Ch. 6 E-Business and E-Commerce

Lecture 5

6.1 e-Business Challenges and Strategies

• Mix of online channels & media gives consumers strong control over where and how they interact with a business or brand.

• Managers need to know how to respond to changing consumer behavior & needs of business customers – and how to deal with IT software vendors and consulting firms.

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Chapter 4 3

E-Business – EC Organizations

• Brick-and-mortar (or old-economy) refer to pure physical organizations (corporations).

• Virtual (or pure-play) organizations are companies that are engaged only in EC .

• Click-and-mortar (or click-and-brick) organizations are those that conduct some e-commerce activities, yet their primary business is done in the physical world.

E-commerce describes the process of buying, selling, transferring, or exchanging products, services, and/or information via computer networks, including the Internet. E-business refers to a broader definition of e-commerce, not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, conducting e-learning, and processing electronic transactions.

Types of E-Business Transactions

• Business-to-business (B2B). Over 85% of EC volume is B2B.

• Business-to-consumers (B2C). Also called e-tailing.

• Consumers-to-business (C2B). Consumers make known a particular need for a product or service, and then suppliers compete to provide that product or service at the requested price; e.g., Priceline.com

• Government-to-citizens (G2C) and to others. A government agency provides services to its citizens via EC technologies.

• Mobile commerce (m-commerce). Transactions and activities are conducted via wireless networks.

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E-Business Web Site Requirements and Challenges

• Availability relates to the server-side of e-business. An always on facility is needed to maintain the business critical apps.

• Accuracy and Quick Response. Web software must be capable of searching, sorting, processing promotions and payments, verifying that the credit card number belongs to the person trying to use it, confirming the purchase in real-time, etc. In time-sensitive B2B, errors that delay delivery are intolerable.

• Security and PCI DSS Compliance. PCI DSS (Payment Card Industry Data Security Standard) is a set of infosec requirements to help prevent credit card fraud.

• Integrating EC systems with enterprise systems. Need better integration across all customer points of interactions.

• Web analytics. Learning from Web traffic and log data.

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E-business Models

• Comparison shopping engines• Affiliate marketing• Electronic marketplaces and exchanges • Information brokers and matching services • Memberships• Forward auctions• Reverse auctions• Name-your-own-price• Online auctions• Online direct marketing. • Viral marketing

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6.2 B2C e-Commerce

• Most well-known B2C site is Amazon.com, whose patented IT developments provide a competitive edge

• ING Direct, largest online bank with high rates, high-volume, low-margins, and high profits

• Online job market. Most companies and government agencies advertise job openings, accept résumés, and take applications via the Internet.

• Despite B2C ongoing growth, many e-tailers still face challenges that interfere with the growth of its e-tailing efforts

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Issues in E-tailing

1.Resolving channel conflict between an online selling channel and physical selling channels

2.Resolving conflicts within click-and-mortar organizations.

3.Managing order fulfillment, logistics, and reverse logistics.

4. Determining viability and risk of online e-tailers.

5.Identifying appropriate revenue (business) models.

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6.3 B2B e-Commerce & e-Procurement

B2B • comprises about 85% of e-commerce dollar

volume. • covers apps that enable an enterprise to form

electronic relationships with its distributors, resellers, suppliers, customers, and other partners.

• By using B2B, organizations can restructure their supply chains and partner relationships.

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6.4 E-Government E-commerce models apply to government & the

public sector

E-government is the use of Internet technology to deliver information and public services to citizens, business partners and suppliers of government entities

Benefits• Improves the efficiency and effectiveness of govn’t

functions, including the delivery of public services• Increases transparency by giving access to govn’t

information• Citizens can provide feedback and more actively

participate in democratic institutions and processes

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Advertising Strategies and Revenue Models

• Affiliate marketing and advertising: an organization refers consumers to other companies’ Web sites.

• Viral marketing: word-of-mouth marketing; customers promote a product or service by telling many others about it, often via tweets or texts.

• Customizing ads: marketing managers can customize display ads based on users’ profiles.

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E-payment systems• Electronic funds transfer (EFT)• Electronic checks• Electronic credit cards• Purchasing e-cards• e-Cash—smart cards • e-Cash—person-to-person• Electronic bill presentment and payments• Pay at ATMs • Micropayments• B2B special methods

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IT at Work 6.6

E-Money: The Future Currency

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Figure 6.11 Contactless Mobile Suica on mobile phone; based on RFID

The growing e-money lifestyle in Japan is making life more convenient for consumers by allowing transactions via mobiles.

The Mobile Suica system was debuted by NTT DoCoMo in 2006.

Mobile Suica is a phone-based smartcard that can be used for buying rail tickets or accessing buildings.

6.6 E-Business Ethics and Legal Issues

• Privacy: Most e-payment systems know who the buyers are; therefore, it’s necessary to protect the buyers’ identities.

• Web tracking: By using tracking software and log files, companies can track individuals’ movements on the Internet.

• Job loss: EC may eliminate jobs.

• Disintermediation: Technology eliminates the need for intermediaries, such as travel and insurance agents.

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