM STATEMENT
Area of Research
Retailing
Ecommerce
Channel Intermediaries:
Cybermediaries
Traditional Intermediaries
Ecommerce adopted firms
Consumers buying behaviors, global retailing and change of company
structure influenced by cybermediaries
Problem Statements
Cybermediaries integrate markets at the national to global levels
Create opportunities and threats for firms, channel intermediaries and all their
internal and external stakeholders
Cybermediaries force to industry re-structuring and Creating IDR Cycles
Influencing consumers buying behaviours
To what extent are those cases?
3. PURPOSE AND SIGNIFICANCE OF THE RESEARCH
Purpose of the Research
To identify the roles and influences of Cybermediaries in global retailing.
To analyze and understand the opportunities and threats of organizations and their
internal and external stakeholders in presence Cybermediaries in retail market place
To understand the affects of different organizations and their internal and external
stakeholders in the presence of Cybermediaries in the retail market place.
To understand and analyze the IDR Cycles and consumers buying behaviour influenced
by Cybermediaries
Significance of the research
To demonstrate the current and future strategic directions for retail distribution channels
which are benefits for the firms in retail sector.
Companies can potentially use SWOT guidelines to perform strategic planning for a
business venture in retail sector using different intermediaries
To confirm are Cybermediaries a real threat for the firms, traditional intermediaries, and
ecommerce adopted firms and their internal and external stakeholders.
To confirm are cybermediaries influencing IDR Cycles and Consumers buying
behaviors.
4. RESEARCH QUESTIONS
Research Questions
What are the roles of Cybermediaries and traditional intermediaries and e-commerce in
the global retail business process?
What are the threats and opportunities for firms in retail sector in the presence of
Cybermediaries in retail distribution channels?
What will be the cost to a company for intermediation, disintermediation, and re-
intermediation through an IDR framework?
Are Cybermediaries influencing consumers buying behaviours?
Are Cybermediaries really a threat or potential revenue generators for firms in global
retail sector?
5. LITERATURE REVIEW CONT……
Retail Sector and Retailing Roles of cybermediaries
Retail sector includes all the shops that sell
Connect millions of buyers and sellers
goods and services to the final consumers.
Retailing is the last stage in the distribution Integrate retail market to global levels
process.
The retailers Price comparison web sites are growing
Retailers are sales intermediaries or sellers Primary beneficiaries in retail sector
those operate between manufacturers and
are (Laudon &Traver):
consumers
Example of retail products Established offline retailers with online
presence (e.g., Staples, Wal-Mart).
Cars to apparel, meal at restaurant, airline
tickets/ hotel reservation, digital First mover dot-com companies
products, books, magazine, newspapers, sof (e.g., Amazon, eBay).
tware, movie, education, banking, and
theatre tickets.
Intermediaries:
Manufacturers Traditional, online or Consumers
manufacturer itself
6. LITERATURE REVIEW CONT…
World internet penetration rate Traditional vs. Online global Retail growth
Online retail growth Traditional retail growth
22.7% 22.1%
12.4%
10.9% 14.5%
7.2% 9.4%
-3.7%
2006 2007 2008 2009
World internet penetration rate: Growth online retail sector vs. B2C commerce
today
Highest - North America(78%)
400
Revenue(billions)
Oceania/ Australia (60%) 350
300
Growth of Ecommerce vs. Online Retail 250
200 Online Retail
150
Benefits from ecommerce 100
50 B2C
Traditional vs. Online Retail Growth: 0
Ecommerce
Growth of Online retail (14.5%)
Year
Traditional retail growth (-3.7%)
7. LITERATURE REVIEW: IDR CYCLES (CONT…)
Traditional retail channel: Govt. benefited
Suppliers Producers Distributers Retailers Consumers
Intermediation: Jobs loss, Govt. losses tax/ revenue ( Turban et.al, p.231)
Suppliers Producers Wholesalers Retailers Consumers
Cybermediaries(eBay, Amazon)
Disintermediation: Jobs loss (Example: DELL, Wal-Mart)
Suppliers Producers Distributer Retailers Consumers
Re-intermediation: More jobs loss, more competitions, Govt. tax loss
Suppliers Producers Distributer Retailers Consumers
Cybermediary
Cybermediary
Cybermediary
8. LITERATURE REVIEW: FINDING CONT….
Multichannel Retailing Strategy Purchasing from online or offline:
Catalogue 42% search online and purchase the products
online
34% research online and then purchased the
Online Traditional
product at the store.
