How the Internet has changed the way we do business. Introduction to E-Commerce

Four Benefits of Internet Technology CommunicationInformationEntertainmentE-CommerceCommunicationInformationEntertainmentE-Commerce

Introduction to E-Commerce Internet Technology Provides Communication Chat rooms Chat rooms Spam  Spam Communication Chat rooms Chat rooms Spam  Spam 

Introduction to E-Commerce Information Newsgroups Newsgroups Portals – AOL, Yahoo Portals – AOL, Yahoo Specialized Search Sites Specialized Search Sites Academic Information Academic InformationInformation Newsgroups Newsgroups Portals – AOL, Yahoo Portals – AOL, Yahoo Specialized Search Sites Specialized Search Sites Academic Information Academic Information Internet Technology Provides

Introduction to E-Commerce Entertainment Webcasts Webcasts Gambling Gambling Games Games eBooks eBooksEntertainment Webcasts Webcasts Gambling Gambling Games Games eBooks eBooks Internet Technology Provides

Introduction to E-Commerce Electronic Commerce is the buying, selling, and trading of goods on the Internet. Internet Technology Provides the Vehicle for E-Commerce

Introduction to E-Commerce Benefits of E- Commerce

Introduction to E-Commerce  Improved Customer Service Shop-at-home convenience Detailed product information Customer controls transaction Simplified ordering Open 24/7/365 Shop-at-home convenience Detailed product information Customer controls transaction Simplified ordering Open 24/7/365

Introduction to E-Commerce  Expanded Markets Elimination of Boundaries Direct to customer (no middleman) Elimination of Boundaries Direct to customer (no middleman)

Introduction to E-Commerce  Cost Cutting Streamlined order processing Fewer errors in order entry Increased speed Lower marketing costs Streamlined order processing Fewer errors in order entry Increased speed Lower marketing costs

Introduction to E-Commerce  Higher Profits Additional sales channel User fee income Advertising Income Lower marketing costs Additional sales channel User fee income Advertising Income Lower marketing costs

Introduction to E-Commerce E-Commerce Challenges Security & privacy Scams & Fraud Down time & poor service Awkward design & functionality Lack of retail experience Security & privacy Scams & Fraud Down time & poor service Awkward design & functionality Lack of retail experience

Introduction to E-Commerce Evolution of a Merchandise Catalog

Introduction to E-Commerce

Introduction to E-Commerce E-Commerce for Small Business Maris Taylor Designs

Introduction to E-Commerce

Categories of Electronic Commerce Five general e-commerce categoriesFive general e-commerce categories –Business-to-consumer (Nike) Nike –Business-to-business (Grainger BD&A) GraingerBD&AGraingerBD&A –Business processes (Monster) Monster –Consumer-to-consumer (ebay) ebay –Business-to-government (Cal-buy) Cal-buy Supply management or procurementSupply management or procurement –Departments devoted to negotiating purchase transactions with suppliers (Intel) Intel

Elements of Electronic Commerce

Categories of Electronic Commerce (Continued) TransactionTransaction –An exchange of value Business processesBusiness processes –The group of logical, related, and sequential activities and transactions in which businesses engage Telecommuting or teleworkTelecommuting or telework –Employee logs in to company computer through Internet instead of traveling to office

Electronic Commerce Categories

Actual and Estimated Online Sales in B2C and B2B Categories

The Second Wave of Electronic Commerce Defining characteristics of first waveDefining characteristics of first wave –Dominant influence of U.S. businesses –Extensive use of the English language –Low bandwidth data transmission technologies –Unstructured use of –Over-reliance on advertising as a revenue source

The Second Wave of Electronic Commerce (Continued) As second wave beginsAs second wave begins –Future of electronic commerce will be international in scope –Language translation and handling currency conversion problem will need to be solved – will be used as an integral part of marketing and customer contact strategies

Focus on Specific Business Processes MerchandisingMerchandising –Combination of store design, layout, and product display knowledge Commodity itemCommodity item –Hard to distinguish from the same products or services provided by other sellers –Features have become standardized and well known

Focus on Specific Business Processes (Continued) Shipping profileShipping profile –Collection of attributes that affect how easily a product can be packaged and delivered High value-to-weight ratioHigh value-to-weight ratio –Can make overall shipping cost a small fraction of the selling price

Value Chain for a Strategic Business Unit

Industry Value Chain for a Wooden Chair

SWOT Analysis: Evaluating Business Unit Opportunities SWOT analysisSWOT analysis –Analyst first looks into the business unit to identify its strengths and weaknesses –Analyst then reviews operating environment and identifies opportunities and threats

SWOT Analysis Questions

Results of Dell’s SWOT Analysis

International Nature of Electronic Commerce Companies with established reputationsCompanies with established reputations –Often create trust by ensuring that customers know who they are –Can rely on their established brand names to create trust on the Web Customers’ inherent lack of trust in “strangers” on the WebCustomers’ inherent lack of trust in “strangers” on the Web – Logical and to be expected

This Cartoon from The New Yorker Illustrates Anonymity on the Web

Language Issues To do business effectively in other culturesTo do business effectively in other cultures –Must adapt to culture Researchers have found thatResearchers have found that –Customers are more likely to buy products and services from Web sites in their own language LocalizationLocalization –Translation that considers multiple elements of local environment

Culture Issues Important element of business trustImportant element of business trust –Anticipate how the other party to a transaction will act in specific circumstances CultureCulture –Combination of language and customs –Varies across national boundaries –Varies across regions within nations

Infrastructure Issues Internet infrastructure includesInternet infrastructure includes –Computers and software connected to Internet –Communications networks over which message packets travel Organization for Economic Cooperation and Development’s (OECD)Organization for Economic Cooperation and Development’s (OECD) –Statements on Information and Communications Policy Deal with telecommunications infrastructure development issuesDeal with telecommunications infrastructure development issues

Infrastructure Issues (Continued) Flat-rate access systemFlat-rate access system –Consumer or business pays one monthly fee for unlimited telephone line usage –Contributed to rapid rise of U.S. electronic commerce Targets for technological solutionsTargets for technological solutions –Paperwork and processes that accompany international transactions

Parties Involved in a Typical International Trade Transaction