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  1. 1. Introduction to Electronic Commerce: Business Models Yelena Yesha Olga Streltchenko
  2. 2. Electronic Commerce (EC) <ul><li>Is an area of study that is concerned with developing methodologies and systems that support </li></ul><ul><ul><li>Creation of information sources; </li></ul></ul><ul><ul><li>Effective and efficient interactions among sellers, consumers, intermediaries and producers; </li></ul></ul><ul><ul><li>Movement of information across global networks. </li></ul></ul>
  3. 3. EC Objectives <ul><li>In general - </li></ul><ul><ul><li>Increasing the speed and efficiency of business transactions and processes and improving customer relationships and services </li></ul></ul>
  4. 4. EC Environment <ul><li>Vast amount of multimedia data; </li></ul><ul><li>Distributed, autonomous, and heterogeneous information sources; </li></ul><ul><li>Supports decision making; </li></ul><ul><li>The Internet as an infrastructure. </li></ul>
  5. 5. Categories of EC - B2C <ul><li>Is built on mutual distrust; </li></ul><ul><li>Has a small volume of transactions; </li></ul><ul><li>Requires a ubiquitous low-cost infrastructure; </li></ul><ul><li>Provides an opportunity for personalization and customization. </li></ul>
  6. 6. Categories of EC – B2B <ul><li>Growth of B2B marketplaces and exchanges; </li></ul><ul><ul><li>Growth in complexity; </li></ul></ul><ul><ul><li>Currently at a saturation point. </li></ul></ul><ul><ul><ul><li>[email_address] </li></ul></ul></ul><ul><li>Currently, 98% of medium and large firms are connected to the Internet and 41% are engaged in EC; </li></ul><ul><ul><li>70% engaged in EC by 2003 </li></ul></ul><ul><ul><ul><li>Projected by eMarketer. </li></ul></ul></ul><ul><li>Full range of business automation: </li></ul><ul><ul><li>Supply chain management, negotiation, etc. </li></ul></ul>
  7. 7. Categories of EC – B2B (cont’d) <ul><li>Worldwide B2B revenues will grow from $185 billion in 2000 to $1.26 trillion in2003. </li></ul><ul><ul><ul><li>eCommerce: B2B Report, eMarketer. </li></ul></ul></ul>
  8. 8. Categories of EC - B2G <ul><li>More restrictive due to government regulations; </li></ul><ul><li>In the US, the Federal Acquisition Streamlining Act (FASA) has mandated that all government agencies conduct bidding via EDI by late 1999. </li></ul>
  9. 9. EC Activities <ul><li>EC involves various business activities such as: </li></ul><ul><ul><li>Online marketing; </li></ul></ul><ul><ul><li>Order processing; </li></ul></ul><ul><ul><li>Payment; </li></ul></ul><ul><ul><li>Delivery (information goods) or delivery management; </li></ul></ul><ul><ul><li>Technical support/Customer care. </li></ul></ul>
  10. 10. EC & Transformation of Business <ul><li>Transformation occurs through: </li></ul><ul><ul><li>Globalization; </li></ul></ul><ul><ul><li>New products/services approaches; </li></ul></ul><ul><ul><li>Greater speed to market; </li></ul></ul><ul><ul><li>Better customer acquisition and retention through customization and personalization; </li></ul></ul><ul><ul><li>Enhanced cost competition. </li></ul></ul>
  11. 11. Phases of E-Commerce <ul><li>Incremental Approach: </li></ul><ul><ul><li>improve existing process for greater efficiency and effectiveness (E.g.. Banks) </li></ul></ul><ul><li>Strategic Transformation: </li></ul><ul><ul><li>Go beyond improvement ( think radical/new way of doing) </li></ul></ul><ul><li>Globalization: </li></ul><ul><ul><li>The last stage in EC. </li></ul></ul><ul><ul><li>Host of issues need to be addressed (legal, etc) </li></ul></ul>
  12. 12. Business Models- Characteristics and Examples <ul><li>Business Model </li></ul><ul><ul><li>Description/architecture of business activities; </li></ul></ul><ul><ul><li>Identifies potential benefits (revenues) from various activities; </li></ul></ul><ul><ul><li>Must work hand-in-hand with marketing strategy. </li></ul></ul><ul><li>Examples </li></ul><ul><ul><li>Retailing of goods and services; </li></ul></ul><ul><ul><li>Supply chain management, requisitions, etc.; </li></ul></ul><ul><ul><li>ASP (Application Service Provider); </li></ul></ul><ul><ul><li>Banking/financial services, and more. </li></ul></ul>
