e-commerce and e-bussines

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e-commerce and e-bussines

  1. 1. RECOMMENDED BOOKS1. E-COMMERCE: AN INDIAN PERSPECTIVE BY P.T. JOSEPH, PRENTICE HALL INIDA2. E-COMMERCE – A MANAGER’S GUIDE BY RAVI KALAKOTA AND WHINSTON, PRENTICE HALL INDIA3. E-COMMERCE – A MANAGERIAL PERSPECTIVE BY EFRAIM TURBAN AND OTHERS, PEARSON4. E-COMMERCE – BUSINESS, TECHNOLOGY, AND SOCIETY BY KENNETH C LAUDON, PEARSON
  2. 2. SCOPE OF E-BUSINESSINFORMATION KNOWLEDGEMENT TECHNOLOGY MANAGEMENT E-BUSINESS CUSTOMERSUPPLY CHAIN RELATIONSMANAGEMENT MANAGEMENT
  3. 3. E-commerce definitionTechnology-enabled transactions and technology-mediated exchanges of digitized informationbetween parties (individuals or organizations) aswell as the electronically based intra-organizationalor inter-organizational activities that facilitate suchexchanges
  4. 4. MEANING OF E-BUSINESSIt is buying and selling, marketing and servicing, and delivery and payment ofproducts, service and information over the Internet, intranet, extranet and othernetworks, between an inter-networked enterprise and its prospects, customers,suppliers and other business partners. (C.S.V. MURTHY)From a communication perspective, electronic commerce is the delivery ofinformation, products/services, or payments via telephone lines, computernetworks, or any other means.From business process perspective, electronic commerce is the application oftechnology toward the automation of business transactions and workflows.From service perspective, electronic commerce is a tool that addresses the desireof firms, consumers, and management to cut service costs while improving thequality of goods and increasing the speed of service delivery.From an online perspective, electronic commerce provides the capability ofbuying and selling products and information on the Internet and other onlineservices. (Ravi Kalakota and Andrew B.Whinston)
  5. 5. Differences between Definitions of E-commerce The definitions differ with respect to the media under consideration. Some focus on the Internet, some include all sorts of direct electronic distribution channels (e.g., TV- shopping), and others include all forms of electronic market places (e. g., electronic trading systems on stock exchanges).
  6. 6. Definitions of E-commerceFor the purpose of this class a broad definition of e- commerce will be used.Electronic commerce denotes the seamless application of information and communication technology from its point of origin to its end point along the entire value chain of business processes conducted VIA the INTERNET, INTRANET & EXTRANET and designed to enable the accomplishment of a business goal.These processes may be partial or complete and may encompass business-to-business, as well as business-to-consumer, consumer-to-business transactions and intermediaries.
  7. 7. Pure Vs. Partial Electronic Commerce– Three dimensions • the product (service) sold [physical / digital]; • the process [physical / digital] • the delivery agent (or intermediary) [physical / digital]– Traditional commerce • all dimensions are physical– Pure EC • all dimensions are digital– Partial EC • all other possibilities include a mix of digital and physical dimensions
  8. 8. Electronic Commerce Vs. Electronic Business • Electronic Commerce is the use of electronic transmission mediums (telecommunications) to engage in the exchange, including buying and selling, of products and services requiring transportation, either physically or digitally, from location to location.
  9. 9. Electronic Commerce Vs. Electronic Business• The term electronic commerce is restricting.• It does not fully encompass the true nature of the many types of digital information exchanges.• The term electronic business also includes the exchange of information directly related to the actual buying and selling of goods. Increasingly, businesses are using electronic mechanisms to distribute information and provide customer support.• E-Business describes the broadest definition of EC. It includes customer service and intrabusiness tasks. It is frequently used interchangeably with EC.
  10. 10. Electronic Commerce Vs. Electronic Business • Electronic business involves more than just selling and buying; it includes all kinds of presale and postsale efforts. • Then it encompasses new approaches to : – market research, – advertising, – product purchasing and distribution, – customer support, – recruiting, – public relations, – business operations, – product management, – knowledge distribution, – financial transactions.
