2. The Internet in Business- Corporations, Businesses, and Entrepreneurs Chapter 9

3.  Electronic Commerce  Buying and selling over the Internet

4.  Retail becomes etail

5.  Clothes  Out-of-print biography  Used car  Bargain airline tickets  Music CDs  Videos  Baby equipment  Jewelry  Sporting goods  Office supplies  Cosmetics  Flowers  Gifts  Groceries What’s for Sale? EVERYTHING!

6.  Any time  No need to dress and travel  Saves time  Provides simple means to comparison-shop  Anyplace  Contributes to competition

7.  No physical store building  People time

8.  Lists and views of products and prices  Content  Product related  Updated regularly  Written to interest visitors in returning to site to purchase in the future

9.  Commerce adding content  Content adding products and sales information  Division is no longer clear

10. E-Commerce Acceptance  Opposition to e-Commerce by in-person sales representatives  Strategy to merge Etail and Retail  Web site prices may be higher  Commission to sales representative on each Internet transaction regardless of their involvement with its origin  Web site marketing followed by local store purchase

11. E-Commerce Acceptance  Successful web site may alienate others

12.  Users must find their way to the site  Advertising needed  Traditional ads on web pages  Portals

13. Portals  Definition – entry point to the rest of the Internet  Presents content and links to variety of topics  Customize the content  User provides personal data  Portal provides related information and links  Can become your home page

14.  Flat fee to be listed on portal based upon number of visitors to the site  Percentage of sale generated by a visitor who traveled to the affiliate via the portal

15.  Yahoo!  MSN  Snap!  Excite  Netscape  Go Network  America Online Search engines that expanded their content and retail connections

16. Advertising  Pay a fee to the host site  Disadvantage of online Ads  Contain graphics and applets that load slowly  Ads load first

17. Advertising Types of Online Ads  Banner ads  Clickable  Users reluctant to click through  Live banner  Displays sales pitch  User does not need to leave current site  Work slowly  Expensive to develop  Context-sensitive  Ad is related to subject matter on web page  Greater click through and conversion

18. Web-based Business  Simple to start-up of new businesses  Provides access to people and global markets  Minimum investment  Server link  Home page  Competition  Not a level playing field  Large advertising budgets of large companies “get the word out”

19. Web-based Business  Make business look large  Many products can be offered since no inventory  No physical space to reflect size

20. Payments  Finalize order by  Phone  Fax  Call with credit card number  Enter credit card number  Security  Communication between buyer and retailer is encrypted  Use SSL (Secure Sockets Layer) protocol and generate the message “our secure server”

21. Taxes  American Federal Law  Taxes due only on mail-orders within your state  Presence of etail is debatable

22. Taxes  Internet Tax Freedom Act – 1998  Provisions  No tax on Internet access charges  No new tax on out-of-state businesses (insures that presence is not redefined)  Creates temporary commission to study Internet taxes  Demand that foreign governments keep Internet free of taxes and tariffs  Free of taxes for three years  Can impose same tax regulations as phone or mail order  Provisions extended through 2005

23.  Content  What you have to say and offer  Cannot be static  News about product, scores, contest, searches  Uniqueness  Not offered elsewhere  Difficult to obtain  Self-help  Search for product  Order product  Check the status of an order  Track a delivery  Community  Provide sense of community  Sharing between visitors  Prizes Repeat business needed

24. B2C Business-to-Consumer  Activity between business and individual  User makes purchase based upon personal decisions  Growing  $38 billion in 1998  Over $800 billion by 2005  Global trend – more than ½ online sales will be outside US by 2004

25. B2B Business-to-Business  Activity of one business providing another with materials and supplies  Advantages to buyers  Reduced costs of procurement  Consider a larger number of suppliers  Problems  Security  Antitrust concerns  Growing  $92 billion in 1998  $2 trillion in 2004

26.  Not planned for current use  Victim of its own success  Original Internet  Low-speed  Text-based  Limited sites  Today’s Internet  Million of users  Downloading high-volume multimedia data  Causes slow transmission speed

27. Internet Speed Impacts Business  Large companies use T1 and T3 lines and have servers capable of thousands of concurrent visitors  Smaller business connect via ISP or pay a company with high-speed connections to host their site

28. Internet Speed Solutions  Increase bandwidth  Satellite  ISDN  DSL  Cable modem  Increase backbone capacity  Backbone – communication lines across geographical areas  Advances in technology  Investment in new facilities  Change Internet access fees

29. Streaming  Hear and see digitized content as it is downloaded  Audio  Video  Animation  Uses substantial bandwidth  Quality of content  Speed of connection  Internet traffic  Performance will improve as bandwidth improves  Content is displayed using Plug-ins

30.  Free download from RealNetworks  Broadcast.com  Live radio  Canned television shows

31. Sharing Files  Unicasting  Send multiple computers copies of files individually  Wastes bandwidth as you are sending the same file over and over

32. Sharing Files  Broadcast  Send one copy of the file to every computer on the network  Wasteful – some users do not need the file  Compromises security  Multicasting  Send one copy of the file and it is directed only to the appropriate recipients

33. Push Technology Webcasting  Software that send (pushes) information from the Internet to a user’s PC  Makes business active participants in providing information to users

34. Push Technology How it Works  User provides consent by downloading and installing free push software  User selects channels to receive  User sets update schedule  Push software goes to the Internet on schedule and downloads updated information for the channels

35. Push Technology Good or Bad?  Time-saver for user; no browsing required  Uses precious bandwidth to send graphics and advertising

36. Intranets  Internal network  Private to a certain company  Easy and fast to setup  Inexpensive

37.  Same components as needed for Internet  Computers for access  Server  TCP/IP  Software including a browser

38. Intranet Web Pages for Employee Use  Personnel data  Internal job posting  Corporate policy information  Available training courses  Cafeteria menu  Notices from management

39. Intranet, Internet, Extranet  Internet  Public  Intranet  Private  Can be linked to Internet  Extranet  Provide access to Intranet to selected customer and suppliers  Replacing EDI

40. VPN Virtual Private Networks  Use public Internet as a channel for private data communication  Use the Internet to access the company network rather than private lines  Sharing public lines  Lower cost

41. VPN Benefits  Lower operating costs  Simplifies communications  No 800 lines and long distance charges  Reduces in-house management responsibilities  Communication needs handled by ISP

42. VPN Technology  Tunneling / encapsulation  Transfer of data between two similar networks over an intermediate network  Point-to-Point Tunneling Protocol (PPTP) – proposed protocol for tunneling  Encloses packet of one protocol (PPTP) inside packet using different protocol (TCP/IP)  Encryption  Packets are encrypted before encapsulation  Authentication software used

43. Consolidation of the Web  Consolidation brings efficiency and uniformity  Occurring quickly  Large scale  1999 AOL purchased Netscape  Conglomerates “moving in” will control the majority of what we see

45. Objectives  Discuss the pervasiveness and inevitability of business on the Internet  Explain how money factors, especially advertising, affect the Web  Describe the likely success factors for Web entrepreneurs  Differentiate between business-to-Consumer and Business-to-Business sites  Explain the importance of Internet transmission speed for business sites  Differentiate between intranets, extranets and virtual private networks

46. Contents  E-Commerce E-Commerce  Promoting a Web Site Promoting a Web Site  Web-based Business Web-based Business  Internet Speed Internet Speed  Streaming Streaming  Sharing Files Sharing Files  Push Technology / Webcasting Push Technology / Webcasting  Intranets Intranets  VPN VPN  Consolidation of the Web Consolidation of the Web