Format of Session

1
Format of Session

• E-Commerce sources
• What is E-Commerce
• Origins of E-Commerce
• E-Commerce Benefits
• E-Commerce Problems
• Practical

2
Internet/Electronic E-Business

• In five years all business will be conducted on
  the Internet etc
• Any company not on the internet will not be a
  company!
• Not a question of IF but HOW
• Groves statement April 1999 ex-Intel Chairman -
  see CD/Intel web site for exact statement
• Fax example - prerequisite to doing business

3
Internet business as a timeline

• Business evolution moving from an agrarian to
  industrial to post industrial economy
• 18th/19th century - inventions such as spinning
  jenny revolutionised business
• 20th - Distribution revolutionised business
• 21st - Internet Economy mass customisation for
  consumers requirements

4
Dynamic Trading

• Service plus product - see Wolf-Garten site
• www.rasenmacher.com/ may not be available
• JCB aim to do this as it gives competitive
  advantage see www.jcb.co.uk
• Demand drives production e.g. Dell inventory
  level of 7 days, Dell sell only over internet
• Prices matches market conditions - auction web
  sites see ebay.com as an example
• Business chain turning into value added network

5
UK.com

• UK/World Facts-
• Over 12m users connected to the Net in the UK
  alone
• 30 years since birth of the what we now know as
  the Internet
• Concern last year that UK.com has not yet
  embraced E-Commerce
• But recent statistics indicate that this may be
  changing
• (see UK dot.coms Lag Behind BBC news site
  26/9/2000)

6
Facts and Figures

• 1996 and 1997 business trade on the Internet
  doubled every six months.
• 1998 doubled every three to four months.
• Business to business accounted for more than 3/4
  of all transactions in 1998.
• Only 19 of 8 million UK Internet users bought
  something online.
• Corporate plans for using the Internet to reach
  customers in 1997
• ¾ for marketing information
• ½ to take orders.

7
What does the EU think?

• The three pillars for the success of the EU
  Integration are the Single Market, Monetary Union
  and Electronic Commerce. Mario Monti, EU
  Commissioner, June 1998.
• However, Europe represents a confusing picture
• Denmark way ahead in E-Commerce, embracing the
  very ethos of E-Commerce - a small country
  maximising its world market share by the use of
  electronic trade frontiers
• Yet recently rejected monetary union
• UK, France and Germany - not as focused but
  starting to gather pace as a digital economy?

8
UK Business pundits

• My conviction has increased that in Electronic
  Commerce we have a massive and beneficial
  instrument for change. The businesses that are
  going to survive are those that are going to
  adapt and change fast.Sir John Harvey Jones
• Other big hitters regularly highlighting
  E-Commerce
• Prime Minister
• Government E-Envoy
• DTI
• CBI
• Professional bodies, BCS, ICM etc

9
World.com

• By its very nature E-Commerce is global
• World hotspots for E-Commerce are
• Hong Kong/Singapore - probably a year ahead -
  they now have a legislative infrastructure -
  these two commercial centres hold certain
  advantages which explain this lead
• USA - very active

10
Buying patterns

• Is there a threat posed by E-Commerce?
• Research is ongoing but suggests that E-Commerce
  does not replace the demand for personal service
  - buying a pair of skis or a mountain bike
• It is a matter of choice - if you know what you
  want or are prepared to browse the web then
  E-Commerce solutions attract customers
• but some customers will still prefer/need to
  visit a store/shop physically

11
What is E-Commerce?

• an electronic communication tool
• exchange of information between
• companies - business to business (extranets)
  known as B2B
• companies and customers(internet) known as B2C
• between company departments (Intranet)

12
What is not E-Commerce?

• A web site or web development is NOT E-Commerce
• These are just pre-requisites for E-Commerce
• E-Commerce is a business issue/business
  policy/business model issue - not just a
  technical issue

13
Exchange of info between companies

• supply chain exchange of information in each
  stage of production (raw materials-final product)
• ordering, payment, tracking
• E-Commerce can streamline the procurement and
  payment processes making it easier for businesses
  to conduct their operations e.g. Tesco

14
Exchange of information B2C

• electronic brochures information about
  products/services
• electronic retailing selling of
  products/services
• customisation customer feedback permits
  tailor-made personalised services.