  11. 11. Electronic Commerce s. Electronic Business• E-business also helps to perform the following functions : – 1) bring products to market; – 2) match buyers with sellers; – 3) communicate with government in pursuit of commerce; – 4) deliver electronic goods. In addition, Electronic business includes other activities such as : - market survey, - data interchange, - business relations development with partners, - joint advertising programs with customers, - joint development of products and services with customers. All these activities impact strategic planning, entrepreneurial opportunities, organizational design and performance, business law, and taxation policies.
  12. 12. Traditional Vs Electronic Commerce Transactions • Example of Traditional Commerce transactions : – The purchaser • generates a request, • gains approval, • selects an appropriate supplier, • determines availability, and issues a purchase order – The seller must • verify credit and sales history, • check inventory, • schedule shipping, • notify the warehouse, and • issue an invoice
  13. 13. Traditional Vs Electronic Commerce Transactions• Example of Electronic Commerce transactions : – The purchaser • Select products from a web site, • Request approvals and forward orders to purchasing via electronic processes, – The seller can • add orders to database, • check warehouse inventory and customer status, • arrange delivery, • handle communications all via electronic commerce.
  14. 14. Differences between traditional and e-commerceIn the following table you can see in table form the differences in media used for traditional and e-commerce. Pleasenotice that as far as e-commerce is concerned everything can be done through a server: Action Traditional commerce E-commerce Acquire product information Magazines, flyers, online catalogs Web pages Request item Printed forms, letters E-mail Check catalogs, prices Catalogs On-line catalogs Check product availability and confirm price Phone, fax E-mail Generate order Printed form E-mail, web pages Send /Receive Order Fax, mail E-mail, EDI Prioritize order On-line database Check inventory at warehouse phone,fax On-line database, web pages Schedule delivery Printed form E-mail, On-line database Generate invoice Printed form On-line database Receive product Shipper Shipper (unless it is electronic) Confirm receipt Printed form E-mail Send/Receive Invoice Mail E-mail, EDI Schedule payment Printed form EDI, On-line database Send /Receive Payment Mail EDI Table from: ‘Understanding e-commerce’ – Microsoft press
  15. 15. E-COMMERCE vs TRADITIONAL COMMERCEKey elements E-commerce Traditional commerceValue Creation Information Product/ServiceStrategy Sense and respond Classical Simple rulesCompetitive edge Speed Quality/CostCompetitive force Low barriers of entry Power of suppliers Power of customers Product substitutionResource focus Demand side Supply sideCustomer interface Screen-to-face Face-to-faceCommunication Technology-mediated channels PersonalAccessibility 24 x 7 Limited timeCustomer Self-service Seller influencedinteractionConsumer behavior Personalization Standardization One-to-one marketing Mass/one-way marketingPromotion Word of mouth MerchandisingProduct Commodity Perishables, feel & touch
  16. 16. Advantages of Electronic Commerce• Electronic commerce can increase sales and decrease costs.• Web advertising reaches to potential customers in the world.• Web creates virtual communities for specific products or services.• A business can reduce the costs by using electronic commerce in its sales support and order-taking processes.• Electronic commerce increases sale opportunities for the seller.• Electronic commerce increases purchasing opportunities for the buyer.
  17. 17. Advantages of Electronic Commerce : General Welfare of Society • Electronic commerce benefits the general welfare of society because: – Electronic payments of tax refunds and welfare cost less to issue and arrive securely. – Electronic payments can be audited easily. – Electronic commerce enables people to work from home. – Electronic commerce makes products and services available in remote areas.
  18. 18. Disadvantages of Electronic Commerce• Some business processes are difficult to be implemented through electronic commerce.• Return-on-investment is difficult to apply to electronic commerce.• Businesses face cultural and legal obstacles to conducting electronic commerce.
