E-Commerce and E-Business The Evolving Internet Economy

Business on Internet Time

 üElectronic business (e-business): use of information and communication technology in support of        business activities

•Involves use of networks for sharing business information, maintaining business relationships, conducting business transactions

 üElectronic commerce (e-commerce): sales aspect of e-business

•Buying and selling of products or services over the Internet and other electronic systems

 üDevelopment of the World Wide Web and the commercialization of the Internet in the early                1990s changed the nature and scope of e-business forever.

•Internet-based companies—dot coms—sprouted like weeds.

•E-business is solidly entrenched in our economy.

•E-commerce sales are measured in billions of dollars each year.

E-Business 1.0: Intranets, Extranets, and E-Sales

 üIdea of e-commerce is that at least two parties—a seller and a buyer—exchange information,            products, or services using network technology.

 üCompanies using e-commerce have:

•Lower expenses

•Higher productivity

•More efficient order processing

•More useful information about customers

•Larger, more geographically dispersed markets

E-Commerce Models

 üBusiness-to-business (B2B): interorganizational information systems in which company handles          transactions within its own value chain

 üBusiness-to-consumer (B2C): represents retail transactions between a company and customers

 üConsumer-to-consumer (C2C): transactions between consumers facilitated by third party

 üBusiness-to-employee (B2E): focuses primarily on handling activities that take place within                organization

B2E: Intranets for Internal Communication

 üIntranet: B2Es use intranets to support its internal value chain activities:

•Information access for employees

•Collaboration and teamwork

•Internal business transactions

•Distribution of information management tools

Large company intranet

B2B: Extranets for Commerce and Communication

 üExtranet (or extended intranet): a private interorganizational information system connecting the        intranets of two or more trusted business partners

 üOrganizations can set up an extranet by:

•Secure private network

•Public network

•Virtual private network (VPN)

B2C: Online Retail Sales and Service

 üTo conduct B2C transactions, a company provides customers with a public Web site where they:

•Can search product catalogs

•Retrieve product information

•Order and pay for a product

•Get service and support information

 üSearch engine optimization (SEO): process of increasing Web site traffic by improving search            engine rankings for targeted keywords

Package Routing and Tracking

 üAn online package tracking system is an important customer-service activity.

 üWireless networks are used to make package routing and tracking fast and accurate.

•Packages are scanned at pickup, at distribution center, when placed on truck, train, or plane, at destination center, and when package is delivered.

 üTracking systems allows customers to learn status of their shipments any time during process.

Online Shopping

   1.Use Web browser to search site databases.

   2.Place items in shopping cart.

   3.Proceed to checkout.

   4.Routed to secure site to enter personal information and credit card number.

   5.Server sends query to credit card company.

   6.Once transaction is approved, server sends message to warehouse and order is filled.

C2C: Making Consumer Considerations

 üMost C2C sites fall into a few broad categories:

•Digital equivalent of newspaper’s classified ad section

•Craigslist

•Online auction

•eBay

•Reverse auction

•Reseller model

•CD Baby

Using PayPal for Electronic Payments

   •People use PayPal to:

•Pay for Web auction items

•Send money to family members

•Pay bills online

•And much more

Selling Stuff Online

Tips to help keep your head above water in online commerce:

üChoose the right option for your business.

üKeep it simple.

üShow off the goods.

üYour reputation is your most powerful marketing tool.

üOffer payment options.

üDon’t let yourself get scammed.

üHelp search engines find you; customers will follow.

üFactor the cost of services into your price.

E-Business 2.0: Reinventing Web Commerce

 üTrends are changing the way people use the Web:

•Social and collaborative capabilities of Web 2.0

•Virtualization of technology through cloud computing

•Growing number of mobile devices with Web connections

 üThese will continue to change and have an impact on the ways we do business as world                     becomes more Web-centric.

Disaggregation: Commerce in the Cloud

 üGrowth in cloud computing will accelerate the trend toward disaggregation: separating                       commerce into component parts.

 üOutsourcing parts that can be better handled somewhere else.

•Businesses can buy computer power and memory.

•Retailer can outsource its payment process.

•Future Web commerce sites may be built from components scattered all over the Web.

Enhancing the Interactive Experience

üMost online shopping carts are abandoned before checkout.

•Customers can’t find information they need before committing to purchase.

üOnline sites enable buyers to personalize and customize purchases.

üNew breed of media-rich sites are designed to attract customers because they are fun, interesting,    and uniquely designed to fit their products.

Mobile Commerce

 üMobile commerce (m-commerce): use of smart phones, tablets, PDAs, laptops, and other                  portable devices has increased as result of several trends:

•Growing popularity of portable computers

•Widespread availability of wireless Internet connections

•Popularity of mobile phones with GPS technology and Web access

•Development of software tools that can take advantage of a variety of mobile technologies

 üApplications that will become increasingly popular:

•Mobile ticketing

•Mobile coupons

•Mobile purchasing

•Location-based m-commerce

The Long Tail

 üMarketing was limited by shelf space and floor space—stores would stock “hits” knowing they          would sell.

 üIn a virtual store—it costs next to nothing for a vendor to offer less popular items along with              hits.

 üThe Long Tail refers to statistical curve that appears when you rank books, movies, or tunes by          popularity as reflected in sales or rentals.

 üMany Web retailers make most of their profits from products not carried by the Walmarts of the        world.

Profits from less popular items

Web Marketing 2.0

üMany successful Web businesses depend on customer contributions to add value.

üMany read customer reviews before purchasing.

üMany retailers have a presence on Twitter, Facebook, and other social networking sites.

üBuzz can generate hits, but it can also create links, which can result in high ranking in search             engines.

The “Free” Market

 üSome e-commerce sites make money by giving things away.

 üGoogle gives away search results, maps, driving directions, telephone directory assistance,                 images, email, and growing library of software.

 üFacebook, MySpace, LinkedIn, and other social networking sites offer free space and services.

 üAdvertisers pay the costs hoping to attract paying customers for their products.

E-Commerce Ethics

 üA code of ethics should include following statements:

•Organization’s privacy policy

•Permission must be secured before ID, photo, ideas, or communications used

•How company informs customers of intended uses of personal information gathered online

•Address issues of ownership with respect to network postings and communication.

•How company tracks user behavior on Web.