e-commerce fundamentals -...
TRANSCRIPT
E-commerce fundamentals
Learning objectives
• Evaluate changes in business relationships
between organizations and their customers
enabled by e-commerce
• Identify the main business and marketplace
models for electronic trading
• Describe different revenue models and
transaction mechanisms available through
hosting an e-commerce site.
Issues for managers
• What are the implications of changes in
marketplace structures for how we trade with
customers and other partners?
• Which business models and revenue models
should we consider to exploit the Internet?
• What will be the importance of online
marketplace hubs or exchanges to our
business?
The e-business environment
The environment in which e-business services are provided
Activity – the e-business environment
• For each of the environment influences shown
previously, give examples of why it is
important to monitor and respond in an
e-business context. For example, the
personalization mentioned in the text is part of
why it is important to respond to technological
innovation.
Environment constraints and opportunities
• Customers – which services are they offering via their web site that your organization could support them in?
• Competitors – need to be benchmarked in order to review the online services they are offering – do they have a competitive advantage?
• Intermediaries – are new or existing intermediaries offering products or services from your competitors while you are not represented?
• Suppliers – are suppliers offering different methods of procurement to competitors that give them a competitive advantage?
• Macro-environment
• Society – what is the ethical and moral consensus on holding personal information?
• Country specific, international legal – what are the local and global legal constraints for example on holding personal information, or taxation rules on sale of goods?
• Country specific, international economic – what are the economic constraints of operating within a country or global constraints?
• Technology – what new technologies are emerging by which to deliver online services such as interactive digital TV and mobile phone-based access?
B2B and B2C models
B2B and B2C interactions between an organization, its suppliers and its customers
Transaction alternatives between
businesses and consumers
Summary of transaction alternatives between businesses and consumers
B2B and B2C characteristics
Characteristic B2C B2B
Proportion of adopters with
access
Low to medium High to very high
Complexity of buying
decisions
Relatively simple –
individual and influencers
More complex – buying
process involves users,
specifiers, buyers, etc.
Channel Relatively simple – direct or
from retailer
More complex, direct or via
wholesaler, agent or
distributor
Purchasing characteristics Low value, high volume or
high value, low volume.
May be high involvement
Similar volume/value. May
be high involvement.
Repeat orders (rebuys)
more common
Product characteristic Often standardized items Standardized items or
bespoke for sale
Disintermediation
Disintermediation of a consumer distribution channel showing
(a) the original situation, (b) disintermediation omitting the wholesaler, and
(c) disintermediation omitting both wholesaler and retailer
Reintermediation
Reintermediation process: (a) original situation, (b) reintermediation contacts
Countermediation
• Creation of a new intermediary
• Example:
– B&Q www.diy.com
Opodo www.opodo.com
Boots www.wellbeing.com
www.handbag.com
Ford, DaimlerChrysler (www.covisint.com)
• Partnering with existing intermediary – Mortgage broker Charcol and Freeserve
Portals
Q1. Define portal
Q2. Is a search engine the same as a portal? Yes, No Q3. Is a search engine the same as a directory? Yes, No
Q4. List search engines / portals you use and explain why
Search engines
Directories
News aggregators
MR aggregators
Comparers
Exchanges
Meta services
Portal
‘A gateway to
information
resources and
services’
Types of portal
Type of portal Characteristics Example
Access portal Associated with ISP Freeserve
(www.freeserve.net)
Horizontal or functional
portal
Range of services: search
engines, directories, news
recruitment, personal
information management,
shopping, etc.
Yahoo! (www.yahoo.com)
Excite (www.excite.com)
Lycos (www.lycos.com)
Vertical May cover a single function
e.g.:
–news
– and industry sector
Moreover
(www.moreover.com)
SciQuest
(www.sciquest.com)
Geographical (region,
country, local area)
May be:
– horizontal
– vertical
Yahoo! country versions
Countyweb
(www.countyweb.com)
Marketplace May be:
– horizontal
– vertical
– geographical
CommerceOne
(www.commerceone.net)
PlasticsNet
(www.plastics.net)
Media type Voice portal
Wireless portal
Streaming media portal
Verizon VoiceGear
(www.voicegear.net)
Vodafone Vizzavi
(www.vizzavi.com)
Silicon
(www.silicon.com)
Importance of portals
Rank Property Unique
visitors
Reach in
%
Ave time
1 MSN 7,924,421 47.0 00:39:24
2 Microsoft 6,910,303 40.9 00:09:48
3 Yahoo! 6,196,878 36.7 00:32:27
4 Google 5,935,960 35.17 00:15:47
5 AOL Time Warner 5,083,892 30.1 00:18:55
6 Wanadoo
(Freeserve)
4,853,630 28.8 00:13:09
7 British Telecom 4,145,338 24.6 00:20:22
8 Amazon 3,757,606 22.3 00:12:58
9 BBC 3,399,175 20.14 00:17:28
10 Ask Jeeves 3,270,176 19.4 00:11:09
Nielsen//NetRatings – top 10 domains web properties in the UK (June 2000 measurement period, at home panel),
September 2002 (http://epm.netratings.com/uk/web/NRpublicreports.toppropertiesmonthly). Data for other countries
available at: www.mediametrix.com http://www.nielsen-netratings.com/hot_off_the_net_i.jsp)
Directories
Search
engine
registered
sites
Search Engine
Search against
every word on
every page
indexed
Directory
Searches against
company name
and 25 word
description
All
the w
eb -
1 b
illio
n p
ages Unregistered
sites,
inaccessible sites
and databases
Invisible web
Not indexed by search
engines
5
Yahoo!