  19. 19. Timeline of History of E-Commerce1981: Worlds first recorded B2B online shopping system. Thomson Holidays UK1982: Minitel was introduced nationwide in France by France Telecom and used for online ordering.1984: Worlds first recorded B2C online home shopper. Mrs Jane Snowball uses the Gateshead SIS/Tesco system to buy groceries.1987: Swreg begins to provide software and shareware authors means to sell their products online through an electronic Merchant account.1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martins Press. ISBN 0312063598.1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also become commercially available, as do cars and bikes. Netscape 1.0 is introduced in late21 SSL encryption that made transactions secure.1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
  20. 20. 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 forUS $149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launchesto sell decorative items for the home online.2000: The dot-com bust.2002: eBay acquires PayPal for $1.5 billion [5]. Niche retail companies CSN Stores andNetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.2003: Amazon.com posts first yearly profit.2007: Business.com acquired by R.H. Donnelley for $345 million[6].2008: US eCommerce and Online Retail sales projected to have reached $204 billion, an increase of 17 percent over 2007[7].
  21. 21. Industrial Age Information Age Market Place Organizing Business Market Space Hierachies Organizing Business Networks Scarce Physical Limitless Digital Resources Economics in Business Resources Machine/Craft Populating Business Knowledge/ Workers Intelligent Workers Real Estate and Infrastructure in Business Information Infrastructure Technology
  22. 22. DOMAINS IN INTERNETA domain name is an identification label that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are also hostnames that identify Internet Protocol (IP) resources such as web sites. Domain names are formed by the rules and procedures of the Domain Name System (DNS).
  23. 23. Top-level domains• The top-level domains (TLDs) are the highest level of domain names of the Internet. They form the DNS root zone of the hierarchical Domain Name System. Every domain name ends in a top-level or first- level domain label.• When the Domain Name System was created in the 1980s, the domain name space was divided into two main groups of domains. The country code top-level domains (ccTLD) were primarily based on the two-character territory codes of ISO-3166 country abbreviations. In addition, a group of seven generic top-level domains (gTLD) was implemented which represented a set of categories of names and multi- organizations. These were the domains GOV, EDU, COM, MIL, ORG, NET, and INT.• During the growth of the Internet, it became desirable to create additional generic top-level domains. As of October 2009, there are 21 generic top-level domains and 250 two-letter country-code top-level domains. In addition, the ARPA domain serves technical purposes in the infrastructure of the Domain Name System.
  24. 24. GenericTop Level Domains intended useAero: the air transport industry.Asia: companies, organizations and individuals in the Asia-Pacific regionBiz: business useCat: Catalan language/cultureCom: commercial organizations, but unrestrictedCoop: cooperativesEdu: post-secondary educational establishmentsGov: government entities within the United Statesat the federal, state, and local levelsInfo: informational sites, but unrestrictedInt: international organizations established by treatyJobs: employment-related sitesMil: the U.S. militarymobisites catering to mobile devicesMuseum: museumsName: families and individualsNet: originally for network infrastructures, now unrestrictedOrg: originally for organizations not clearly falling within the other gTLDs, now unrestrictedPro:certain professionsTel: services involving connections between the telephone network and the Internet (added March 2, 2007)Travel: travel agents, airlines, hoteliers, tourism bureaus, etc
  25. 25. HISTORY OF .COM DOMAIN•On 15 March 1985, the first commercial Internetdomain name (.com) was registered under the nameSymbolics.com by Symbolics Inc., a computer systemsfirm in Cambridge, Massachusetts.•By 1992 fewer than 15,000 dot.com domains wereregistered.•In December 2009 there were 192 million domainnames. A big fraction of them are in the .com TLD,which as of March 15, 2010 had 84 million domainnames, including 11.9 million online business and e-commerce sites, 4.3 million entertainment sites, 3.1million finance related sites, and 1.8 million sports sites.
