DOING BUSINESS DOING BUSINESS ON THE INTERNET

June 2, 2015 QUME 1852 Some Implications Removes the impact of geography Consumer has more power: Competitors are only a click away First impressions count Small companies can look large and serve global markets, allowing for specialization Consumers have very high expectations Fast response needed to stay competitive

June 2, 2015 QUME 1853 Management Challenges Internet provides many opportunities, but also challenges, such as: Electronic commerce & electronic business require a new way of thinking Finding a successful Internet business model

June 2, 2015 QUME 1854 Internet Business Models Three basic categories of e-commerce –B 2 C – Business to consumer –B 2 B – Business to Business –P 2 P – Peer to Peer

June 2, 2015 QUME 1855 Retailers Retailers who have no physical presence eg. Amazon.com, (now over 10 years!) Retailers who have both physical stores and on-line stores eg. VIU Bookstore (Sometimes called Bricks and Clicks) Bricks, clicks, and catalogue – traditional mail-order business, plus physical store, plus on-line store eg. Mountain Equipment Co-op, L.L. Bean

June 2, 2015 QUME 1856 Implications for Retailers Supply, inventory and delivery of physical goods. Technical capability of delivering digital products: –software titles –downloadable media

June 2, 2015 QUME 1857 On-line auctions On-line auctions eg. E-Bay Revenue comes mainly from commissions Makes it easy for anyone to participate in on-line commercial activity

June 2, 2015 QUME 1858 Information / Entertainment Providers Magazines eg. Slate and Salon Newspapers eg. New York Times Sports sites eg. ESPN –Make money from a combination of advertising, subscriptions for premium content, affiliations with other sites –Trend toward getting people to pay for content directly

June 2, 2015 QUME 1859 Portals Portals eg. Yahoo Rely on advertising for main revenue stream

June 2, 2015 QUME Technology Affects the Business Internet technology allows organizations to communicate directly with their constituents Removes layers between the organization and its partners (e.g. suppliers) Reduces transaction costs in many ways

June 2, 2015 QUME New Strategies Viral Videos on YouTube –Ikea –i-Tunes: Affects the entire music distribution industry; a disruptive innovation –Second Life: Many organizations have a presence there

June 2, 2015 QUME end

June 2, 2015 QUME More Business Models Virtual Storefront Marketplace Concentrator Online Exchange Information Broker Transaction Broker Auction Reverse Auction Aggregator Digital Product Delivery Content provider On-line service provider Virtual Community Portal Syndicator Some additional examples:

June 2, 2015 QUME Internet Business Models: Selling Virtual Storefront –Sells goods and /or services online – cawww.chaptersindigo. ca Marketplace Concentrator –Concentrates information and/or products from several providers – mwww.canadashop.co m Online Exchange –Bid-ask system, multiple buyers and sellers – Aggregator –groups come together to gain volume discounts –

June 2, 2015 QUME Internet Business Models: Auctions Auction –Dynamic pricing – Reverse Auction –Consumers submit a bid to multiple sellers –

June 2, 2015 QUME Business Models: Online Delivery, Products & Services Digital Product Delivery –Sell and deliver software, multimedia, etc. – mwww.Compusmart.co m Content provider –creates revenue through providing content for a fee, and through advertising – On-line service provider –provides service & support for hardware, software products –

June 2, 2015 QUME Internet Business Models: Brokers & Syndicators Information Broker –Provides information about products – Transaction Broker –Buyers view rates and terms & completes transaction – mwww.TDWaterhouse.co m Syndicator –Aggregate information or applications from several sources, sell to other companies –

June 2, 2015 QUME Internet Business Models: Web Entries & Communities Virtual community –Provides an online meeting place for people with common interests – Portal –Initial point of entry to Web, specialized content, services –

June 2, 2015 QUME Electronic Commerce Business to Business B2B C2C Consumer to consumer Business to consumer B2C

June 2, 2015 QUME Intranets Using Internet technology to support internal organizational needs – –Document sharing –Online repositories of information –Remote access to resources –Group collaboration

June 2, 2015 QUME Intranets: Organizational Benefits Cross platform availability Can be tied to internal & transaction processing systems Interactive applications with text, audio, video Scalable as required Easy to use Web interface Low start-up costs Improved information sharing Reduced cost of distributing information

June 2, 2015 QUME Challenges & Opportunities Unproven business models Business processes require change –channel conflicts Legal Issues Security and Privacy

June 2, 2015 QUME E-commerce in Canada There is a higher percentage of Canadians than Americans using the Internet But... Canadian businesses are underrepresented on the Internet –Only 6 percent of Canadian businesses selling online in 2000, down from 10% in 1999 –In 2000, e-commerce sales accounted for 0.4 % of revenues, up from 0.2% in 1999 –Canadians purchase from US companies

June 2, 2015 QUME Internet Technology affects Relationships Information flows seamlessly Throughout the organization With trading partners, suppliers & distributors To and from customers

June 2, 2015 QUME Barriers to e-commerce in Canada High percentage of SMEs in Canada –May not have adequate resources to develop e-commerce strategy & solution Shortage of skilled IT workers Lack of sense of urgency Traditional investment decisions based on ROI, which may not be appropriate Conservative investor culture Tax structure