Electronic Commerce

Lecture 4

Traditional Businesses Microprocessor Technology

Internet Technology

Internet

Global Digital Community

e-Commerce

WebMDOfficeMax

e-Publisher

Consumers

Consumers Businesses Governments

Traditional Businesses Intel/Motorola/Sun/IBM

Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …

Internet

ee-Consumers

Consumers

Internet

ee-Store

Consumers

…

Should We?

Entrepreneurs & Small Businesses Attractive channels in reaching

customers Easy Delivery of innovative products Cost Effective channels for marketing

Big Corporations A threat, an opportunity -> a must Further explore procurement & supply

chain management

Whoever You are…

Could only be better Cutting costs, increase

productivity, … Models from information providers,

products and services providers (e-tailers), e-business, e-enterprise, e-industry,…

Pessimism Out There?

Business is business; can’t afford to be…

Lack of social interactions; generation to generation

One language: :> +,) ?

Internet Business Strategy

Commerce & Technology Revolutions calendar years vs internet years local/regional vs global competition: across/down the street vs unseen

and everywhere; playing field is getting invisibly large

Internet Value transform customer relationships traditional sources of business value disappear

The Commerce Value Chain

o Introduce the idea of Value ChainValue Chaino A value chain from the raw material supplier to

the final product, or from the product on the market to the buying customer

o Using a generic value chain, four stages are identified

o Attracto Interacto Acto React

Stages in a Value Chain

Attract Advertising Marketing

Interact Catalog Sales

ActOrder capturePaymentFulfillment

ReactCustomer serviceOrder tracking

This should be compared to the traditional business practice.

What Strategy?

Channel Master : CiscoSold more than $1.0 billion online out of a total $6.4 billion

worth of routers, switches, and other network interconnect devices (1997)

Customer Magnet : TripodTarget certain consumer group with a selected range of

products to meet their needs

Value Chain Pirate : ONSALE Digital Distributor : Classifieds2000 Others…

ee-Business Models

Consumer retail (c-to-b, c2b) Business-to-business (b-to-b, b2b) Information Commerce Services Commerce??

Bank? Social?

B2C Electronic Commerce

b2c e-commerce or retailing in the Internet company retailing sites, such as B&N, Gateway

, Wellcome domain portal sites, such as WebMD, Expedia,

Amazon.com (not sure…) general portal sites, such as Yahoo! Business contacts/buyers-sellers/market place,

such as Go.com, JobDB.com, www.hkjobs.com newspapers

Will it work b2c ec

one in five persons have made some purchases over the net

50% used e-tickets 60% of Charles Schwab trading via Web distance learning US$8 billion 1998 to estimated US$20

billions in 1999 Internet retailing revenue: implications?? No more traditional shopping malls?

Analysis of B2C EC

threshold of users implies success transaction costs reduced? supply and demand presentation WOULD YOU USE IT?

B2C e-tailers(Tresse, chapter4)

Benefits Ability to reach a global market

(marketspace: critical mass maybe reached quickly)

Reduced marketing and selling expenses (update is easy; no re-printing)

Increased efficiency of operation (specialized personnel)

Ability to target consumers more precisely Ability to convey more accurate product and

availability information

B2C e-tailers

Attracts: advertising, e-coupons, sales, promotions, frequent buyer programs, one-to-one marketing (individualized product announments)

Interact: content development and interactivity

Act: Order processing (one-click ordering) – shopping

cart, order validation and modifications, discounts, cross-selling (this with that), taxes (not applicable), shipping & handling charges, records and receipts

Continued

Act (cont’d) Payment: Cash, credit/debit cards,

check, e-wallets?, currencies? Fulfillment: how? Logistics?

React: customer service – self help, discussion group, track and trace, multiple-language support.

B2B EC

actual business transactions and connection of organizations

types: selling/buying between business - company sites target other business partners

types: portal sites but for businesses; cybercash, security system integration,…

B2BEC - US$43 billion in 1998; expect to hit US$1.3 trillion by the end of 2003

B2B Models(Turban, et al)

Supplier-oriented Marketplace www.cisco.com

Buyer-oriented Marketplace Tpn.geis.com

Intermediary-oriented Marketplace Www.industry.net

Traditional Businesses Intel/Motorola/Sun/IBM

Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …

Internet

ee-Consumers

Consumers

Internet

ee-Store

…

Selling-Chain Management CRMCRM

Enterprise Resource Planning (ERP)/IT

e-Procurement Supply Chain Management

Elements of ERP(p 169)

Sales, Distribution (Order Entry) Human Resources Accounting and Financials Integrated Logistics Production Planning Customer/Employee

