Chapter 9 E-Commerce 1 ©2008 Thomson/South-Western

Chapter 9 E-Commerce 2 Lesson 9.1 Business and the Internet Goals Describe the recent growth of the Internet. Discuss common business uses of the Internet other than e-commerce.

Chapter 9 E-Commerce 3 The Growth of the Internet Number of Internet Domains

Chapter 9 E-Commerce 4 Business Uses of the Internet E-Commerce – doing business online including buying and selling products and exchanging information online (advertising). The Internet has allowed many businesses to compete with larger, established companies and to reach consumers world-wide. Currently, less than 11% of all business sales are completed online.

The Growth of the Internet The Internet started as a military and research tool in the 1950’s. Over 400 million Internet domain sites were online by Jan An Internet Domain is a registered Web site, since the invention of the WWW in the late 1960’s, access to the Internet has grown to an estimated 1 billion people around the world – 77 million homes had access to the Internet in the US – just 13 million US accounts for approximiately 20% of all users, however China is projected to be ahead of us within a decade. Chapter 9 E-Commerce 5

The Growth of the Internet Business Use of the Internet is booming. According to the US Census Bureau, US Internet sales to consumers in 2004 totaled $130billion ($71 billion in retail sales and $59 billion in selected services). B2B online sales in 2004 totaled $1.95 trillion. Total sales to consumers represent less than 2.5% of all consumer purchases (according to text). By 2010 – Business to Consumers sales are expected to reach $200 billion. Chapter 9 E-Commerce 6

Business Uses of the Internet: I. Business communications — I. (Newsletters, reports, memos) II. Voice over Internet Protocol (VoIP), III. Web sites (Business-to-business services) IV. Communicate with existing and future customers. V. Provide information about the co. (hours, product descriptions, find location of business) and its products/services, customer service/tech support. VI. Research your competition VII. Advertising VIII. Online B2B Services – Online Training, Financial Planning and Accounting, Maintaining Personnel Records, and Data processing. Chapter 9 E-Commerce 7

Business Uses of the Internet: II. Information Gathering/Research (pg. 217) - Research on current and prospective customers and on competition. – Businesses gather info. For free provided by gov’t agencies, colleges & universities, libraries, and private businesses. – Obtain/purchase info. From research co.s including Dunn & Bradstreet. – Used to Gather info. On current and prospective customers by completing a Product Registration. Product Registration allows a co. to collect information their customers including their address, phone number, address. Co.s use this infor. For future advertising. Chapter 9 E-Commerce 8

Business Uses of the Internet: II. Information Gathering/Research, continued: Co.s also use product registration information to gather info. On where the product was purchased, the price, the reasons for purchasing the product, and other related products the consumer currently owns or plans to purchase. Many co. websites provide a place to give prospective customers to request information, be placed on a mailing list, or obtain answers about specific questions. This allows co.s to develop a list of prospective customers and to determine their interests. Chapter 9 E-Commerce 9

Business Uses of the Internet: II. Information Gathering/Research, continued: Competitive information is easy to find online. You can research your competitions’s products, prices, credit terms, distribution policies, and the types of customer services offered. Other information include comparisons and reviews of products, and blogs to discuss their experiences with a co. and its products. Chapter 9 E-Commerce 10

Business Uses of the Internet: III. Improving Business Operations a. Salespeople and log on to their co.s website to determine inventory. b. A production manager can access the records of a transportation copmany to see when an expected shipment of raw materials will be delivered. c. An accountant in a branch office can download financial statements from the main computer to compare with prior years. d. Product designers from various countries can collaborate on a new design by examining drawings and making changes instantly. Chapter 9 E-Commerce 11

Business Uses of the Internet: III. Improving Business Operations, cont. Small auto parts retailers can consolidate orders through an e-business wholesaler that can compile orders into 1 large order and hopefully receive a price reduction. Shipping is quicker too, online. See pg. 218 for a list of savings to businesses when customers used the internet. 9.1 Assessment, pg. 218, 1-4 Chapter 9 E-Commerce 12

Chapter 9 E-Commerce 13 Lesson Stages of E-Commerce Development, pg Describe the stages businesses commonly go through in developing an e-commerce business. Identify successful e-commerce businesses and strategies.

E-Commerce Development, pg. 219 The.coms - businesses that do all/almost all of their business online. Amazon.com, eBay.com, iTunes.com – Vs. Brink-and-Mortar Businesses – businesses that conduct most of their business in an actual building. Bricks-and-Click Businesses – businesses that do business both online and in a building. Steps in Developing an E-Commerce Presence Online: – A. Offering Information ONLY. – B. Progressing to Interactive Capabilities …. And finally – C. Full Integration of Business Transactions on the Web. Chapter 9 E-Commerce 14

Chapter 9 E-Commerce 15 E-Commerce Development 1. Information stage — site provides information about the organization and its products or services but offers no opportunity to communicate with the organization through the Internet – Customers use the Website to gain info. About where they can purchase specific products and to learn about the co. and its products. – They might add additional links and the following information: Complete Product Descriptions Information on Payment Methods Customer Services Product Manuals Product Updates Procedures for Obtaining Product Upgrades