shop Store
21% research online, research at the store
and then purchase later online
Mobile 12% research at the store first and then
purchase the product online
7% purchase the product at the store and
Buy Return research the product later online( Amazon
Source:(IMAP, 2010) web services, 2010).
Browse Buy
9. LITERATURE REVIEW- FINDING
Some factors influencing consumers buying from online shops are:
Opportunity: Internet penetration, convenience shopping, low price, different
selections of goods and services, save time, transparent prices (IMAP).
Types of products/services and growing smaller to medium businesses and their
online presence
Quick growth of ecommerce B2C business sector and other multichannel
applications.
Multichannel Retailing Strategy is another significant factor for influencing
consumers buying from online shops (IMAP).
Threats
Job losses due to intermediation, disintermediation and re-intermediation process
from traditional retail shops(Jappone, 2011).
Threat for traditional retailers (Melbourne IT, 2011).
Payment Security threats ( Vinograd, Satter & Satherley, 2011) and (Chaffey).
Power of consumers are high(Jappone, C. 2011).
Increased conflicts between Cybermediaries and Traditional Intermediaries
(Flach, 2011). Increased competition between cybermediaries (New York
Post, 2011).
Government loses sell tax (Robison).
10. RESEARCH METHODOLOGY CONT…….
Secondary Data
Collected during Literature Review from past and present published
information, academic research paper, recent or historical research studies, company
data, industry reports relevant to Retail Sector.
Primary Data
Collected from survey on consumers and companies in retail Industry
Sampling Selection Framework
For Consumers: Collected data from face to face from AIS ST HELENS, St. Lukes
shopping mall, Kmart’s customers and staffs, University of Auckland, Public park, door to
door, community events, sending survey web link email to community leaders ,LinkedIn
professional social web group and friends.
For company: Face to face, telephone, email attach with web link of survey questions to out
side of Auckland ( Tauranga in New Zealand, Melbourne in Australia, Dhaka in Bangladesh).
Respondent Organizations from Retail sector: Education, real-estate, construction
and building products, Consumers electrical and electronics goods, Computer hardware and
software service, Fast food, Furniture, Pharmaceutical company, Home
entertainment/DVD/Video, Retail chain store, Retail stationary and book company, Quality
shoes and Jewelry.
11. RESEARCH METHODOLOGY
Targeted population and Sampling size:In this research, the author selected two
groups of target populations and their sampling sizes are as follows:
A. The consumers in Retail Industry
Sampling Size: Selected sample size was 200. However, the author was able to
collect 186 samples (74 respondents from online and 112 from face to face) by
conducting survey using 37 questionnaires used Survey Statistical Online
Software to get instant results (link: http://lnkd.in/txw9iU )
B. The organizations in Retail Industry and the respondents were influential
or well-informed executives .
Sampling Size: Selected sample size was 15 and the author sent email and made
telephone calls to 50 retail sector firms. However the author was able to conduct
survey on 14 ( face to face , sending email with questions link) organizations in
Retail Industry using structure open and close ended 36 questions used survey
statistical online software ( link: http://www.mysurvey.tw/s/6p8q2tJs
Data analysis Tools
SPSS Software version 19 used for data input, Data analysis for cross
tabulations, Mann – Whitney Test for Hypothesis Testing. Online My Survey
Analytics Software for company data analysis plus consumers’ data analysis.
12. RESULTS ON CONSUMERS’ BUYING BEHAVIORS:
DEMOGRAPHIC( CONT..)
