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Ecommerce Chap 05
 

Ecommerce Chap 05

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    Ecommerce Chap 05 Ecommerce Chap 05 Presentation Transcript

    • Chapter 5EC in Service Industries © Prentice Hall, 2000 1
    • Learning ObjectivesUnderstand how broker-based services areperformed onlineDescribe online travel tourism services andtheir benefitsDiscuss the impact of EC on the travelindustryDescribe the online job market, its driversand benefitsDescribe the electronic real estate marketUnderstand how stock trading is done onlineand its benefits © Prentice Hall, 2000 2
    • Learning Objectives (cont.)Discuss cyberbanking, its drivers andcapabilitiesDiscuss implementation issues of onlinefinancial services and its futureDescribe electronic auctions, their benefits,implementation, and impactsDescribe some innovative applications in theservice industriesDiscuss the future of intermediaries and theirrole in cyberspace © Prentice Hall, 2000 3
    • Opening Vignette:Ordering Journals ElectronicallyHow a large university automated thepurchasing of magazines and journals,saving $365,000/yearDirect Marketing: Buyer-to-seller; orders andpaymentsMarket maker charges $5/transaction Vs.about $40 (conventional agents)Ordering time reduced by up to 80% 4
    • Opening Vignette:Ordering Journals Electronically (cont.) EDI Rowe.Com System EDI, University Order + Internet Payment BANC ONE Order Publisher of California Browsing Electronic OM Transact Payment Catalogs EDI Payments Automated Buyer’s Publisher’s Clearing Bank Bank House (ACH) $5 Fee Fee BANC ONE Rowe. Com’s Account Buyer Intermediary Seller Electronic Commerce in Magazine Ordering 5
    • Broker-Based ServicesBrokers work as intermediaries between buyersand sellersAgents basically make the marketsAgents provide many servicesMost of the value-added tasks of brokers can beautomatedMajor electronic agent-based services travel employment electronic auctions at-home banking real estate insurance stocks © Prentice Hall, 2000 6
    • Broker-Based Services (cont.)Service Industries Vs. Manufacturing andProduct’s Retailing Service Industries pure EC ⇒ substantially reduced cost bank and brokerage houses • possible digitization of the entire process travel and real estate agents • viewing an online video clip or seeing photos of a hotel or a house for sale Manufacturing and Product’s Retailing physical delivery cost may be high © Prentice Hall, 2000 7
    • Travel and Tourism ServicesBy the year 2000, close to 25 percent of allbusiness-to customer Internet commerce willbe related to tourismThe Internet is an ideal place to plan,explore, and arrange almost any tripIBM’s vision of seamless electronic travelusing smart cards © Prentice Hall, 2000 8
    • Travel and Tourism Services (cont.) Services Provided Providing mapsInformation and booking Pictures of majorof airlines, hotels, cars, attractionsand even golf courses Information about Fare comparisons entertainment and ticket purchasing (such as 360 degree www.ticketmaster.com) video tours of Tips provided by people top destinations that experienced certainElectronic Travel situations (like a visamagazine Converting 200 problem) currencies © Prentice Hall, 2000 9
    • Travel and Tourism Services (cont.) Frequent Fare tracker (freeSpecial discount flier deals e-mail alerts oninformation Restaurant reviews low fares) Current status Chat rooms of flights Major international news and bulletin (real time) Worldwide boards business and Special Travel news places locator interestShopping for travel vacations Bed and breakfastaccessories and recommendations E-mail tobooks intermediary Driving directions Experts’ options in the US Weather watch © Prentice Hall, 2000 10
    • Travel and Tourism Services (cont.)Benefits and LimitationsBenefits Limitations Free information is Not all people use tremendous the Internet Free information is It may take a long accessible anytime time to find what Substantial discounts you want People are still reluctant to provide credit card numbers © Prentice Hall, 2000 11
    • Travel and Tourism Services (cont.)Corporate Travel: New Business ModelThe Impact of EC on the Travel Industry Porter’s framework of competitive advantage (the five forces) Focus: environment competitive responses firm’s strategy The industry is clearly transformed Taking away some functions traditionally performed by travel agents © Prentice Hall, 2000 12
    • Travel and Tourism Services (cont.)Impacts on the industry Multimedia helps customers understand the products Offering of lower-cost trips Providing a more personalized service Saving money in a paperless environment Increasing the convenience of getting information at home Supporting a customer-focused strategy (such as targeted advertisement and integration of products); push information to customers © Prentice Hall, 2000 13
