ECommerce

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E-Commerce

• MIS 4133
• Software Systems
• Fall 2007

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Outline

• E-commerce and E-business
• E-business patterns/models
• E-business advantages/disadvantages and CSFs
• Design and Strategy
• Phases
• Why e-Businesses Fail

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E-commerce vs. E-business

• E-commerce
• Buying and selling products/services
  electronically
• E-business
• Conducting of business electronically

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E-Business Structural Patterns
Begins as a Channel, But Extends to Total
Transformation of Business
e-Channel
e-Portal (B2C)
Pure E
Click and Brick
e-Market-Makers (B2B)

• Basic efficiency,
• effectiveness enhancements
• as the selling become
• e-enabled
• Selling goods/services
• Payment/settlement
• enhancements

• Traditional business
• transferred to the Net
• Rise of new intermediaries
• New forms of supply chain
• integration
• Consolidation/transformation
• of intermediary industry

• Customer expects E
• everything
• Fundamental redesign of
• business
• New structures to allow market
• making, trading, and virtual
• warehousing

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E-Channel Pattern
Transaction Enhancement
Consumer
Manufacturer
E-Channel Compression
Consumer
X
Manufacturer
E-Channel Expansion
Consumer
Manufacturer
E-Channel Innovation
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Click-and-Brick Pattern

• Brick Mortar
• Localized inventory
• In-store shopping
• experience
• Immediacy (try, buy,
• take home)
• Service (returns,
• repairs, exchanges)

• Click
• Infomediation
• Speed
• Direct, one-to-one
• experience
• Personalized content
• Automation
• (assistants, alerts)

Click Brick
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E-Portal Pattern

• Intermediary/middleman offering an aggregated set
  of services for a specific well-defined group
• Superportals AOL, Yahoo!, Amazon.com
• Auction portals eBay, Amazon.com, Yahoo!
  Auctions
• Megatransaction portals Travelocity

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E-Market Maker Pattern

• Exchanges
• Buyers and suppliers negotiate prices
• Virtual distributors
• Takes control of accounts receivable but not
  physical inventory
• Lead generation
• Derive revenue from ads, commissions, or fees for
  leads to suppliers
• Catalog aggregators
• Helps normalize info coming from diverse sources
• Auctions
• Reverse auctions

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Pure E Digital Products Pattern
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E-Business Models

• Brick-and-Mortar
• A traditional business with no online presence
• Click-and-Mortar / Click-and-Brick /
  Brick-and-Click
• A traditional businesses online presence that is
  used to enhance its brick-and-mortar operations
• Dot Com
• Only an online presence no physical store

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E-Business Models

• B2C sells products/services directly to
  consumers
• Amazon.com, Autobytel.com, Pets.com
• B2B sells products/services to other businesses
  or brings multiple buyers and sellers together in
  a central marketplace
• VerticalNet, HoustonStreet.com, CATEX
• B2G businesses selling to local, state, and
  federal agencies
• eFederal, iGov.com
• C2C consumers sell directly to other consumers
• eBay, InfoRocket, American Boat Listing
• C2B consumers name own price, which businesses
  accept or decline
• Priceline.com, ReverseAuction.com
• P2P enables Internet users to share files and
  computer resources directly without having to go
  through a central Web server
• Napster.com
• M-commerce use of wireless digital devices to
  enable transactions on the Web

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B2B

• Storefronts
• Provide businesses with purchase, order
  fulfillment, and other value-added services
• Staples, Office Depot
• Vertical markets
• Provide a trading community for a specific
  industry
• MediSpeciality.com, HotelResource.com,
  NetPossibilities
• Aggregators
• Provide a single marketspace for business
  purchasing from multiple suppliers
• Chemdex, MetalSite, VIPAR

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B2B

• Trading hubs
• Provide a marketspace for multiple vertical
  markets
• VerticalNet
• Post and browse markets
• Provide a marketspace where participants post buy
  and sell opportunities
• CATEX, CreditTrade, TechEx

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B2B

• Auction markets
• Provide a marketspace for buyers and sellers to
  enter competitive bids on contracts
• e-Steel, HoustonStreet.com, Altra, FreeMarkets
• Fully automated exchanges
• Provide a marketspace for the automatic matching
  of standardized buy and sell contracts
• PaperExchange.com

