McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, All Rights Reserved Chapter 14 and Plug-in B11 E-Business

14-2 Learning Outcomes Compare e-commerce and e-business Compare the four types of e-business models Describe the benefits and challenges associated with e-business

14-3 E-Business One of the biggest benefits of the Internet is its ability to allow organizations to perform business with anyone, anywhere, anytime. –Touch customers –Enrich products and services with information –Reduce costs

14-4 E-Business How do e-commerce and e-business differ? –E-commerce – the buying and selling of goods and services over the Internet –E-business – the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners

14-5 E-Business Industries Using E-Business

14-6 E-Business Models E-business model – an approach to conducting electronic business on the Internet

14-7 E-Business Models

14-8 E-Business Models

14-9 Business-to-Business (B2B) Electronic marketplace (e-marketplace) interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activities

INFORMATION X E-Marketplaces  Companies can use their own web sites for B2B commerce or use electronic hubs  Electronic hubs OR Exchange  Online marketplaces with many buyers and many sellers  Avoid point-to-point connections  integrated information – one stop shopping for supplier and supplier product information Sellers Buyers Catalogs Automated purchasing Pricing Processing and Fulfillment

14-11 Business-to-Consumer (B2C) Common B2C e-business models include: –e-shop – a version of a retail store where customers can shop at any hour of the day without leaving their home or office –e-mall – consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shops Business types: –Brick-and-mortar business operates in a physical store without an Internet presence. –Pure-play business a business that operates on the Internet only (Amazon) –Click-and-mortar business a business that operates in a physical store and on the Internet ( Sears & Canadian Tire)

14-12 Consumer-to-Business (C2B) Priceline.com is an example of a C2B e- business model The demand for C2B e-business will increase over the next few years due to customer’s desire for greater convenience and lower prices

14-13 Consumer-to-Consumer (C2C) Online auctions –Electronic auction (e-auction) - Sellers and buyers solicit consecutive bids from each other and prices are determined dynamically –Forward auction - Sellers use as a selling channel to many buyers and the highest bid wins ( eBay) –Reverse auction - Buyers use to purchase a product or service, selecting the seller with the lowest bid ( Priceline)

14-14 Consumer-to-Consumer (C2C) C2C communities include: –Communities of interest - People interact with each other on specific topics, such as golfing and stamp collecting –Communities of relations - People come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiasts –Communities of fantasy - People participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan

14-15 Accessing Internet Information Four tools for accessing Internet information 1.Intranet – internalized portion of the Internet, protected from outside access, for employees only 2.Extranet – an intranet that is available to strategic allies (suppliers, distributors, etc.) 3.Portal – Web site that offers a broad array of resources and services ( yahoo & MSN) 4.Kiosk – publicly accessible computer system that allows interactive information browsing ( used in museums and showrooms)

INFORMATION X Intranets  Using Internet technology to support internal organizational needs   Document sharing  Online repositories of information  Remote access to resources (employee’s handbook)  Group collaboration  Extranet – intranet that is available to authorized outsiders.  Exmaple of an Intranet System: 

14-17 Providing Internet Information Three common forms of service providers 1.Internet service provider (ISP) –provides individuals and other companies access to the Internet ( Eastlink, Aliant) 2.Online service provider (OSP) – offers an extensive array of unique Web services and content (e.g. American Online- AOL) 3.Application service provider (ASP) – offers access over the Internet to systems and related services that would otherwise have to be located in organizational computers

14-18 Providing Internet Information Common ISP services include: –Web hosting –Hard-disk storage space –Support

14-19 Providing Internet Information Wireless Internet service provider (WISP)

14-20 Measuring E-Business Success Most companies measure the traffic on a Web site as the primary determinant of the Web site’s success However, a large amount of Web site traffic does not necessarily equate to large sales Many organizations with high Web site traffic have low sales volumes

14-21 Measuring E-Business Success Web site traffic analysis can include: –Cookie Small file saved on local client machine sent by the business server –Click-through Counts the number of users visited a website and clicked on an ad –Banner ad

14-22 Behavioral Metrics Clickstream data tracks the exact pattern of a consumer’s navigation through a Web site Clickstream data can reveal: –Number of pageviews –Pattern of Web sites visited –Length of stay on a Web site –Date and time visited –Number of customers with shopping carts –Number of abandoned shopping carts

14-23 Web Site Visitor Tracking

14-24 Web Site Personalization

14-25 More web personalization

14-26 Interactive Marketing/Personalization How do web sites know it’s you? Answer: using a “cookie”

14-27 How a cookie works A cookie is a tiny file deposited on the user’s computer hard drive when an individual visits certain Web sites; used to identify the visitor and track visits to the Web sites.