Table 1: Age group Graph 1: Gender
Age group Frequency Valid percent
20-30 years 88 47.6
31-40 years 42 22.7 Female,
51- 60 years 15 8.1 46.8% Male,
41- 50 years 11 5.9 53.2%
61 and above 10 5.4
Under 20 years 19 10.3
Total 185 100%
Missing System 1
Total 186
Result from Table 1 (Age group):
Most of the respondents (47.6%) were from age group 20-30 years
Least respondents were from age group 61 and above
Result from Graph 1( Gender):
46.8% respondents were female and 53.2% male
13. RESULTS ON CONSUMERS’ BUYING BEHAVIORS:
INTERNET USE
Table 2:What consumers are doing on the Table 3: How long consumers are spending
web? time online every day?
Activities on the web Responses Consumers online time No. Of respondents Valid %
Number (N) Percentage of spending per day
cases (%) 1 - 3 hours per day 92 49.5%
Read news 116 62.5 3 - 6 hours 42 22.6%
Search Information 143 76.9 Less than 1 hour per day 24 12.9%
Entertainments 111 60.0
More than 9 hours 11 5.9%
Buy Goods or services 84 45.2
6 - 9 hours 13 7.0%
Sell Goods or services 26 14.0
Other 4 2.2%
Other 34 18.3
Total 186 100%
Total 514 276.3
Results from Table 2:
76.9 % of consumers are search information on the web
62.5% consumers red news
60.0% consumers are using web for entertainments
45.2% are buying goods and services from web
Results from Table 3:
Most of the consumers (49.5%) are spending average1-3 hours every day on internet
22.6% consumers are spending 3-6 hours and 5.9% are spending more than 9 hours
14. DATA ANALYSIS :CROSS TABULATION
Graph 3: Online spending everyday as per Graph 4: How frequently consumers are
gender shopping from online or offline shops?
50
Numbers of genders
40 39.8%
37%
30 40
29%
20
30 18.9%
10 18.8% 18.8%
0 20
Less
1-3 3-6 6-9 More
than 1
hours hours hours than 9 Other
hour per 10
per day per day per day hours
day
Male 26 44 13 10 3 1 0
Female 16 47 14 5 3 1 Online shopping Offline shopping
1-2 tims a week Other Never shopping online
Here are two variables genders and their spending online(graph 3):
Most of the consumers are spending 1-3 hours every day and highest is the female(47) than male(44)
More male(10) are spending 3-6 hours per day than female(5)
Here are two variables online and Offline shopping ( Graph 4):
29% consumers are shopping from online 1-2 times a week and 37% are shopping from offline at
the same frequency
18.8% consumers never shopping online
Other 39.8% are doing online shopping and 18.9% from traditional shop as per their requirements.
15. DATA ANALYSIS: FACTORS INFLUENCING CONSUMERS ONLINE AND OFFLINE
SHOPPING(CROSS TABULATION)
Table 5 Consumers feel easy to price Table 6 Consumers feel easy to reach global
comparison with retailers as: Total market through retailers such as: Total
Traditional Online Both Other Traditional Online Both Other
Male 10 61 26 1 98 Male 6 76 15 2 99
Female 13 45 24 3 85 Female 11 53 18 2 84
Total 23 106 50 4 183 Total 17 129 33 4 183
Table 7 Consumers feel comfortable payment with Table 8 Consumers received lowest price
retailers such as: Total offered by retailers such as: Total
Traditional Online Both Other Traditional Online Both Other
Male 38 16 44 0 98 Male 10 46 36 1 93
Female 41 20 24 1 86 Female 13 49 20 2 84
Total 79 36 68 1 184 Total 23 95 56 3 177
From table 5
Male consumers( 61 out of 106 respondents) feel easy to price comparison with online retailers than
female consumers( 45 out of 106 respondents).
From Table 6:
More male(76 out of 129 respondents) are buying and feel easy to reach global market through
online retailers than female( 53 out of 129 respondents).
