Electronic Commerce Selling on the Web MIS 6453 – Spring 2006 Instructor: John Seydel, Ph.D.
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Transcript of Electronic Commerce Selling on the Web MIS 6453 – Spring 2006 Instructor: John Seydel, Ph.D.
Electronic Commerce
Selling on the Web
MIS 6453 – Spring 2006
Instructor: John Seydel, Ph.D.
Student Objectives
Compare an contrast LANs/WANs, the Internet, intranets, and extranetsDiscuss ecommerce connectivity optionsSummarize the basic ecommerce revenue modelsDiscuss why business models evolveUnderstand revenue strategy issues facing ecommerce businessesAddress what it takes to create an effective Web presenceSummarize web design principles
Some Connectivity Issues
Types of networksConnection optionsInternet2
Intranets and Extranets
Intranet (not just a LAN): Interconnected network that does not extend beyond the organization that created it; uses TCP/IP
Extranet (not just a WAN):
Intranet extended to include entities outside the boundaries of an organization
Connects companies with suppliers, business partners, or other authorized users
Public and Private Networks
Public network: Any computer network or telecommunications network available to the publicPrivate network: A private, leased-line connection between two companies that physically connects their intranetsLeased line: Permanent telephone connection between two points
Virtual Private Network (VPN)
Extranet that uses public networks and their protocols IP tunneling is uses; effectively creates a private passageway through the public InternetEncapsulation is involved; process used by VPN softwareVPN software: must be installed on the computers at both ends of the transmission; special encryption involved
VPN Architecture Example
Internet Connection ConceptsBandwidth: the primary criterion
Amount of data that can travel through a communication line per unit of time
Net bandwidth is what counts (actual speed that information travels)
Symmetric connections Provide the same bandwidth in both directions
(upload/download) Asymmetric connections provide different bandwidths for
each direction
Options: Voice-grade Broadband (data-quality) Leased lines Wireless
Voice-Grade Telephone Connections
POTS, or plain old telephone service Uses existing telephone lines and an analog
MoDem Provides bandwidth between 28 and 56 Kbps
Digital Subscriber Line (DSL); Connection methods do not use a modem Instead use Integrated Services Digital
Network (ISDN) switching Bandwidths between 128 Kbps and 256 Kbps
Broadband Connections
Higher quality; developed for transmitting data
Operate at speeds of greater than 200 Kbps
Asymmetric digital subscriber (ADSL) 100 to 640 Kbps upstream 1.5 to 9 Mbps downstream
Cable modems: transmission speeds between 300 Kbps and 1 Mbps
DSL: private line with no competing traffic
Leased-Line ConnectionsNon-shared connections between organizations and ISPs
Include: DS0 (carries only one digital signal); typically 56
Kbps telephone line T1 line (also called a DS1); carries 24 DS0 lines
and operates at 1.544 Mbps Fractional T1; provides service speeds of 128
Kbps and upward in 128-Kbps increments T3 service (also called DS3); offers 44.736 Mbps
Wireless ConnectionsSatellite
For rural areas May work in conjunction with MoDem for uploads
Bluetooth Designed for personal use over short distances (< 9 meters) Low power / low-bandwidth, with speeds of up to 722 Kbps Networks are called personal area networks (PANs) or piconets Devices can discover one another and exchange info automatically
WiFi (wireless ethernet using 802.11 protocols) Most common wireless connection technology for use on LANs Wireless access point (WAP): device required to transmit network
packets between WiFi-equipped computers and other devices Bandwidths vary (11 and 45 Mbps and up); range of about 300 ft Devices are capable of roaming
Fixed point; use repeaters from ISP to customersCellular networks: here’s the big potential for growth
Some Comparisons (Kbps)POTS – phone modem (56)Cable modem – sharing channel (300/10,000)T1 – leased line (1,544)DSL – private line (640/9,000)T3 – leased line (44,700)T3 with ATM – asynchronous transfer (622,000)Internet2 – testbed for tech (up to 10,000,000)LAN/WAN connections (e.g., ASU)
Wired (1,000,000) Wireless
802.11b (11,000) 802.11g (45,000)
Satellite – mostly for rural access (150/500)Note: we must consider the digital divide
Yet to Come . . .
Business models for the WebWeb presence conceptsWebsite critiques
eCommerce Revenue Models
Web catalogDigital contentAdvertising supportedAdvertising/subsubcription mixFee-for-transactionFee-for-service
The Web Catalog Model
Evolved from the mail-order model B2C B2B (often as extranets)
Extensively used for: Consumer electronics Entertainment (books, music, videos) Luxury goods (high value:weight ratio) Clothing retail and discount Gifts and flowers General discount
Most typically supplement traditional businesses
Consider Walmart.com Think also about websites chosen for critique
The Digital Content Model
Ideal means of exchange for digitized content: Movies and recordings Photographs Published documents (online library) Newspapers, magazines, . . . Other . . . ?
Limited, of course, to customers with broadbandAgain, often used to supplement conventional business models
The Advertising Supported Model
Examples include Portals (MSN, AccessPoint.AState, Yahoo, . . . ) Newspapers Classified ads (targeted)
Originally thought to be “goldmines”! The source of many .com failures Most survivors have evolved
Challenges How to measure the value of a visitor What to consider an exposure (click-through?) Critical mass of visitors
The Advertising/Subscription Mixed Model
Based upon the newspaper/TV model Primary costs paid by advertising Supporting revenues from subscribers
Allow nonsubscribers access to limited content Abstracts Headlines Crossword puzzles Other . . . ?
