1. E-commerce fundamentals
Chapter 2
E-commerce fundamentals

2. 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?

3. Figure 2.1 The environment in which e-business services are provided

4. Activity – the e-commerce environment
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.

5. 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?

6. Environment constraints and opportunities (Continued)
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?

7. Strategic Agility
Capability to respond to environmental opportunities and threats to gain competitive advantages
Read the pp 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

8. Figure 2.2 Professor Donald Sull of London Business School talks about strategic agility Source:

9. Figure 2.3 An online marketplace map

10. Online Marketplace Analysis
Customer Segment
Search Intermediaries

11. 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

12. Marketplace Channel Structure
It describes the way a manufacture / supplier delivers products and services to its customers
Fig. 2.5 and Fig 2.6 display variety of options

13. Figure 2.5 B2B and B2C interactions between an organization, its suppliers and its customers

14. 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

15. 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

16. Reinter-mediation
The creation of new intermediaries between customers and suppliers, such as search engine, price comparator, etc. such as
Supplies need to
Be represented with new intermediaries
Monitor other suppliers via intermediaries
Create own intermediaries

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

18. Countermediation
Creation of a new intermediary by an established company
Example:
B&Q
Opodo
Boots
Ford, Daimler (
Partnering with existing intermediary – Mortgage broker Charcol and Freeserve

19. 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:

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

21. Business model Timmers (1999) defines a ‘business model’ as:
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.

22. Business model 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

23. Revenue model It describes how a business generate revenue
What are traditional ways?
The New Ways

24. 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

25. Figure 2. 14 Alex Tew’s Million Dollar Home Page (www
Figure Alex Tew’s Million Dollar Home Page (

26. 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)

27. Figure 2. 15 Example spreadsheet for calculating a site revenue model
Figure Example spreadsheet for calculating a site revenue model. Available for download at

28. 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)