From Table 7:
For payments, female consumers feel comfortable payment with traditional retailers than male and
male feel comfortable both ways. But both gender feel uneasy to payment with online retailers.
From Table 8:
Both male and female consumers receiving lowest price offered by online shops but female
respondents always searching for lowest price offered by online retailers.
16. TYPES OF PRODUCTS /SERVICES INFLUENCED CONSUMERS
ONLINE AND OFFLINE SHOPPING( CROSS TABULATION)
Table 9: Products and services Online Offline Both Total,
influencing consumers buy from Frequency (%) Frequency (%) Frequency (%) Missing,
The following
online/offline shops Total products/services
Airline tickets/reservations 127 (70.9%) 14 (7.8%) 38(21.2%) 179,7,186 consumers prefer to buy
Books 41 (24.3%) 80 (47.3%) 48 (28.4%) 169,17,186
from traditional shops:
Clothing/Accessories/Shoes 26 (14.6%) 93 (52.2%) 59 (33.1%) 178,8,186 Books, Clothing/accessor
Videos / DVDs / Games/ 38 (22.5%) 69 (40.8%) 59 (34.9%) 169,17,186 ies/shoes, Video/DVD/Ga
Software mes/software, Groceries, F
Electronic Equipments 25 (14.8%) 80 (47.3%) 63 (37.3%) 169,17,186
urniture, Education, real
Groceries 11(6.4%) 140 (81.9%) 18 (10.5%) 171,15,186 estate and insurance.
Health/beauty products / 20 (11.6%) 107 (62.2%) 44 (25.6%) 172,14,186 Consumers prefer to buy
Jewellery both ways(online/Offline)
Furniture 13 (7.7%) 127 (75.6%) 27 (16.1%) 168,18,186
Education 23 (13.7%) 94 (56.0%) 47 (28.0%) 168,18,186
But Online shopping is
increasing significantly as
Banking 71 (38.6%) 38 (20.7%) 65 (35.3%) 184,2,186 shown in the table 11.
Real estate 24 (14.4%) 92 (55.1%) 47 (28.1%) 167,19,186
Insurance 36 (21.4%) 91(54.2%) 40 (23.8%) 168,18,186
70.9% consumers are buying airline tickets and hotel reservation from online
In retail banking, 38.6% prefer online banking, 35.3% prefer both online/offline
The online shopping are significantly increasing in Airline tickets/hotel reservation and retail
banking sector.
17. HYPOTHESIS TESTING: MANN – WHITNEY TEST
The Mann-Whitney test:
It is the non-parametric equivalent of the independent samples t-test. A non-parametric
test (distribution-free) used to compare two independent groups of sampled data.
Ho: There are no differences between male and female to buy airline tickets/reservation from
online shop
H1: There are some differences between male and female to buy airline tickets/ hotel reservation
from online shop
Significance level of p-value < 0.05
Reject the null hypothesis if p-value < 0.05.
Finding P-value = 0.463
Decision: Since p-value = 0.46 > 0.05. Therefore, the author did not reject the null hypothesis.
Conclusion: At the p-value = 0.46 level of significance, there is enough evidence to
conclude that there is no difference between two gender classes for buy airline tickets/
hotel reservation from online shops.
18. RESULTS FROM SURVEY/INTERVIEW ON COMPANIES
Business Model:
92.9% respondents’ companies have B2C Business Model
14.3% have Intermediaries
7.1% companies are providing information, digital products and services via intermediaries
Concepts about Cybermediary
64% companies have enough knowledge on Cybermediaries
36% companies are not aware about it.
Revenue Model:
86% respondent companies are generating profits to sell their products
36% respondent companies are making profits to sell their services
21.4% respondent companies are generating their profits through transaction fees and Commissions
on sale products
19. RESULT: COMPANIES’ OPPORTUNITIES AND THREATS IN
PRESENCE OF CYBERMEDIARIES IN RETAIL VALUE CHAIN
Opportunities
50% companies have more customers using cybermediary
43% companies can lowering their cost using Cybermediaries
29% companies have opportunities to global reach using cybermediaries
14.3% companies have opportunities for cross- selling, new service, saving transaction
cost due to cybermediaries
Threats
64% companies are facing threat as consumers have different choices and 36% said that
consumers are powerful
28.6% said that new entrant increased and increased competitions among the firms
21.4% said that new substitute products, channel conflicts and products and price
comparison have increased.