Enterprise Resource Planning (ERP)

To improve sutomer order processing To consolidate and unify business functions

such as manufacturing, finance, distribution/logistics, and human resources

To integrate disparate technologies, along with the processes they support, into a common denominator of overall functionality

To create a new foundation on which next-generation applications can be developed

E-Commerce

Example: e-Procurement(chapter nine of A)

A typical procurement process: Identify sellers/vendors Make a request Receive approval Fill up a Purchase Order Wait for Business/Procurement Office to

interface with supplier Wait for the delivery of products Receiving report to Business/Procurement

Office

e-Procurement Solutions

http://www.buyingchain.com/buying_chain/default.asp

http://www.walker.com/products_services/eprocurement/

Benefits of e-Procurement

Efficiency: “lower procurement costs, faster cycle times, reduced maverick or unauthorized buying, more highly organized information, and tighter integration of the procurement function with key back-office systems” (p234)

Effective: “increased control over the supply chain, proactive management of key procurement data, and higher-quality purchasing decisions within organizations”

Other e-Procurement Solutions

Buy-side: linking the buying party with suppliers and back-office systems Fire up browser and login Browser products catalog Select Products and obtain quotes Create On-line PO Get On-line Approval Send PO to Supplier for fulfillment Start order tracking and ready for receipt

CU Business Office

Browser

Quote1 Quote2 Quote3

Quote1 Quote2 Quote3

Approve and Generate P.O.

Other e-Procurement Solutions

Sell-side: Vertical product trading community

www.chemdex.com www.sciquest.com

Supply Chain Management

Too much to read… For a company For inter-enterprises

Other ‘possibilities’ of EC

Industrial E-Commerce: logistic centers, a case in point; third-party or company-owned? Governmental agencies involvement?

Person-centered e-commerce: improves one’s own life and better quality of life overall?

Empowered an individual? Networking...

Two Views of Where EC is Going

acquisition of information vs conduct of actual business transactions

connection of persons vs connection of organizations

“The Future of E-Commerce: Integrate & Customize”Choi & Whinston, ComputerComputer, Jan, 1999.

Traditional Businesses Intel/Motorola/Sun/IBM

Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …

Internet

ee-Consumers

Consumers

Internet

ee-Store

…

Selling-Chain Management CRMCRM

Enterprise Resource Planning (ERP)/IT

e-Procurement Supply Chain Management

Traditional Businesses Intel/Motorola/Sun/IBM

Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …

Internet

ee-Consumers

Consumers

Internet

EE--BusinessesBusinesses

Personal Integrator

Get Started: Planning

Questions to Ask: How is EC going to change our business or

create new channel for new business? How do we uncover new types of business

opportunities? How can we take advantage of new

electronic linkages with customers and trading partners? (Extended Enterprise)

Do we become intermediaries ourselves? (Shrink and Specialize; Expand and Capture)

Planning

How do we bring more buyers together electronically (and keep them there)?

How do we change the nature of our products and services or create new ones?

Why is the Internet affecting other companies more than ours?

How do we manage and measure the evolution of our strategy?

How to assess the success of EC?

What to do?

Mougayar (1998, Opening Digital Markets)

1. Conduct Necessary Education and Training2. Review Current/New Distribution and

Supply Chain Models3. Understand What Your Customers and

Partners Expect from the Web4. Re-evaluate the Nature of Your Products

and Services5. Give a New Role to Your Human Resources

Department

What to do?

6. Extend Your Current Systems to the Outside

7. Track New competitors and Market Shares

8. Develop a Web-Centric Marketing Strategy

9. Participate in the Creation and Development of Virtual Marketplaces

10. Instill EC Management Style

Four System Architechure (Hsu)

Document Connectivity HTML, …

Applications Connectivity CGI, Javascript, …

Database Connectivity ODBC/JDBC, databases

Enterprise Connectivity Java, CORBA

Five Elements of an EC System(Hsu)

Web Server Applications Server Database Server Internal Networking Internet Connection

To Implement the Site

E-business Plan and Design

Web-based Enterprise Computing

(article 20)

DB

db engine

ODBC/JDBC compliant

WebServer-received request-Invoked applications

APIWeb-based

Applications

WebBrowser

Web-based Enterprise Computing

Client-server computing ODBC- & JDBC- compliant DBMS Static vs Dynamic HTML

pages Java COM CORBA Drumbeaat 2000 X/Open Informix, Sybase, Oracle

CGI programs (Unix shell scripts, C and/or Perl programs)

HTTP Applets vs Servlets API ASP vs JSP Lotus Domino, Netscape

Enterprise, IIS, … SQL ColdFusion/CFML XML