(BCA-3005)E- COMMERCE AND APPLICATIONS

Module-7Module-7

Dr. B. B. SagarDept. of Computer Science & EngineeringBIT Mesra-Ranchi, Noida Campus

Module -VII

Issues of Trademarks and Domain Names,

Management Challenges in On-line Retailing, Supply

Chain Management Fundamentals, Online Auctions, E-

Commerce Portals, and Barriers to Growth of E-

Commerce in India.

Customercentric

Who are the customers?Where are the customers?Their purchasing habits

What they need/want?How many they need/want?When they need/want?How to reach them?

Demands Products

E-BUSINESS

BUSINESS FOCUS

•SCM•CRM•BPR•ERP

Supply Chain Management Supply Chain Management FundamentalsFundamentals

• The product life cycle (PLC) concept is based on four premises:

1.Products have a limited life

2.Product sales pass thru distinct stages, each with different marketing implications

3.Profits from a product vary at different stages in the life cycle

4.Products require different strategies at different life cycle stages

Product Life Cycle

The Product Life Cycle

Introductory

Stage

Growth

Stage

Maturity

StageDecline Stage

Total

Market

Sales

Time

Total Market Profit

7.1 E-Supply Chains

• The success of organizations (private, public, and military) depends on their ability to manage the flow of materials, information, and money into, within, and out of the organization– Such a flow is referred to as

• Supply chain involves activities that take place during the entire product life cycle including the movement of information, money and individuals involved in the movement of a product or a service

supply chain

FIVE BASIC SUPPLY CHAIN MANAGEMENT COMPONENTS

Plan DeliverSource Make Return

• Best Buy checks inventory levels at each of its 750 stores in North America as often as every half-hour with its SCM system, taking much of the guesswork out of inventory replenishment

• Supply chain management improves ways for companies to find the raw components they need to make a product or service, manufacture that product or service, and deliver it to customers

• Plan – This is the strategic portion of supply chain management. A company must have a plan for managing all the resources that go toward meeting customer demand for products or services. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers (marketing, sales depts)

• Source – Companies must carefully choose reliable suppliers that will deliver goods and services required for making products. Companies must also develop a set of pricing, delivery, and payment processes with suppliers and create metrics for monitoring and improving the relationships.

• Make – This is the step where companies manufacture their products or services. This can include scheduling the activities necessary for production, testing, packaging, and preparing for delivery. This is by far the most metric-intensive portion of the supply chain, measuring quality levels, production output, and worker productivity.

• Deliver – This step is commonly referred to as logistics. Logistics is the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers. During this step, companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.

• Return – This is typically the most problematic step in the supply chain. Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products (service dept).

E-Supply Chains

• Definitions and Concepts– supply chain

The flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers

– e-supply chain

A supply chain that is managed electronically, usually with Web technologies

E-Supply Chains

(Suppliers)(Firms)

E-Supply Chains (cont.)

• Supply chain parts– Upstream supply chain

• activities of a manufacturing company with its suppliers (1st tiers) and their connections to their suppliers (2nd tiers)

•

– Internal supply chain• in-house processes for transforming the inputs from the

suppliers into the outputs•

– Downstream supply chain• activities involved in delivering the products to the final

customers•

procurement is the major activity

major concerns are production management, manufacturing, and inventory control

attention is directed at distribution, warehousing, transportation, and after-sale service

BASICS OF SUPPLY CHAIN

• Organizations must embrace technologies that can effectively manage supply chains

Involvement(integration)

What is (are) the elements added in the model?

The Value System: Interconnecting relationships between organizations

Upstreamvalue

Firmvalue

Downstreamvalue

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E-Supply Chains• supply chain management (SCM)

A complex process that requires the coordination of many activities so that the shipment of goods and services from supplier right through to customer is done efficiently and effectively for all parties concerned.