  13. 13. EC Models -Introduction <ul><li>EC can either </li></ul><ul><ul><li>compliment traditional business; </li></ul></ul><ul><ul><li>represent a whole new way of doing business. </li></ul></ul><ul><li>Issue is what is an appropriate model and marketing strategy. </li></ul>
  14. 14. EC Models <ul><li>Primary Models: </li></ul><ul><ul><li>E-Shop </li></ul></ul><ul><ul><ul><li>Traditional web marketing </li></ul></ul></ul><ul><ul><ul><li>Low cost passed to consumer </li></ul></ul></ul><ul><ul><ul><li>24 hr availability </li></ul></ul></ul><ul><ul><ul><li>See for excellent tutorial on setting up an e-shop </li></ul></ul></ul>
  15. 15. EC Models (cont’d) <ul><ul><li>E-Procurement: </li></ul></ul><ul><ul><ul><li>Attracts large number of suppliers; </li></ul></ul></ul><ul><ul><ul><li>Automated tender processing; </li></ul></ul></ul><ul><ul><ul><li>Lower cost for both parties; </li></ul></ul></ul><ul><ul><ul><li>Major corporations/public entities involvement. </li></ul></ul></ul>
  16. 16. EC Models (cont’d) <ul><ul><li>E-Auction </li></ul></ul><ul><ul><ul><li>Electronic bidding with contacting, payment and delivery; </li></ul></ul></ul><ul><ul><ul><li>Buyers benefit from competitive costs and lower lot size; </li></ul></ul></ul><ul><ul><ul><li>Buyers benefit through reduced stock requirement and lower sales overhead. </li></ul></ul></ul>
  17. 17. EC Models (cont’d) <ul><ul><li>E- Mall </li></ul></ul><ul><ul><ul><li>Collection of e-shops; </li></ul></ul></ul><ul><ul><ul><li>Enhanced under a common umbrella( brand name); </li></ul></ul></ul><ul><ul><ul><li>Benefits through common user interface and “spill over” from neighbors. </li></ul></ul></ul>
  18. 18. EC Models (cont’d) <ul><ul><li>3rd Party Market Place </li></ul></ul><ul><ul><ul><li>Contracting out of web marketing to a 3rd party; </li></ul></ul></ul><ul><ul><ul><li>Allows for common marketing front end and transaction support for multiple businesses. </li></ul></ul></ul><ul><ul><li>Virtual Communities </li></ul></ul><ul><ul><ul><li>A growing trend; </li></ul></ul></ul><ul><ul><ul><li>Allows members to add their profiles to the web company. </li></ul></ul></ul>
  19. 19. EC Models (cont’d) <ul><ul><li>Value chain Providers/Integrators </li></ul></ul><ul><ul><ul><li>Support part of the value chain. E.g. electronic payments ( banks); </li></ul></ul></ul><ul><ul><ul><li>Add value by integrating several steps of value chain. </li></ul></ul></ul><ul><ul><li>Collaboration Platform </li></ul></ul><ul><ul><ul><li>Provide environment/specialist tools for collaboration; </li></ul></ul></ul><ul><ul><ul><li>E.g. collaborative design. </li></ul></ul></ul>
  20. 20. EC Models (cont’d) <ul><ul><li>Information Brokers </li></ul></ul><ul><ul><ul><li>Information search (Google); </li></ul></ul></ul><ul><ul><ul><li>Derive revenue through use (LEXIS) or advertising(Yahoo). </li></ul></ul></ul><ul><ul><li>ASP </li></ul></ul>
  21. 21. EC Models (cont’d) <ul><ul><li>Banking/Financial services </li></ul></ul><ul><ul><ul><li>Account management tools; </li></ul></ul></ul><ul><ul><ul><li>Simplified bill payment system; </li></ul></ul></ul><ul><ul><ul><li>Automated customer service; </li></ul></ul></ul><ul><ul><ul><li>Availability of quotes and charts representing stock market information; </li></ul></ul></ul><ul><ul><ul><li>Visualization and decision support tools for investment. </li></ul></ul></ul>
  22. 22. Technology Success Factors <ul><li>Technology Success Factors </li></ul><ul><ul><li>Aligned infrastructure </li></ul></ul><ul><ul><li>Integrated business systems (ERP) </li></ul></ul><ul><ul><li>Security </li></ul></ul>