    • Travel and Tourism Services (cont.)Travel agencies, as we know them today, willdisappearOnly their complex value-added activities willnot be automatedThese complex activities will be performedby a new breed of intermediates © Prentice Hall, 2000 14
    • Travel and Tourism Services (cont.)The Future Collaborative organizational process performed by multiple organizational intelligent agents Acting autonomously Work cooperatively Work collectively to achieve the collective goal Example — How will your next vacation be planned, booked and paid for? © Prentice Hall, 2000 15
    • The Employment Placement Market Job markets Employers are looking for employees with specific skills, and individuals are looking for a job Very volatile market Moved to the Internet Millions of job seekers, hundred of thousands of jobs © Prentice Hall, 2000 16
    • The Employment Placement Market (cont.) Shortcomings of the Non-Internet Job Market Cost—Classified ads are expensive. Life cycle— Unless renewed, at an additional cost, the life of the ads is only days or weeks. Place— Most ads are local. Nationwide ads are very expensive. International ads are even more expensive. Minimum information— Because of the high cost, the information provided is minimal and may not appeal to some job seekers. Search— It is very time consuming for individuals to find all relevant newspapers. A trip to a library results in finding only major out of town newspapers. © Prentice Hall, 2000 17
    • The Employment Placement Market (cont.) Finding applicants— Most job seekers, in the pre Internet era, did not place ads about their availability. Some sent unsolicited letters with resumes. This situation made it difficult for companies to find employees with special skills. They had to use employment agencies and pay them high commissions. Matching— It was difficult to match candidates to open jobs as well as to match supply and demand. Lost and dated material— Some applications or letters of response tended to get lost, or arrive late. A letter in a big city may travel two weeks to arrive at a distance of a few blocks. Speed— Communication by mail is slow and so is the processing of a large number of applications. Frequently, employers lose good employees, since by the time the application is processed, the applicant had taken another job. Similarly, applicants accept less desirable jobs because they are afraid to wait too long. © Prentice Hall, 2000 18
    • The Employment Placement Market (cont.) The Internet Job Market The Internet offers a perfect environment; it is especially effective for technology-oriented jobs. Job seekers Job offerers Recruiting firms Government agencies and institutions © Prentice Hall, 2000 19
    • The Employment Placement Market (cont.)The Advantage of the Electronic Job Market For job seekers Ability to find very detailed and timely information on a large number of jobs world-wide Ability to quickly communicate with potential employers Ability to post resumes for large-volume distribution Ability to search for jobs quickly from any place at any time Obtain several support services at no cost • writing resume ⇒ career development ⇒ how to interview Find employer profile & industry guides • www.valuereports.com © Prentice Hall, 2000 20
    • The Employment Placement Market (cont.) For employers Ability to advertise to a large number of job seekers Ability to save on advertisement costs Lower the cost of processing (using electronic application forms) Ability to provide greater ‘equal opportunity’ for job seekers Ability to find highly skilled employees Ability to conduct tests quickly, online Ability to change and update ads quickly Ability to fill up positions rapidly Interviewing from distance © Prentice Hall, 2000 21
    • The Employment Placement Market (cont.) The Limitations of the Electronic Job Markets Many people do not use the Internet Security Privacy Lack of face-to-face contact © Prentice Hall, 2000 22
    • The Employment Placement Market (cont.) Major Services Available on the Net Finding a job Writing and posting resumes Career planning Newsgroups The Intranet Job Market Most companies organize an internal electronic job market Openings are posted for employees to look at, and search engines enable managers to identify talents even if the people were not actively looking for a job change © Prentice Hall, 2000 23
    • Real Estate: From Virtual Realtors to Virtual Reality You can view many properties on the screen You can sort and organize properties You can find detailed information about the properties You can search, compare and apply for loans © Prentice Hall, 2000 24
