Chapter 1 What Is E-Commerce?. Copyright © 2003, Addison-Wesley Figure 1.1 Dot- com Super Bowl...

Chapter 1

What Is E-Commerce?

Copyright © 2003, Addison-Wesley

Figure 1.1 Dot-com Super Bowl advertisers.

Super Bowl XXXIII (1999)

Super Bowl XXXIV (2000)

Super Bowl XXXV (2001)

HotbotHotJobsMonsterYahoo

E-TradeHotJobs.comMonster.com

AgillionAutoTraderBritannicaComputerEpidemicE-TradeHealtheon/WebMDHotJobsKforceLifeMindersMicroStrategyMonsterNetplianceOnMoneyOurBeginningOxygenPetsWall Street Journal InteractiveWebEx

How many XXXIV ads do you remember?

What product did each dot-com advertise?


Figure 1.2 The Pets.com sock puppet.


The Myth Start with an idea

Sell a product or a service over the Web Get seed money – venture capitalist Get your name out there Get paid in stock options Cash in following company sale or

IPO You’re an instant billionaire!!!


Figure 1.3 Technology stock prices tumbled in 2000.

The bubble bursts

Look at those percentage drops!

Do you know anyone who lost money?

Selected Year 2000 Stock Prices

Company High Year End Loss ($) Loss (%)Amazon 91.50 15.56 75.94 82.99%Ask Jeaves 139.75 2.44 137.31 98.25%DoubleClick 135.25 11.00 124.25 91.87%E-Trade 34.25 7.38 26.87 78.45%eBay 127.00 33.00 94.00 74.02%eToys 28.00 0.19 27.81 99.32%HotJobs 45.50 11.44 34.06 74.86%Pets.com 14.00 0.09 13.91 99.36%Priceline 104.25 1.31 102.94 98.74%Yahoo! 250.13 13.06 237.07 94.78% Source: Sarasota Herald-Tribune , 12/13/2000, pp. 4D-7D


The surviving 2001 dot-com advertisers.

Just what an out-of-work dot-commer needs 2 job placement sites 1 stock trading site

to dump that worthless stock

Super Bowl XXXV (2001)E-TradeHotJobs.comMonster.com


What happened? Poor business planning

Excessively narrow focus A business is more than a storefront

Even if the storefront is virtual Greed and ignorance Immature technology

The average consumer was not ready Speculative bubbles always burst Ignorance is not bliss. It’s ignorance.


What were they thinking? AllAdvantage.com paid surfers Several sites marketed funerals Bidforsurgery.com—bid on surgery Furniture? Mylackey.com—neat name (Live) fish delivery service


Why study e-commerce? The dot-com debacle

Hype got it wrong on the way up Hype got it wrong on the way down

E-commerce is: More than just selling stuff online Redefining how business does business Focused on efficiency, not revenue generation A source of technological innovation

Forget the dot-com hype. Electronic commerce is a source of good, old-fashioned technological innovation that improves efficiency and spawns competitive advantage. That’s the reality


E-commerce and E-business E-commerce

Encarta Transactions conducted over the Internet

By consumers Directly between businesses

Webopedia Conducting business online

E-business – a broader term E-business is the objective & encompasses

electronically buying, selling, servicing customers as well as interacting with business partners and intermediaries over the Internet.

E-commerce is the means


Figure 1.4 Direct business-to-customer transactions represent the visible tip of the e-commerce iceberg.

The business-to-customer tip of the iceberg

The e-commerce iceberg


Layering The process of adding onto or tapping into

an existing infrastructure. Electric power distribution Communication infrastructure Water and sewer Network of roads and highways

New applications on top of infrastructure In an information system or e-commerce application, a

layer is a program or set of programs that provide services to the layer above it and uses the services provided by the layer below it

Infrastructure essentially disappears


The black box concept

Contents of black box unknown

Functional independence

Black box

Input parameters

Output parameters


Figure 1.6 Layering.

Functionally independent layers

Common interface Stacking layers is

like stacking building blocks Information technology infrastructure

Application Alayer

Application Blayer

Application Clayer


Figure 1.7 Islands of automation.

Island ASales

Island BPayroll

Island CInventory

Island DAccountsrecievable

Island EBilling

Sales report

A/R report

Sales report

Sales report

Bills


Islands of automation Early computer applications

Single-function focus Efficiency within functional group

Payroll Manufacturing Accounting

Result—isolated fiefdoms Problem—no function is an island


Figure 1.8 Corporate databases provided a means for integrating the islands of automation.

Sales systemPayrollsystem

Inventorysystem

Accountsreceivable

systemBilling system

Centralized information technology infrastructure

Corporatedatabase

Dataconverter

Dataconverter

Dataconverter

Dataconverter

Dataconverter


Figure 1.9 Proprietary systems allowed suppliers and distributors to selectively access the

database.

Centralized information technologyinfrastructure

Corporatedatabase

Billingsystem

Payrollsystem

Salessystem

Inventorysystem

A/Rsystem

Internal Corporate Systems

Supplier

Supplier

Distributor

Distributor

Communicationinterface

Communicationinterface


Some definitions Internet

Global network of networks defined by set of open standards for communicating data and information between computers

World Wide Web Standard set of naming and linking conventions

that uses the Internet to locate and transport hypertext documents and other files stored on computers located all over the world

Browser Application program—point-and-click interface to

access the Web


Figure 1.11 The value chain.

The set of integrated internal processes that combine to deliver value to customers by transforming raw materials into finished products.

Inboundlogistics

Productionprocesses

Outboundlogistics

Sales andmarketing

Customerservice

Information technology infrastructure

Upstream Downstream


Figure 1.12 The arrows connecting adjacent value chain entities represent product flows and data flows.

Note the complexity

In-boundlogistics

Production

Physical product deliveries

Physical product returns

Physical data flows

Information technology infrastructure

Logicaldata flows

Logicaldata flows

Logicalproduct flows

Logicalproduct flows


Physical and Logical Value Chain Flows

Physical product flows Delivery

Data flows Control info

Physical data flows Paperwork

Logical data flows E-commerce


E-commerce advantages Gain efficiency by:

Eliminating redundant data entry Reducing errors Eliminating paperwork clutter Delivering information more quickly Coordinating related processes


Competitive advantage Something a company has that its

customers want and its competitors cannot (or choose not to) match.

Gives customers a reason to buy from you rather than from a competitor.

Technological innovation is a common source.


Figure 1.16 The competitive advantage model.

Stimulus for action

First major move

Customer acceptance

Competitor catch up moves First mover expansion moves

Commoditization


Figure 1.18 E-commerce categories.

Business-to-Business(B2B)

Intra-organizational

Business-to-Consumer(B2C)

Consumer-to-Consumer(C2C)

Category Comments

E-commerce links between businesses. The largest and mostlucrative e-commerce category. The way modern businessdoes business.

Internal information sharing. B2B at the value chain level. Asignificant source of competitive advantage through enhancedefficiency.

The best known category, but a relatively small piece of the e-commerce picture. The source of the lion's share of e-commerce failures.

Direct information sharing between customers, oftenfacilitated (but not controlled by) intermediaries. Currently aminor form of e-commerce, but with intriguing potential.


Why study e-commerce? E-commerce is:

The way modern business does business A mechanism for integrating across the

value chain and the supply chain A source of

Technical innovation Efficiency gains Competitive advantage

E-commerce is changing the way we live.

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Chapter 1 What Is E-Commerce?. Copyright © 2003, Addison-Wesley Figure 1.1 Dot- com Super Bowl...

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