Ebiz - Batch 1 Handouts

(IS3167) MANAGEMENT AND INNOVATION OF E-BUSINESS (2012 Academic Year)
MR JACK KOH
BATCH 1
8/10/2012
Management & Innovation of E-Business

(IS3167, 2790167 ) Slides (Set-1) (Lectures 1 to 6)
What
notes & How are they prepared? How are the lectures structured
Aug 2012
Lecture1/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)
Dave Chaffey: E-Business and E-Commerce Management, FT -Prentice hall (2011), fifth edition, isbn 978-0-273-75201-1 ** Kenneth C Laudon & Carol Guercio Traver: ECommerce 2011: Business, Technology, Society. Pearson (2011) 7th Edition.isbn 10:0-273-75084-4.
** UOL recommended textbox
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Jack koh Dr. Antonio Cordella Dr. S.Smithson

Aug 2012
Analyse e-business models from Mgt & economics disciplines rather than technical successes & failures, innovations of e-business Application of Marketing & Distribution systems to e-business Impact of social and legal context on e-business Understand the supporting infrastructure pillars of e-business: economic transaction cost and technology
Aug 2012
Introduction, history, and growth of e-business & strategies Unique features of e-business Elements in building an e-business model Classes of e-business models e-business from Examiners perspective Ebiz group mini-research project
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For the purpose of our UOL study, we treat ecommerce and e-business as synonyms, and shall not be bothered with trying to differentiate between them (unless specifically being asked for)..
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What happened with e-business in the last two decades?
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e-business technologies challenge the old traditional way of doing business
Blendtec http://www.youtube.com/watch?v=qg1ckCkm8YI
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1) Ubiquity Anywhere Anytime Not limited by physical boundary space of flows rather than space of places
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2) Global Reach Distance is not a problem anymore Speed Easy to reach many corners of the world
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3) Universal Standards Easy to adopt and setup Inexpensive Low cost to entry
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4) Richness Easy to attach Message with

- text - graphic - audio - animation - video
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5) Interactivity Consumers can get immediate clarifications through

- online chats - video chats - interactive FAQs - product forums
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6) Information density Large amount of information readily available on local storage or cloud R.A.T information reduces information asymmetry
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7) Customization Selective information to be displayed Format e.g. color scheme, layout
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8) Social technology Social network linkage, RSS feeds Sharing of User created content
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1 Value proposition, 2 revenue model, 3 market opportunity, 4 competitive environment, 5 competitive advantage, 6 market strategy, 7 organisational development, 8 management team
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You have been asked, as a consultant, to begin work on an e-business strategy for a new pure-play, online, business-to-consumer retailer. What areas would you examine regarding this strategy? For each area, briefly discuss an issue that you feel is likely to be important in this context. (UOL Sample Q4)
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Business to Consumers Business to Business Which is larger? How many times? Why?

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E-business to gain market share and move up the market hierarchy. From perfect competition to pure monopoly
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What,
Why the mini research project? How to publish the report?
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End of Lecture-1/Introduction
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Understand the devt of the retail side of ebusiness Retail Business models and Revenue models Understanding shoppers/browsers Website design E-Payment systems Case studies of successful and failed B2Cs Problems & Critical success factors B2C Innovations
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Lect 2&3/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)
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How
big a slice of the total retail market belongs to e-business? Can you name some top e-tailers and their market values? Emerging e-business markets Key strengths :Market process reengineering, disintermediation
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Only a guideby no mean, the perfect definition and classification..

Pure
Play
Clicks-and-mortar Vendors Brokers Specialised Generalised
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Advertising,
transaction, affiliate, catalogue, subscription, digital content, sales? Any issue with:
Channel conflict Alliances Customer acquisition cost (CAC)
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Business
strategy Offerings IPs Mkt competitive positioning Mkt, Sales, Distribution strategy Key relationships Untapped revenue Revenue quality
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Differences
Conventional retail shopper e-tail shoppers Different types of website visitors Browsers Buyers Shoppers
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differences between shopping and procurement
Quick
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Cash Wait
rich and time poor in long queue for standard items Travel inconvenience Replace repetitive mundane activities
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Content Customisation Community Convenience Choice Lower
& availiability
Cost
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Ease of use Responsiveness Low Trust Poor Security Poor Data Privacy Product quality/price/brand Poor reliability Information quality Specific culture, lifestyle, risk aversion

