Electronic Commerce and Electronic Business Part 2

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Electronic Commerce and Electronic BusinessPart
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Example of new business models

• Grocery Gateway Video Case
• Questions
• What kind of business model is Grocery Gateway
  developing?
• Identify the three different potential business
  models mentioned in this case
• Which model do you think has the greatest
  likelihood of success?
• What are the benefits and risks of each model to
  a traditional Bricks and Mortar grocery
  retailer?

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Strategic positioning

• Technology can be replicated (see Netflix)
• Technology can enable novel ways to manage
  process, to do things differently than competitors

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Fresh Direct

• NYC online grocer
• Caters to busy professionals
• Highly successful
• Profitable
• Can do many things that traditional grocers cant
• Delivery
• Selection
• Freshness
• Prepared meals (4 minutes or less)
• Grocery list history
• Input/Feedback
• Convenience

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Fresh Direct - results

• Now 1/3 fewer grocery stores in Manhattan than 10
  years ago
• 20 margins vs. 1 for grocers
• First mover benefits

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Electronic Commerce - types
Business to Business
B2B
Business to consumer
B2C
Consumer to consumer
C2C
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Customer-Centric Retailing

• Internet allows firms to get closer to customers,
  cheaply
• Direct sales over the Web
• Interactive Marketing and Personalization
• M-Commerce and Next Generation Marketing
• Customer Self-Service

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Direct Sales Over the Web

• Sell directly to consumers
• Eliminate the middleman
• Disintermediation
• Example of disintermediation selling a sweater

Cost
Manufacturer
Distributor
Retailer
Customer
48.50
40.34
20.45
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Reintermediation

• Reintermediation The shifting of the
  intermediary role in a value chain to a new
  source ( e.g. Information Brokers)

Auto Dealer
Consumer
Info Broker (edmonds)
Auto Dealer
Consumer
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Interactive Marketing/Personalization

• Internet Understand user tastes
• Based on what they have viewed (or not viewed)
• How they behave on the site (e.g., abandoned
  shopping cart analysis)
• Based on what they have bought
• Pages then can be tailored (generally) and
  personalized to user interests

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Web Site Personalization
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Interactive Marketing/Personalization
How do web sites know its you?
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How a cookie works
A cookie is a tiny file deposited on the users
computer hard drive when an individual visits
certain Web sites used to identify the visitor
and track visits to the Web sites.
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Web Site Visitor Tracking
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M-Commerce and Next Generation Marketing

• M stands for mobile
• Internet is moving into the wireless world on
  private and public networks (cell phones a good
  example)
• Firms can and will communicate with customers
  through
• Cell phones (you can surf the web on a phone
  today)
• PDAs
• Interactive TV
• Cars
• Virtually anywhere

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Self Service

• Big use of the web answer customer questions,
  let them help themselves
• Substitute the web for human contact
• Needs to be combined with human contact to be
  effective

Examples of web based self service? Whats the
value proposition of web based self service?
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B2B Business to Business

• Automation of transactions between businesses
• Fastest growing eCommerce
• Current estimate 80 of all eCommerce
  transactions are B2B
• 2004 revenue estimated to be 2.8 trillion WW
• Provides purchasers with
• More information (products, pricing)
• More options in terms of suppliers
• Convenience
• Reduced transaction costs

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Electronic Marketplaces

• Companies can use their own web sites for B2B
  commerce or use electronic hubs
• Electronic hubs
• Online marketplaces with many buyers and many
  sellers
• Avoid point-to-point connections
• integrated information one stop shopping for
  supplier and supplier product information

Buyers
Sellers
Catalogs Automated purchasing Pricing Processing
and Fulfillment