    • Real Estate: From Virtual Realtors to Virtual Reality (cont.) Real Estate Applications International Real Estate Directory and News is the most comprehensive Web site www.ired.com National listing of real estate properties www.cyberhomes.com Commercial real estate directory www.comspace.com The complete real estate software catalog www.mnink.com/re/cover.html © Prentice Hall, 2000 25
    • Real Estate: From Virtual Realtors to Virtual Reality (cont.)Real Estate Applications Mortgage comparisons and calculations and other financing information; mortgage application www.eloan.com ; www.homeshark.com Searching residential real estate in multiple databases www.homescout.com Real estate related maps are available on: www.mapquest.com Automating the closing of real estate transactions, which is overwhelmed by paperwork © Prentice Hall, 2000 26
    • Real Estate: From Virtual Realtors to Virtual Reality (cont.) Real Estate Applications The National Association of Realtors, www.realtor.com has links to property listings in all major US cities To find how much house you can afford, consult: www.replace.com/links.html Mortgage brokers can pass on loan applications over the Net and receive bids from lenders that want to issue the mortgages © Prentice Hall, 2000 27
    • Real Estate: From Virtual Realtors to Virtual Reality (cont.) Real Estate Applications To find mortgage interest rates online use: www.bankrate.com www.eloan.com www.quickenmortgage.com To rent an apartment or a house try www.rent.net Several additional services are available including a virtual walk through of some listings © Prentice Hall, 2000 28
    • Trading Stocks OnlineCosts between $7 and $20 per transaction (Vs.$30 - $100 in traditional brokerage)No waiting on busy telephone linesNo oral communication, less chance for errorsPlace orders from anywhere, any time, day ornightNo biased broker to push youConsiderable amount of free information © Prentice Hall, 2000 29
    • Trading Stocks Online (cont.)E*Trade, Schwab OnlineOrder is placed, as The order is routed todescribed earlier, on an Schwab’s host computerelectronic form from in San Francisco and,any computer with within a split second,access to the Web, forwarded to the tradinganywhere in the world. floor of the New York Sock Exchange (NTSE). Yes NoOrder is transferred to Is the order larger than Order is automaticallySchwab’s floor brokers 30,000 shares? transferred to aat the NYSE, who take specialist and fulfilledit to the specialist, who based on the bid and askfinds the best price and, prices.if satisfactory, the In a few seconds, (mostorder is fulfilled. cases), Schwab confirms that trade and the price, relaying the information to the investor’s PC. © Prentice Hall, 2000 30
    • Trading Stocks Online (cont.)Investment Information For municipal bond pricing see : www.bondmarkets.org and www.investinbonds.com For overall market information and many links see: www.cyberinvest.com For free Gurus’ advice see: www.upside.com For stock screening and evaluation try: www.marketguide.com www.aaii.com provides articles from the Journal of the American Association of Individual Investors © Prentice Hall, 2000 31
    • Trading Stocks Online (cont.) pomaven.com reports the latest findings and pricing of IPOs For chart lovers try www.bigcharts.com For mutual funds evaluation and other interesting investment information see www.morningstar.net Almost anything that you need will be provided to you by www.yahoo.com www.firstcall.com provides earning estimates and much moreInitial public Offerings (IPOs) Spring Street Brewing © Prentice Hall, 2000 32
    • Cyberbanking and Personal Finance Electronic banking Saves time and money for users Offers an inexpensive alternative to branch banking Application Case: Cyberbanking at Wells Fargo © Prentice Hall, 2000 33
    • Cyberbanking and Personal Finance (cont.) Implementation Issues in Banking and Online Trading Securing Financial Transactions Application Case: Security at NationsBank B of A Web SiteCustomer’s Encrypted External Logon Screen B of A Internal B of AComputer SSL Session Firewall •User ID Web Server Firewall Application & Digital •User Password Server Certificate Verification Initiated Bank of America Security System © Prentice Hall, 2000 34
    • Cyberbanking and Personal Finance (cont.) Using the Extranet Imaging Systems Pricing Online Vs. Offline Services The Future of Banking building alliances quickly with banks, and software vendors, and information providers effective outsourcing without neglecting to build in- house skills, particularly with respect to customer information systems focusing on the profitable customers to provide broad channels for services and products keeping a central role in the payment environment © Prentice Hall, 2000 35
