E-business refers to conducting business on the Internet. The term e-business describes a wide range of business activities that take place on the Internet using applications that rely on the Internet.
E-business offers a variety of benefits for organizations. E-business is an important part of the growth in the service sector. Effective online presence improves the performance of traditional operations. A brick-and-mortar operation is the term for traditional stores.
E-business has proven very successful for many organizations. University of Phoenix, FreshDirect and the Boston Symphony Orchestra are all successful e-business ventures.
Businesses use the web for a variety of reasons. Most frequently they serve as a marketing tool to attract customers. E-business features allow customers to shop online.
Many of the benefits of e-commerce have come with business-to-business transactions. Companies like UPS and the Post Office use their websites to save money and time by doing business online. Companies use a variety of tools to conduct business online with partners, wholesalers and retailers.
Walmart is one of the first major corporations to adopt EDI and other technologies to gain a competitive advantage. EDI is a main reason that Walmart is so efficient. The Internet has allowed many EDI technologies to improve. Extranets use the Internet for partners and businesses to collaborate. Private exchanges are the future of extranets. These are secure web sites that allows businesses to share all types of information. E-procurement allows organizations to streamline their procurement (purchasing) processes. Electronic exchanges are online marketplaces that bring together buyers and sellers of a specific industry. Electronic exchanges are focused on procurement.
Selling to customers directly over the Internet. There are millions of goods for sale online. There are a variety of retail stores that make the Internet one big cybermall.
The number of older shoppers online is increasing dramatically. Demographics of online buyers and sellers are changing constantly.
Consumers note many reasons they shop online. For some consumers these are singular benefits, while combined, they create a strong benefit for a growing number of consumers.
Customers have a growing concern regarding safety on the Internet. There have been a constant technology developments to address shopping online. The Security Standards Council, which was started by credit card companies, exists to enhance payment account data security.
In addition to credit card transactions online, privacy is a growing concern for consumers. Consumers worry that the information about them will be available to others without their permission. Although online shopping is growing, consumers are very concerned about providing credit cards and personal information online.
Internet fraud is another challenge of e-business. High-tech scams that use authentic-looking email or phone systems are reported to the Internet Crime Complaint Center. Phishing has evolved into a more advanced form of Vishing that uses phone systems and voice technology.
For firms to attract customers and keep them, they must meet buyers’ expectations. A well designed website is important. Many customers get frustrated with delivery and return procedures. A good example of proactively reducing channel conflict is Mattel – you can only purchase specialty dolls from their website.
Companies have long-used email and it has served as a key by-product of the Internet. The volume of email today exceeds regular mail by ten to one. Communication is a key purpose of the web and includes entertainment, information, e-business and communication.
Blogs have become increasingly popular. People have combined the use of blogs with other technologies like wikis and podcasts. Wikis allow all users to edit the pages while podcasts are audio and video content. Many organizations are beginning to use blogs as a way to build brand loyalty but some blogs can be problematic. Disgruntled employees can destroy a company’s reputation.
Web-based promotions are another way for businesses to reach customers. Click ValPak Marketing to view their searchable coupon site.
E-business provides a global opportunity for organizations. The US leads in Internet users but the US does not still maintain the most popular website in every country.
Internet access around the world is growing, but Internet presence in other countries can cause problems. Should companies censor their web content in other countries?
Business websites serve multiple purposes. It is imperative that websites are good. Different websites serve different purposes; therefore, success may mean different things. Popularity for a news web site that sells advertising is important, while a website that is selling goods requires a streamlined transaction process. The planning of the website is the first step. The content that is included on a website determines whether visitors return to a site. The cost of a site is an important consideration. Costs include variable costs like development expenses, maintenance, updating and promotion.
Managers measure their website by click-through rates and conversion rates. Web site measurement is continuing to evolve. It is important as firms can gauge sales potential and learn about their customers.