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Usability enjoyable Meet expectations of target customers Not exacting yet secured Two way communication Drill down information avoid jargon Promote loyalty Avoid propaganda Assess the need for multiple languages Innovative design

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Do you agree that certain products/ services appear more suitable for e-sales and others remain more suitable for offline sales?
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Aims: promote saving in e-transaction and encourage e-business activities Credit card Digital wallet Micropayment Stored value Digital cash/ Digital check Peer2peer / paypal Billing presentation & payment
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Amazon.com.
Application of long-tail Dell application of disintermediation Ebay application of business ecosystem and re-intermediation
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Webvan.
Growing to fast. Successful Ads dont count. Flooz.com. Failure to keep out the Russian mafia Boo. Like Amazon, but why failed?
Pets.com.
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Unproven business models Discount, discount, discount Cost-efficiency Inability to globalize Overheads of security and privacy Channel confusion Cost of customer acquisition Expensive switching cost implementation Strong investor backing

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Innovative Understand
shoppers Understand product & industry Use relevant technology Branding Customer retention Multi-channel approach
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- eBusiness processes are aimed at decoupling product flows through traditional market processes through intermediaries or brokers, with online transactions. - eBusiness enthuses a more intensive use of electronic markets
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Responder Initiator Business Consumer Govt Business B2B C2B G2B Consumer B2C C2C G2C Govt B2G C2G G2G
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Aug 2012
EBIZ - Mgt & Innovation eBusiness(by JackKoh)
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If
you do not get your email + name into my ebiz-email register, you will not be auto e-distributed the Ebiz Bible later in Mar (when it is fully constructed) How to get into register? Complete group mini-research project or individual assignment-1 stating your valid email /full name correctly in the report.
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EBIZ - Mgt & Innovation eBusiness(by JackKoh)
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1.
Why do you believe that business-toconsumer (B2C) e-business has grown steadily in countries such as the UK? Illustrate your argument with examples. 2. Companies engaged in business-toconsumer (B2C) e-business need to understand shoppers, technology and their industry. Discuss with examples
Aug 2012
Lecture-4/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)
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3. In business-to-consumer (B2C) e-business the critical success factors may be hidden and the growth path unpredictable. Discuss with examples. 4. The South London Museum of Art, a small local museum, has a website that only provides basic information, such as opening hours and location. The director feels there must be a way to use it to increase revenue. How would you approach this problem? What would you advise her?
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5. What is the general online value proposition for business-to-consumer e-business? Illustrate this value proposition by applying it to one particular sector (e.g. books). Describe the problem of channel conflict and cannibalisation. How can retailers alleviate this problem?(2011) 6. Business-to-consumer (B2C) e-business is now some seventeen years old in the more mature markets of Europe and North America. Why does it only account for a relatively small share of total retail sales in these markets? (2012)
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Understand key concepts of B2B structures Marketplaces E-Procurement Benefits and problems of e-Procurement
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Business-to-business (B2B) e-commerce involves the sale of goods and services between businesses. B2B covers a spectrum of applications that enable an enterprise or business to form electronic relationships with their distributors, suppliers and other partners.
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B2B
e-marketplace is a virtual online market where firms register as buyers or sellers to conduct business-to-business ecommerce The orientation of the marketplace is normally determined by the organisation (or organisations) that finance the investment
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Basically two approaches (which relies heavily on the internet and other networking technologies to either sustain/ enable economic relationships between business organisations): Application of IT to pre-existing business relationships Creation of new marketplaces
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Supplier
oriented Buyer oriented Intermediary or independent oriented Vertical & Horizontal oriented
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Catalogues
Some e-marketplaces provide a single catalogue of all suppliers and products, while others have links to individual supplier catalogues
Directory
listings
Some e-marketplaces offer a directory of suppliers listed by products or services provided, with links to supplier websites.
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Biased
Aggregation
vs Neutral marketplace vs Matching marketplace
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General
business benefits for the buyers Benefits for the sellers

