1. E-COMMERCE
Recent Topics in IT

2. Outline What is E-commerce History of E-commerce
Categories of E-commerce
E-commerce marketing strategies
Setting up for E-marketing
Benefits of E-commerce
Strategy Formulation

3. Commerce Need a Product or service to sell
Place from which to sell the products
Figure out a way to get people to come to your place.
A way to accept orders.
A way to accept money.
A way to deliver the product or service, often known as fulfillment.
A way to accept returns.
Customer service
Technical support department to assist customers with products.

4. E-Commerce
E-Commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other computer network, consists of:
Buyers - these are people with money who want to purchase a good or service.
Sellers - these are the people who offer goods and services to buyers.
Producers - these are the people who create the products and services that sellers offer to buyers.

5. History of E-Commerce
Late 1970s and early 1980s Electronic Data Interchange (EDI) for e-commerce to transmit data from one business to another within companies.
1990: Tim Berners-Lee writes the first web browser, using NeXT computer.
1994: Pizza Hut offers pizza ordering on its web site. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online.
1995:Jeff Bezons launches amazon.com and the first commercial free 24 hour e-Bay is founded.
1998: Electronic postal stamps can be purchased from the web.
2008: E-commerce sales projected to reach $204 billion, an increase of 17 percent over 2007.

6. E-Commerce (cont.)
Distributing, buying, selling and marketing products and services over electronic systems
E-business for commercial transactions
Involves supply chain management, e-marketing, online marketing, EDI
Uses electronic technology such as:
- Internet
- Extranet/Intranet
- Protocols

7. E-Commerce (cont.)
The Internet is the perfect vehicle for e-commerce because of its open standards and structure.
No other methodology or technology has proven to work as well as the Internet for distributing information and bringing people together.
It’s cheap and relatively easy to use it as a medium for connecting customers, suppliers, and employees of a firm.
No other mechanism has been created that allow organizations to reach out to anyone and everyone like the Internet.

8. Major Business Pressures and Role of E-Commerce

9. Key Drivers of E-commerce
Technological – degree of advancement of telecommunications infrastructure
Political – role of government, creating legislation, funding and support
Social – IT skills, education and training of users
Economic – general wealth and commercial health of the nation

10. Examples
Selling physical goods using websites flowers, shoes, electronic items, etc.
Reserving a hotel room or transportation ticket over the Internet
A manufacturing plant orders electronic components from another plant within the company using the company’s intranet.

11. Digitally enabled commercial transactions
Data networks
Intense competition
Globalization
Information age
Technologies
Automation
Low cost high quality products/services
DIGITAL

13. E-Commerce View

14. E-Business Business that uses the WWW to fulfill it’s business process
Four basic business processes:
- information dissemination
- data capture
- promotions and marketing
- transacting with stakeholders
Business objectives interact with web based applications

15. E-Business Organizational Responses
Strategic systems
- Provide organizations with strategic advantages, enabling them to:
Increase their market share
Better negotiate with their suppliers
Prevent competitors from entering into their territory
Continuous improvement efforts
- Many companies continuously conduct programs to improve:
Productivity
Quality
Customer service
Business process reengineering (BPR)
- Strong business pressures may require a radical change
- Such an effort is referred to as business process reengineering (BPR)

16. E-Business Organizational Responses
Business alliances
- Alliances with other companies, even competitors, can be beneficial
- Virtual corporation—electronically supported temporary joint venture
Special organization for a specific
Time-limited mission
Electronic markets
- Optimize trading efficiency
- Enable their members to compete globally
- Require the collaboration of the different companies and competitors

17. E-Business Organizational Responses
Reduction in cycle time and time to market
- Cycle time reduction—shortening the time it takes for a business to complete a productive activity from its beginning to end
- Extremely important for increasing productivity and competitiveness
- Extranet-based applications expedite steps in the process of product or service development, testing, and implementation

18. Transaction costs
Cost of providing some good or service through the market
Effects of e-commerce and the internet that impacts the business model
Searching for an obtaining information
Participating in a market
Policing and enforcing transactions
Bargaining and decision costs
Actual cost of buying or selling the product

19. Key Success Factors of E-Commerce
Mission
Goals
Internal
(Company)
Analysis
External
Analysis
Strategy
Formulation
Corporate
Business-unit
Functional
Operating
Implementation
Control and Monitoring

20. Difference Between E-Commerce and E-Business

21. How E-Commerce Sites Work
E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and co-operating with business partners. Special Technical Standards (EDI) for e-business facilitate the exchange of data between companies. E-business software solutions allow the integration of intra (WITH IN) and inter (B/W) firm business processes. E-business can be conducted using the Web, the Internet, intranets, extranets, or some combination of these.