20. INTERMEDIARY ANALYSIS – USING IDR FRAMEWORK
Table 10: Levels of intermediation Cost levels
High Medium Low
Traditional Intermediation process 64.3% (9) 35.7% (5) 00%
Online or Cybermediation process 7.1% (1) 57.1% (8) 35.7% (5)
Both ( Traditional and web shop) 50% (7) 42.9% (6) 7.1% (1)
Levels of intermediation and cost of company as shown in Table 15
For traditional intermediation , 64% companies have high cost
For Cybermediation, cost level is medium for 57% companies, 36% have low cost
For Both intermediation, cost level is high for 50% companies and 43% have medium cost
21. PLAN FOR DISINTERMEDIATION AND CYBERMEDIATION
Graph 9: Disintermediation Strategy Graph 10: Reintermediation or Cybermediation Strategy
No
No 29%
43%
Other
50% Other
43%
Yes
Yes 28%
7%
Table 11: Effects of Disintermediation and Re-intermediation or Cybermediation ( Analysis)
Effects of disintermediation Effects of re -intermediation or Cybermediation
Revenue Increased: 42.9%(6) Revenue Increased: 64.3%(9)
Revenue decreased:21.4%(3) Revenue decreased: 21.4%(3)
Sell Increased: 28.4%(4) Sell increased: 42.9%(6)
Sell decreased: 7.1%(1) Sell decreased: 00%
Increased cost: 00% Increased cost: 7.1%(1)
Decreased cost: 28.6%(4) Decreased cost: 28.6%(4)
Increased competition:21.4%(3) Increased competition:35.7%(5)
Decreased competition: 00% Decreased competition: 00%
Price decreased:14.3%(2) Price decreased: 35.7%(5)
Price increased: 00% Price increased: 00%
Government benefited: 00% Government benefited: 7.1%(1)
Government not benefited : 14.3%(2) Government not benefited: 14.3%(2)
Increased employment: 7.1%(1) Increased employment:7.1%(1)
Decreased employment:7.1%(1) Decreased employment:14.3%(2)
Other: 28.6%(4) Other: 7.1%(1)
22. SUMMARY OF RESEARCH FINDING FROM PRIMARY DATA
From consumers’ side From Companies’ side
Most of the consumers are spending Most of the company have B2C business
online every day 1-3 hours and the highest model, generate revenue for sell goods and
used search intermediary is Google (79%) aware about Cybermediary.
Most of the company’s weakness is High
45.2% consumers search web for buying
operating cost – space, tech, staffs plus lack of
products and services. cross channel support.
TV is the highest influential media to Opportunities for using Cybermediaries are:
influencing consumers for online shopping more customers, lowering cost and global
plus significantly influencing by reach.
iPhone/QR codes and online communities
Threat for using Cybermediaries are consumers
Most consumers prefer to buy both ways have different choices, more substitute
(44%). But traditional shoppers (37%) and products, price competition to provide lowering
price.
(29%) prefer to buy from online shop.
Most of the company’s competitors are Brick
Reasons for online shopping are global and click and multichannel firms.
reach, save time, Variety of products, price
comparison and low price. For selling products/ services in traditional
way, governments are more benefited than
selling products/services using Cybermediaries
23. SUMMARY OF RESEARCH FINDING (CONTINUE)
From Consumers’ Side From Companies’ side
Consumers’ purchasing behaviors in o For cybermediation, more jobs will loss than
traditional way or using online shop disintermediation.
depend on types of products/ services
they are going to buy. o Companies are making more revenues for
using cybermediaries compare with
Most of the consumers prefer to buy disintermediation
airline tickets/hotel reservation and retail
banking from online. Therefore, most of the company sells
products/services in both traditional and using
Limitations of buying from online shops: online shops.