SCM aims to minimize inventory levels, optimize production and increase throughput, decrease manufacturing time, optimize logistics and distribution, streamline order fulfillment, and overall reduce the costs associated with these activities

E-Supply Chains

• e-supply chain management (e-SCM)The collaborative use of technology to improve the operations of supply chain activities as well as the management of supply chains

• The success of an e-supply chain depends on:– The ability of all supply chain partners to view

partner collaboration as a strategic asset– A well-defined supply chain strategy– Information visibility along the entire supply chain– Speed, cost, quality, and customer service– Integrating the supply chain more tightly

E-Supply Chains

• Activities and infrastructure of E-SCM– Supply chain replenishment– E-procurement– Supply chain monitoring and control using RFID– Inventory management using wireless devices– Collaborative planning– Collaborative design and product development– E-logistics– Use of B2B exchanges and supply webs

E-Supply Chains• e-procurement

The use of Web-based technology to support the key procurement processes, including requisitioning, sourcing, contracting, ordering, and payment. E-procurement supports the purchase of both direct and indirect materials and employs several Web-based functions such as online catalogs, contracts, purchase orders, and shipping notices

• collaborative planningA business practice that combines the business knowledge and forecasts of multiple players along a supply chain to improve the planning and fulfillment of customer demand

E-Supply Chains

• Infrastructure for e-SCM– Electronic Data Interchange (EDI)– Extranets– Intranets– Corporate portals– Workflow systems and tools– Groupware and other collaborative tools

E-Supply Chains

• Determining the Right Supply Chain Strategy– Functional products are staple products (e.g.,

groceries and gasoline) that have stable and predictable demand and call for a simple, efficient, low-cost supply chain

– Innovative products (e.g., fashion and high-technology) tend to have higher profit margins, volatile demand, and short product life cycles. These products require a supply chain that emphasizes speed, responsiveness, and flexibility rather than low costs

7.2 Supply Chain Problems and Solutions

• Typical problems along the supply chain1. Slow and prone to errors because of the

length of the chain involving many internal and external partners

2. Large inventories without the ability to meet demand Incorrect demand forecasting

3. Insufficient logistics infrastructure Vehicle failures to road conditions

4. Poor quality

Supply Chain Problems and Solutions (cont.)

• : Erratic shifts in orders up and down supply chains– Creates production and inventory problems– Stockpiling can lead to large inventories

• Effect is handled by information sharing -

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collaborative commerce (c-Commerce)

Bullwhip effect

The Bullwhip Effect

Retailer

Wholesaler

Distributor

Factory

External Demand

Order lead time Delivery lead time

Order lead time Delivery lead time

Order lead time Delivery lead time

Production lead time

customer

Supply Chain Problems and Solutions

• The Need for Information Sharing along the Supply Chain

• EC Solutions along the Supply Chain– Order taking– Order fulfillment– Electronic payments– Managing risk– Inventories can be minimized– Collaborative commerce

7.3 Key Enabling Supply Chain Technologies: RFID and Rubee

• radio frequency identification (RFID)

Tags that can be attached to or embedded in objects, animals, or humans and use radio waves to communicate with a reader for the purpose of uniquely identifying the object or transmitting data and/or storing information about the object

Key Enabling Supply Chain Technologies: RFID and Rubee

Key Enabling Supply Chain Technologies: RFID and Rubee

Key Enabling Supply Chain Technologies: RFID and Rubee

Key Enabling Supply Chain Technologies: RFID and Rubee

• LIMITATIONS OF RFID– For small companies, the cost of the system may

be too high– The restriction of the environments in which RFID

tags are easily read– Different levels of read accuracy at different

points along the supply chain– Concerns over customer privacy– Agreeing on universal standards – Connecting the RFIDs with existing IT systems

Key Enabling Supply Chain Technologies: RFID and Rubee

• RuBee– Bidirectional, on-demand, peer-to-peer

radiating transceiver protocol under development by the Institute of Electrical and Electronics Engineers

– It relies on low-frequency magnetic waves to track products and transfer information.

– It excels in situation where RFID has limitations.