Benefits
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Compatibility/Industry Who
fit? is managing? What upfront cost and running cost? What marketing values? What E-marketplace design values? What technical issues?
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There are two parts to the e-purchasing cycle (any difference or not? ..like eating and chewing?): - e-sourcing - e-procurement
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Advertising Contracts
contracts Management Tenders managment Paying suppliers Auctioning Vendor management Catalogue management
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Chaffey
tends to use the terms B2B and e-procurement interchangeably !! But what about UOL study guide ? .any underlining commonalities between them?
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Shortening
of buying cycle/cost Improved control Reduction in administrative work Improve buyers productivity Driving down prices Mgt of information Payment integration
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Security Reliability Organisational
risks Technological risks Business risks Business risks
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Compare Contrast
.. and B2B with B2C
(End of Lecture-5)
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1.
Self test at:

http://wps.pearsoned.co.uk/ema_uk_he_chaffey_ebus_ 4/123/31737/8124888.cw/index.html
2.
Case study: Pick one B2B structure and take the Alibaba example and draw a diagram representing its suppliers, buyers, etc. (depending on which structure you choose). The purpose of this activity is to help you read case studies in detail and then visualise various B2B structures through diagram construction.
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8.
Discuss the main obstacles to B2B (business-to-business) e-commerce. Justify your answer with examples. (2011) In the literature, the impact of IT on markets is either seen as a reason for the reduction of the number of intermediaries or as a reason for an increased role played by intermediation in the exchange processes. Discuss. (2011)
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4.
5.
B2B buyer, supplier and intermediary oriented marketplaces reflect different power relationships in electronic markets. Discuss, with examples, how and why these power relationships are shaped and maintained. Discuss how and why disintermediation occurs. Discuss, with examples, whether ICT based disintermediation is always sustainable.
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Management & Innovation of E-Business IS3167, 2790167 (2011)(assembled by Jackkoh)
EBIZ Course Material for 2012 Acknowledgment: 1) All text in italics are replicated from the UOL Study Guide, for easy references by students 2) All diagrams are taken from Chaffeys instructor guide How are the lectures structured? Our lectures will follow Chaffeys textbook approach to learning the EBIZ course. Hence, the reasons for the way the lectures are arranged in our lesson plan. The format, structure and sequence of the lectures for EBIZ may be approached from several angles. 1) The UOL study guide argues that e-business technology and practice is still changing radically as the technology and its users, entrepreneurs and consumers, companies and governments, interact together within various societies. E-business heavily relies on technology, business economics, management and social aspects. Hence, EBIZ lectures shall start with an understanding of the technology infrastructure followed by the economic infrastructure driving the e -business transactions. The two infrastructures (technology and transaction economics) enable B2C e-business transactions. Looking behind consumer transactions is marketing to examine ways to bring consumers and vendors closer. The lecture progresses to the extension of e-business transactions to the wholesale market, i.e. B2B transactions. Driving down transactional complexity, cost and improving quality of services lead to the lecture on SCM. Business interest of the wider social behaviour partly championed by social networking leads to lecture on Web2.0. The new technology, economics, web2.0, social aspects of e-business force firms to look into new effective way of organising. With increased technological complexity and new organisational dependency, security is a real concern. Introduction technology economic transactions retail/consumer transactions (B2C) Marketing to consumers Reaching out to wholesale markets transactions B2B Driving down cost, complexity with SCM Social aspects: Web2.0 new forms of organising security concerns 2) Chaffeys textbook approaches the study by first examining concepts of e-business B2C, B2B follow by a summary discussion of the development of the e-business strategy. Such strategy is make up of a combination of other strategies: Marketing, SCM, CRM and procurement. The e-business development is supported by technical and economic infrastructures hence the chapters on technology, Web2.0, and transaction cost model. It is inevitable there is the need to manage change with new forms of organising the firm and security concerns for the e-business development . Introduction retail/ consumer transactions (B2C) reaching out to wholesale transaction markets (B2B) e-business strategy Marketing, SCM, CRM the supporting infrastructures: technology/Web2.0 and economic cost model of transactions managing change, new forms of organising security concerns 3) Kenneth C Laudon / Carol G Traver e-Commerce 2011:Business, Technology, Society Pearson (2011) 7th edition, Isbn 10:0-273-75084-4, textbook adopts a mixed approach of the UOL study guide and Chaffeys. Laudon looks at reasons for growth of e-commerce (e-business), its concepts and various e-commerce models B2C, B2B. This is followed by the technology infrastructure driving the e-commerce/e-business firms. Finally moving to marketing, advertising, ethical, security aspects of e-commerce/e-business. Introduction ecommerce growth business models: retail/consumer transactions (B2C) wholesale transaction markets (B2B) the supporting infrastructures: technology/Web2.0 and economic cost model of transactions e-business strategy Marketing, Advertising, social aspects security concerns 4) Many other texts look into details one or two of the topics listed above.