Sometimes consumers feel uneasy to use
payment card, privacy of data and Companies are trying to adopt multiple
spamming. They like to touch and feel distribution channels or cross channels in
the products before buy. current competitive market place.
Key findings from research: Cybermediary is good for global retailing, consumers and of course
benefited to some companies and generates revenue but big threat for traditional intermediaries in
airlines and hotel industries plus threats for employment and governments. Some times online
spamming and payment security issues is the highest threats of companies, cybermediaries or online
shops as distribution channels.
24. CONCLUSIONS – CONSUMERS’ SIDE
The internet: Internet facility and time spending in online is increasing significantly
and more people linked to email and online advertising.
Other factors: Convenience shopping, easy for price comparison, save time, lowest
price, easy to reach global market, products/ service qualities, variety of
products/services.
Limitations of buying from online shops: Security issues and privacy of data.
Retail service sector :Secondary data(60% increased in online). From primary
data, airline tickets/ hotel reservations (71%) and online banking (39%).
Buying goods :From Primary and secondary data, Asian, Australian, and European
prefer to buy products and services from overseas through online shops and100%
Australian prefer it.
Preference of shopping: From primary data analysis , consumers’ preference of
shopping from both shops (44.3%).
However, percentage of shopping preference from online (24%) and offline (28%) is
not much difference which is similar to secondary data.
25. CONCLUSIONS ON COMPANY SIDES
Opportunities : increasing more customers, entering new markets, lowering
cost, increase cross selling or can use as multiple distribution channels.
Threats: lowering price, increasing more substitute products/services, increasing more
online companies, and significantly threat for traditional intermediaries plus security
threats for all firms who are using online shops.
Competitors: Brick and click, Click and click and multichannel firms.
Cost of different intermediation process: Cybermediation ( Lowering cost offering
products and services in a lower price to consumers. Cost is high( over 60%) for sell
products and services in traditional way which was similar with secondary data.
Multichannel Strategy: Most of the companies are looking for multichannel
strategy for sell their products and services.
Disintermediation and re-intermediation effects: For disintermediation, 43% company
respondents said that their revenue increased but for using Cybermediaries or for re-
intermediation, company respondents (64%) said that their revenue will further increase.
26. RECOMMENDATIONS
Research and developments
Need to develop research focused on consumers and different technologies which are influencing
consumers’ buying behaviours and changing company channels structure.
Management of IDR Cycles
Frequency of IDR Cycles are increasing due to internet technology and growth of online
intermediaries. Traditional intermediaries plus other companies can use multiple distribution
channels to sell their products and services using cybermediaries for short or long term as per their
needs.
Strategy for disintermediation or re-intermediation
Sometimes company itself plays an intermediary role for sell its products and services.
Company can use cybermediaries for promotion products and services as a multiple channel.
External Threats Management
- Need sufficient support or commitment by senior management to address information security
issues
- Keeping up-to-date with changes in technology
- Online security threats Management
- Strategies for increase more opportunities for firms in competitive market place
27. RECOMMENDATIONS CONT…..
Limitations of Research
Time constraint, limited resources.
Data collection and Sample size
Difficulties to get personal information for conventional survey
For companies, they are not ready to disclose their internal weakness.
Retail sector population is too large therefore it is impossible to include every individual.
Most of the company respondents tried to avoid tax related question.
Data was missing from some particular questions from conventionally collected data as
respondents were not much interested.
Area of further research
Need to investigate more effectiveness on IDR Cycle and deeply focused on roles of
Cybermediaries in particular retail sector.
To develop more precisely consumers’ buying behavior focused on country individually using
some important variables such as current economic condition, culture etc.
Need to investigate impact of economy due to online growth in retail sector.
Any other reasons which influencing consumers buying from online shops?
THANK YOU ( ANY QUESTIONS ?)