Key Enabling Supply Chain Technologies: RFID and Rubee

Trademarks and Domain NamesTrademarks and Domain Names

What is a trademark?. A trademark is a name or logo used by a company to identify its goods or services. For example, eBay® is the name of our company, but it is also a trademark used on our site and on various eBay products. Coca Cola® is a trademark used in the sale of soft drinks. Many trademarks are registered, but a trademark need not be registered for an owner to protect it. Trademark laws are primarily designed to protect consumers from confusing one company's goods or services with those of another.

What is trademark infringement?

Trademark infringement usually involves using someone's trademark

on a good or service in a way that may confuse others about the

source or affiliation of the goods or services. For example, if a seller

unauthorized by or unaffiliated with Nike® sells sports clothes called

"Nikestuff," the seller is probably infringing Nike’s trademark. There

are other ways to infringe a trademark, including registering domain

names that are substantially similar to the name of a trademark

owner.

Domain names and trademark infringement

• A domain name is an address that is used for identifying and locating computers on the Internet (for example, www.ebay.com and www.ebaymotors.com). Many companies register domain names that contain their trademarks. For example, eBay owns www.ebay.com. The Coca Cola Company owns www.cocacola.com and www.coke.com. Read more information on eBay domain names.

• If a person operates a website using a domain name that contains someone else's trademark (for example, "www.nikestuff.com"), people who see or visit that domain name are likely to be confused and believe that the site is affiliated with Nike when it is not. People may also mistakenly go to this website thinking it's connected with the other company, only to find out that it is not. Intentional misspellings of and similarities to trademarked names (for example, www.wwwebay.com, www.amizon.com) may also be considered trademark infringements. Just because a company hasn't registered all variations of its name or trademark as domain names doesn't mean that others can use those domain names. If the domain names are likely to confuse consumers, they're probably infringing.

A TRADEMARK IS MADE OF :

Any Distinctive Words, Letters, Numerals, Pictures, Shapes, Colors,

Logotypes, Labels

• Examples:

What is a Trademark?

• A BRAND NAME - A KIND OF VISIT CARD THAT PROMOTES THE IMAGE OF A COMPANY AND ITS RANGE OF GOODS & SERVICES.

• “A sign distinguishing goods or services produced or sold by one enterprise (from those of other enterprises)”.

Less traditional forms

• Single colors (Louis Vuitton)

• Three-dimensional signs • (shapes of products • or packaging)

• Audible signs (sounds)

• Olfactory signs (smells)

Types of Trademarks?

• Trade marks: to distinguish goods (*)• Service marks: to distinguish services• Collective marks: to distinguish goods or

services by members of an association• Certification marks

• Well-known marks: benefit from stronger protection

• Tradename (Brand name) (*)

The function of a Trademark

• Allows companies to mark A TERRITORY, EXPRESSING specific functions among similar products in the market.

• Ensures that consumers can identify a line of products.

• Ensures extension of the mark through licensing or franchising process.

The value of a Trademark?

• A marketing tool

• A source of revenue through licensing

• A crucial component of franchising agreements

• Useful for obtaining banks or third part finance

• A valuable business asset

The Value of Trademarks

• Global Brand Scoreboard

• 1. Coca-cola 67.52$ billion

• 2. Microsoft 59.95$ billion

• 3. IBM 53.37$ billion

• 4. GE 46.99$ billion

• 5. Intel 35.58$ billion

• (German survey January 17, 2006)

PRACTICAL ASPECTS

• Create or buy a trademark (after searching worldwide to find out that there are no similar registered ones -avoid claims- refusals or oppositions

• Protect your trademark through your national or regional office and then extend it to the world (WIPO Madrid & Protocol System)

• Use and maintain your trademark(s) (paying fees, following notification of refusals, extending territory)

• Enforce your trademark(s), innovate (develop new products)

What to avoid when selecting a Trademark

• Generic terms: CHAIR to sell chairs

• Descriptive terms: SWEET to sell chocolates

• Deceptive terms: “ORWOOLA” or “Pure whool” for 100% synthetic material

• Marks and terms contrary to public order/morality

• Do not use flags, armorial bearings, official hallmarks, emblems without a legal authorization

What to Remember when selecting Trademark?