E-Business: Doing Business Online Chapter 7
Define e-business and discuss how it can help achieve business success. Distinguish between a corporate and a marketing Web site. List the major forms of B2B e-business. Explain B2C e-business and identify the products most often sold online. Describe some of the challenges associated with e-business. Discuss how organizations use Internet communications to advance their objectives. Discuss Web sites and identify methods for measuring Web site effectiveness. Explain the global scope of e-business. 1 2 3 4 5 6 7 Learning Goals 8
<ul><li>Electronic business (e-business) - Conducting business via the Internet. </li></ul><ul><ul><li>E-tailing, or virtual storefronts on Web sites. </li></ul></ul><ul><ul><li>Online business-to-business transactions. </li></ul></ul><ul><ul><li>Electronic data interchange (EDI), the business-to-business exchange of data using compatible software. </li></ul></ul><ul><ul><li>E-mail, instant messaging, and other Web-enabled communication tools and their use as media for reaching prospective and existing customers. </li></ul></ul><ul><ul><li>The gathering and use of demographic, product, and other information through Web contacts. </li></ul></ul>What is E-Business?
<ul><li>Global Reach . Goods and services can be sold to customers worldwide. </li></ul><ul><li>Personalization . Companies can customize products and reduce inventory. </li></ul><ul><li>Interactivity . Customers and suppliers can negotiate prices online. </li></ul><ul><li>Right-time and integrated marketing . Online retailers provide products when and where customers want them and promotions can be directed to individual customers. </li></ul><ul><li>Cost savings . E-business can reduce costs. </li></ul>Capabilities and Benefits of E-Business
University of Phoenix FreshDirect Boston Symphony Orchestra Some E-Business Successes
<ul><li>Increase a firm’s visibility, promote its offerings, and provide information to interested parties. </li></ul><ul><li>Build customer goodwill and assist retailers and other resellers in their marketing efforts. </li></ul><ul><li>Disseminate financial information to investors. </li></ul><ul><li>Enable prospective employees to apply online for jobs. </li></ul><ul><li>Provide e-mail communication. </li></ul><ul><li>. </li></ul>Business Web Sites Web sites are frequently used for marketing to attract visitors/customers.
Business-to-Business (B2B) <ul><li>Business-to-business e-business (B2B) Electronic business transactions between businesses using the Internet. </li></ul><ul><li>B2B transactions total $2.5 trillion. </li></ul><ul><li>By some estimates, account for 90% of all e-commerce activities. </li></ul><ul><li>Can reduce cost of B2B transactions by almost 25 percent. </li></ul>
<ul><li>Electronic data interchange (EDI) is a computer-to-computer exchange of invoices, purchase orders, price quotations and other sales information. </li></ul><ul><li>Extranets offer an efficient way for business to collaborate with vendors, partners and customers. </li></ul><ul><li>Private Exchanges are the next generation of extranets where all types of data related to e-business is shared. </li></ul>Electronic Data Interchanges, Extranets, & Private Exchanges
<ul><li>Business-to-consumer (B2C) </li></ul><ul><li>E-tailing accounts for 4% of all U.S. sales. </li></ul><ul><li>Growing at a rate of 18%. </li></ul><ul><li>Services like banking and brokerage are key aspects of e-tailing </li></ul><ul><li>Many retailers have electronic storefronts. </li></ul><ul><li>Growth of broadband is aiding e-tailing. </li></ul>Online Shopping and B2C
Who are online buyers and sellers? <ul><li>Typical user is young, highly educated, urban or suburban, and affluent. </li></ul><ul><li>Demographics are shifting; there is decreasing difference in Internet purchasing habits among groups. </li></ul>
<ul><li>Lower Prices </li></ul><ul><li>Many products cost less online. </li></ul><ul><li>Internet allows customers to easily compare prices from multiple sellers. </li></ul><ul><li>Convenience </li></ul><ul><li>Can order products from around the world anytime, day or night. </li></ul><ul><li>Can register customer information to streamline transactions. </li></ul><ul><li>Personalization </li></ul><ul><li>Emphasis on personalized, one-on-one marketing to increase repeat purchases. </li></ul>Benefits of B2C E-Business
<ul><li>Through encryption , data is encoded for security purposes. </li></ul><ul><li>Many companies use Secure Sockets Layer (SSL) technology to encrypt information and verify senders and receivers. </li></ul><ul><li>An electronic wallet contains credit card and identification information. Customers can avoid retyping purchase information. </li></ul>Developing Safe Online Payment Systems