22. How E-Commerce Sites Work
Create value largely through gathering, synthesizing and distribution of information
Formulate strategies that make management of the enterprise and technology convergent
Compete in real time rather than in “cycle time”
Operate in a world characterized by low barriers to entry, near-zero variable costs of operation and shifting competition
Organize resources around the demand side rather than supply side
Manage better relationships with customers through technology

23. Consumer Decision Process
Disposal
Loyalty
Satisfaction
Purchase Decision
Evaluation of Alternatives
Information Search
Problem - Recognition
PRE-PURCHASE
PURCHASE
POST-PURCHASE

24. Consumer Decision Process — Flower Example
Flowers
Disposal
Loyalty
Satisfaction
Purchase Decision
Evaluation of Alternatives
Information Search
Problem - Recognition
Pre-Purchase
Purchase
Post-Purchase
Need recognition, potentially triggered by a holiday, anniversary or everyday events
Search for ideas and offerings, including:
Available on-line and off-line stores
Gift ideas and recommendations
Advice on selection style and match
Evaluation of alternatives along a number of dimensions, such as price, appeal, availability, etc.
Purchase decision
Message selection (medium and content)
Post-sales support
Order tracking
Customer service
Education on flowers and decoration
Post sales perks

25. Traditional vs. New Business Models
Traditional New Business
Production
Mass Personalized
Manufactures push Customer Pull
Distribution
Middleman Direct
Communications
Closed Open
Finance
Slow Fast
Difficult Easier
Markets
Local Global
Mass Niche
Assets
Physical Virtual

26. Business Models in E-commerce
Method of doing business
Well-planned model gives a competitive advantage
Impacts on sustainability and growth
Three areas:
- value stream
- revenue stream
- logistical stream

27. Value Stream Create long-term sustainability
Benefit for business stakeholders
Can be achieved in four ways:
- creation/participation in an e-marketplace
- creation/participation of virtual communities
- additional value offers
- exploitation of offers

28. Creation/participation in an e-marketplace
Reduce transaction costs directly/indirectly
Economics of e-market similar to traditional market
Can be setup by supplier/buyer or run independently
Buyer value:
- reduced costs
- improved service
- convenience
Supplier value:
- differentiation
- reduced lead time

29. Creation/participation of virtual communities
Bringing together members of a community
Larger communities mean larger sources
Improves customer service

30. Additional value offers
Value is added by improving product mix
Through association or partnership
Can be achieved with minimum costs
Can be integrated into the host sites

31. Exploitation of offers
E-commerce/Internet economy founded on information
Value can be added by using this information
Target customers demographically
Can bridge the uncertainty gap
Can post Request for Proposal (RFP’s)

32. Revenue Stream Short-term realization of value proposition Direct:
- cost reduction
- free offerings of service/products
- pricing strategies
Indirect:
- internet advertising
- selling customer information
- joining affiliate programs

33. Logistical stream
Examines organization restructure to deliver value added and revenue streams
Issues such as:
- organizational culture
- pre/post restructuring
- implementing information
- communication and training
- reward systems for motivation

34. Different types of E-Commerce
Business
(organization)
Customer
(individual)
Business (organization)
B2B
(e.g TPN)
B2C
(e.g Amazon)
Customer
(individual)
C2B
(e.g Priceline)
C2C
(e.g eBay)

35. Type of E-Commerce
Business to Business (B2B) refers to the full spectrum of e-commerce that can occur between two organizations.
This includes purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management &service and support. Pricing is based on quantity of order and is often negotiable.
Examples: FreeMarkets, Dell and General Electric
Business to Consumer (B2C) refers to exchanges between business and consumers, activities tracked are consumer search, frequently asked questions and service and support.
Examples: Amazon, Yahoo and Charles Schwab & Co

36. Type of E-Commerce
Peer to Peer (C2C) exchanges involve transactions between and among consumers. These can include third party involvement offering free classifieds, auctions and forums where individuals can buy and sell thanks to online payment systems since 1995.
Examples: Owners.com, Craiglist, Monster,ebay
Consumer to Business (C2B) involves when consumers band together to present themselves as a buyer in group. The consumer reviews the bids and selects the company that will complete transactions.
Example:

37. Component of E-Commerce
e-CRM
e-marketing
e-services
e-marketplace
e-auction
e-SCM
e-ERP

38. The 7’ C of E-Commerce E-COMMERCE Context Content Commerce Community
Site’s layout and design
Content
Text, pictures, sound and video that web pages contain
Commerce
Site’s capabilities to enable commercial transactions
Community
The ways sites enable user-to-user communication
E-COMMERCE
Connection
Degree site is linked to other sites
Customization
Site’s ability to self-tailor to different users or to allow users to personalize the site
Communication
The ways sites enable site-to-user communication or two-way communication

39. Metrics Metrics: If it moves, measure it!
Measures of performance; may be quantitative or qualitative
Security and privacy
On-time order fulfillment
Return policy
Navigability
Response times
Site availability
Download times
Timeliness

40. Benefits and Challenges of E-commerce
Persistent connection with customers
New value for customers
Access to new customers
Scalability
Cannibalization
Channel conflict
Customer confusion
Investor confusion

41. Benefits of E-commerce
To consumers: 24/7 access, more choices, price comparisons, improved delivery, competition
To organizations: International marketplace (global reach), cost savings, customization, reduced inventories, digitization of products/services
To society: flexible working practices, connects people, delivery of public services

42. Limitations of E-commerce
To organizations: lack of security, reliability, standards, changing technology, pressure to innovate, competition, old vs. new technology
To consumers: equipment costs, access costs, knowledge, lack of privacy for personal data, relationship replacement
To society: less human interaction, social division, reliance on technology, wasted resources, JIT manufacturing

43. Benefits to Consumers Convenience Buying is easy and private
Provides greater product access and selection
Provides access to comparative information
Buying is interactive and immediate

44. Benefits to Organizations
Powerful tool for building customer relationships
Can reduce costs
Can increase speed and efficiency
Offers greater flexibility in offers and programs
Is a truly global medium

45. Benefits to Society More individuals can work from home
Benefits less affluent people
Third world countries gain access
Facilitates delivery of public services

46. Questions and Answers….