Saudi Electronic University

ECOM-101

E-commerce 2013, 9e

Chapter 9 Online Retail and Services

1)Mobile commerce currently accounts for more retail goods sold than social commerce.

2. In 2012, the number of online buyers was around 150 million.

3. Groupon is an example of local commerce.

4. Online retailing is one of the largest segments of the retail industry.

5. Contrary to predictions of analysts made during the early days of e-commerce, the Internet has led to both disintermediation and hypermediation on a widespread basis.

6. Consumers are primarily price-driven when shopping on the Internet.

7. Online retailing provides an example of the powerful role that intermediaries continue to play in retail trade.

8. The power of suppliers is a key industry strategic factor.

9. In the United States, the service sector accounts for about 75 percent of all economic activity.

10. The retail industry is the largest investor in information technology.

11. In the United States, banks, insurance firms, and brokerage firms are prohibited from having significant financial interests in one another.

12. Almost 80 million households now use online banking.

13. The online mortgage industry has transformed the process of obtaining a mortgage.

14. The major impact of Internet real estate sites is in enabling online-only property transactions.

15. Online career sites are being threatened by both job search engines and aggregators.

16. Which of the following is not a major trend in online retail for 2012-2013?
    1. Online retailing is the fastest growing retail channel.
    2. Lunchtime purchases are the fastest growing time segment for online retail purchases.
    3. Online retailers increase the use of interactive marketing tools such as blogs and user- generated content.
    4. Social commerce triples from $1 billion to $3 billion.

17. Personal consumption of retail goods and services accounts for approximately                                

of the United States GDP.

1. 1. $11 billion
   2. $110 billion
   3. $1.1 trillion
   4. $11 trillion

18. All of the following products are considered durable goods except:
    1. automobiles.
    2. clothing.
    3. appliances.
    4. furniture.

19. Within the United States retail goods and services market, personal consumption of

                      accounts for the largest share.

1. 1. durable goods
   2. nondurable goods
   3. online retail
   4. services

20. Which of the following segments of the United States retail market is highly concentrated, with large firms dominating sales?
    1. food and beverage
    2. online retail
    3. MOTO
    4. general merchandise

21. The MOTO sector of the retail industry is most similar to the                                 sector.
    1. specialty stores
    2. general merchandise
    3. online retail sales
    4. product-based services

22. Which of the following is not one of the seven major segments of the retail industry?
    1. electronics and computers
    2. consumer durables
    3. gasoline and fuel

1. 4. food and beverage

23. Which of the following sectors of the United States retail industry is the largest?
    1. consumer durables
    2. specialty stores
    3. gasoline and fuel
    4. online retail

24. All of the following statements are true except:
    1. Compared to general merchandisers, the transition to e-commerce has been easier for MOTO firms.
    2. The MOTO sector is also called the general merchandise sector.
    3. MOTO was the last technological revolution that preceded e-commerce.
    4. Distribution of catalogs is one of MOTO retailers' biggest expenses.

25. All of the following were factors that precipitated the growth of MOTO except:
    1. the national toll-free call system.
    2. the growth of the cellular phone industry.
    3. falling long distance telecommunications prices.
    4. the growth of the credit card industry.

26. All of the following were parts of the vision during the early days of e-commerce except

the belief that:

1. 1. new, "first-mover" middlemen, with expertise in e-commerce, would force traditional intermediaries out of business.
   2. Web consumers were rational and cost-driven.
   3. entry costs to the online retail market would be much less than those needed to establish a physical storefront.
   4. the cost of acquiring customers would be much lower.

27. In 2012, online retail sales revenues were approximately:
    1. $2.24 billion.
    2. $22.4 billion.
    3. $224 billion.
    4. $2.24 trillion.

28. In 2012, approximately what percentage of Internet users over the age of 14 made a purchase at an online retail store?
    1. 30 percent
    2. 50 percent
    3. 70 percent
    4. 90 percent

29. To improve shipment and delivery, Amazon has used all of the following techniques

except:

1. 1. increasing its number of warehouses.
   2. sending pre-posted packages to United States Postal System centers.
   3. optimizing the size of shipments.
   4. establishing pick-up centers for pickup and delivery of commonly ordered goods.