• Create inherently distinctive mark• Think about fanciful names as: “Kodak”

– Arbitrary marks and logos as: “apple” for computers– Suggestive marks as : SUNNY for heaters

• A mark easy to memorize and pronounce, with a positive connotation and that fits product or image of the business

• Has no legal restrictions or reasons for rejection– TM search>not identical or confusingly similar to existing

• Suitable for export markets with a corresponding domain name which is not already used

Protecting a TM through registration

• The applicant can file a request at his national office and then at WIPO which offers free assistance, information & guidelines for:– Filing application forms, contact details, fees– Registration and certificate valid for 10 years– Renewal services & publication (CD-ROMs /Gazette)

• The IP national office is the only authority in charge of :

– Formal examination– Substantive examination– Publication and opposition

Protecting a TM through registration

• While filling in a TM application, it is critical to register your trademark in all classes in which you use or intend to use your trademark.

• The most widely used classification system (Nice has 34 classes for goods and 11 for services - a total of 45 classes of goods and services).

• Some TM offices such as in US and Canada require the proof that the TM is used.

• A substantive examination may be required to avoid conflict with an existing and similar Mark, previously registered.

• Some countries publish the TM in a journal allowing 3rd parties to make an opposition (during a certain period of time).

• Once it is decided that there are no grounds for refusal, a certificate is issued with a validity of 10 years.

• Registration can be renewed indefinitely but may be cancelled if TM is not actively used for a certain period stated in the TM law.

•

USING A TRADEMARK

• Actively using a TM

• Using/maintaining a TM in marketing and advertising

• Using the mark on the internet

• Using the mark as a business asset

ACTIVELY USING A TRADEMARK

• Offering the goods or services

• Affixing the mark to the goods or their packaging

• Importing or exporting the goods under the mark

• Using it on business papers or in advertising

USING A TRADEMARK IN ADVERTISING

• Shall be used exactly as registered

• Protect TM from becoming generic– Set apart from surrounding text– Specify font, size, placement and colors– Use as an adjective not as noun or verb– Not plural, possessive or abbreviated form– Use a trademark notice in advertising and labeling ®

• Monitor authorized users of the mark• Review portfolio of trademarks• An evolving trademark

USING A TM ON THE INTERNET

• Use of TM on internet may raise controversial legal problems

• Conflict between trademarks and domain names(internet addresses) - cyber squatting

• WIPO procedure for domain name dispute (http://arbiter.wipo.int.domains)

USING A TRADEMARK AS A BUSINESS ASSET

• Licensing: owner retains ownership and agrees to the use of the TM by other companies in exchange of royalties > licensing agreement (business expansion/diversification)

• Franchising: licensing of a TM central to franchising agreement.The franchiser allows franchisee to use his way of doing business (TM, know-how, customer service, s/w, shop decoration, etc)

• Selling/assigning TM to another company (merger & acquisitions/raising of cash)

ENFORCING TRADEMARKS

• Responsibility of TM owner to identify infringement and decide on measures

• “ Cease and desist letter” to alleged infringer (s)

• Search and seize order

• Cooperation with customs authorities to prevent counterfeit trademark goods

• Arbitration and mediation (preserve business relations)

Management Challenges in Management Challenges in Online RetailingOnline Retailing

• Retail advertising & marketing issues:Retail advertising & marketing issues:• AdvertisingAdvertising• Product displayProduct display• Brand & categoryBrand & category• Pricing & incentivesPricing & incentives

• Retail operations issues:Retail operations issues:• Inventory managementInventory management• Customer service qualityCustomer service quality

• Retail management issues:Retail management issues:• Location & decision making (site selection)Location & decision making (site selection)• Retail policiesRetail policies

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Management Challenges in Online Management Challenges in Online Retailing : Retailing StrategyRetailing : Retailing Strategy

• Qualifying a customerQualifying a customer• Learning the customer needsLearning the customer needs• Understanding the customer purchasing processUnderstanding the customer purchasing process• Making the presentation based on customer interactionMaking the presentation based on customer interaction• Handling objections, negotiations with the customerHandling objections, negotiations with the customer• Closing the saleClosing the sale• Building an ongoing relationship through the serviceBuilding an ongoing relationship through the service• Retailers lifestyle, voice, imageRetailers lifestyle, voice, image