    • Alternative Strategies for BankingCustomers’ Agents— banks unable to achieve economies of scale Offer customers the widest possible choices, including products from multiple sources, and provide the customers with integrated information servicesProduct Manufacturers— banks able to achieve economies ofscale It will strengthen a trend that can already be seen in a number of product segments and in core processing services for small and medium sized institutionsIntegrated Players— banks with a strong brand and position frommanufacturing to delivery Many banks will adopt a hybrid strategy, but every player needs to make crucial decisions about which areas are strategically too risky to outsource and which capabilities need to be built up in- house © Prentice Hall, 2000 36
    • Billing OnlineAutomatic transfer of mortgages This method has existed for several years. The payer authorizes its bank to pay the mortgage, including tax escrow payments.Automatic transfer of funds to pay monthlyutility bills As of fall 1997, the city of Long Beach has allowed its customers to pay their gas and water bills automatically form their bank accounts. In 1999, many utility companies worldwide, including those in Hong Kong, allow customers to pay from bank accounts, or ATMs. © Prentice Hall, 2000 37
    • Billing Online (cont.)Paying bills from online banking account Such payments can be made into any bank account. Many people pay their monthly rent and other bills directly into the payee’s bank accounts. Bill Consolidator Billers Phone Credit Card Utility Consumer © Prentice Hall, 2000 38
    • Billing Online (cont.)A merchant-to-customer direct billing Under this model, a merchant like American Express posts bills on its Web site, where customers can view and pay them . This means that the customers have to go to many Web sites to pay all their bills. Several utilities in Los Angeles allow customers to pay bills on the utilities’ Web site, charging customers 20 cents per transaction, which is less than the price of a postage stamp. © Prentice Hall, 2000 39
    • Billing Online (cont.)Using an intermediary According to this model, a third party like MSFDS (Microsoft and First Data Corporation) consolidates all bills related to each customer in one site, and in a standard format. Collecting a certain commission, this intermediary makes it convenient both for the payee and payer to complete transactions. This model is of interest to vendors such as E*Trade, and Intuit.Personal finance online Available from many banks and other financial institutions, frequently free of charge. © Prentice Hall, 2000 40
    • Auctions: From Theory to PracticeUsed when the conventional marketingchannels are ineffective or inefficientOffer trading opportunities for both buyers andsellers which are not available in theconventional channelsInternet provides much cheaper infrastructurewith many more involved sellers and buyersIndividual consumers and corporations alike canparticipate in this rapidly growing and veryconvenient form of electronic commerce © Prentice Hall, 2000 41
    • Auctions: From Theory to Practice (cont.) Types of AuctionsAuction Co-ordination Price Allocation DistributionType Mechanism Discovery Mechanism MechanismBuyer Short term acquisition Often experts/ Bargain hunting, Bargain hunting,Role of resources, e.g. for professional collectors gambling motive gambling motive; demand peaks, auction trying to acquire rare possible side motive: as a mechanism to items at a reasonable charity achieve an equilibrium priceSupplier Short term allocation of Exposing items for Clearance of Attention, directRole resources, load balance sale to a sufficient inventory sales channel, public breadth of demand, relations; possible hope for a high price side motive: charityAuctioneer/ Often electronic auction Achieve high breadth Achieve high breadth Limited role becauseIntermedi- without auctioneer and depth of the and depth of the of 1:n supplier -ary auctions, high trading auctions, high trading buyer relation;Role volume results in high volume results in high possible function as returns, competitive returns, competitive service provider for advantage over other advantage over other the supplier side auctions auctions © Prentice Hall, 2000 42
    • Auctions: From Theory to Practice (cont.) Limitations of traditional auctions Last only a few minutes for each item sold Give buyers little time to make a decision The bidders do not have much time to examine the goods Exclude many potential bidders May be complicated for sellers to move goods to the auction site Commissions are fairly high (rent, advertising, auctioneer and other employees) © Prentice Hall, 2000 43
    • Auctions: From Theory to Practice (cont.) Electronic Auctions Early auctioning done on local area networks the auctioning of pigs in Taiwan and Singapore the auctioning of flowers in Holland the auctioning of cars in Japan Auctions on the Internet started in 1995 similar to offline auctions, except for the fact that they are done on a computer some last days, others a short time detailed information is available start bidding by sending e-mail or filling out an electronic form names of bidders are kept coded to maintain privacy © Prentice Hall, 2000 44