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E-Business Advantages

• Sellers
• Increased sales opportunities
• Decreased transaction costs
• Operate 24-7
• Reach narrow market segments that may be widely
  distributed geographically
• Access to global markets
• Increased speed and accuracy of info exchange
• Bring multiple buyers and sellers together

• Buyers
• Wider product availability
• Customized/personalized info and buying options
• Shop 24-7
• Easy comparison shopping and one-stop shopping
• Access to global markets
• Quick delivery of digital products and of info
• Participate in auctions, reverse auctions,
  knowledge exchanges

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E-Business Disadvantages

• Sellers
• Rapidly changing technology
• Insufficient telecommunications
  capacity/bandwidth
• Difficulty integrating existing systems with
  e-business software
• Problems maintaining system security and
  reliability
• Global market issues language, political
  environment, currency conversions
• Conflicted legal environment
• Shortage of skilled technical employees

• Buyers
• Concern over transaction security and privacy
• Lack of trust when dealing with unfamiliar
  sellers
• Desire to touch and feel products before purchase
• Resistance to unfamiliar buying processes,
  paperless transactions, and electronic money

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E-Commerce CSFs

• Add value to products/service
• Convenience, info value, disintermediation,
  reintermediation, price, choice
• Focus on a niche and then expand
• Maintain flexibility
• Segment geographically
• Get the technology right
• Manage critical perceptions
• Presence, brand, trust
• Provide exceptional service
• Create effective connectedness
• Understand Internet culture
• Spam
• Requiring registration before browsing site
• Many graphics
• Secondary browser windows
• Lack of FAQ page

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E-business Strategy

• About the uncertain future
• Based on assumptions, premises, and beliefs about
  customer priorities, technology evolution,
  competition, and the core competencies

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A Generic Business Model
Supplier called or invoices mailed
Inventory warehoused or stored
Products delivered to retailer
Company manufacturers for industry schedules
Traditional media used for advertising. Sales
force sells product.
Customer sees ads and goes to retailer to make
purchase
Payments are made at retail funds used to pay
suppliers. Information flows
(Kleindl, 2003)
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A Generic E-Business Model
Suppliers linked through Extranet deliver
just-in-time
Products delivered through independent shippers
such as UPS
Manufacturer customizes product and sells at
lower price
Web page provides information and ordering
Customer gathers information and purchases
through Web page
Payments are made online through Web page
(Kleindl, 2003)
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E-Business Design Phases

• Phase 1 Business Planning and Strategizing
• Phase 2 Technology Infrastructure/Security
• Phase 3 Design
• Phase 4 Marketing
• Phase 5 Fulfillment
• Phase 6 Maintenance/Enhancement

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Phase 1 Business Planning and Strategizing

• Vision
• Business plan
• Target market
• Immediate and long-range goals
• Deciding on the Website type / e-business model

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Phase 1 Business Planning and Strategizing

• Vision
• What is the best way to launch the business on
  the Internet?
• How much of the companys business should be on
  the Internet?
• When should the business go on the Web?
• Resources
• Culture

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Phase 1 Business Planning and Strategizing

• Strategic Planning Questions
• How familiar you are with the Internet?
• Who will buy the product?
• Will this be a long- or short-term presence?
• Who are your competitors?
• How good will your products look?
• How will you present your product offers?
• How will transactions be managed and processed?
• How will the product be shipped?
• How will you handle unexpected change?
• How will you handle CRM?

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Phase 2 Technology Infrastructure/Security

• Hardware
• Speed, quality, reliability, durability
• Type and brand to buy purchase location etc.
• Software
• Basic software needed browser, email, etc.
• Software to manage products, promotions,
  customers, and orders
• Security
• Internet Service Provider (ISP)
• Access to the Web server
• Firewalls
• Monitor traffic and irregularities
• Webmaster
• Backups

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Phase 3 Design

• Web Storefront
• Good web design features
• Locate products quickly, processing order
  efficiently, order summary and receipt,
  confirmation email
• Other Applications
• Database server, store administrator, catalog
  builder, shopping cart, order-processing system

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Phase 3 Design

• Outsourcing?
• Services to offer
• View Website
• Input data
• Etc.

