CS453: The Business of E-Commerce

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CS453 The Business ofE-Commerce

• Readings Handout

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(No Transcript)
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Why E-Commerce?

• Using the Internet is a given now
• Lets reflect (back perhaps) on what it offers
  companies
• Better access to customers
• Cost reductions for services provided
• Opportunity to deliver new products or services
  that would be impossible without the network

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Better Access to Customers

• Reasons?
• Quantity, frequency, quality
• Explain! Examples!
• Quantity, Frequency
• More people can visit a site than a store
• Global presence
• Anytime access

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Better Access to Customers (2)

• Quality
• Learn preferences, target advertising
• Email news and information
• Offer discounts, etc.
• Customer service
• Two-way communication

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Benefits for a Traditional Business View

• Global presence not as hard
• Mass distribution now easier, cheaper
• Maybe costs shifted? Scalability?
• Others pay part of costs (NWs, access)
• Up to date info and products
• Searchable

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Another List 8 Unique Features

• Ubiquity
• Global Reach
• Universal Standards
• Richness
• Interactivity
• Information Density
• Personalization / Customization
• Social Technology

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Discussion
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Has the Net Changed the Business World?

• Of course, in many ways
• Consider concentration vs. empowerment
• Think of Walmart vs. the local small-town general
  store
• What are some issues here?

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Concentration vs. Empowerment

• Big store
• Many customer benefits
• Takes over
• How can a small store survive?
• Meet some need Walmart cant
• Niche market, specialization
• Discuss examples in E-commerce?

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Your Examples
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Concentration vs. Empowerment

• Business on the Internet supports both
• Businesses supporting niche markets can succeed
  better than without the net
• Of course large companies are successful too

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Changes in Competition between Businesses

• Traditional roles and distributions are
  short-circuited
• Consider what banks did 20 years ago
• No other options
• New combinations of loans, investing, money
  management, getting financial info
• Banks, investment houses, insurance companies,
  new startups,

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Creeping Costs

• SW Engineering has taught us things about system
  life-cycles and costs over time
• How do you think these might apply to companies
  that begin to provide services on the Web?
• Discuss!

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SW Engin. Lessons?
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SW Engin. Lessons?

• Maintenance costs over time
• Success hurts
• New features needed
• Environment changes
• Systems degrade over time
• Usability matters
• Scalability

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(No Transcript)
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Topics in this Slideset

• A commerce value chain
• From Chap. 2 Treese and Stewart textbook
• Identifying customers
• Marketing to customers
• International issues
• Legal issues

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1. Whats the Commerce Value Chain?

• Generally
• Value added during the process of creating and
  delivering a product or service
• Commonly used to describe manufacturing of things
• Consider Value-Added Tax (VAT) based systems

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Treese and Stewarts View

• Certainly a commerce-value chain (CVC here) for
  underlying business products
• Also one directly tied to e-commerce
• Focused on customers

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Value Chains (in general)

• Way of organizing activities a business unit does
  to design, , support products or services
• (See p. 26ff in handout)
• At each stage, how can things be improved?
• And can the internet help?

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Chain for Internet Systems

• Four parts Attract Interact Act React
• Attract
• Get and keep customer interest
• Activities advertising, marketing
• Interact
• Turn interest into orders
• Content/product driven web pages, info, query
  results, etc.
• Activities

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Chain for Internet Systems (2)

• Act
• Process and manage orders
• Activities
• Order processing -- shopping carts, taxation,
  shipping charges)
• Payment processing -- account, credit cards,
  third-party financial companies, etc.
• Fulfillment -- deliver hard goods, packing,
  shipping carry out e-service deliver digital
  goods (file, software, license)

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Chain for Internet Systems (3)

• React
• Service customers, order tracking, returns,
  warranties, rebates, help services

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Another View

• Of course its not linear
• Not necessarily even sequential now

Attract
Interact
React
Act
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Comments on This

• Relatively simple ideas here
• Reasonable as a framework for partitioning the
  domain of e-commerce topics, components
• At different points in this chain
• Businesses can fail or succeed
• Businesses can focus
• Differentiation
• Can you think of an example?

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2. Defining the Customer

• With the web, anyone can be
• Thats good news and bad news
• General public vs. specialized companies or
  employees within companies
• E.g. a Motorola engineer looking for ICs for a
  new cell-phone design
• How that persons need different than you or me
  buying a book or song?

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Is it Important to Design for Customer Types?

• Many e-commerce sites assume one kind of customer
• Examples where a mismatch is a problem?
• Examples of sites that dont?
• Things to consider
• Home consumer vs. corporate
• Novice vs. expert
• Age

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3. Marketing on the Internet

• Why does this matter more now than, say, in 2000?
• Your ideas

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Why is Marketing Different on the Internet?

• Can reach many more people anywhere
• More competition
• Identity more easy to conceal
• Who are you? Big company or not? Scam artist or
  market leader?
• New media and multi-media the norm
• Harder or not clear how to get placement,
  presence or attention
• No longer just ads in print, TV or radio
• Search, ad auctions, email, blogs, YouTube,

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Whats the Same?

• Customer identity, needs, wants
• Clear messages
• Effective presentation
• Tracking and measuring success

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Internet Customer Demographics

• Remember when mom and dad didnt surf the web?
  -)
• Students, university types, technologists,
• One interface, many demographics
• E.g. kids and adults use search engines
• Should they really be finding the same things
• Note how in the non-internet world there are
  different marketing channels

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Strategies

• One-to-one marketing
• Email
• Profiles on sites like Google (customers like
  you were also interested in
• Mass marketing (dead or not?)
• Convergence
• With other media sources
• Targeted ads
• On sites, in applications, with query results

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Search and Marketing

• Originally, search didnt include marketing
• Gaming the system became the norm
• Search sites tied ads in with user searches
• Ad auctions
• Specialized search
• Sites by price
• Sites like Priceline
• Sites like Travelocity (car or hotel with that
  flight?)

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4. International Issues

• Global customers, content
• Making sites work for international customers
• Language monetary conversions taxes shipping
  customs and other laws
• Customs, norms, conventions
• Products for international customers
• Software internationalization
• Services sites, games,
• Privacy
• Laws governing info privacy etc.
• E.g. Google and Yahoo in China

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5. Legal Issues

• Privacy
• Policies
• Practical security for customer info and company
  info
• Authorization, digital signatures, etc.
• Government regulation
• Privacy
• Export rules (e.g. cryptography)

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Summary

• Internet Commerce a brave new world?
• Some things arent so different?
• Quickly face global and legal issues that in the
  past only large companies dealt with
• Commerce Value Chain
• A guide to organizing a business plan or a
  system?
• A framework for talking about business efforts
• Next Business strategies