Weighting of revenues varies WSJ: more subscription Arkansas Democrat-Gazette: more advertising
The Fee-for-Transaction Model
Used extensively by Travel agents Auto sales services Stockbrokers Insurance agents Event booking Mortgage loan brokers Online banking
Represent distintermediation Removing the “middleman” Actually, a common phenomenon as organizations
move online Not a bad thing, necessarily, but can lead to
cannibalization
Fee-for-Service
Essentially a “pay-per-view” conceptSome examples
Gaming Video games (a major growth industry) Gambling
Entertainment (concerts, films, etc.) Consulting services
Medical Legal Investment
And guess what else . . . ? Extremely effective Considered a social malignancy, however Probably not a good idea to study further
eCommerce Revenue Models are Evolving
Remember the ecommerce is in its infancy; much change continues to take place in how business is done on the WebSome common transitions we’re seeing
Subscription sites toward ad-supported Ad-supported toward ad/subscription mixed Ad-supported toward fee-for-service Ad-supported toward subscription (Note the general trend away from advertising!)
The process has in numerous cases involved series of multiple transitions (e.g., Britannica)
Some Revenue Strategy Issues
Channel conflict / cannibalization Recall the 4th “P” in the marketing mix Only so much demand exists, so using multiple
channels can be inefficient and lead to loss of customer goodwill
Consider ASU’s means of distribution: F2F Online CVN Correspondence
Strategic alliances (look at the Amazon site) More important than ever The Web is just too big for someone to have much
chance of making it alone So many opportunities exist to augment
capacity/offerings/etc. with online and conventional affiliates
Creating an Effective Online Presence
Identify goals and make them consistent with firm’s brand image
Attracting visitors to the website Making the site interesting enough that visitors stay and
explore Convincing visitors to follow the site’s links to obtain
information Creating an impression consistent with the organization’s
desired image Building a trusting relationship with visitors Reinforcing positive images that the visitor might already
have about the organization Encouraging visitors to return to the site
Varies according to organization type Profit-driven Not-for-profit
Profit-Driven Organizations
Should provide links to Detailed information about each product
model A store locator page if applicable Information about the company and
services such as financing offeredShould offer a strong sense of corporate presenceNeeds to make it easy for customers to communicate with the organizationShould be attractive, yet professional
Not-for-Profit Organizations
Key goal for the websites is typically information disseminationMust also provide and facilitate two-way communications
Web Site Usability: Consider Site Visitor Motivations
Learning about products or services that the company offers
Buying products or services that the company offers
Obtaining information about warranty, service, or repair policies for products they purchased
Obtaining general information about the company or organization
Obtaining financial information for making an investment or credit granting decision
Identifying the people who manage the company or organization
Obtaining contact information for a person or department in the organization
Web Site Usability: Accessibility
One of the best ways to accommodate a broad range of visitor needs is to build flexibility into the Web site’s interfaceGood site design lets visitors choose among information attributesWeb sites can offer visitors multiple information formats by including links to files in those formatsGoals that should be met when constructing Web sites
Offer easily accessible facts about the organization Allow visitors to experience the site in different ways
and at different levels Sustain visitor attention and encourage return visits Offer easily accessible information
Trust and Loyalty
True with any business: A 5 percent increase in customer loyalty can yield
profit increases between 25% and 80%
Repetition of satisfactory service can build customer loyalty
Especially important in ecommerce Customer service is a problem for many ecommerce
sites
It’s much harder to build trust when you can’t see the person with whom you’re doing business
This is aided by making websites customer-centric
Let’s Look at Some of the Sites
General thoughtsWe’ll try to identify some criteria for judging sites
Customer-Centric Website Design
Puts the customer at the center of all site designs Guidelines Design the site around how visitors will navigate
the links Allow visitors to access information quickly Avoid using inflated marketing statements Avoid using business jargon and terms that visitors
might not understand Be consistent in use of design features and colors Make sure navigation controls are clearly labeled Test text visibility on smaller monitors Conduct usability tests
Involves connecting with customers
Connecting With CustomersPersonal contact model:
Firm’s employees individually search for, qualify, and communicate with potential customers
Prospecting – personal contact approach to identifying and reaching customers
Mass media approach: firms prepare advertising and promotional materials about the firm and its products Addressable media:
Advertising efforts directed to a known addressee Also called mass media
One-to-many communication model: communication flows from one advertiser to many potential buyersOne-to-one communication model: both buyer and seller participate in information exchange
Design Guidelines (Specifics)
Realize comparisons to print media Similarities Differences
Layout, content, & navigationFonts & colorsImage considerations
Print versus Web Delivery
Similarity: good layout is good layoutDifferences: Hyperlink ===> nonlinear capability (easy to
get lost in maze) Can’t see whole page at once Readers scan first; take longer to read Content appearance is a function of
monitor/browser settings Use sans-serif for body and serif for headings Animation (two-edged sword!)
Layout, Content, & Navigation
Short paragraphs 10 lines or less Use bullets (customized! ), tables, & headings
MarginsPages <= 3 screensDon’t underline!Navigation system (each page) Navigation bar Top, bottom, next, . . . Use frames (or don’t use frames!)
Fonts & Colors
Color info: the-light.com/colclick.html Hexadecimal codes “Browser-safe” colors
Fundamental issue: contrastSetting: best if defined within <style> tagsSafe fonts: Arial & TimesDon’t get carried away with fonts (<=3)
Images
Use sparinglyArrange to achieve balance with text and white spaceKeep small (page should take no more than 10 seconds to load at 28kbs) Reduce size Use thumbnails Add warnings
Maintain contrasts when using background images
Summary of Objectives
Compare an contrast LANs/WANs, the Internet, intranets, and extranetsDiscuss ecommerce connectivity optionsSummarize the basic ecommerce revenue modelsDiscuss why business models evolveUnderstand revenue strategy issues facing ecommerce businessesAddress what it takes to create an effective Web presenceSummarize web design principles