30. The top 25 retailers account for about                            percent of all online retail.
    1. 90
    2. 60
    3. 45
    4. 20

31. All of the following are advantages of online retail except:
    1. lower supply chain costs.
    2. lower cost of distribution.
    3. ability to change prices.
    4. faster delivery of goods.

32. Which of the following is not one of the central challenges facing the online retail industry?
    1. lack of physical store presence
    2. consumer concerns about the privacy of personal information
    3. inconvenience in returning goods
    4. delivery delays

33. Which of the following is not one of the methods used by traditional retailers to develop multi-channel integration?
    1. online Web catalog
    2. online order, in-store pickup
    3. online supply-push
    4. online promotions for offline purchases

34. Which of the following is not a key industry strategic factor?
    1. synergies
    2. barriers to entry
    3. industry value chain
    4. existence of substitute products

35. All of the following are strategic factors that pertain specifically to a firm and its related businesses except:
    1. core competencies.
    2. synergies.
    3. technology.
    4. power of customers.

36. The lower the cost of sales compared to                           , the higher the gross profit.
    1. assets
    2. revenue
    3. gross margin
    4. operating expenses

37. Gross margin is defined as gross profit:
    1. minus total operating expenses.
    2. divided by net sales revenues.
    3. divided by cost of sales.
    4. minus net income.

38. Which of the following is not categorized as an operating expense?
    1. the cost of products being sold
    2. marketing costs
    3. administrative overhead
    4. amortization of goodwill

39. Operating margin is defined as:
    1. operating income or loss divided by net sales revenues.
    2. operating income or loss divided by total operating expenses.
    3. net sales revenues divided by net income or loss.
    4. net assets divided by net liabilities.

40. What is another name for pro forma earnings?
    1. net margin
    2. operating income
    3. earnings before income taxes, depreciation, and amortization (EBITDA)
    4. generally accepted accounting principles (GAAP) earnings

41. Which of the following would not be considered a current asset?
    1. long-term investments
    2. cash
    3. accounts receivable
    4. marketable securities

42. Current liabilities are debts of the firm that will be due within:
    1. three months.
    2. six months.
    3. one year.
    4. two years.

43. For a quick check of a firm's short-term financial health, examine its:
    1. working capital.
    2. gross margin.
    3. long-term debt.
    4. cost of sales.

44. Virtual merchants face potentially large costs for all of the following except:
    1. building and maintaining a Web site.
    2. building and maintaining physical stores.
    3. building an order fulfillment infrastructure.
    4. developing a brand name.

45. All of the following statements about Amazon.com are true except:
    1. Amazon has achieved success by focusing on its primary mission: selling books at highly competitive prices.
    2. Amazon compensates for its low price strategy by focusing on operating expenses and eliminating marketing in offline media.
    3. eBay can be considered a competitor of Amazon's.
    4. The Kindle is the best-selling product in Amazon's history.

46. All of the following are challenges faced by bricks-and-clicks firms except:
    1. coordinating prices across channels.
    2. handling returns of Web purchases at retail outlets.
    3. building a credible Web site.
    4. building a brand name.

47. All of the following are challenges for catalog merchants except:
    1. high costs of printing and mailing.
    2. building a credible Web site.
    3. the need to bring staff in or manage new technology.
    4. building sophisticated order entry and fulfillment systems.

48. Which of the job recruitment sites is a job site aggregator?
    1. SimplyHired
    2. Craigslist
    3. Monster
    4. CareerBuilder

49. The term demand-pull refers to:
    1. making products prior to orders being received based on estimated demand.
    2. waiting for orders to be received before building a product.
    3. channel conflict.
    4. multi-channel manufacturers who sell directly online to consumers.

50. All of the following are examples of the challenges that traditional manufacturers experience when using the Internet to sell directly to the consumer except:
    1. moving to a supply-push model.
    2. high cost structures.
    3. developing a fast-response online order and fulfillment system.

1. 4. channel conflict.

