Ecommerce

1
E-commerce

• Some pros and cons

2
Obvious benefits of the I-net

• It is pervasive
• Standard protocols connectivity
• Wide reach
• Linking suppliers, retailers, warehouses,
  customers, markets
• Links nations
• Links cultures

3
Cost savings from I-net

• Reduced communication costs
• Compare to hard copy costs
• Compare I-net telephony to private network costs
• Reduced transaction costs
• Compare to in-person transactions costs
• Paperless
• Reduces numbers of intermediaries
• Reduces management costs
• Organizing
• Controlling
• Coordinating
• Employee informing costs (employee personal
  information access)

4
Customization of information

• Appeal to diverse audiences
• Customize to viewing style approach
• Customize timing and location of viewing
• Customize to purpose and interest of viewer (the
  dynamic page)

5
Instant gratification

• Rapid access to knowledge
• On-the-spot access
• Access to varied content suppliers
• entertainment
• statistics
• weather
• government

6
Environmental friendliness

• Paper saving
• Traffic (travel) saving
• pollution
• congestion
• personal conflict
• Is h/w environmentally friendly?

7
Under what circumstances do we have a workable
Internet business model?

• How do you determine viability of a business
  model?
• How important is information?
• Is anything else as important as information?

8
A business model (brick and mortar?)
9
How do present day e-businesses fit the working
business model?Some e-business models

• Virtual storefront
• Exchange and auction
• Content providers and information brokers
• Hardware and software service providers
• Shopping brokers and aggregators

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How do present day e-businesses fit the business
model?

• Virtual storefront
• Selling of physical products, services,
  electronic products.
• Need acquisition? How?
• Need warehousing? How?
• Need delivery? How?
• Source of revenue?
• (Amazon, Specialty foods, Banking, h/w s/w
  sales)

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How do present day e-businesses fit the business
model? (contd)

• Exchange and auction
• Provide a forum to exchange goods and services in
  response to changing prices (auction and reverse
  auction).
• Need acquisition? How?
• Need warehousing? How?
• Need delivery? How?
• Source of revenue?
• (eBay, Bid.com, Priceline, steel sales sites,
  commodities auction sites)

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How do present day e-businesses fit the business
model? (contd)

• Content providers and information brokers
• Provides information subjects of interest as well
  as on the availability of products, product and
  services evaluations and their costs.
• Need acquisition? How?
• Need warehousing? How?
• Need delivery? How?
• Source of revenue?
• (Travel services, journal newspaper sites,
  economic data sites)

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How do present day e-businesses fit the business
model? (contd)

• Hardware and software service providers
• Provides hardware, software and processing
  services to business and private users.
• Need acquisition? How?
• Need warehousing? How?
• Need delivery? How?
• Source of revenue?
• (PC support on-line, application software
  providers (ASPs), backup storage services, etc.)

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How do present day e-businesses fit the business
model? (contd)

• Shopping brokers and aggregators
• Provide forums for many sellers to display and
  sell their products or provides forum for
  several buyers to purchase in quantity at a
  discount.
• Need acquisition? How?
• Need warehousing? How?
• Need delivery? How?
• Source of revenue?
• (Insurance broker sites, car shopping sites,
  Mercata.com, etc.)

15
Dangers when the business model is disregarded.

• Faltering customer service
• Lack of delivery service
• Poor business process
• Week supply management (see eBay)
• Drying up of revenue sources (.com dot bust!)
• The bottom line in any case
• Quality products services
• Lowest cost
• Delivery
• Customer care

16
Will the Internet really change everything?

• Can a single technology do all that?
• Can a single technology impact on the entire
  economy? (see 2000-01 performance)
• Can it impact on the world economy?
• Will some be left behind? Why?

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Where the Internet may have an influence

• Financial services (banking, loans financial
  institutions and the public are still
  distrustful why?)
• Entertainment (but how do you pay the bills?)
• Health care (x-actions on the web but are the
  public, providers, and the institutions on
  board?)
• Government (delivery of regulatory information
  however, it is costly where is enforcement?)
• Basic information services (national data sites
  who pays the bill?)

18
Where the impact of the Internet may be more
marginal

• Retailing (sites look good but, you still need to
  move the boxes)
• Manufacturing (supply and value chains are
  important but, you still have to produce quality
  goods)
• Education (can cut costs but, at what price
  impersonal education?)
• Travel (the sites look fantastic but, you still
  need to get there and find a room you can afford)
• Energy (power exchange sales are popular but, you
  still need to have the equipment to generate
  deliver the juice)

19
A quick challenge!

• Consider the low value retailer who wishes to
  expand its market horizon and sell products on
  the web. Building a glitzy web site with 100's of
  products is no problem. How about receiving
  payment for low value of goods sold? How will
  this retailer deliver goods to buyers? Assume the
  value range for goods is between 1 to 10 per
  item, and assume that total purchases range form
  5 to 20 per item. You may also assume that due
  to cost savings on the Web items are generally
  priced about 10-12 below competing brick and
  mortar stores.
• You may also assume that the prospective customer
  does not have immediate access to the corner
  Target or Wall-Mart but would otherwise be
  classified as the candidate customer. Also, this
  customer has Internet access, a bank, and all the
  popular delivery services.
• What are the problems? You need to think of an
  Internet solution to this problem.
• What solutions do you suggest? Are they feasible?
  How does your business model look?

20
A business challenge

• Using the business model discussed earlier,
  describe an e-commerce site for a non-profit
  business serving the Elder Care industry. Your
  product is information services. See the WSJ
  article and the links there, for ideas. You need
  to describe the modules of supply, business
  process, service delivery, storage/warehousing,
  access, source of financing of operations.

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End e-commerce