  26. 26. The Chronological Events of the Evolution of Internet1969 First ARPANET installed in UCLA in Sept. 19695 E-mail was invented by accident for sending messages by two programmers. Ray Tomlinson of BBN is credited for sending the world’s first e-mail message in 19731973-74 Transport Control Protocol/Internet Protocol (TCP/IP) was developed by Vintcerf to link difference packet networks. These are capable of connecting multiple independent networks through routers/gateways.1980-86 National Science Foundation (NSF) supported the development of CSNET, a computer science research network.12 NSF initiated a new program of networking and computer support for super computing centers for research. It launched the NSFNET network backbone program.15 In Switzerland at CERN Tim Berners-Lee proposed a hypertext system that will run across the Internet on different operating systems. This was the World Wide Web.18 CSNET service was discontinued. Internet connectivity had become essential tool for the conduct of scientific research. NSFNET program had outgrown its initial version
  27. 27. Brief HistoryOriginThe demand within business and government to make better use of computing and to better apply computer technology to improve customer interaction, business processes, and information exchange both within an enterprise and across enterprises.Evolution• During 1970s – Introduction of Electronic Funds Transfer (EFT) – Ex. Debit Cards• During the late 1970s and early 1980s – introduction of electronic messaging technologies, such as Electronic Data Interchange (EDI) (procurement) and Electronic Mail (E-MAIL) (Communication), Document workflow systems Desktop videoconferencing, Outsourcing and coordination of logistics, Virtual and team-based enterprises, Mass customization (demand-driven manufacturing), Technical data interchange (engineering).• Mid-1980s – introduction of online services – Social interaction (Chat and Inter-relay Chat (IRC)) and knowledge sharing (such as File Transfer Programmes)• During 1990s – the advent of World Wide Web on the Internet – Publishing and dissemination of information. (Ravi Kalakota and Andrew B.Whinston)
  28. 28. 1979: Michael Aldrich invented online shopping1981: Thomson Holidays, UK is first B2B online shopping1982: Minitel was introduced nationwide in France by France Telecom andused for online ordering.1984: Gateshead SIS/Tesco is first B2C online shopping and Mrs Snowball ,72,is first online home shopper1985: Nissan UK sells cars and finance with credit checking to customers onlinefrom dealers lots.1987: Swreg begins to provide software and shareware authors means to selltheir products online through an electronic Merchant account.1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using aNeXT computer.1992: J.H. Snider and Terra Ziporyn publish Future Shop: How NewTechnologies Will Change the Way We Shop and What We Buy. St. MartinsPress. ISBN 0312063598.1994: Netscape releases the Navigator browser in October under the code nameMozilla. Pizza Hut offers online ordering on its Web page. The first online bankopens. Attempts to offer flower delivery and magazine subscriptions online.Adult materials also become commercially available, as do cars and bikes.Netscape 1.0 is introduced in late1994 SSL encryption that made transactions secure.
  29. 29. 1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour,internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.1998: Electronic postal stamps can be purchased and downloaded for printingfrom the Web.1999: Business.com sold for US $7.5 million to eCompanies, which waspurchased in 1997 for US $149,000. The peer-to-peer filesharing softwareNapster launches. ATG Storeslaunches to sell decorative items for the homeonline.2000: The dot-com bust.2002: eBay acquires PayPal for $1.5 billion [8]. Niche retail companiesCSN Stores and NetShops are founded with the concept of selling productsthrough several targeted domains, rather than a central portal.2003: Amazon.com posts first yearly profit.2007: Business.com acquired by R.H. Donnelley for $345 million[9].2008: US eCommerce and Online Retail sales projected to have reached $204billion, an increase of 17 percent over 2007[10
  30. 30. E-Business Applications can be divided into three categories:• Internal Business Systems: Customer Relationship Management Enterprise Resource Planning Human Resources Management2. Enterprise Communication and Collaboration: VoIP (Voice over Internet Protocol) Content Management System E-mail Voice Mail Web Conferencing Digital Work Flows (or business process management)9. Electronic Commerce - Business-to-Business Electronic Commerce (B2B) or Business-to-Consumer Electronic Commerce (B2C): Internet shop Supply chain management Online marketing Offline marketing
  31. 31. ModelsWhen organizations go online, they have to decide which e-business models best suittheir goals. A business model is defined as the organization of product, service andinformation flows, and the source of revenues and benefits for suppliers and customers. The concept of e-business model is the same but used in the online presence. Thefollowing is a list of the currently most adopted e-business models such asE-shops – Online shoppingE-procurement-is the business-to-business or business-to-consumer or Business-to-government purchase and sale of supplies, Work and services throughthe Internet as well as other information and networking systems, such as ElectronicData Interchange and Enterprise Resource Planning.E-malls -Web site that displays electronic catalogs from several suppliers,and charges commission from them for the sales revenue generated at that site.E-auctionsVirtual Communities - is a social network of individuals who interact throughspecific media, potentially crossing geographical and political boundaries in order topursue mutual interests or goals. One of the most pervasive types of virtual communityinclude social networking services, which consist of various online communities.
