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  • CHAPTER 4: ELECTRONIC COMMERCE & ELECTRONIC BUSINESS

  • Management ChallengesInternet provides many opportunities, but also challenges, such as:Electronic commerce & electronic business require a new way of thinkingFinding a successful Internet business model

  • New Business Models and Value PropositionsBusiness Model: How an organization delivers a product or service

    Changing Economics of InformationThe Internet reduces information asymmetryThe Internet eliminates the tradeoff between richness and reach of information

  • Business ModelsBricks and MortarClicks and Mortar (Bricks and Clicks)Canadian TirePure PlayAmazon

  • Internet Business Models: SellingVirtual StorefrontSells goods and /or services onlinewww.amazon.com

    Aggregatorgroups come together to gain volume discounts

  • Internet Business Models: AuctionsAuctionDynamic pricingwww.eBay.com

    Reverse AuctionConsumers submit a bid to multiple sellerswww.priceline.com

  • Business Models: Online Delivery, Products & ServicesDigital Product DeliverySell and deliver software, multimedia, etc.www.Compusmart.com

    Content providercreates revenue through providing content for a fee, and through advertisingwww.yahoo.com

  • Internet Business Models: BrokersInformation BrokerProvides information about productswww.baystreet.ca

    Transaction BrokerBuyers view rates and terms & completes transactionwww.TDWaterhouse.com

  • Internet Business Models: Web Entries & CommunitiesVirtual communityProvides an online meeting place for people with common interestswww.kidshelp.sympatico.caPortalInitial point of entry to Web, specialized content, serviceswww.lycos.com

  • Electronic CommerceBusiness Originating From:And Selling to:

  • Electronic CommerceBusiness Originating From:And Selling to:

  • Customer-Centric RetailingDirect sales over the WebInteractive Marketing and PersonalizationM-Commerce and Next Generation MarketingCustomer Self-Service

  • B2B: Business to BusinessExchanges: commercial online market; many buyers, many sellers

    VERTICAL EXCHANGESSet up for specific industriese.g. Steel and Chemical IndustriesHORIZONTAL EXCHANGESAddress functions that occur cross industrye.g. purchasing office equipment

  • E-commerce Payment SystemsDigital wallet E-cashSmart cardPerson-to-person paymentsCredit Cards

  • Security: Credit CardsTransfer of data from customer to vendorTransfer of data from vendor to payment processorProtection of customer data in stored in merchants databaseSecure Socket Layers (SSL)

  • IntranetsUsing Internet technology to support internal organizational needsEmailDocument sharingOnline repositories of informationRemote access to resourcesGroup collaboration

  • Example: Sun MicrosystemsIntranet to support Sales Team

    The good news is theres lots of information

    The bad news is theres lots of information

  • Intranets: Organizational BenefitsCross platform availabilityCan be tied to internal & transaction processing systemsInteractive applications with text, audio, videoScalable as requiredEasy to use Web interfaceLow start-up costsImproved information sharingReduced cost of distributing information

  • Challenges & OpportunitiesUnproven business modelsBusiness processes require changechannel conflictsLegal IssuesSecurity and Privacy

  • E-commerce in CanadaThere is a higher percentage of Canadians than Americans using the Internet But . . . Canadian businesses are underrepresented on the InternetOnly 6 percent of Canadian businesses selling online in 2000, down from 10% in 1999In 2000, e-commerce sales accounted for 0.4 % of revenues, up from 0.2% in 1999Canadians purchase from US companies

  • Barriers to e-commerce in CanadaHigh percentage of SMEs in CanadaMay not have adequate resources to develop e-commerce strategy & solutionShortage of skilled IT workersLack of sense of urgencyConservative investor cultureTax structure

  • E-commerce Taxation IssuesCross-border shoppingDigital downloads

  • Who is Making Money on the Web?190 companies split into 7 categoriesPortalsTransactionCommerceContentISPEnablersAdvertisingEvaluated on financial metrics

  • Who is Making Money on the Web? Ctd.ResultsWinner: Transaction (8/11 cos. had positive earnings)Why: solid revenue modelLosers: Content Providers and ISPs (4/34 CPs had positive earnings)Commerce (0/26 had positive earnings)Conclusion:

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