Methods for finding web pages
Location of trading
Place of purchase
A. Seller controlled
B. Seller oriented
C. Neutral
v
v
v
v
v
v
Example of sites
Vendor sites, i.e. home site of organization selling products, e.g.
www.del.com.
Intermediaries controlled by third-parties to the seller such as distributers
and agents, e.g. Opodo (www.opodo.net) represents the main air carriers.
Intermediaries not controlled by buyer’s industry (e.g. industry net
www.commerceone.com).
Product specific search engines (e.g. CNET (www.computer.com)).
Comparison sites, e.g. Barclay Square/Shopsmart
(www.barclaysquare.com).
Auction space, e.g. uBid (www.ubid.com).
Trading arrangements Commercial (trading) mechanism Online transaction mechanism of Nunes et al.
(2000)
1. Negotiated deal
Example: Can use similar mechanism to auction as
on Commerce One(www.commerceone.net)
Negotiation – bargaining between single seller
and buyer. Continuous replenishment – ongoing
fulfilment of orders under pre-set terms
2. Brokered deal
Example: Intermediaries such as Screentrade
(www.screentrade.co.uk)
Achieved through online intermediaries offering
auction and pure markets online
3. Auction
Examples: C2C: E-bay (www.ebay.com)
B2B: Industry to Industry
(www.assetauctions.freemarkets.com)
Seller auction – buyers’ bids determine final price
of sellers’ offerings. Buyer auction – buyers
request prices from multiple sellers. Reverse –
buyers post desired price for seller acceptance
4. Fixed price sale
Example: All e-tailers
Static call – online catalogue with fixed prices
Dynamic call – online catalogue with continuously
updated prices and features
5. Pure markets
Example: Electronic share dealing
Spot – buyers’ and sellers’ bids clear instantly
6. Barter
Example: www.intagio.com and
www.bartercard.co.uk
Barter – buyers and sellers exchange goods.
According to the International Reciprocal Trade
Association (www.irta.com) barter trade was over
$9 billion in 2002.
Business model
Timmers (1999) defines a ‘business model’ as:
An architecture for product, service and
information flows, including a description of
the various business actors and their roles;
and a description of the potential benefits for
the various business actors; and a description
of the sources of revenue.
Business models
Alternative perspectives on business models
Reverse auction example
• Through 2001 there were over 512 online auction
bidding events processed for DaimlerChrysler on
vendor supported portal Covisint (www.covisint.com)
amounting to approximately €10 billion. That is a third
of their total procurement volume. In May 2001,
DaimlerChrysler staged the largest online bidding
event ever, with an order volume of €3.5 billion in just
four days. As well as savings in material purchasing
prices, DaimlerChrysler also reduced throughput
times in purchasing by 80 percent
Revenue models
• Visit the Global Composites site and explore the different opportunities for revenue generation (see the Business Directory for company listings). You should include current and future possiblities for revenue generation.
• Global Composites (www.globalcomposites.com) is a business-to-business intermediary providing resources for over 10,000 professionals in the composites industry.More than 2000 companies are listed
Revenue model answers
• Simple listings are free, but more sophisticated company profiles with web links are charged for
• Banner advertising in different categories can be used to generate revenue
• Sponsorship of e-newsletters
• Commission on affiliate referrals to company sites
• Fees for hosting an e-commerce shop-front (future possibility)
• Commission on sales occurring at the site (future possibility)
• Commission on auctions (future possibility)
• Note that there is a careful balance for this business type of generating revenue and not discouraging potential suppliers or buyers. For this reason the service is free to buyers and sellers can list minimum services.
• Revenue models will use a combination of techniques as follows:
• Online commerce – sale of products (direct or indirect)
• Online commerce – sale of digital services (can be on subscription basis or pay per view)
• Ad revenue through banner advertising or sponsorship of content/services
Learning from the dot coms
Thomson Travel lastminute.com
Formed 1965 1998
FY 2000
2002
FY 2002
Turnover £3 billion £2.6 million 18.4 m
(on Total
Transaction
Value of
124.2m)
Profit/loss £77 million – £6 million – £53 million
Market capitalization £980 million £700 million £ 200 million
Explain these financials!
Dot com lessons – can you add to these?
1. Explore new business and revenue models.
2. Perform continuous scanning of the marketplace and respond rapidly.
3. Set up partner networks to leverage the expertise and reputation of specialists.
4. The real world is still important for product promotion and fulfilment.
5. Examine the payback and return on investment of new approaches carefully.