  32. 32. Collaboration Platforms - offer a set of software components andsoftware services that enable individuals to find each other and the information theyneed and to be able to communicate and work together to achieve common businessgoals. The core elements of a collaboration platform are messaging (email,calendaring and scheduling, and contacts), team collaboration (file synchronization,ideas and notes in a wiki, task management, full-text search), and real-timecollaboration and communication (e.g., presence, instant messaging, Webconferencing, application / desktop sharing, voice, audio and video conferencing),and Social Computing tools (e.g., blog, wiki, tagging, RSS, shared bookmarks).Third-party Marketplaces - online marketplace that allows sellers to offertheir goods alongside offerings of the websiteValue-chain - a business model describing the dissemination of value-generating information services throughout an Extended Enterprise. This valuechain begins with the content supplied by the provider, which is then distributed andsupported by the information infrastructure; thereupon the context provider suppliesactual customer interaction. It supports the physical valuechain of procurement, manufacturing, distribution and sales of traditionalcompanies.Information Brokerage andTelecommunication
  33. 33. Classification by provider and consumerRoughly dividing the world into providers/producers andconsumers/clients one can classify e-businesses into thefollowing categories:•business-to-business (B2B) - describes commerce transactions betweenbusinesses, such as between a manufacturer and a wholesaler, or between awholesaler and a retailer. Metalsite.com, verticalnet.com, SHOP2gether.com•business-to-consumer (B2C) - describes activities of businesses serving endconsumers with products and/or services. Ex. Amazon.com, autobytel.com,eDiets.com. Pets.com•business-to-government (B2G) – iGov.com•government-to-business (G2B)•government-to-government (G2G)•government-to-citizen (G2C)•consumer-to-consumer (C2C) – ebay.com, InfoRocket.com•consumer-to-business (C2B) – Priceline.com
  34. 34. Basic Categories of E-Business Models •Brokerage •Advertising •Infomediary •Merchant •Manufacturer (Direct) •Affiliate •Community •Subscription •Utility
  35. 35. Brokerage ModelsBrokers are market-makers. theybring buyers and sellers togetherand facilitate transactions. Brokersplay a frequent role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually abroker charges a fee or commissionfor each transaction it enables. Theformula for fees can vary.
  36. 36. Brokerage models include:Marketplace Exchange -- offers a full rangeof services covering the transactionprocess, from market assessment tonegotiation and fulfillment. Exchangesoperate independently or are backed by anindustry consortium. [Orbitz,ChemConnect]Buy/Sell Fulfillment -- takes customerorders to buy or sell a product or service,including terms like price and delivery. [CarsDirect, Respond.com]
  37. 37. Demand Collection System -- the patented "name-your-price" model pioneered by Priceline.com.Prospective buyer makes a final (binding) bid for aspecified good or service, and the broker arrangesfulfillment. [Priceline.com]Auction Broker -- conducts auctions for sellers(individuals or merchants). Broker charges the seller alisting fee and commission scaled with the value of thetransaction. Auctions vary widely in terms of theoffering and bidding rules. [eBay]Transaction Broker -- provides a third-party paymentmechanism for buyers and sellers to settle atransaction. [PayPal, Escrow.com]
  38. 38. Distributor -- is a catalog operation that connects a largenumber of product manufacturers with volume and retailbuyers. Broker facilitates business transactions betweenfranchised distributors and their trading partners.Search Agent -- a software agent or "robot" used tosearch-out the price and availability for a good or servicespecified by the buyer, or to locate hard to findinformation.Virtual Marketplace -- or virtual mall, a hosting servicefor online merchants that charges setup, monthly listing,and/or transaction fees. May also provide automatedtransaction and relationship marketing services. [zShopsand Merchant Services at Amazon.com]
  39. 39. Advertising ModelsThe web advertising model is an extension of thetraditional media broadcast model. Thebroadcaster, in this case, a web site, providescontent (usually, but not necessarily, for free) andservices (like email, IM, blogs) mixed withadvertising messages in the form of banner ads.The banner ads may be the major or sole source ofrevenue for the broadcaster. The broadcaster maybe a content creator or a distributor of contentcreated elsewhere. The advertising model worksbest when the volume of viewer traffic is large orhighly specialized.