Set 1 of 3 sets of Ebiz study notes
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Lesson-Plan Lecture/ Topics (chapter-no refers to the chapter of the UOL study guide) Lesson 1 Chapter-1: Introduction: growth of e-business and strategies (16/9/12) Group Mini-research Assignment: TripAdvisor.com (or Netflix.com or Facebook). Form a group of 2 members (or 3 max). Write a research report and post it on the Internet. The report should, at least, explain briefly the nature of its business, and how the 8 key elements of business model strategy are addressed by them. See www.uol-ebiz.blogspot.com for sample layout-format of report. The leader shall submit their url-link by the start of lecture-4 to JackKoh (jackkoh@singapore.com cc jackkoh20@gmail.com ) Start-date: Lecture-1 Due/Deadline: Lecture-4 2-3 Chapter-4: Business-to-consumer (B2C) retail systems and strategies 4 Tutorial-1 5 Chapter-6: Business-to-Business (B2B) wholesaler models and strategies Individual Assignment-1: Start-date: lecture-5, Due/Deadline: lecture-7 6 Tutorial-2 7-8 Chapter-5: Marketing for e-business (e-business strategy) Individual Assignment-2: Start-date: lecture-8, Due/ Deadline: lecture-10 9 Tutorial-3 10-11 Chapter-7: Supply Chain Management Individual Test-1: 2nd half of Lecture-11 12 Tutorial-4 13-14 Chapter-3: Economic theories of e-business (economic infrastructure) 15 Tutorial-5 16 Chapter-8: Web 2.0 in business and society (technical infrastructure) Chapter-2: e-Business, technology & infrastructure (technical infrastructure) 17 Chapter-9: New forms of organisation (Managing Change) 18 Tutorial-6 Individual Test-2: 2nd half of Lecture-18 19 Chapter-10: Security issues in the digital environment 20 - 21 Chapter -11: Conclusion & implications of e-business strategies Tutorial-7 Appendix-1: Past year Exam & Discussions Appendix-2: How to publish your mini-research report? Ebiz notes compiled into Set-1 (lectures 1-6), Set-2 (lectures 7-12) and Set-3 (lectures 13 -21) Assignment and Test Schedule You are advised to participate in assignments and tests. One of the benefits is these assignments and tests will add credits to your personal testimonial and will greatly facilitate the writing of reference letter for you later on. 1. Group Mini-research Assignment: TripAdvisor.com (or Netflix or Facebook). Form a group of 2 members (or 3 maximum). Write a research report and post it on the Internet. (For more details, refer to last page of this chapter/lesson-1). Start-date: Lecture-1 Deadline: Lecture-4 (Participants will receive the Ebiz bible auto-email to them in Mar 2013) 2. Individual Assignment-1: Start-date: lecture-5 Deadline: lecture-7 (Participants will receive the Ebiz bible auto-email to them in Mar 2013) 3. Individual Assignment-2: Start-date: lecture-8 Deadline: lecture-10 (Participants will receive the Ebiz bible auto-email to them in Mar 2013) 4. Individual open-book Test-1: 2nd half of Lecture-11 (sample solution shall be auto emailed to participants later) 5. Individual open-book Test-2: 2nd half of Lecture-18 (sample solution shall be auto emailed to participants later)
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Main (Book-title) references: 1) Dave Chaffey: E-Business and E-Commerce Management, FT -Prentice hall (2011), fifth edition, isbn 978-0273-75201-1 . 2) Kenneth C Laudon & Carol Guercio Traver: E-Commerce 2011: Business, Technology, Society. Pearson (2011) 7th Edition.isbn 10:0-273-75084-4.
About the Lecturer Jack Koh graduated from the University of Heriot-Watt (Scotland) with a Master degree in Business Administration, and the University of Aston, Birmingham (UK) with a Master degree in Computer Science. Jack also possesses professional qualifications from the Institute of Marketing (UK), Institute of Industrial Managers (UK), Institute of Management Services (UK), British Computer Society, and Association of Certified Accountants (UK). Jack has won two educational scholarships, namely British Embassy University Award and JICA-Colombo Plan. He has worked for several multinationals that include BP, IBM, and Apple Computers. He has held various responsibilities as Divisional Manager, MIS Manager, and Senior Systems Analyst. He has also worked in Singapore Polytechnic for 18 years, and last held the position of Senior Lecturer and Head of the Mobile Applications Section. He was awarded the SP-Excellent Teacher Award in 2001. Jack has also conducted lectures for the SIM/University of London's LSE degree programmes for more than 20 years now. To-date, Jack has written three IT related books published by Prentice Hall. A year and half ago, Jack took 1 year away off his work to solo-backpack, on 3 separate occasions, to China, Vietnam, Laos, Myanmar, Cambodia, and Thailand. He experienced