14-28 Organizational Strategies for E-Business Primary business areas taking advantage of e-business include: –Marketing/sales –Financial services –Procurement –Customer service –Intermediaries

14-29 MARKETING/SALES Generating revenue on the Internet: –Online ad (banner ad) - box running across a Web page that contains advertisements –Pop-up ad - a small Web page containing an advertisement –Associate programs - businesses generate commissions or royalties ( e.g. sending potential buyers to Amazon. com) OR Google business model –Viral marketing - a technique that induces Web sites or users to pass on a marketing message ( msg in Hotmail)

14-30 MARKETING/SALES Generating revenue on the Internet: –Personalization - occurs when a Web site can fashion offers that are more likely to appeal to that person –Blog - Web site in which items are posted on a regular basis and displayed in reverse chronological order –Real simple syndications (RSS) - a Web feed format used for Web syndication of content –Podcasting - the distribution of audio or video files, such as radio programs or music videos, over the Internet to play on mobile devices

14-31 MARKETING/SALES Generating revenue on the Internet: –Search engine optimization (SEO) - a set of methods aimed at improving the ranking of a Web site in search engine listings- pay-per-click –Spamdexing - uses a variety of deceptive techniques in an attempt to manipulate search engine rankings, whereas legitimate SEO focuses on building better sites and using honest methods of promotion

14-32 Video SEO video

14-33 FINANCIAL SERVICES Online consumer payments include: –Financial cybermediary OR P2P payment (e.g. PayPal) –Electronic check & Electronic cash –Electronic bill presentment and payment (EBPP) Sends bill over the Internet and provides easy-to-use payment –Digital wallet (e.g. providing credit card number and its expiry date, used in many online stores such as Amazon)

INFORMATION X Some Examples of E-commerce Payment Systems  Digital wallet  Software that Stores your credit card information securely at the e-Commerce site   E-cash  Used instead of cash, cheque or credit card.   Peer-to-Peer payments  To pay sellers not set up to process credit cards   Electronic bill payment  Pay your bills using your credit card or your bank account  All major banks.  epost epost

14-35 FINANCIAL SERVICES Online business payments include: –Differs from consumers payment because of large purchases and No use of credit cards –Electronic data interchange (EDI), standard format for exchanging business data –Financial EDI (financial electronic data interchange) – standard for B2B payments

14-36 FINANCIAL SERVICES Electronic Trading Network

14-37 PROCURMENT Maintenance, repair, and operations (MRO) materials (also called indirect materials) – materials necessary for running an organization but do not relate to the company’s primary business activities –E-procurement - the B2B purchase and sale of supplies and services over the Internet –Electronic catalog - presents customers with information about goods and services offered for sale, bid, or auction on the Internet

14-38 CUSTOMER SERVICE Customer service is the business process where the most human contact occurs between a buyer and a seller e-business strategists are finding that customer service via the Web is one of the most challenging areas of e-business The primary issue facing customer service departments using e-business is consumer protection

14-39 Consumer Protection

14-40 Consumer Protection E-business security –Encryption Scrambling of info which requires a key to decrypt –Secure socket layer (SSL) (1) Creates secure and private connection between a client and server computer (2) encrypts the info (3) sends the info over the Internet ( e.g. websites with https URL) –Secure electronic transaction (SET) Similar to SSL but also enables customer authentications for credit card transaction

INFORMATION X Disintermediation  Sell directly to consumers  Eliminate the ‘middleman’  Disintermediation: the removal of organizations or business process layers  Example of disintermediation: selling a sweater ManufacturerDistributorRetailerCustomer Cost $48.50 $20.45 $40.34

INFORMATION X Reintermediation Reintermediation: The shifting of the intermediary role to a new source ( e.g. Information Brokers)Reintermediation: The shifting of the intermediary role to a new source ( e.g. Information Brokers) Auto Dealer Info Broker (Edmonds.com) Consumer Auto Dealer Consumer

14-43 INTERMEDIARIES Intermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance e-business Reintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways

14-44 New Trends in E-Business: E-Government and M-Commerce E-government - involves the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government

14-45 New Trends in E-Business: E-Government and M-Commerce

14-46 New Trends in E-Business: E-Government and M-Commerce Mobile commerce - the ability to purchase goods and services through a wireless Internet-enabled device.

14-47 E-Business Benefits and Challenges E-Business benefits include: –Highly accessible (24/7/365) –Increased customer loyalty –Improved information content –Increased convenience –Increased global reach –Decreased cost

14-48 E-Business Benefits and Challenges E-business challenges include: –Protecting consumers –Providing security –Respecting taxation rules