15
Exchange of info company departments

• increase of information flows between company
  departments
• improves communication
• improves customer service

16
Growth of E-Commerce

• Estimated value of E-Commerce by 2003 2
  trillion or 5 of world sales.
• UK 2001 12.25 million Internet users

17
Origins of E-Commerce

• Electronic commerce (E-Commerce) did not appear
  with the internet!
• Some firms have been exchanging bread and
  butter data i.e. purchase orders, invoices etc
  for many years using Electronic Document
  Interchange(EDI) e.g. Ford Motor Co.

18
EDI

• EDI is still the backbone of E-Commerce
• EDI traditionally costly to implement for a SME
• Traditionally it is a batch data system - 2 - 10k
• EDI usually involves tracking software
• (Note SME means small to medium enterprise and
  applies to companies with lt200 employees)

19
Impact of the Internet on EDI

• Massive increase!
• One of the major difficulties in implementing EDI
  between two companies has been getting both
  parties on the same network
• With the Internet every company is potentially on
  the same network with every other company

20
EDI to E-Commerce

• The internet has enabled entry level for SMEs
  into EDI/E-Commerce more affordable
• Costs about lt5k a year to run
• E-Commerce solution only needs a browser and a
  hosted web site to get started. Payment
  servicing and logistics are needed as well
• Companies with existing e-mail and web browser
  usage can quickly adjust to E-Commerce

21
E-Commerce Benefits

• Huge cost savings
• Growth of customer base and market share
• Protection of brand, customer base and market
  share
• Reduction of risk low capital requirements
• Increase in efficiency
• Increase in profits

22
E-Commerce Benefits

• Improvement in customer service and information
  about products/services
• Feedback of vital information allows
  customisation
• Sharing of information (stock availability, price
  changes, invoice payment, delivery times,)
• Encourages change in the organisational structure
  and culture, necessary to survive in the
  networked economy

23
E-Commerce Benefits

• Tax benefits - may be VAT and tax breaks - still
  not clear on this globally. Recent World Trade
  Organisation meeting in Seattle tried to clarify
• Accessible by everyone who has Internet access
• Accessible 24hrs per day, 7 days per week, 365
  days of the year
• Lower price feasible (at least two links in the
  supply chain disappear)

24
E-Commerce Benefits

• Access to up-to-date information
• Easy comparison of thousands of products on a
  single web site
• No contending with traffic, parking, limited
  store hours, other shoppers, lugging around with
  heavy packages.
• Elimination of fraudulent use of credit cards by
  sales personnel?

25
E-Commerce Problems

• Company culture lack of communication between
  departments
• the IT department does not understand the
  business opportunities of E-Commerce
• the commercial department does not understand the
  potential of new technologies
• Resistance to change business processes
• Results of a recent survey
• 21 of British companies have an E-Commerce
  strategic plan
• 33 at planning stage
• 46 no strategy

26
General Problems

• E-Commerce priority
• UK business to business focus on short-term
  profitability
• US business to consumer focus on long-term
  profitability
• Investments
• US heavy, to gain competitive advantage
• UK wait to see which way the cat jumps (fear
  of failure of investments)

27
Problems

• Danger of missing out on huge opportunities
• Risk of commercial suicide
• US companies threat to UK companies
• Consider advantages of business to consumer focus
• E-Commerce wrongly interpreted as a technology
  issue rather than a business opportunity
• Consumer lacks trust in security systems

28
Problems

• Legacy integration how to integrate inherited
  systems with new Internet-based solutions? Adapt
  to old systems
• How to get the goods to the customer? Adapt
  logistic processes
• Brand awareness (first brand stays in customers
  mind) solve by offering Internet freebies
• Keep the customer informed about the progress of
  their order tracking
• Import regulations and customs

29
Other issues

• decrease in seduction power
• customer has to know exactly what he/she wants
• increase in cocooning with social and health
  consequences
• increase in unemployment (links in supplier chain
  disappear)

30
E-Commerce held back?

• By what - recent newspaper articles and research
  indicate that security is the big fear amongst
  consumers - fear of giving credit card details
  over the web
• At least two problems exist in trade of any
  sort
• Authenticity of the shopper and the vendor
• Security issues from the release of credit card
  etc details - mention Which? 50
• These issues have been amplified by the web