<ul><li>Privacy is among the top concerns of Internet users. </li></ul><ul><li>E-business sites often require passwords and use electronic signatures , an electronic form of identity verification. </li></ul><ul><li>Companies can track customers’ shopping and viewing habits through cookies. </li></ul><ul><li>Customers usually prefer that companies do not share their personal information. Merchants have responded by joining privacy organizations. </li></ul><ul><li>Privacy protections may soon become legally required. </li></ul><ul><li>Employees also have concerns that employers are monitoring their Internet behavior. </li></ul><ul><li>Companies worry about data theft. </li></ul>E-Business Challenges (privacy)
<ul><li>Internet Crime Complaint Center logs more than 200,000 complaints annually. </li></ul><ul><li>50% of the complaints referred to law enforcement agencies deal with online auctions. </li></ul><ul><li>Phishing is a growing form of Internet fraud that uses e-mail or pop-up messages to get unsuspecting victims to disclose personal information. </li></ul><ul><li>Vishing, or voice phishing, involves phone calls to credit card customers to obtain personal and banking information. </li></ul><ul><li>Payment fraud is growing. </li></ul>E-Business Challenges (Internet Fraud)
<ul><li>50% of shopping carts are abandoned before any purchase is made. </li></ul><ul><ul><li>Lack of Information </li></ul></ul><ul><ul><li>Inability to find the information they need </li></ul></ul><ul><ul><li>Feeling overwhelmed by too much information </li></ul></ul><ul><li>Companies that have brick-and-mortar experience often have better success satisfying customers than Internet-only retailers. </li></ul><ul><li>Online sales can compete with business partners such as retailers and distributors causing disputes called channel conflict. </li></ul>E-Business Challenges (poor website design)
<ul><li>Web has four main functions: e-business, entertainment, information , and communication . </li></ul><ul><li>Communication is Web’s most popular function. </li></ul><ul><li>Firms use e-mail to communicate with customers, suppliers, and other partners. </li></ul><ul><li>Online Communities: Internet forums, newsgroups, electronic bulletin boards, and Web communities that appeal to people who share common interests. </li></ul><ul><li>Spam is junk e-mail. </li></ul>Using the Web’s Communication Function
<ul><li>Blog - short for Web log , an online journal written by a blogger. </li></ul><ul><li>May incorporate wikis , a Web page that anyone can edit. </li></ul><ul><li>Some incorporate podcasts , video & audio recordings. Feedburner services more than 200,000 podcasts. </li></ul><ul><li>Corporate blogs can help build brand trust. </li></ul><ul><ul><li>Example: Apple’s iLounge builds the iPod brand and gives Apple ideas for product improvement. </li></ul></ul><ul><li>Employee blogs may present ethical issues. </li></ul>Web Communication Blogs
<ul><li>Banner Ads – messages placed on frequently visited websites </li></ul><ul><li>Pop-up Ads – ads that appear in separate windows </li></ul><ul><li>Pre-roll Video Ads – advertisements that roll as soon as a page is loaded </li></ul><ul><li>Search marketing – companies pay for top visibility in search results </li></ul><ul><li>Some companies, such as ValPak Marketing Systems , offer virtual, searchable coupons. </li></ul>Web Communication Web Based Promotion
<ul><li>Future growth of many companies is linked to a global strategy that incorporates e-business. </li></ul><ul><li>U.S. leads world in Internet users but ranks only 5th in Internet penetration. </li></ul><ul><li>E-Bay may dominate most markets, but Chinese company Alibaba .com has 83% of the auction business in China. </li></ul><ul><li>Three of four Web pages are written in English. </li></ul><ul><li>E-business can heighten competition in the global marketplace... </li></ul>Global Environment of E-Business
Developing a Successful Website <ul><li>It is easier to create a bad website than a good one. Organizations must think about: </li></ul><ul><li>Planning and Preparation </li></ul><ul><li>Content and Connections </li></ul><ul><li>Costs and Maintenance </li></ul>
<ul><li>Click-through rate - percentage of people presented with a Web banner ad who click on it. </li></ul><ul><li>Conversion rate - percentage of visitors to a website who make a purchase. </li></ul>Managing a Website