walking through no-man land at various border crossings and remote towns like Mengli, HuayXai, Stung Treng, Veum Kham, Nakasang, Arangyaprathet, Nong Khai, MocBai, Chiang Khong, Maesai, Luang Namtha, Oudomsay, VangVeng, Nakhon Phanom, Savannakhet, Tachileik, Mohan, and Boden. It was indeed very enriching being able to un-lost oneself many times. About your UOL examiners: S. Smithson, PhD, FBCS, Senior Lecturer in Information Systems, Department of Management, London School of Economics, University of London, www.lse.ac.uk Antonio Cordella, PhD, Lecturer in Information Systems, Department of Management, London School of Economics, University of London, www.lse.ac.uk A. Martin, Research Student, Department of Management, London School of Economics, University of London, www.lse.ac.uk M. Shaikh, PhD, Researcher, Department of Management, London School of Economics, University of London, www.lse.ac.uk Great quotes: Always treasure the people in your life that charge your battery Happiness is measured by how many others you have helped make happy The time to start saving is when there is no need to do so
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Lecture-1 Supporting Notes: Chapter-1/ Course Introduction, the growth of e-business and strategies (All text in italics are extracts from the UOL Study Guide, for your easy references) (References: Chaffeys chapter 1 and chapter 2, Laudons chapter 1 and chapter 5 http://ec.europa.eu/enterprise/archives/e-business-watch/about/what_is.htm http://ec.europa.eu/consumers/rights/e-shopping_en.htm http://www.zainbooks.com/books/computer-sciences/e-commerce_1_e-commerce.html) What you will take away from this course? You will receive an understanding of how and why e-business developed so quickly and where it fits within modern business and society. UOL/LSE background is in management and economics, and it is theories from these disciplines that are employed in analysing e-business. E-business also represents an important evolution from the days when computer-based information systems were mostly internal to the organisation to today, when e-business provides both a shop window, through websites, and a transaction and coordination mechanism, through payment systems and supply chain management. Thus, e-business represents a practical culmination of information systems thinking from the past four decades. Upon completion of this whole course, you should be able to: explain the history of e-business from the dot.com boom to the present day critically discuss successful and failed e-business ventures assess the role of innovation in e-business. Dave Chaffys list of innovative e-businesses include Amazon.com, eBay, googles, Alibaba, skype, secondlife, facebook, youtube, whatApp. explain the key elements of e-business technology including websites, inter-organisational networks and social networks describe the social and legal context within which e-business has prospered explain the growth of social networks and their impact on e -business analyse and criticise the business models underlying e-business proposals and existing e-business systems discuss the changing structure of business-to-business e-business and the shifting role of intermediation apply economic theories, such as transaction cost analysis, to explain the economics of e-business explain the interaction between the needs of business and the potential of e-business technology to produce new organisational structures and different ways of working (e.g. outsourcing, mobile working and tele-working) discuss the key innovations in business models, products and processes and how e-business contributes to innovation through, for example, open source development and open innovation. This set of learning outcomes is provided here as a high-level overview of the positive outcomes e-business has grown from a hobby for computer geeks to become an essential channel in less than 2 decades in the areas of: Communication, with the growth of email and instant messaging for internal and external business communications.(e.g. live chat, whatApp) Marketing, by giving firms the opportunity for one-to-one marketing (e.g. Twitter, eBay) Sales, such that the online travel business makes up around 50 per cent of the US market (e.g. Expedia) Advertising: Googles 2008 advertising revenue was $21.1 billion. (consider its impact on normal brick & mortar newspapers and magazines) Distribution of digital goods, with the huge growth of music downloads. (consider impact on normal brick&mortar firms) Recruitment: Monster UK hold three million CVs = 13 per cent of the UKs working population (consider the pros and cons) and many, many more functions. Most of this course is concerned with the management, business and social aspects of e-business. We treat