  40. 40. Portal -- usually a search engine that may include variedcontent or services. A high volume of user traffic makesadvertising profitable and permits further diversification ofsite services. A personalized portal allows customization ofthe interface and content to the user. A niche portalcultivates a well-defined user demographic. [Yahoo!]Classifieds -- list items for sale or wanted for purchase.Listing fees are common, but there also may be amembership fee. [Monster.com, Craigslist]User Registration -- content-based sites that are free toaccess but require users to register and provide demographicdata. Registration allows inter-session tracking of usersurfing habits and thereby generates data of potential valuein targeted advertising campaigns. [NYTimes]
  41. 41. Query-based Paid Placement -- sells favorable linkpositioning (i.e., sponsored links) or advertisingkeyed to particular search terms in a user query,such as Overtures trademark "pay-for-performance" model. [Google, Overture]Contextual Advertising / Behavioral Marketing --freeware developers who bundle adware with theirproduct. For example, a browser extension thatautomates authentication and form fill-ins, alsodelivers advertising links or pop-ups as the user surfsthe web. Contextual advertisers can sell targetedadvertising based on an individual users surfingactivity.
  42. 42. Content-Targeted Advertising -- pioneered byGoogle, it extends the precision of search advertisingto the rest of the web. Google identifies the meaningof a web page and then automatically deliversrelevant ads when a user visits that page. [Google]Intromercials -- animated full-screen ads placed atthe entry of a site before a user reaches the intendedcontent. [CBS MarketWatch]Ultramercials -- interactive online ads that requirethe user to respond intermittently in order to wadethrough the message before reaching the intendedcontent. [Salon in cooperation with Mercedes-Benz]
  43. 43. Infomediary ModelsData about consumers and theirconsumption habits are valuable,especially when that information iscarefully analyzed and used to targetmarketing campaigns. Independentlycollected data about producers and theirproducts are useful to consumers whenconsidering a purchase. Some firmsfunction as infomediaries (informationintermediaries) assisting buyers and/orsellers understand a given market.
  44. 44. Advertising Networks -- feed banner ads to a network ofmember sites, thereby enabling advertisers to deploy largemarketing campaigns. Ad networks collect data about webusers that can be used to analyze marketing effectiveness. [DoubleClick]Audience Measurement Services -- online audience marketresearch agencies. [Nielsen//Netratings]Incentive Marketing -- customer loyalty program thatprovides incentives to customers such as redeemable pointsor coupons for making purchases from associated retailers.Data collected about users is sold for targeted advertising. [Coolsavings]Metamediary -- facilitates transactions between buyer andsellers by providing comprehensive information andancillary services, without being involved in the actualexchange of goods or services between the parties. [Edmunds]
  45. 45. Merchant ModelsWholesalers and retailers of goods and services. Sales may bemade based on list prices or through auction.Virtual Merchant --or e-tailer, is a retail merchant thatoperates solely over the web. [Amazon.com]Catalog Merchant -- mail-order business with a web-basedcatalog. Combines mail, telephone and online ordering. [Lands End]Click and Mortar -- traditional brick-and-mortar retailestablishment with web storefront. [Barnes & Noble]Bit Vendor -- a merchant that deals strictly in digitalproducts and services and, in its purest form, conducts bothsales and distribution over the web. [Apple iTunes Music Store]
  46. 46. Manufacturer (Direct)The manufacturer or "direct model", it is predicated on the power of theweb to allow a manufacturer (i.e., a company that creates a product orservice) to reach buyers directly and thereby compress the distributionchannel. The manufacturer model can be based on efficiency, improvedcustomer service, and a better understanding of customer preferences. [Dell Computer] Purchase -- the sale of a product in which the right ofownership is transferred to the buyer.Lease -- in exchange for a rental fee, the buyer receives the right to usethe product under a “terms of use” agreement. The product is returned tothe seller upon expiration or default of the lease agreement. One type ofagreement may include a right of purchase upon expiration of the lease.License -- the sale of a product that involves only the transfer of usagerights to the buyer, in accordance with a “terms of use” agreement.Ownership rights remain with the manufacturer (e.g., with softwarelicensing).Brand Integrated Content -- in contrast to the sponsored-contentapproach (i.e., the advertising model), brand-integrated content is createdby the manufacturer itself for the sole basis of product placement.