    • Auctions: From Theory to Practice (cont.) Electronic Auctions Auctioning methods Yankee method Dutch (Reverse bidding) method “Straight sale” method Examples www.usaweb.com/auction.html ; a directory of sites, search Onsale, eBay, uBid © Prentice Hall, 2000 45
    • Auctions: From Theory to Practice (cont.) Benefits and Limitations Benefits Limitations For seller Inability to • Sells goods efficiently physically see the • Sells goods with little action items or effort • Creates a greater range of Possibility of potential buyers fraud • Sells excess inventories Less competitive quickly via this process atmosphere may For buyers prevail on the Net • Gets a huge variety of goods • Finds quality goods for largely discounted prices © Prentice Hall, 2000 46
    • ImpactsParameter Impact of the WebAuctioneer Lower entry barriers, opportunity for direct salesAccess rules Customizable, theoretically millions of potential customers can be reachedItems Focused product segments can be auctioned off, theauctioned technology extends the complexity of the product descriptionTrading rules The trading rules reflect the lack of a guaranteed serviceExecution For digital products the entire trading cycle can beprocess handled on the Web; for physical products the trading process and the physical logistics of the trade objects can be separated, leading to a reduction of costs © Prentice Hall, 2000 47
    • Online PublishingThe electronic delivery of newspapers,magazines, news, and other informationthrough the InternetOnline Publishing Today and Tomorrow Today— mainly used for disseminating information and for conducting sales transactions interactively Tomorrow— include more customized material that the reader will receive free, or will pay for © Prentice Hall, 2000 48
    • Online Publishing (cont.)Publishing Modes newspapers, magazines, news, textbooks, music, artwork, video clips, and moviesPublishing Methods online archive approach— a digital archive such as library catalogs and bibliographic databases new medium approach— add extra comprehensiveness to any issue or topic publishing intermediation approach— an online directory for news services dynamic or just-in-time approach— create content in real-time and transmitted on the fly © Prentice Hall, 2000 49
    • Knowledge DisseminationVirtual Teaching and Universities Many universities are offering limited courses and degrees but use innovative teaching methods and multimedia support MBA program in Hong Kong lectures are delivered as an interactive TV (iTV) students can decide what and when they want to ‘attend’ the lecture lecture, support material, exercises etc. are provided on the Web © Prentice Hall, 2000 50
    • Knowledge Dissemination (cont.)Online Consulting Medical advice— provide consultation with top experts Management consulting— provide accumulated expertise from knowledge bases Legal advice— delivery of legal consultation services to business has considerable prospects Financial advice— offer extensive financial advice Other service online insurance, healthcare, future exchanges, matchmaking, venture capital, finding a college, digital delivery of documents, and electronic stamps © Prentice Hall, 2000 51
    • The Impact on Intermediaries and Their Changing RolesChange the role of agents to : Assist in comparison shopping from multiple sources Providing total solutions by combining services from several vendors Providing certifications and trusted third party control and evaluation systems © Prentice Hall, 2000 52
    • The Impact on Intermediaries and Their Changing Roles (cont.)Issues that could impact the future of theintermediaries The success of intelligent agents— In addition to the travel intelligent agents, there are agents to support job matching and to interpret resumes. The more intelligent the software agents will be, the less you will need human agents. Customer attitudes and behavior are important— If you have good experience with online insurance or stock purchasing, or with virtual travel agencies would you ever return to use a human agent? © Prentice Hall, 2000 53
    • The Impact on Intermediaries and Their Changing Roles (cont.)New roles of electronic marketing intermediaries To extend what we are familiar with in physical markets to the virtual world (e.g., search services and electronic malls) To extend payment clearing functions into the Internet (e.g. electronic cash and digital credit card services) © Prentice Hall, 2000 54
    • Managerial IssuesEffectiveness of out-of-town recruitmentPrivacy may be in dangerInternational legal issues may impact servicesmore than productsEthical issues are prevalent in servicesThe intermediaries and their roles are changing © Prentice Hall, 2000 55