E-Business: 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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University of Phoenix  FreshDirect  Boston
Symphony Orchestra
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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.
Allows retailers like Walmart to use a system of
quick response, is the retailing equivalent of
just-in-time inventory. Extranet Secure
networks used for e-business and accessible
through the firms Web site by external
customers, suppliers, or other authorized
users. Provide selected outsiders with internal
information.
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Private Exchanges A secure Web site at which a
company and its suppliers share all types of data
related to e-business. Participants collaborate
on product ideas, production scheduling,
distribution, order tracking, and any other
functions a business wants to include.
Sometimes called c-business.
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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?  Typical
user is young, highly educated, urban or
suburban, and affluent. Demographics are
shifting there is decreasing difference in
Internet purchasing habits among groups.
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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. Seventy percent of the complaints
referred to law enforcement agencies dealt with
online auctions. Phishing Growing form of
Internet fraud that uses e-mail or pop-up
messages claiming to be from familiar businesses
or organizations to get unsuspecting victims to
disclose personal information. Payment fraud is
also growing.  Cardholder fraudulently claims
ordered merchandise was never delivered and asks
credit issuer for a chargeback.
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Poor Web Site Design and Service Two-thirds of
Internet shopping carts are abandoned before any
purchase is made. Problems with system
overloads during holiday and other busy shopping
seasons. Problems with delivery and
returns.  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. Example Mattel sells only
specialty products online.
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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. Some incorporate wikis, a
Web page that anyone can edit. Some incorporate
podcasts, video audio recordings that are
posted online. According to iPodder.org, more
than 3,000 podcasts operate worldwide.
Corporate blogs can help build brand trust.
Example Apples iLounge Builds iPod
brand.  Gives Apple ideas for product
improvement.  Employee blogs present ethical
issues.  Negative comments can harm company.
Form of free speech that humanizes a company.
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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.  Some
companies, such as ValPak Marketing Systems,
offer virtual, searchable coupons.  Nikes Joga
Bonita marketing campaign and worlds longest
soccer clip, to which Nike invites fans to
contribute.
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MANAGING A WEB SITE Developing Successful Web
Sites
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Planning and Preparation What is the companys
goal for its Web site? Determines content and
design. Determines scope. 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. Available resources should be
relevant to viewers, easy to access and
understand, updated regularly, and written or
displayed in a compelling, entertaining way.
Small businesses are 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.  U.S. firms run eight of the 10
most popular e-business sites in Europe, but
French-owned Fnac.com is now more popular than
Amazon.com in both France and Spain. Three of
four Web pages are written in English.  Can
heighten competition in the global marketplace.
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