51. Which of the following has experienced the most significant online growth?
    1. offline general merchandisers
    2. virtual merchants
    3. catalog merchants
    4. manufacturer-direct firms

52. Approximately                          percent of the United States labor force is involved in providing services.
    1. 30
    2. 50
    3. 60
    4. 80

53. Which of the following is not an example of a transaction broker?
    1. a stockbroker
    2. a real estate agent
    3. an accountant
    4. an employment agency

54. All of the following services require extensive personalization except:
    1. financial services.
    2. legal services.
    3. medical services.
    4. accounting services.

55. All of the following are trends in the financial service industry except:
    1. industry consolidation.
    2. integrated financial services.
    3. pure online banks are displacing established multi-channel firms.
    4. growth of online personal banking.

56. Which of the following statements about financial portals is not true?

1. 1. They do not offer financial services.
   2. They add to the online price competition in the finance industry.
   3. Their strategy is similar to that of large banking institutions.
   4. They make their money from advertising, referral fees, and subscription fees.

57. In                       , all of a customer's financial (and even nonfinancial) data are pulled together at a single personalized Web site.
    1. account aggregation
    2. a financial portal
    3. integrated financial services
    4. EBPP systems

58. The Internet has resulted in lower search costs, increased price comparison, and lower prices to consumers for which insurance product line?
    1. term life insurance
    2. automobile insurance
    3. health insurance
    4. property and casualty insurance

59. All of the following statements about the online insurance industry are true except:
    1. The Internet has dramatically changed the insurance industry's value chain.
    2. Web sites of almost all the major firms provide the ability to obtain an online quote.
    3. Internet usage has lead to a decline in term life insurance prices industry-wide.
    4. The industry has been very successful in attracting visitors searching for information.

60. All of the following statements about the online real estate services market are true

except:

1. 1. The major impact of Internet real estate sites is in influencing offline decisions.
   2. Real estate differs from other types of online financial services because it is impossible to complete a property transaction online.
   3. The primary service offered by real estate sites is a listing of houses available.
   4. The Internet and e-commerce have created significant disintermediation in the real estate marketplace.

61. Craigslist is a player in which of the following online services market?
    1. real estate services and career services
    2. insurance services and brokerage services

1. 3. travel services
   4. online accounting services

62. Which of the following best explains why the service sector is a natural avenue for e- commerce?
    1. The service sector is less geographically reliant and more globally oriented.
    2. The service sector has historically been more technology-reliant.
    3. Much of the value in services is based on the collection, storage, and exchange of information.
    4. It is not; services are difficult to translate to e-commerce because they rely on face-to-face communication and barter.

63. What is the largest sector of the online travel services market in terms of revenue?
    1. hotel reservations
    2. car reservations
    3. cruise/tour reservations
    4. airline reservations

64. Which of the following statements is not true?
    1. Price competition among online travel services is difficult as comparison shopping for better prices is easy.
    2. Online travel services is one of the few sectors in which extensive disintermediation has occurred.
    3. The ability of travel products and services to be commoditized is a significant factor in the explosive growth of the online travel services industry.
    4. The online travel services industry has gone through a period of consolidation.

65. Which of the following is not a major trend in the online recruitment services industry?
    1. disintermediation
    2. localization
    3. social networking
    4. consolidation

66.                        goods are consumed quickly and have shorter life spans.

67. General merchandisers have always competed against a more traditional form of retail firms called               .

68.                        refers to the ability of firms to survive as profitable business firms during the specified period.

69.                        measures the percentage of sales revenue a firm is able to retain after all expenses are deducted from gross revenues.

70. A(n)                         provides a financial snapshot of a company's assets and liabilities (debts) on a given date.

71. If a firm's                          is only marginally positive, or negative, the firm will likely have trouble meeting its short-term obligations.

72. A(n)                         is a single channel Web firm that generates almost all its revenues from online sales.

73. In a(n)                         strategy, traditional merchants combine their offline retail and online retail stores and services to provide a seamless customer experience.

74. Thus far, the most successful and innovative pure-play online retailer is                                .
75. Also called bricks-and-clicks merchants,                               companies have a network of physical stores as their primary retail channel but also have introduced online offerings.

76. In a(n)                         model, products are made prior to orders received based on estimated demand.

77. The United States Department of Labor defines                             occupations as "concerned with performing tasks" in and around households, business firms, and institutions.

78.                        are sites that provide consumers with comparison shopping services, independent financial advice, and financial planning.