ECommerce

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E-Commerce
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• Pentagons Arpanet was first attempt to use
  computer networks to share knowledge
  electronically
• National Science Foundation developed system
  further to permit public access to build first
  internet
• Now local area networks (LANS) connected to wider
  area networks (WANS) using TCP/IP protocol
• Originally text based now evolved into visual,
  audio and text knowledge format transfers

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• Internet is only one component of way
  organisations use electronic media to share
  knowledge
• Volume and quality of knowledge exchange has been
  dramatically improved
• Anderson project concluded 5 Truths of
• New market structures
• Knowledge gains value
• Zero cost of operation
• Reduction in prices
• Instant delivery

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Economics

• E-Commerce provides knowledge and as knowledge
  approaches perfect competition (everybody is
  informed) should move prices downwards
• Evidence from some sectors (e.g. Tickets books)
• In B2B markets administration costs are reduced
  due to electronic data transfer
• Marketing costs are lowered by advent of
  automated web sites providing customer with
  knowledge at touch of a button

5

• Scale of e-commerce is massive
• In 1999 e-commerce in USA equalled entire GDP of
  Switzerland
• Industrial e-commerce markets are much bigger
  than on-line consumer markets
• Rapid growth of e-commerce attracted
  entrepreneurs and venture capitalists

6

• Many dot.com start-ups had high expenses but
  lacked knowledge of how to build viable sales
  base
• Late 90s saw the dot.com unsustainable bubble
  burst
• Real success stories are existing terrestrial
  firms that moved on-line
• Able to exploit existing knowledge of markets and
  exploit customers knowledge of their existence

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Benefits

• Range of benefits to customers from on-line
  trading
• Convenience of 24/7 operations
• More knowledge provision
• Fewer hassles (no shopping trip)
• Multi-media knowledge delivery
• New products/services
• For firmsbenefits include
• Lower operating costs
• Improved distribution
• Reduced personal selling costs
• Ability to build closer customer relations
• Customised promotions
• Faster market response
• New opportunities

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Low High
Integrated e-commerce knowledge orientation
Knowledge content focus orientation
High Low
Role of E-commerce in Knowledge Provision
Low knowledge involvement orientation
Transaction knowledge focus orientation
Role of E-commerce in using knowledge to support
the Purchase Transaction
FIGURE 31 AN E-COMMERCE ALTERNATIVE
ORIENTATION MATRIX
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• Terrestrial good practice still applies in
  cyberspace
• Technology is only a facilitator
• Marketers must lead process
• Technology must offer additional benefits to
  customers
• Originally technology was designed to permit
  e-mails and discussion groups
• Original web sites published static knowledge
• Gateway interface technology permitted on-line
  data interaction between supplier and user

10

• Applications programme interface (API) allowed
  supplier and user to store data usage and speed
  up knowledge-access activities
• Certain firms more successful (e.g. Cisco)
  because
• Customer driven
• Established commitment to TQM and JIT
• High level of expertise in IT
• High expertise in supply chain management
• Success requires move to systems automation to
  optimise knowledge exchange

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Customer Web Browser
Rational Database Server
Web-to-Database Middleware
API Interface
Web Server
Firms Database
Internet
Integration of Data from all internal operations
FIGURE 32 AN AUTOMATED E-BUSINESS DATABASE
SYSTEM
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• Needs to exploit automated data utilisation
• All data integrated on single location
• Data must be organised by topic
• Data must remain accurate over time
• Move to use relationship databases to enhance
  ability to analyse data and generate new
  knowledge
• Real Time Data Mining permits almost instant
  access to knowledge, identifying market change
  and new opportunities