Defining Your E-Business Idea

Chapter 2

The Entrepreneur• Someone who assumes the risks of starting

and running their own business• An entrepreneur needs

– High energy personality– Self-confidence– High levels of organizational skills– Ability to act

The Entrepreneurial Process

E-Business Success Factors • The network effect• Scalability• Innovative Web marketing ideas• Ease of entry into (electronic) markets• Adaptability to change

The Network Effect

• The greater the number of nodes (participants) the greater the value of the network

• Metcalf law of network power– Power= number of nodes2

Scalability

• The ability of your idea to continue to function regardless of size

• Can refer to the ability of a server or Internet service to support increased loads

Innovative Web Marketing Ideas

• Use the power of the Web and Internet to leverage new ideas.

• Hotmail gave away free e-mail accounts that used a Web interface and was linked to a site.

Hotmail

Ease of Entry Into Markets• The Internet opened up access to markets

by lowering barriers to entry.• Good ideas can be cloned.• Advantage frequently goes to first mover.• Ebay was a “first mover.”

Ebay Auction Site

Adaptability to Change

• Internet and Web Technologies facilitate rapid change in business models.– New products or services – New features– Amazon.com added auctions to their

product/service mix

Amazon.com

Exploiting E-Business Advantages

• Expand the market• Acquire greater business visibility • Maximize customer relationships and

improve responsiveness• Create new services• Reduce costs

Expand the Market

• Reach more customers• Lower location barrier• Lower time zone barrier

Acquire Greater Visibility

• The Internet allows companies to get their name, products, or services exposed to more customers than ever before.

• Use or outsource distribution to others.– Find distributors for eToys and Pier1

Maximize Customer Relationships

• Build one-on-one relationships with customers.

• Use technology to build and sustain links with customers.

Improve Responsiveness• Use technology to respond more quickly or

effectively to customer needs and inquiries.– Use services such as parcel tracking and

delivery confirmation– Allow for on-line purchases

Create New Services

• The Web allows for expansion and refinement of traditional business

• Add new products quickly

Reduce Costs

• The Internet can lower costs of doing business by lowering…– Distribution costs– Marketing costs

Example Web Sites• Fingerhut• Half.com• Southwest Airlines• WW Grainger• Trailmaker• Sun Microsystems• Foodlocker• Grocery Works.com

Fingerhut

Half.com

Southwest Airlines

Grainger.com

Trailmaker

Sun Microsystems

Foodlocker.com

Grocery Works.com