EBusiness: Doing Business Online

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Chapter 7 E-Business Doing Business Online
Learning Goals
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.
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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.
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WHAT IS E-BUSINESS? Electronic business
(e-business) Conducting business via the
Internet.  E-tailing, or virtual storefronts on
Web sites. Online business-to-business
transactions. Electronic data interchange
(EDI), the business-to-business exchange of data
using compatible software. E-mail, instant
messaging, and other Web-enabled communication
tools and their use as media for reaching
prospective and existing customers. The
gathering and use of demographic, product, and
other information through Web contacts.
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Capabilities and Benefits of E-Business  Global
reach. The Net allows goods and services to be
sold to customers regardless of geographic
location. Personalization. Companies can begin
the production process when an order is received
to better satisfy customer needs and sharply
reduce inventory. Interactivity. Customers and
suppliers negotiate prices online, resulting in
an ideal product at the right price that
satisfies both parties. Right-time and
integrated marketing. Online retailers provide
products when and where customers want them and
can coordinate promotional activities and
communication to create a unified,
customer-oriented message. Cost savings.
E-business can markedly reduce the costs
associated with operating and starting a business.
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Business Web Sites Corporate Web site Web site
designed to increase a firms visibility, promote
its offerings, and provide information to
interested parties. Attempt to build customer
goodwill and assist retailers and other resellers
in their marketing efforts. Use for a variety
of other purposes Disseminating financial
information to investors Enabling prospective
employees to apply online for jobs  Providing
e-mail communication. Marketing Web site Web site
whose main purpose is to increase purchases by
visitors.
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BUSINESS-TO-BUSINESS (B2B) E-BUSINESS Business-to-
business e-business (B2B) Electronic business
transactions between businesses using the
Internet.  B2B transactions account total 2.5
trillion. By some estimates, account for 80
percent of all e-commerce activities.  Can
reduce cost of B2B transactions by almost 25
percent.
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Electronic Data Interchanges, Extranets, and
Private Exchanges Electronic Data Exchange
Computer-to-computer exchanges of invoices,
purchase orders, price quotations, and other
sales information between buyers and
sellers. Extranet Secure networks used for
e-business and accessible through the firms Web
site by external customers, suppliers, or other
authorized users. Private Exchanges A secure
Web site at which a company and its suppliers
share all types of data related to e-business.
Sometimes called c-business because of use as a
collaborative tool.
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Electronic Exchanges and E-Procurement
Electronic exchanges are online marketplaces that
bring buyers and sellers together and cater to a
specific industrys needs. Initially 15,000
were launched but only 20 percent remain.
E-procurement is Web- based systems that enable
all types of organizations to improve the
efficiency of their procurement processes.
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ONLINE SHOPPING COMES OF AGE Business-to-consumer
e-business (B2C) Selling directly to consumers
over the Internet.  E-tailing accounts for eight
percent of all U.S. sales.  Thirty percent of
the U.S. population shops online.  Services also
are important participants in e-business. E-Tailin
g and Electronic Store Fronts Electronic
storefronts Company Web site that sells products
to consumers.  Growth of broadband is aiding
e-tailing. Fifty-five percent of American
Internet users have broadband.  Expected to
rise to 70 percent.
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Who Are the Online Buyers and Sellers?
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Who Are the Online Buyers and Sellers?  Online
market is changing as customers become more
familiar with online shopping.
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Benefits of B2C e-Business Lower Prices Many
products cost less online. Internet allows
customers to easily compare prices from multiple
sellers. Convenience Can order products from
around the world anytime day or night. Can
register customer information to streamline
transactions. Personalization Emphasis on
personalized, one-on-one marketing to increase
repeat purchases.
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Developing Safe Online Payment Systems Response
to customer concerns about security of sending
credit card information over the Internet.
Through encryption, data is encoded for security
purposes. Many companies use Secure Sockets
Layer (SSL) technology to increase to encrypt
information and verify senders and receivers.
Others use electronic method payment method, a
computer data file at an e-business sites
checkout counter that contains not only
electronic cash but credit card information,
owner identification, and address.
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E-BUSINESS CHALLENGES Privacy Issues Privacy is
among the top concerns of Internet users.
E-business sites often require passwords and use
electronic signatures, an electronic form of
identity verification. Companies can track
customers shopping and viewing habits through
cookies. Customers usually prefer that
companies do not share their personal
information. Merchants have responded by joining
privacy organizations.  Privacy protections may
soon become legally required. Employees also
have concerns that employers are monitoring their
Internet behavior. Companies worry about data
theft.
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Internet Fraud Internet Crime Complaint Center
logged more than 207,000 complaints in a recent
year, an increase of 67 percent over the prior
year. Phishing Using e-mail or pop-up messages to
get unsuspecting victims to disclose personal
information. Poor Web Site Design and Service
Two-thirds of Internet shopping carts are
abandoned before any purchase is
made.  Companies that have brick-and-mortar
experience often have better success satisfying
customers than Internet-only retailers. Channel
Conflicts Direct sales to customers can compete
with business partners such as retailers and
distributors, disputes called channel conflicts.
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USING THE WEBS COMMUNICATION FUNCTION Web has
four main functions e-business, entertainment,
information, and communication. Communication
is Webs most popular function. Firms use
e-mail to communicate with customers, suppliers,
and other partners. Spam Popular name for junk
e-mail. Online Communities Internet forums,
newsgroups, electronic bulletin boards, and Web
communities that appeal to people who share
common interests.
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Blogs Blog Short for Web log, an online journal
written by a blogger. Corporate blogs can help
build brand trust.  Employee blogs present
ethical issues. Web-Based Promotions Companies
buy banner ads and pop-up ads on Web sites
customers are likely to visit. Search marketing
Paying search engines a fee to make sure the
companys listing appears toward the top of
search results.  Companies use online coupons to
promote their products.
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MANAGING A WEB SITE Developing Successful Web
Sites Planning and Preparation What is the
companys goal for its Web site? Will the site
be maintained in-house or by a contractor? What
will the site be named? Content and Connections
Content an important factor for whether visitors
return to a site. Resources should be relevant,
easy to access and understand, updated
regularly, and compelling. Small businesses may
be better off outsourcing to meet their hosting
and maintenance needs.
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Costs and Maintenance Variety of
costs  Development  Placing the site on a
Web server. Maintaining and updating the
site. Promoting the site.
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Measuring Web Site Effectiveness Click-thr
ough rates Percentage of people presented with a
Web banner ad who click on it. Conversion rates
Percentage of visitors to a Web site who make a
purchase.
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GLOBAL ENVIRONMENT OF E-BUSINESS  Future growth
of many companies is linked to a global strategy
that incorporate e-business. U.S. leads world
in Internet users but ranks only fifth in
Internet penetration. International competition
is growing.  Can heighten competition in the
global marketplace.