Thao Le

ITS 380

Professor Shin-Ping Tucker



Chapter 9: Online Retail and Services

Case Study

1.      What characteristics of the restaurant market made it difficult for a reservation system to work?

The market is highly splintered with large regional differences. A lot of small restaurants do not have computer experienced and will not have the spare resources to participate. Therefore, it is difficult for a software provider of reservation system to target restaurant market. Furthermore, not every restaurant has ability to pay for an equal amount of subscription fee and the reservation system makers need to prepare revenue models according to the size, location and other elements of the restaurant.


2.      How did Open Table change its marketing strategy to succeed?

Firstly, OpenTable tried to market its targeting national chains as well as pay online restaurant reviewers for links to OpenTable Web Site. However, the fee was too expensive and was concentrated on the $1 per reservation revenue. Secondly, OpenTable focused on four main geographic areas. It offered not only to send diners to restaurants but also to provide a system which manages customer relationship so that restaurants could aware and serve their customer better.


3.      Why would restaurants find the SaaS model very attractive?

Because restaurant do not have to buy software or hardware and need an IT staff to install it manually. Instead, they can only focus on what they do best and get a subscription of a ready to use system. This method helps restaurants save their money, save time. They can also go live in no time and let the service providers take care of maintenance and upgrade of the software and hardware systems in exchange of a subscription fee. All they need are computers and trained on how to use the system which is provided buy OpenTable.


4.      What challenges does Open Table face?

OpenTable faces challenges from their competitors in term of matching them with the features in the services they provide and on the subscription fee that these competitors have come up with. OpenTable was late with payment option. For example, its competitor startup, Resy allowed restaurant owners to allow customers to reserve tables by paying through credit card. Furthermore, both Reserve and yelp undercut the monthly subscription of 99$ while the fee of OpenTable is 295$ per month.


1.Find an example not mentioned in the text of each of the four types of online retailing business models. Prepare a short report describing each firm and why it is an example of the particular business model.

•           Bricks-and-clicks:

- - Nordstrom is a big retailing system with stores around the country. This chain of stores allows people to order products through either online or in stores. Furthermore, they allow them to pickup in store directly at local branch or delivery to their home.

•           Virtual merchant:

- - This is an online store with no available physical outlets. It provides sale services through web portals as well as intermediaries between sellers and buyers.   

•           Catalog merchant:

- - Argos was already a successful catalog business and has now leveraged that success to an online presence in Ireland and UK. They offer a broad range of products in a variety of categories.

•           Manufacturer direct:

- - Dell Computer has always been a manufacturer direct merchant of producing and sell computers and computer components. Dell started marketing products directly to their market, rather than going through a traditional tiered sale system. Dell counts as an e-commerce pioneer and its strategy of selling over the Internet with no retail outlets and no middleman has been as discussed, admired and imitated as any e-commerce model.


2. Drawing on material in the chapter and your own research, prepare a short paper describing your views on the major social and legal issues facing online retailers.

Cyber security has been raised as a major concern on the Internet era. Hackers have becoming more and more sophisticated in steal users' personal information provided by E-commerce websites that people shop frequently. Hackers would catfish internet user to inject viruses or obtain their financial information. One of the reasons that makes cyber security a serious problem is that it's too easy for cyber criminals to obtain our personal information these days. Online services providers are not providing their customers with how their personal data will be used in a convenient and effective way. In conclusion, until a thorough cyber law system is reviewed and enacted, internet's user’s security would still be threatened every second they participate in the Internet world.