1. 2. E-commerce fundamentals

2. Figure 2.1 The environment in which e-business services are provided
For each of the environment influences shown in Figure 2.1, give examples of why it is important to monitor and respond in an e-business context. For example, the personalization mentioned in the text is part of why it is important to respond to technological innovation.

3. Environment constraints and opportunities
Customers – which services are they offering via their web site that your organization could support them in?
Competitors – need to be benchmarked in order to review the online services they are offering – do they have a competitive advantage?
Intermediaries – are new or existing intermediaries offering products or services from your competitors while you are not represented?
Suppliers – are suppliers offering different methods of procurement to competitors that give them a competitive advantage?

4. Environment constraints and opportunities …
Macro-environment
Society – what is the ethical and moral consensus on holding personal information?
Country specific, international legal – what are the local and global legal constraints for example, on holding personal information, or taxation rules on sale of goods?
Country specific, international economic – what are the economic constraints of operating within a country or global constraints?
Technology – what new technologies are emerging by which to deliver online services such as interactive digital TV and mobile phone-based access?

5. Figure 2.2 Professor Donald Sull of London Business School talks about strategic agility Source:
Strategic Agility- Capability to respond to environmental opportunities and threats to gain competitive advantages

6. Figure 2.3 An online marketplace map

7. Online Marketplace Analysis
Customer Segment
The phase that the customer is at in his/her lifecycle
n.htm
Psychographic segmentation is sometimes also referred to as behavioural segmentation.
Search Intermediaries

8. Online Marketplace Analysis
Intermediaries and Media Sites
Mainstream news media sites or portal, e.g., cbc.ca, Google
Niche or vertical media sites, e.g., e-consultancy
Price comparison sites (also called aggregator), e.g.,
Super-affiliates
Niche affiliate or bloggers—often small or individual sites
Destination Sites
The sites that the marketer tries to generate traffic to

9. Figure 2.4 Google trends for web sites – useful for benchmarking the growth of online intermediaries and destination sites Source:

10. Figure 2.5 B2B and B2C interactions between an organization, its suppliers and its customers
Marketplace Channel Structure- It describes the way a manufacture / supplier delivers products and services to its customers

11. B2B and B2C characteristics
Proportion of adopters with access
Low to medium
High to very high
Complexity of buying decisions
Relatively simple – individual and influencers
More complex – buying process involves users, specifiers, buyers, etc.
Channel
Relatively simple – direct or from retailer
More complex, direct or via wholesaler, agent or distributor
Purchasing characteristics
Low value, high volume or high value, low volume. May be high involvement
Similar volume/value. May be high Involvement. Repeat orders (rebuys) more common
Product characteristic
Often standardized items
Standardized items or bespoke for Sale

12. Figure 2.6 Disintermediation of a consumer distribution channel showing (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

13. Figure 2.7 From original situation (a) to disintermediation (b) and reintermediation (c)

14. Figure 2.8 Variations in the location and scale of trading on e-commerce sites
Trading Location- Trading can be done on seller-controlled site, buyer-controlled side, or neutral third-party site

15. Figure 2.9 Priceline Hong Kong service (www.priceline.com.hk)
Commercial Mechanisms- There are several ways for closing a transactions. Priceline.com uses a new model that allows client to bid on the services such as hotel, airline ticket

16. Figure 2.10 Example channel chain map for consumers selecting an estate agent to sell their property
Multi-channel Marketplace Model- Consumers use a combination of channels for their purchases. M-Channel Defines how different marketing channels should integrate and support each other

17. Types of Online Intermediary
Infor-mediaries— intermediaries that capture, profile, and sell customer information
Metamediaries— intermediaries that assist with selection and discussion of about different product and services; they connects customers with the providers
Example:

18. Figure 2.11 Metacritic (www.metacritic.com) Source: CBS Interactive

19. Figure Number of searches through the Google Keyword Tool Source: Google

20. Business model
An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue.
Key elements
Value proposition-products & services to offer
Market or audience
Revenue models and cost base
Competitive environment
Value chain and marketing positioning
Representation in the physical & virtual world
Organizational structure
Management
Complete Activity 2.3 on page 79

