e-commerce applications

E-COMMERCE TECHNOLOGIESPage 239Electronic commerce the electronic transmission of buyer/seller transactions and related information between individuals and businesses or between two or more businesses that are trading partners

E-COMMERCE TECHNOLOGIESWill we see continued growth in e-commerce (Internet) applications?

Consider Metcalfes Law: The value of a network to each of its members is proportional to the number of other users, expressed as (n2 n) / 2There are increasing returns to be gained as more organizations and people use the WebPage 240

E-COMMERCE TECHNOLOGIESPage 241 Figure 8.1 Internet Technology Innovations for E-CommerceCommercial History of the Internet

E-COMMERCE TECHNOLOGIESImprovements for online sales or auction biddingNew channels for customer serviceCollection of clickstream metrics and personal data from Web site usersAcceptance of Web cookies stored on users hard drive to enable customization of Web sitesWeb browser improvements with multimedia

Page 240Technologies for B2C Applications

E-COMMERCE TECHNOLOGIESMost important technological advance for B2B applications XML markup languageNow have accepted standardsCan be used for a flexible, low-entry form of EDIPage 242Technologies for B2B ApplicationsElectronic data interchange (EDI) proprietary applications for communicating with trading partners based on agreed-upon standards for business document transmission

E-COMMERCE TECHNOLOGIESEDI Benefits:Reduced cycle times for doing businessCost savings for automated transaction handling and elimination of paper documentsImproved interfirm coordination and reduced interfirm coordination costsEDI Constraints:Start-up coordination challenges (EDI standards agreement and legal issues)Start-up and ongoing IT costsPage 242-243Technologies for B2B Applications

E-COMMERCE TECHNOLOGIESPrediction:Web forms using XML and extranet applications will continue to grow!Page 242-243Technologies for B2B Applications

E-COMMERCE TECHNOLOGIESPotential constraint to e-commerce: lack of security for Internet transactionsIssues:How to control access to a computer that is physically networked to the InternetHow to ensure that security of a given communication is not violated

Page 243Technologies for IT Security

E-COMMERCE TECHNOLOGIES How to control access to a computer that is physically networked to the Internet?Use of a firewall devices that sit between the Internet and an organizations internal network to block intrusions from unauthorized users and hackers How to ensure that security of a given communication is not violated? Encryption based on two decoding keys and mathematical principles for factoring a product into its two prime numbers, where one key codes a message and the other decodes itPage 243-244Technologies for IT Security

Figure 8.2 E-Commerce Framework(Adapted from Applegate, Holsapple, et al. 1996; Kalakota and Whinston, 1996)

LEGAL AND REGULATORY ENVIRONMENTTax PoliciesCopyright LaysAntitrust LawsPrivacy IssuesPage 244-246

STRATEGIC OPPORTUNITIES AND THREATSPage 246Porters Competitive Forces ModelSupplier powerCustomer powerThreat of new entrantsThreat of substitute products or servicesResponses of competitors

STRATEGIC OPPORTUNITIES AND THREATSPage 246Opportunities due to the Internet:Procurement of supplies via Internet can increase companys power over suppliersSize of potential market is expanded Distribution channels between traditional company and customer can be eliminated

STRATEGIC OPPORTUNITIES AND THREATSPage 246-247Threats to traditional companies due to the Internet:Migration to price competition difficult to keep offerings proprietaryIncreased number of potential competitorsInternet reduces some traditional barriers (such as in-person sales force)Customers increase their bargaining power Internet reduces customers switching costs

The four main areas where companies conduct business onlineDirect marketing, selling, and servicesFinancial and information servicesMaintenance, repair, and operations (MRO)Intermediaries

Maintenance, Repair, & Operations (MRO)MRO goods include office suppliers, office equipment, furniture, computers, and replacement parts

Internet transforms corporate purchasing from a labor-and paperwork-intensive process into a self-service application

IntermediariesContent providers companies that use the Internet to distribute copyrighted content, including news, music, games, books, movies, and many other types of informationOnline brokers intermediaries between buyers and sellers of goods and servicesMarket makers intermediaries that aggregate three services for market participantsA place to tradeRules to govern tradingAn infrastructure to support trading

Types of Intermediaries

E-BUSINESS MODELS Figure 8.4 Potential Benefits to Sellers and BuyersPage 249B2C Applications

If Buyers and Sellers are Fragmented, Independent Intermediaries are likely to be successful.

If Sellers are Concentrated, Sellers are likely to dominate.

If Buyers are Concentrated, Buyers are likely to dominate. Figure 8.5 Opportunities for B2B MarketplacePage 250B2B Applications

E-BUSINESS MODELS Weill and Vitale proposition: The value propositions of eight business models differ according to the degree to which the following e-business assets are captured online:Customer transaction to capture revenueCustomer data to capture data about customers purchasing needsCustomer relationship ability to influence customers behaviors Page 251Atomic Business Models

E-BUSINESS MODELS Figure 8.6 Business Models and Their E-Business AssetsPage 251Atomic Business Models(Based on Weill and Vitale 2001, Straub 2004)

DIRECT-TO-CUSTOMER EXAMPLESDot-com pioneer in online retailing of third-party productsBegan as bookseller competitorNow a multi-store, online mall First profitable year 2003Provides excellent online shopping experiences for millions of customers

Page 252Amazon.com

DIRECT-TO-CUSTOMER EXAMPLESPage 254Dell.comTraditional direct seller and market leader of made-to-order microcomputersDeveloped custom software to support mass customization strategyTook advantage of early penetration of Internet market

Figure 8.8 Dell.com Home PagePage 254(Used with permission of Dell Corporation.)

DIRECT-TO-CUSTOMER EXAMPLESPage 255Landsend.comTraditional catalog company that developed capability to give online tools to customers so they could make orders for new custom clothing via its Web site

Figure 8.9 Landsend.com Home PagePage 256( 2004 Lands End, Inc. Used with permission.)

DIRECT-TO-CUSTOMER EXAMPLES All developed B2C Web sites that use advanced technologies to support customized interactions with customers

Amazon.comDellLands EndPage 256Successful Online Models

DIRECT-TO-CUSTOMER EXAMPLES Figure 8.10 Common Online Activities by U.S. ConsumersPage 257Successful Online ModelsSource: Pew Internet & American Life Project Surveys, 2002

INTERMEDIARY EXAMPLESPage 257 Figure 8.11 Key Characteristics of Six Types of Intermediaries(Based on Weill and Vitale, 2001)

INTERMEDIARY EXAMPLESPage 258eBayA dot-com pioneer in electronic auctionsOne of first to achieve profitabilityNow is a C2C, B2B, and B2C intermediary

INTERMEDIARY EXAMPLESPage 259-260Yahoo!Early dot-com intermediaryHas recently leveraged IT innovations and business acquisitions to become a leading portalAs a portal, site owns only the customer relationshipPrimary source of revenue is advertisementsThrough acquisition, now offers online job searches

INTERMEDIARY EXAMPLESPage 260-261ManheimTraditional B2B intermediary for sale of used carsHas leveraged the Internet to reduce purchasing and sales costsProvides remote, real-time bidding during physical auctions

Figure 8.14 Manheim.com Home PagePage 261(Used with permission of Manheim.)

Types of Intermediaries

SPECIAL ISSUE: WHAT MAKES A GOOD WEB SITE?Page 262Why is Web page design important?

For e-commerce applications, the companys Web site is the company

Figure 8.15 7Cs Framework for Web Site DesignPage 262(Based on Rayport and Jaworski, 2004)

e-commerce applications

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