  47. 47. Affiliate ModelsIn contrast to the generalized portal, which seeks to drive ahigh volume of traffic to one site, the affiliate model, providespurchase opportunities wherever people may be surfing. Itdoes this by offering financial incentives (in the form of apercentage of revenue) to affiliated partner sites. The affiliatesprovide purchase-point click-through to the merchant. It is apay-for-performance model -- if an affiliate does not generatesales, it represents no cost to the merchant. The affiliate modelis inherently well-suited to the web, which explains itspopularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs. [Barnes & Noble,Amazon.com]Banner Exchange -- trades banner placement among anetwork of affiliated sites.Pay-per-click -- site that pays affiliates for a user click-through.Revenue Sharing -- offers a percent-of-sale commission basedon a user click-through in which the user subsequentlypurchases a product.
  48. 48. Community ModelsThe viability of the community model is basedon user loyalty. Users have a high investmentin both time and emotion. Revenue can bebased on the sale of ancillary products andservices or voluntary contributions; orrevenue may be tied to contextual advertisingand subscriptions for premium services. TheInternet is inherently suited to communitybusiness models and today this is one of themore fertile areas of development, as seen inrise of social networking.
  49. 49. Open Source -- software developed collaboratively by a globalcommunity of programmers who share code openly. Instead oflicensing code for a fee, open source relies on revenuegenerated from related services like systems integration,product support, tutorials and user documentation. [Red Hat]Open Content -- openly accessible content developedcollaboratively by a global community of contributors whowork voluntarily. [Wikipedia]Public Broadcasting -- user-supported model used by not-for-profit radio and television broadcasting extended to the web. Acommunity of users support the site through voluntarydonations. [The Classical Station (WCPE.org)]Social Networking Services -- sites that provide individualswith the ability to connect to other individuals along a definedcommon interest (professional, hobby, romance). Socialnetworking services can provide opportunities for contextualadvertising and subscriptions for premium services. [Flickr,Friendster, Orkut]
  50. 50. Subscription ModelsUsers are charged a periodic -- daily, monthly or annual -- feeto subscribe to a service. It is not uncommon for sites tocombine free content with "premium" (i.e., subscriber- ormember-only) content. Subscription fees are incurredirrespective of actual usage rates. Subscription and advertisingmodels are frequently combined. Content Services -- providetext, audio, or video content to users who subscribe for a fee togain access to the service. [Listen.com, Netflix]Person-to-Person Networking Services -- are conduits for thedistribution of user-submitted information, such as individualssearching for former schoolmates. [Classmates]Trust Services -- come in the form of membership associationsthat abide by an explicit code of conduct, and in which memberspay a subscription fee. [Truste]Internet Services Providers -- offer network connectivity andrelated services on a monthly subscription. [America Online]
  51. 51. Utility ModelsThe utility or "on-demand" model is based on meteringusage, or a "pay as you go" approach. Unlike subscriberservices, metered services are based on actual usage rates.Traditionally, metering has been used for essentialservices (e.g., electricity water, long-distance telephoneservices). Internet service providers (ISPs) in some partsof the world operate as utilities, charging customers forconnection minutes, as opposed to the subscriber modelcommon in the U.S. Metered Usage -- measures and billsusers based on actual usage of a service.Metered Subscriptions -- allows subscribers to purchaseaccess to content in metered portions (e.g., numbers ofpages viewed). [Slashdot]
  52. 52. TIM BERNERS-LEEwrites the first web browser, WorldWideWeb, using a NeXT computer
  53. 53. Every Business is an information business Industrial logic Managers are becoming based information on information processorsValue chains arevirtual as well as Information Business operations physical Business are information Entrepreneurs are Organizations are infopreneurs information designs
  54. 54. Leadership Technology Services Infrastructure Brand Markets Organizational learningSeven Dimensions of E-Commerce Strategy
  55. 55. TechnologyBrand Integrated E-Strategy Service Market CONVERGENCE
  56. 56. Problems encountered in e-commerce in IndiaConcerns about security. Many people will not use credit cards over the Internetdue to concerns about theft and fraud.Lack of instant gratification with most e-purchases (non-digital purchases). Muchof a consumers reward for purchasing a product lies in the instant gratificationof using and displaying that product. This reward does not exist when onespurchase does not arrive for days or weeks.The problem of access to web commerce, particularly for poor households andfor developing countries. Low penetration rate of Internet access in some sectorsgreatly reduces the potential for e-commerce.The social aspect of shopping. Some people enjoy talking to sales staff, to othershoppers, or to their cohorts: this social reward side of retail therapy does notexist to the same extent in online shopping.Cyber crime is the greatest hurdle for the development of e-commerce indeveloping countries like India.
