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 Outline
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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. 3
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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. 4
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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. 5
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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 6
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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.
Its 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. 7
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Major Business Pressures and Role of E-Commerce 8
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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 9
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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 companys
intranet. 10
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Digitally enabled commercial transactions Data networks Intense
competition Globalization Information age Technologies Automation
Low cost high quality products/services DIGITAL 11
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E-Commerce View 13
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E-Business Business that uses the WWW to fulfill its business
process Four basic business processes: - information dissemination
- data capture - promotions and marketing - transacting with
stakeholders Business objectives interact with web based
applications 14
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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) 15
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Business alliances - Alliances with other companies, even
competitors, can be beneficial - Virtual corporationelectronically
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 E-Business
Organizational Responses 16
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Reduction in cycle time and time to market - Cycle time
reductionshortening 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 E-Business Organizational
Responses 17
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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 18
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Key Success Factors of E-Commerce Mission Goals Implementation
Control and Monitoring Strategy Formulation Corporate Business-unit
Functional Operating External Analysis Internal (Company) Analysis
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Difference Between E-Commerce and E-Business 20
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E-business 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. How
E-Commerce Sites Work 21
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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 How E-Commerce Sites Work 22
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Consumer Decision Process 23 Disposal Loyalty Satisfaction
Purchase Decision Evaluation of Alternatives Information Search
Problem - Recognition PRE-PURCHASE PURCHASE POST-PURCHASE
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Consumer Decision Process Flower Example 24 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
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Traditional vs. New Business Models Traditional New Business
ProductionMass Personalized Manufactures push Customer Pull
DistributionMiddleman Direct CommunicationsClosed Open FinanceSlow
Fast Difficult Easier MarketsLocal Global Mass Niche AssetsPhysical
Virtual 25
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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 26
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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 27
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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: - reduced costs - differentiation -
reduced lead time 28
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Creation/participation of virtual communities Bringing together
members of a community Larger communities mean larger sources
Improves customer service 29
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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 30
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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 (RFPs) 31
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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 32
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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 33
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Business (organization) Customer (individual) Business
(organization) Customer (individual) B2C (e.g Amazon) C2B (e.g
Priceline) C2C (e.g eBay) B2B (e.g TPN) Different types of
E-Commerce 34
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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
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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:
www.planetfeedback.com 36
The 7 C of E-Commerce 38 Context Sites layout and design
Commerce Sites capabilities to enable commercial transactions
Connection Degree site is linked to other sites Communication The
ways sites enable site-to- user communication or two-way
communication Customization Sites ability to self-tailor to
different users or to allow users to personalize the site Community
The ways sites enable user-to- user communication Content Text,
pictures, sound and video that web pages contain E-COMMERCE
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Metrics Response times Site availability Download times
Timeliness Security and privacy On-time order fulfillment Return
policy Navigability 39 Measures of performance; may be quantitative
or qualitative Metrics: If it moves, measure it!
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Benefits and Challenges of E-commerce 40 Benefits Persistent
connection with customers New value for customers Access to new
customers Scalability Challenges Cannibalization Channel conflict
Customer confusion Investor confusion
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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 41
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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 42
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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 43
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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 44
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Benefits to Society More individuals can work from home
Benefits less affluent people Third world countries gain access
Facilitates delivery of public services 45