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Phase 4 Marketing

• Good Site Service
• Keeping it up-to-date and accurate
• The Web site should be a mirror image of the
  real business. (Awad, 2007)
• Advertising
• Search engines, press releases, links from other
  Web sites, banner ads, newsgroup announcements,
  email

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Phase 4 Marketing

• Customer Service
• Cookies, hit counters, etc.
• Easy order processing
• Stock control
• Ease in processing payment
• Follow Up
• Speedy delivery
• Coordinating with suppliers

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Phase 5 Fulfillment

• Solving shipping (fulfillment) problems can make
  the difference between e-business success and
  failure. (Awad, 2007)
• Packing
• Shipping
• Answering questions regarding the order
• Sending bill or verifying e-payment
• Follow up to see if customer is satisfied

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Phase 5 Fulfillment

• Product availability
• Links to inventory
• Out-of-stock
• Back orders
• Processing orders

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Phase 6 Maintenance/Enhancement

• Maintaining and growing the business
• Managing customer feedback
• Managing customer service
• Role of the Webmaster

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Why e-Businesses Fails

• Too many projects
• Lack of funding (takes a few years to get
  customer base)
• Resources / people spread too thin (increases
  cycle time)
• No tough decision points and poor project
  selection decisions (therefore good projects are
  starved for resources)
• Decisions based on politics, disputes, and emotion

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References

• Awad, E.M. (2007). Electronic Commerce From
  Vision to Fulfillment, 3rd edition, Pearson
  Education Inc., Upper Saddle River, New Jersey.
• Christensen, C. (2000). The Innovators Dilemna,
  Harvard Business School Press, Boston, MA.
• Deitel, H.M., Deitel, P.J. and Steinbuhler, K.
  (2001). e-Business and e-Commerce for Managers,
  Prentice Hall, Upper Saddle River, New Jersey.
• Eisenmann, T.R. (2002). Internet Business
  Models Text and Cases, McGraw-Hill Companies,
  Inc. New York.
• Huff, S.L., Wade, M., Parent, M., Schneberger, S.
  and Newson, P. (2000). Cases in Electronic
  Commerce, Irwin McGraw-Hill Co., Inc.
• Jessup, L. and Valacich, J. (2006). Information
  Systems Today, 2nd edition, Pearson Education,
  Inc., Upper Saddle River, NJ.

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References

• Kalakota, R., Robinson, M. and Tapscott, D.
  (2001). E-Business Roadmap for Success 2.0,
  Addison Wesley Longman, Inc.
• Kleindl, B.A. (2003). Strategic Electronic
  Marketing Managing E-Business, Thomson Learning.
• Krishnamurthy, S. (2003). E-Commerce Management
  Text and Cases, Thomson Learning.
• Laudon, K.C. and Traver, C.G. (2007).
  E-commerce Business. Technology. Society., 3rd
  edition, Addison Wesley.
• Napier, H.A., Judd, P.J., Rivers, O.N. and
  Wagner, S.W. (2001). Creating a Winning
  E-Business, Course Technology, Thomson Learning,
  Inc.
• Oz, E. (2002). Foundations of e-Commerce,
  Pearson Education, Inc., Upper Saddle River, New
  Jersey.
• Poirier, C. C. and Bauer, M. J. (2000). E-Supply
  Chain Using the Internet to Revolutionize Your
  Business, Berrett-Koehler Publishers, Inc.

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References

• Rayport, J.F. and Jaworski, B.J. (2002).
  Introduction to E-Commerce, McGraw-Hill
  Companies, Inc. New York.
• Schneider, G.P. (2002). Electronic Commerce, 3rd
  edition, Course Technology Thomson Learning,
  Inc.
• Treacy, M. and Wiersema, F. (1995). The
  Discipline of Market Leaders Choose Your
  Customers, Narrow Your Focus, Dominate Your
  Market, Perseus Books, Cambridge, Massachusetts.
• Treese, G.W. and Stewart, L.C. (2003). Designing
  Systems for Internet Commerce, 2nd edition,
  Pearson Education Inc., Boston, MA.
• Turban, E., King, D., Lee, J., Warkentin, M. and
  Chung, H.M. (2002). Electronic Commerce 2002 A
  Managerial Perspective, Pearson Education, Upper
  Saddle River, New Jersey.