  57. 57. The Intranets– An intranet is a corporate LAN and/or Wide Area Network (WAN) that is secured behind company’s firewalls and it uses Internet technologies.– Although intranets are developed using the same TCP/IP protocol as the Internet, they operate as private networks with limited access.– Only employees who are issued passwords and access codes are able to use them. So, intranets are limited to information pertinent to the company and contain exclusive and often proprietary and sensitive information.– Firewalls protect intranets from unauthorized outside access. © Prentice Hall, 2000 58
  58. 58. The Intranet ERP Servers Clients Legacy systemsPublic/External Intranet E-mailInternet Users servers Web Firewalls servers Databases 59
  59. 59. The Extranet– An extranet implies an “extended intranet”, which uses TCP/IP protocol networks (like the Internet) to link intranets in different locations.– Extranet is a network that links business partners to one another over the Internet by tying together their corporate intranets– Extranet transmissions are conducted over the Internet to save money.– Connecting two or more Intranets forms an extranet.– Goal is to foster collaboration between organizations © Prentice Hall, 2000 60
  60. 60. The Extranets• Extranet enables companies to share some of their data with business partners or clients, perhaps by establishing a shared database, and connecting intranets using TCP/IP and Firewall.
  61. 61. Major difference between Extranet, Intranet and Internet • The major difference between each of these networks is the control of access to information and how it is shared.
  62. 62. Summary : Internet, Intranet, and Extranet Network Typical Type of Type Users Access InformationInternet Any individual Unlimited, General, public with dial-up public; no and advertisement access or LAN restrictionsIntranet Authorized Private and Specific, employees restricted corporate and ONLY proprietaryExtranet Authorized Private and Shared in groups from outside authorized collaborating authorized collaborating companies partners group © Prentice Hall, 2000 63
  63. 63. FROM MASS ADVERTISEMENT TO INTERACTIVE ADVERTISEMENTParameters Mass Marketing Direct Interactive Marketing MarketingBest outcome Volume sales Customer data Customer relationshipsConsumer Passive Passive ActiveBehaviourLeading products Food, personal care Credit cards, travel Upscale apparel, travel Products financial servicesMarket High volume Targeted goods Targeted individualsPreferred media TV, magazines Mailing lists Online servicesPreferred Tech. Story boards Databases Servers, the WebWorst outcome channel surfing Recycling bins Log off
  64. 64. ONLINE ADVERTISEMENT METHODS1. BANNERS A banner contains a short text and graphical message to promote product. With the progress of Internetprogramming we are starting to find banners with video clips and sound. Banners contain links that, whenclicked on, transfer the customer to the advertiser’s home page.Types of Banners:Keyword banners – effective for targeted audienceRandom banners – effective for introduction and promotion of new product.2. SPLASH SCREENAn initial Web site page used to capture the user’s attention for a short time as a promotion or lead-in to thesite home page or to tell the users what kind of browser and other software they need to view the site.3. SPOT LEASINGSearch engines often provide space (spot) in their home page for any individual business to lease. Unlikebanners, which show up at various times, the ad place on the spot will always be there.4. URL (UNIVERSAL RESOURCE LOCATORS)The major advantage of using URL as advertising tool is that it is free. Anyone can submit its URL to a searchengine and be listed. Also, by using URL the targeted audience can be locked and the unwanted viewers can befiltered because of the keyword function.5. E-MAIL6. CHAT ROOMS7. INTERNET COMMUNITIES

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