21. Business Models & Revenue Models
Business model- Alternative Perspectives
Marketplace position perspective
Revenue model perspective
Commercial arrangement perspective
Revenue model
It describes how a business generate revenue
What are traditional ways?
The New Ways

22. Figure 2.13 Alternative perspectives on business models

23. Revenue Model- Publisher Example
Advertising CPM (cost per thousand/mille)
Advertising CPC (cost per click)
Sponsorship of section, content, or widget
Affiliate Revenue (CPA or CPC)
Transaction Fee
Subscription access to content or services
Per-per-view Access to document
Subscription Data Access for Marketing

24. Figure 2. 15 Example spreadsheet for calculating a site revenue model
Figure Example spreadsheet for calculating a site revenue model. Available for download at
Continued …

25. Online Business Revenue Calculation- What factors to consider?
Number and size of ad units, Ads Capacity to be sold, Fee level negotiated for different ads models, Traffic, Visitor engagement (time to stay)
Figure Example spreadsheet for calculating a site revenue model. Available for download at (Continued)

26. Figure 2.16 Econsultancy (www.econsultancy.com)

27. Revenue Model- Auction Example
Roles for auction (Klein 1997)
Price discovery
Efficient Allocation mechanism
Distribution mechanism—attracting audience
Coordination mechanism
Types of auction
English—forward or upward, initiated by seller this is more of conventional auctions we commonly seen in physical world and on virtual market
Dutch—Reverse, downward, initiated by buyer This is more commonly seen in large manufacture procurement
Read the Case Study 2.1 on page Discuss the questions.
Research on the web to find Reverse auction examples in Canada

28. Business Model-Start-ups
Many dot.com start-ups failed. Some succeeded and newer ones are still created.
Value the Internet start-ups (pp )
Concept
Innovation
Execution—promotion, performance, availibility, security
Traffic
Financing
Profile—publicity and awareness in the market

29. ???

30. Learning outcomes
After completing this chapter the reader should be able to:
Complete an online marketplace analysis to assess competitor, customer, and intermediary and competitor use of the Internet as part of strategy development
Identify the main business and marketplace models for electronic communications and trading
Evaluate the effectiveness of business and revenue models for online businesses.

31. Management issues
What are the implications of changes in marketplace structures for how we trade with customers and other partners?
Which business models and revenue models should we consider in order to exploit the Internet?
What will be the importance of online intermediaries and marketplace hubs to our business and what actions should we take to partner these intermediaries?

32. Exercises Case Study 2.3 on Pages 95-98 What is Zopa’s business model?
Do you think it can succeed and develop further and why?

33. Class discuss Preview the E-consultancy Interview.107-109
Prepare to discuss the following
What’re the impacts of the Internet to publishing industry
How are publish industry coping with the challenges?
How do they reach online readers?
How do they use social network for their advantage?
What a role do digital content and ecommerce play in their business?
From this interview, how do you feel about the publishing industry and where it is going?

34. Class discuss Read the pp. 58-59 Mini Case Study 2.1
The video may be searched form Google video search.
Discuss the key points of strategic agility
P. 59, Activity 2.1 Give examples of why it’s important to monitor and respond in an e- business context

35. Interactive activity – portals
Q1. Define portal (p.74)
Q2. Is a search engine the same as a portal? Yes, No Q3. Is a search engine the same as a directory? Yes, No
Q4. List search engines / portals you use and explain why

36. Resource for Analysing e-Marketplace
Ref. pp , Tab 2.2. Some websites have changed and some need registration
Online Business Revenue Calculation
Lab exercise: Activity 2.4 on page 85.

37. Lab Exercises Case Study 2.2 on Pages 91-93 Read the case
Discuss the question 1-3 on page 93
Mini Case Study 2.3 on pages 93-94
What’s business model of Firebox?
What made it a success?