INTRODUCTION TO E-BUSINESS AND E-COMMERCE

Chapter 1

Abul Khayer, Lecturer

International Business

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Learning outcomes Define the meaning and scope of e-business

and e-commerce and their different elements

Summarize the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption

Use resources to define the extent of adoption of the Internet as a communications medium for consumers and businesses

Outline the business challenges of introducing e-business and e-commerce to an organization.

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Management issues How do we explain the scope and

implications of e-business and e-commerce to staff?

What is the full range of benefits of introducing e-business and what are the risks?

How great will the impact of the Internet be on our business? What are the current and predicted adoption levels?

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E-business opportunitiesReach:

Over 1 billion users globally Connect to millions of products

Richness Detailed product information on 20 billion + pages

indexed by Google. Blogs, videos, feeds… Personalised messages for users

Affiliation Partnerships are key in the networked economy

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E-business Risk

Strategic risks: making wrong decisions about e-business investments

practical risks: bad stories which may lead to change the company reputation

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E-business

E-business is the use of the Internet and IT to execute all of the business processes for the firm. E-business includes e-commerce, all internal processes, and coordination with business partners such as customers and suppliers

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E-business

E-business refers to the use of digital technology and the internet to execute the major business processes in the enterprise. It includes the activities for the internal management of the firm and for coordination with supplier and other business partners. It also includes e-commerce.

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E-business

E-business is the conduct of business on the Internet, in supply-chain planning, tracking, fulfillment, invoicing, and payment. It includes buying and selling as well as serving customers and collaborating with business partners. It combines the resources of traditional information systems with the global reach of the Web.

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E-Commerce

E simply means anything done via the internet and commerce means buying and selling products, services and information.

So, E Commerce refers to the process of buying and selling or exchanging of products, services, or information via computer networks including internet.

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E-Commerce

E-commerce is associated with buying and selling of information, products and services via computer networks to-day and in the future via any one of the myriad of networks that make up the I-way.

E-commerce concerns the processes for buying and selling goods and services electronically

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E-Commerce

E-commerce is the online process of developing, marketing, selling, delivering, servicing, and paying for products & services transacted on internetworked, global marketplaces of customers, with the support of a worldwide network of business partners.

Retail e-commerce revenues have grown exponentially since 1995 and have only recently “slowed” to a very rapid 16 percent annual increase, which is projected to remain the same until 2010.

The Growth of E-CommerceThe Growth of E-Commerce

Slide 1.13 Key Concepts in E-Commerce

Digital goods: Digital goods are goods that can be delivered over a digital network.

• E.g., Music tracks, video, software, newspapers, books

Slide 1.14 Key Concepts in E-Commerce

Digital market: In Digital market, consumers and suppliers can ‘see’ the prices being charged for goods, and in that sense digital markets are said to be more ‘transparent’ than traditional market.

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E-Commerce

E-commerce involves digitally enabled commercial transactions between and among organizations and individuals. Digitally enabled transactions include all

transactions mediated by digital technology

Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services

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E-Commerce Electronic commerce is the paperless exchange of business information using electronic data interchange (EDI), e-mail, electronic bulletin boards, fax transmissions and electronic fund transfer. It refers to Internet shopping, online stock and bond transactions, the downloading and selling of “soft merchandise” such as software, documents, graphics, music etc (Business town.com).

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Electronic Commerce from the different perspective

Communication Perspective: Electronic Commerce is the delivery of the information, products/ services, or payments over the telephone lines, computer network, or any other electronic means.

Slide 1.18Electronic Commerce from the different perspective

Business Process Perspective: EC is the application of the technology toward the automation of business transactions and workflow.

Online Perspective: EC provides the capability of buying and selling products and information on the internet and other online services

Slide 1.19Electronic Commerce

from the different perspective

Service Perspective: EC is the tool that addresses the desire of firms, consumers, and mgt to cut service costs while improving the quality of goods and increasing the speed of service delivery

The Scope of E-Commerce

Figure 1.1 The distinction between buy-side and sell-side e-commerce

Slide 1.22Different types of Sell-side E-commerce

Transactional e-commerce sites: These enables purchase of products online. The main business contribution of the site is through sale of these products. It also provides information to the customer about the products

Services-oriented relationship-building web sites: provide information to stimulate purchase and build relationship. Products are not typically available here for purchase.

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Brand-building sites: Provide an experience to support the brand. Their main focus is to support the brand by developing an online experience of the brand.

Portal or media sites: provide information or news about a range of topics. ‘Portal’ refers to a gateway of information. These information both on the site and through links to other sites.

Figure 1.2 Summary and examples of transaction alternatives between businesses, consumers and governmental organizations

Figure 1.3 Dubit C2C site for a youth audience (www.dubit.co.uk)

Figure 1.4 Three definitions of the relationship between e-commerce and e-business

Figure 1.5 UK rate of adoption of different digital mediaSource: MORI Technology Tracker, January 2006. See www.mori.com/technology/techtracker.shtml for latest details

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Drivers of consumer Internet adoption

Driver Marketing approach

COST TRANSPORTATIONSTAFFTIME SAVINGPAPER LESSFASTER

CUSTOMERSATISFACTION

DemandIncreasing market place shareServicesQuality (R&D)

COMPETITIVENESS customer demand.Improving the range and quality of services offered. Avoid losing market share to business alreadyusing e- commerce

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Barriers to consumer adoption

No Perceived Benefit

Lack of Trust

Security Problem

Lack of Skill

Cost

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Drivers of business internet adoption Cost/efficiency drivers◦ Increasing speed with which supplies can be

obtained◦ Increasing speed with which goods can be

dispatched◦ Reduced sales and purchasing costs◦ Reduced operating costs.

Competitiveness drivers◦ Customer demand◦ Improving the range and quality of services

offered◦ Avoid losing market share to businesses already

using e-commerce.

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Tangible and intangible benefits

Tangible benefits Intangible benefits

Increased sales from new sales leads giving rise to increased revenue from:– new customers, new markets– existing customers (repeat-selling)– existing customers (cross-selling).

Marketing cost reductions from:– reduced time in customer service– online sales– reduced printing and distribution costs of marketing communications.

Supply-chain cost reductions from:– reduced levels of inventory– increased competition from suppliers– shorter cycle time in ordering.

Administrative cost reductions from more efficient routine business processes such as recruitment, invoice payment and holiday authorization.

Corporate image communication Enhancement of brand More rapid, more responsive marketing

communications including PR

Faster product development lifecycle enabling faster response to market needs

Improved customer service Learning for the future Meeting customer expectations to have a

web site Identifying new partners, supporting existing

partners better Better management of marketing information

and customer information Feedback from customers on products

Figure 1.6 Attitudes to business benefits of online technologiesSource: DTI (2002)

Figure 1.7 North West Supplies Ltd site (www.northwestsupplies.co.uk)Source: Opportunity Wales

Figure 1.8 Adoption of Internet and e-business services across EuropeSource: Eurostat, Community Survey on ICT usage in enterprises, eEurope (2005) Information Society Benchmarking Report, © European Communities 2005, http://europa.eu.int/information_society

Figure 1.9 Barriers to development of online technologiesSource: DTI (2002)

Figure 1.10 The McKinsey 7S frameworkSource: Adapted from Waterman et al. (1980)

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7S Framework

Strategy – new strategic responses are required

Structure – new structures and responsibilities may be required

Systems – new information systems and new processes will be required

Style – less likely to change, but some organizational styles are more responsive to change

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Staff – new responsibilities

Skills – new skills

Super ordinate goals – higher level aims may be updated depending on the business.

Thanks All