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Management Challenges in Online Management Challenges in Online RetailingRetailing

• Manage channel conflictManage channel conflict

• Learn to price online products/ servicesLearn to price online products/ services

• Deliver a satisfying shopping experienceDeliver a satisfying shopping experience

• Design the layout of online storeDesign the layout of online store

• Mange brandsMange brands

• Create the right incentivesCreate the right incentives

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The Online Retail Sector TodayThe Online Retail Sector Today• Smallest segment of retail industry (5%)Smallest segment of retail industry (5%)

• Growing at faster rate than offline segmentsGrowing at faster rate than offline segments

• Revenues flat during recession, expected to Revenues flat during recession, expected to continue growth between 2010–2013continue growth between 2010–2013

• 70% Internet users bought online in 200970% Internet users bought online in 2009

• Primary beneficiaries: Primary beneficiaries:

– Established offline retailers with online presence Established offline retailers with online presence (e.g., Staples)(e.g., Staples)

– First mover dot-com companies (e.g., Amazon)First mover dot-com companies (e.g., Amazon)

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Online Retail and B2C E-Online Retail and B2C E-commerce Is Alive and Wellcommerce Is Alive and Well

SOURCES: eMarketer, 2009a; U.S. Department of Commerce, 2009; Forrester Research, 2008; authors’

estimates.Figure 9.2, Page 580

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E-tailing Business ModelsE-tailing Business Models

• Four main online retail business models:Four main online retail business models:

1.1. Virtual merchantVirtual merchant

• AmazonAmazon

2.2. Bricks-and-clicksBricks-and-clicks

• Wal-Mart, J.C. Penney, SearsWal-Mart, J.C. Penney, Sears

3.3. Catalog merchantCatalog merchant

• Lands’ End, L.L. Bean, Victoria’s SecretLands’ End, L.L. Bean, Victoria’s Secret

4.4. Manufacturer-directManufacturer-direct

• DellDell58

Common Themes in Online Common Themes in Online RetailingRetailing

• Online retail fastest growing channel on revenue Online retail fastest growing channel on revenue basisbasis

• Profits for startup ventures have been difficult to Profits for startup ventures have been difficult to achieveachieve

• Disintermediation has not occurredDisintermediation has not occurred

• Most significant online growth: offline general Most significant online growth: offline general merchandiser giants extending brand to online merchandiser giants extending brand to online channelchannel

• Second area of rapid growth: Second area of rapid growth:

– Specialty merchants with high-end goods, e.g., Blue NileSpecialty merchants with high-end goods, e.g., Blue Nile59

Industry Consolidation and Integrated Financial Industry Consolidation and Integrated Financial ServicesServices

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Online Financial Consumer Online Financial Consumer BehaviorBehavior

• Consumers attracted to online financial sites Consumers attracted to online financial sites because of desire to save time and access because of desire to save time and access information rather than save moneyinformation rather than save money

• Most online consumers use financial services Most online consumers use financial services firms for mundane financial managementfirms for mundane financial management

– Check balancesCheck balances

– Pay billsPay bills

• Greatest deterrents are fears about Greatest deterrents are fears about security and security and confidentiality confidentiality

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Online Banking and BrokerageOnline Banking and Brokerage

• Online banking pioneered by NetBank and Online banking pioneered by NetBank and Wingspan; no longer in existenceWingspan; no longer in existence

• Established brand-name national banks have Established brand-name national banks have taken substantial lead in market sharetaken substantial lead in market share

• Over 100 million people use online banking; Over 100 million people use online banking; expected to rise to 192 million in 2013expected to rise to 192 million in 2013

• Early innovators in online brokerage (E*Trade) Early innovators in online brokerage (E*Trade) have also been displaced by established have also been displaced by established brokerages (Fidelity, Schwab)brokerages (Fidelity, Schwab)