E-Commerce Development Interaction stage — site offers visitors ability to communicate with the company using the Internet and often has a search feature to help visitors find specific information on the site. Examples are: – to request information, ask questions, or contact specific people in the co. – Co. Databases that gives customers info. About their brands, product features, and services – Check product availability, calc. costs and shipping charge, determine delivery time. – Provide 3 dimensional photos, video clips, etc. for customers to examine. – Prospective customers can order via an online catalog and printing/mailing/faxing the order forms to the co. Chapter 9 E-Commerce 16

E-Commerce Development Integration stage — site enables visitors to complete full business transactions using the Internet – Customers get necessary product, pricing, and shipping information. – Customers place the order and pay for it. – Customers can track the shipping, and obtain assistance/chat with a customer service rep. all at the same time. – Turan Ozmat integration of Internet, pg. 220 Chapter 9 E-Commerce 17

Case Study: Tax Ethics – Tax Fairness & E-Commerce Complete, pg. 221 Chapter 9 E-Commerce 18

Success with E-Commerce, pg. 220 & 222 Web design companies, ISP’s, and Web Security businesses are some of these new types of businesses. New jobs have been developed as of.com businesses, such as Webmasters, programming, db management, and Web Design. Chapter 9 E-Commerce 19

Leading Internet Businesses, pg. 222 Top Internet Retailers as of 2005 (see Fig. 9.3, pg.223/next slide). Top 5 are: – Amazon.com – Office Depot, Inc. – Staples, Inc. – Dell, Inc. – HP Home and Home Office Store Chapter 9 E-Commerce 20

Chapter 9 E-Commerce 21 Top Internet Retailers, 2005

Leading Internet Businesses, cont. Top Brick and Click Businesses: – Office Depot – Sears – Wal-Mat – Other Rapidly Growing Product Categories for On-Line Shopping are: Travel/Airline Investing Education Chapter 9 E-Commerce 22

Leading Internet Businesses, cont Top B2B in Internet Sales are: – Computers and electronics – Utilities (gas and electric) – Petroleum and Chemicals – Vehicles – Office Supplies – Shipping Services Chapter 9 E-Commerce 23

Internet Advertising, pg. 222 Internet Advertising is rapidly growing. – 1998 – Business spent $2Billion to advertise online. – 2005 – Businesses spent $12.5Billion to advertise online. – Top Internet Advertisers as of 2005: Vonage U. of Phoenix Online Classmates.com Ameritrade Chapter 9 E-Commerce 24

Internet Advertising, pg. 222 Businesses compete online by placing ads on website that are visited more often by consumers. They also use creative designs, various sizes, colors, placements of ads to encourage users to stop and read. Animation/moving text is visually appealing along with catchy graphics. Chapter 9 E-Commerce 25

Internet Advertising, pg. 222 The Internet Advertising Bureau has established standards for the size and appearance of Internet Advertisements, which are measured in pixels (dots per inch). The next size illustrates common sizes of Internet banner ads (pg. 224). Chapter 9 E-Commerce 26

Chapter 9 E-Commerce 27 Relative Sizes of Common Internet Advertisements Full Banner 468  60 pixels Full Banner 468  60 pixels Half Banner 234  60 pixels Half Banner 234  60 pixels Button 120  90 pixels Button 120  90 pixels Vertical Banner 120  240 pixels Vertical Banner 120  240 pixels Micro Button 88  31 pixels

Meeting Customer Needs, pg. 223 Chapter 9 E-Commerce Over 50% of the US populations has purchased online. Most people use the Internet for research and communication and comparison shopping. Reasons why some people do not shop online: Security concerns Difficulty in making purchases using the Internet Concerns over poor customer service is there are problems with the order or product. Online shoppers are often very loyal to specific brands and businesses. 28

Meeting Customer Needs, pg. 223 Chapter 9 E-Commerce 29 How Do Businesses Maintain Customer Satisfaction and Loyalty? a.Businesses must create an easy-to-use and understandable website. b.Shipping must be completed quickly. c.Helps if businesses must sell familiar brand names. d.Website must provide useful and accurate information.

Complete 9.2 Assessment, pg. 225 Chapter 9 E-Commerce 30

Chapter 9 E-Commerce 31 Lesson Establishing an E-Commerce Business, pgs Goals Outline the steps for starting a new e- commerce business. Describe the technology needed to run an e- commerce business. Describe promotional strategies for an e- commerce business.

E-Commerce Business Planning, pg. 226 Chapter 9 E-Commerce 32

Chapter 9 E-Commerce 33 E-Commerce Business Planning 1. Determine the purpose of your Web site. 2. Study your customers, their needs, and their Internet experience. Social networking 3. Plan your online business.

Chapter 9 E-Commerce 34 Technology Development 1. Obtain a server and domain name. Web-hosting service — private business that maintains Web site for a fee Domain name — unique name that identifies the site 2. Develop order processing and procedures. Electronic shopping cart — program that keeps track of shoppers’ selections as they shop 3. Design the Web site.

Chapter 9 E-Commerce 35 Site Promotion Advertise your online business — register with major search engines, sponsor or advertise in other sites Advertise your business offline — business cards, brochures, correspondence Open for business