MD240 Electronic Commerce

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MD240Electronic Commerce
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First A Sales Pitch
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e-ServiceMD253 and MD254

• If you are interested in learning more about
  e-Commerce business models, business plans,
  marketing, and funding a startup
• MD253 Electronic Commerce
• Spring 2004, Fall 2004
• If you are interested in learning more about
  tools and methods for building and managing
  e-Service operations
• MD254 e-Service Operations Management
• Spring 2004

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Agenda

• Electronic Commerce
• Electronic Markets
• Inter-Organizational Systems

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E-Commerce Terminology
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Electronic Commerce (EC)

• In Electronic Commerce, business transactions
  take place via telecommunications networks
• Electronic Funds Transfer (EFT)
• Electronic Data Interchange (EDI)
• Internet/WWW
• Wireless Networks
• WAP
• SMS
• Bluetooth
• 802.11

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Electronic Business

• E-Business refers to a broader definition of
  Electronic Commerce, not just buying and selling,
  but also servicing customers, collaborating with
  business partners, and conducting electronic
  transactions within an organization
• Electronic marketplaces
• Inter-Organizational Systems

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Electronic Markets

• Electronic Markets
• The business center is not a physical building
  but a digital network-based location where
  business interactions occur
• The principal participants - transaction
  handlers, buyers, brokers, and sellers - not only
  are at different locations but seldom even know
  one another

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Inter-OrganizationalInformation Systems (IOS)

• Inter-Organizational Information Systems
• Involve information flows among two or more
  organizations
• Business-to-business (B2B) oriented
• Objective is efficient transactions between
  organizations

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Inter-OrganizationalInformation Systems (IOS)

• Drivers of Interorganizational Systems
• Reducing costs
• Improving the quality of information
• Compressing cycle time
• Eliminating paper
• Making the trading process easy for users
• Types of Inter-Organizational Systems
• Electronic data interchange (EDI)
• Electronic funds transfer (EFT)
• Extranets
• Integrated messaging
• Shared databases

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Corporate Extranet
EDI, VAN
Internet
The network organization How a company uses the
Internet, and internet and extranet
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E-Commerce Benefits Limitations
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Benefits of E-Commerceto Organizations

• Cost/Price
• Decreasing information costs
• Lowers telecommunication costs
• Reduced inventories (and associated holding
  costs)
• Time/Delivery
• Reduced cycle time
• Innovation
• Supports BPR

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Benefits of E-Commerceto Consumers

• Cost/Price
• Less expensive products
• Customized product at competitive prices
• Quality
• More choice
• Delivery/Time
• Quick delivery
• 24-hour availability
• Quick access to information
• Enhanced Service
• Virtual auctions
• Interact with other EC customers

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Benefits of E-Commerceto Society

• Lower air pollution
• Increase standard of living
• Enjoy products and services in third-world
• Facilitates delivery of public services

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Limitations of E-CommerceTechnical

• Lack of security
• Insufficient telecommunication bandwidth
• Software tools still evolving
• Integration of internet and EC software
• Special Web servers
• Interoperability of software and hardware

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e-Services on the Web
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Types of e-Service
Service Provided To
Service Provided By
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Types of e-Service

• B2B business-to-business
• auctions, procurement
• B2C business-to-consumer
• retail, product support
• C2C consumer-to-consumer
• eBay, communication, chat
• C2B consumer-to-business
• selling/leasing personal information
• G2B government-to-business
• procurement, request-for-proposal
• G2C government-to-consumer
• tax forms, information, purchase T-bills
• G2G government-to-government
• welfare payment management (fed-to-county)

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B2C Business Models

• Electronic Retailing
• sell your stuff, make a profit off of it (e.g.
  Amazon.com)
• Intermediary
• facilitate the sale of other peoples stuff (e.g.
  EBay.com)
• Affiliate
• provide your own free content, sell other sites
  stuff directly on your site
• Advertisement Based/Publishing
• provide something for free, get people to click
  on banner ads
• Subscription Based
• provide content/experience worthwhile of people
  paying a periodic membership fee

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B2C vs. B2B

• B2B is similar to and different from B2C
• B2B e-Services that are targeted at a companys
  employees can be very much like B2C e-Services,
  since an individual will use them
• B2B e-Services that are targeted at the
  organizations regular procurement needs often
  need to provide both
• personal e-Services for employees who monitor the
  procurement process
• high volume transactions to accomplish the
  regular procurement transactions without human
  interference

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B2B Business Models

• Buy Side
• One company serves as a buyer
• Offers to buy electronically from many suppliers
• Sell Side
• One company serves as a seller
• Offers to sell electronically to many customers
• Exchanges
• An exchange in which many buyers and many sellers
  meet

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B2B Business ModelsMarket Mechanisms

• Buy Side
• Buy via a tendering (Request For Quote RFQ)
  system
• Buy from approved supplier catalogs at
  approved/predetermined prices
• Buy from group purchasing clubs
• Sell Side
• Sell from an online catalog
• Exchanges
• Neutral third-party exchanges
• Owned and operated by one large company
• Owned and operated by a consortium of large
  buyers or large sellers

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B2B Business ModelsAuction Mechanisms

• Buy Side
• Reverse Auction The buyer places an item for
  bid that they would like to have supplied.
  Potential suppliers bid down the price until no
  one is willing to bid lower to supply the item.
• Sell Side
• Forward Auction The seller places an item for
  bid that they would like to sell. Buyers then bid
  up the price until no one is willing to bid
  higher to buy the item.

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C2C Business Models

• Auctions
• eBay.com
• Classified Ads
• Variant on simple B2C static web site approach to
  commerce
• Personal Services
• Tutoring
• Astrology
• The Oldest Profession on Earth
• Peer-to-Peer/Barter
• Napster, Aimster, Gnutella, BearShare, etc.

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C2C Business Models

• Person-to-Person Payment
• PayPal
• A fast-growing payment scheme easy to set up
• Enables the transfer of funds between two
  individuals for a variety of purposes
• Example Dr. Paul Tallon (CSOM) sells bound
  copies of his PhD dissertation for 25 paid
  through PayPal. For those interested in buying a
  copy, this is cheaper and of better quality than
  having University Microfilms International do the
  same. It is also faster than mailing a check.
• Competitors include C2IT, QuickCash, eMoneyMail,
  PayDirect, WebCertificate

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B2E (Intra-Business) e-Service

• Business-to-Employee
• HR e-Services
• Hiring
• Employee information
• Online employee recognition programs
• Managing fringe benefits
• Retirement information e-Service

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Emerging e-Services

• Collaborative commerce (c-commerce)
• Business partners collaborate electronically to
  achieve some goal of all organizations
  participating
• Ex manage supply chain
• Ex forecast demand
• Mobile commerce (m-commerce)
• E-commerce performed over wireless devices
• PDAs
• Cell phones

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Consumer-Oriented e-Services Consumer Behavior,
Market Research, and Customer Support
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Objective of Consumer e-ServiceOne-to-One Service
Treat Different Customers Differently

• A firm must be able to change how its products
  are configured or its services is delivered,
  based on the needs of individual customers

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Objective of Consumer e-ServiceOne-to-One Service

• To change products based on customer needs,
  businesses must know about and continuously learn
  about the customer
• Market research techniques are used to study
  customers who participate in e-Services
• e-Service market research techniques are NOT the
  same ones as in traditional environments
• Involves some traditional marketing research
  techniques
• Adds in newer data mining techniques used in an
  online service environment

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e-Services Marketing Model Cycle of Online
Marketing Research
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Sense and Respond in e-Services Drivers of
Consumer Purchase Decision