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The Growth of Online BankingThe Growth of Online Banking

Figure 9.4, Page 610 SOURCE: eMarketer, Inc., 2008a; authors’ estimates.63

Online Insurance ServicesOnline Insurance Services

• Online term life insurance: Online term life insurance:

– One of few products for which Internet lowered search costs, increased One of few products for which Internet lowered search costs, increased price comparison, and resulted in lower pricesprice comparison, and resulted in lower prices

• Other insurance product lines:Other insurance product lines:

– Web gives insurance companies new opportunities for product and Web gives insurance companies new opportunities for product and service differentiation and price discriminationservice differentiation and price discrimination

– Online use is more for discovering prices and terms of policies than Online use is more for discovering prices and terms of policies than purchasing policies onlinepurchasing policies online

– Reduced search and price discovery costsReduced search and price discovery costs

• Industry affected by being regulated at state as Industry affected by being regulated at state as opposed to federal levelopposed to federal level

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Online Real Estate ServicesOnline Real Estate Services

• Early vision: local, complex, and agent-driven real Early vision: local, complex, and agent-driven real estate industry would transform into disintermediated estate industry would transform into disintermediated marketplace where buyers and sellers would transact marketplace where buyers and sellers would transact directlydirectly

• However, major impact is influencing of purchases However, major impact is influencing of purchases offlineoffline– Impossible to complete property transaction onlineImpossible to complete property transaction online

– Main services are online property listings, loan calculators, research, Main services are online property listings, loan calculators, research, and reference materialand reference material

• Despite revolution in available information, there has Despite revolution in available information, there has not been a revolution in the industry value chainnot been a revolution in the industry value chain

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Online Travel ServicesOnline Travel Services

• One of most successful B2C e-commerce segmentsOne of most successful B2C e-commerce segments

• 2007: first year online bookings greater than offline2007: first year online bookings greater than offline

• 2009: online travel bookings declined slightly due to 2009: online travel bookings declined slightly due to recession but expected to grow to $118 billion by 2013recession but expected to grow to $118 billion by 2013

• For consumers: more convenient than traditional travel For consumers: more convenient than traditional travel agentsagents

• For suppliers: a singular, focused customer pool that For suppliers: a singular, focused customer pool that can be efficiently reached through onsite advertisingcan be efficiently reached through onsite advertising

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E-commerce in Action: E-commerce in Action: Amazon.comAmazon.com

• Vision: Vision: – Earth’s biggest selection, most customer-centric Earth’s biggest selection, most customer-centric

• Business model: Business model: – Amazon Retail, Third Party Merchants, and Amazon Web Services Amazon Retail, Third Party Merchants, and Amazon Web Services

(merchant and developer services)(merchant and developer services)

• Financial analysis: Financial analysis: – Greatly improved, profitable; still heavy long-term debtGreatly improved, profitable; still heavy long-term debt

• Strategic analysis/business strategy: Strategic analysis/business strategy: – Maximize sales volume, cut pricesMaximize sales volume, cut prices

• Strategic analysis/competition: Strategic analysis/competition: – Online and offline general merchandisersOnline and offline general merchandisers

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E-commerce in Action: E-commerce in Action: Amazon.comAmazon.com

• Strategic analysis/technology: Strategic analysis/technology: – Largest, most sophisticated collection of online retailing Largest, most sophisticated collection of online retailing

technologies availabletechnologies available

• Strategic analysis/social, legal: Strategic analysis/social, legal: – Antitrust, sales tax, patent lawsuitsAntitrust, sales tax, patent lawsuits– Toys’R’Us lawsuitToys’R’Us lawsuit

• Future prospects: Future prospects: – In 2008, net sales grew 30%In 2008, net sales grew 30%– Ranks among top five in customer service, speed, Ranks among top five in customer service, speed,

accuracyaccuracy– However, net margins still much narrower than Wal-MartHowever, net margins still much narrower than Wal-Mart

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E-Commerce PortalsE-Commerce Portals

Barriers to Growth of Barriers to Growth of E-Commerce in IndiaE-Commerce in India