E-Commerce ©David Whiteley/McGraw-Hill, Chapter 16: e-Business

E-Commerce ©David Whiteley/McGraw-Hill, Introduction  The important differences between e-Commerce applications are:  How they fit into the consumer market,  How they are supported by the supply chain  Their potential to alter the role of players in that supply chain.

E-Commerce ©David Whiteley/McGraw-Hill, Introduction  The sectors examined in the book are: 1. Bookshops; 2. Grocery Supplies; 3. Software Supplies and Support; 4. Electronic Newspapers; 5. Banking; 6. Auctions; 7. Share Dealing; 8. Gambling.  These sectors exemplify the range of consumer e ‑ Commerce services that are available.

E-Commerce ©David Whiteley/McGraw-Hill, Internet Bookshops General  One of the first applications of e-Commerce  Books have four advantages for the online retailer:  They can be adequately described online.  They are moderately priced.  Many customers will wait for delivery.  Delivery is manageable/affordable.  Reactions of other players have included:  Large existing players that set up their own e ‑ Bookstores;  New operators have entered the online market;  Conventional bookshop have been up-rated.

E-Commerce ©David Whiteley/McGraw-Hill, Internet Bookshops Supply Chain  e-Commerce has not altered the supply chain.  All bookshops have two main sources of supply:  Book wholesalers.  Direct supply from the publisher. (some e-fulfilment is direct from the wholesalers)

E-Commerce ©David Whiteley/McGraw-Hill, Internet Bookshops Requirements/Facilities  Warehouse (as opposed to retail) premises  Packaging and despatch  IT infrastructure / Web site:  A large database of books.  A search engine for author, title, subject, etc.;  Online access to details of stock  Record of the readers’ interest  Integration into the supply chain

E-Commerce ©David Whiteley/McGraw-Hill, Internet Bookshops Examples  Amazonwww.amazon.com,  Barnes and Noblewww.barnsandnoble.com  Bertelsmann AGwww.bol.com  Blackwellwww.bookshop.blackwell.co.uk  Chapterswww.chapters.ca

E-Commerce ©David Whiteley/McGraw-Hill, Internet Bookshops amazon.com  Amazon opened for business in July ’95  By 1999 Amazon had:  Four despatch bases in the US  Operations in Germany and the UK  As of 1998, turnover was US$610 million (a growth of 313% over the previous year).  Amazon has never made a profit:  The loss for the third quarter of 1999 was US$79 million on sales of US$356 million.  Amazon has diversified into selling:  Recorded music  Videos  Electronic equipment  and several other product areas TM

E-Commerce ©David Whiteley/McGraw-Hill, Grocery Supplies General  Going to the supermarket can be just a chore - how much easier if, with just a few clicks of the mouse, the weekly shop could done.  The logistics of an online supermarket are a bit different from other online stores:  The supermarket stocks several thousand lines  The customer may well select (say) 60 of them.  Groceries are both bulky and perishable  Common practice is to arrange a delivery slot with the customer.

E-Commerce ©David Whiteley/McGraw-Hill, Grocery Supplies Supply Chain  The home delivery grocery business requires local depots and it needs the same supply chain infrastructure, co-ordinated by EDI, that the supermarkets have in place.  A home delivery operation can use a depot rather than a retail facility. However many existing players are using their local retail facilities for e-fulfilment.

E-Commerce ©David Whiteley/McGraw-Hill, Grocery Supplies Examples  Peapodwww.peapod.com  Homestorewww.homestore.com  Sainsburywww.sainsbury.co.uk  Tescowww.tesco.net

E-Commerce ©David Whiteley/McGraw-Hill, Grocery Supplies peapod.com  Peapod started selling groceries in  Peapod depots stock a full range of groceries.  Items can be found through the classification / menu system or using a search.  Shopping lists can be stored.  Orders have to be put in at least a day in advance of delivery time.  Peapod currently operate in six metropolitan areas in the US.  Peapod is a software company – the depots are operated as franchises. TM

E-Commerce ©David Whiteley/McGraw-Hill, Internet Banking General  Customer services typically include:  Online balances and statements.  Credit transfers so that bills can be paid online.  Maintenance of standing orders and direct debits … but exclude any transactions involving cash  For the bank, online transactions are cheaper than telephone banking and much cheaper than branch transactions.

E-Commerce ©David Whiteley/McGraw-Hill, Internet Banking Supply Chain  Using e-banking reduces usage of the branch network (although a branch or ATM machine will still be required).  For online banking, security is obviously an issue.

E-Commerce ©David Whiteley/McGraw-Hill, Internet Banking Examples  Bank of Scotlandwww.rbs.co.uk  The Co-operative Bankwww.smile.co.uk  First National Bank of the Internet

E-Commerce ©David Whiteley/McGraw-Hill, Internet Banking smile.co.uk  The Co-operative Bank:  Grew out of the Co-operative movement  Has about a 5% UK market share.  Has a very small branch network.  The bank’s online offering is called ‘smile’ ☺. (one of the UK’s first operational online banks)  Smile’s banking service include:  A full range of accounts;  Online money transfer;  Flexible paying in arrangements;  Online payment of bills;  Standing orders and direct debits;  Use of ATM machines;  Conventional cheques;  A guarantee of reimbursement TM

E-Commerce ©David Whiteley/McGraw-Hill, Online Share Dealing General  The Internet can make available to the private investor:  Up-to-the-minute information.  Immediate access to the market.  Reduced trading costs. ‘The investor is able to deal at a price viewed immediately, whereas using more traditional dealing services an investor will often have to wait in a telephone queuing system to get through to the dealing desk and when trading may have to wait for the price of the trade to be confirmed.’ (Allgood, 1999)

E-Commerce ©David Whiteley/McGraw-Hill, Online Share Dealing Supply Chain  The supply chain for share dealing is unchanged, the use of the net just speeds up the whole process (and that can be vital in some share dealing).

E-Commerce ©David Whiteley/McGraw-Hill, Online Share Dealing Examples  E*Tradewww.etrade.com,  Market Eyewww.market-eye.co.uk  Charles Schwabwww.schwab.co.uk

E-Commerce ©David Whiteley/McGraw-Hill, Online Share Dealing etrade.com  E*Trade started online trading in  Available on CompuServe and AOL in  Net version online in  The services they list are:  Free real-time quotes;  Market news and research;  Choice of order types;  Low commission rates;  Portfolio tracking;  Customer accounts;  Discussion groups. TM

E-Commerce ©David Whiteley/McGraw-Hill, e-Diversity  The technology for online operation and the issue of payment security is much the same whatever the trade sector.  Differences between products and services include:  How adequately the product can be described online,  The ease with which the product can be delivered to the customer,  The extent to which the price to the consumer can be cut by operating online,  The possibility of offering an enhanced service by operating electronically.  The ability of virtual operators to avoid tax and other regulations.

E-Commerce ©David Whiteley/McGraw-Hill, Chapter 16 – Exercise 1 Investigate further one of the sectors outlined in the report. Take, for instance, electronic newspapers and checkout a range of papers. Look at the newspaper, the use of adverts and any background information that the sites might give. Identify how the different newspapers use the web and try to establish how this might complement (or compete with) their conventional paper publication. Identify a sector not covered in the chapter and carry out a similar investigation. Sectors that might be chosen are insurance, fashion, cosmetics, etc. Choose a sector that sells tangible goods and one that offers a service and contrast the two.