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the technology as a tool and prefer to study the impact of its use, rather than how to build the tools. Large companies expend considerable resources on their e-business systems and, with relatively few exceptions, websites and their associated systems are now highly professional. Many of the products sold on the web are highly discounted which has meant that high profits and excess rents are few and far-between and new business models are being widely explored to leverage the power of the technology for profit. This course presents an up-to-date analysis of the management, innovation and information systems aspects of the use of e-business technology. It combines transaction cost economics with a decades experience of e-business development to discuss e-business trends and strategies. This is a management information systems course and not a technical course. It considers the organisational, managerial, technological and theoretical aspects of e-business and how these elements can be combined to produce innovation in business models, processes and products. The aims of the course are to: explain the growth of e-business to date, both business-to-consumer and business-to-business, using relevant theories from business, management and the social sciences examine the interaction between technological trends and the business and social context of e-business, including the diffusion of social networks and web 2.0 developments identify innovations within the domain of e-business by presenting cases of the innovative use of e-business technologies present relevant theories from business, management and the social sciences that help to explain the development and growth of e-business discuss different e-business (business) models and strategies, including global supply chain management and electronic markets introduce the notion of new organisational forms, such as virtual organisations, electronic markets and open source production, which depend upon e-business technology. It is important that you appreciate that different topics are not self contained. There is a degree of overlap between them and you are guided in this respect by the cross-referencing between chapters. In terms of studying this subject, the chapters of this guide are designed as self-contained units of study but, for examination purposes and to understand the realities of e-business fully, you need to have a good understanding of the subject as a whole. This includes both technological and management issues, as well as organisational, social and (a few) legal issues. Business is fundamentally about people and e-business is about the utilisation of particular technologies in business. You should also understand the connections to other courses you have studied, including units from management, sociology and economics. The implementation of e-business technology has resulted in changes in organisations, society and the global economy through, for example, virtual organisations, social networking and global supply chain management. As you read about these topics in the guide, you should reflect on how these changes link to your understanding of these disciplines. What happened in the last 2 decades? The significance and role of technologies in the economy and in society has become highly pervasive over the last 2 decades. A number of key technologies (e.g. computers, network communications, databases, social network technology) are shaping and changing organizations, societies and our lives. The role of information and communication technologies has become more and more prominent and have shaped what e-business is today. Technology continues to move at lightning speed and that means consumers are only getting smarter, faster, and more powerful. Thats why its imperative for retailers to understand todays super consumer, how they shop an d, maybe most importantly, what makes them happy.
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In less than 2 decades, e-business in US alone has ballooned to a US$255 billion consumer retail business (B2C) and US$3.6 trillion enterprise businesses (B2B supply chains) by 2011 bringing phenomenal change in the marketplace and consumer behaviour (Laudon, 2011). e-Business has grown from a hobby for computer geeks to become an essential channel for: Communication, with the growth of email and instant messaging for internal and external business communications. Marketing, by giving firms the opportunity for one-to-one marketing. Sales, such that the online travel business makes up around 50 per cent of the US market. Advertising: Googles 2008 advertising revenue was $21.1 billion. Distribution of digital goods, with the huge growth of music downloads. Recruitment: Monster UK hold three million CVs = 13 per cent of the UKs working population. And many, many more functions. B2B, while 10 times larger than B2C, is projected to reach US$ 5.2 trillion by 2014. E-business has revolutionised new ways of doing business, unique services that are just impossible in the traditional physical world. For example, there is no physical world equivalent to Facebook, Google search, Twitter, Youtube, and a host of other online innovations. It was projected that e-Business will dictate business and society in the 21st century in similar ways motorcars, airplanes and electronics (like fridges, TV, sound systems) dictated the 20 th century. In 2010, e-business entered a new era of entrepreneurial activities centred around social networks (e.g. Facebook, Twitter, Photobucket), and the mobile digital networks have brought about revolutionary changes to markets, industries, businesses, and society. They are sometime referred to collectively, as social e-commerce. In Aug 2010, a class action was filed against Facebook for making personal data to outside Web sites and Apps (e.g. sharing info on what you like). Facebook has since reviewed its privacy policies but still refuses to make no sharing the default option. They impacted business strategies and plans, and have become important factors for the firms success. Even the need for search-engines is being questioned when you can ask friends over Facebook or forums about their personal opinions of new products and services (like Vets), where they bought them, and then buy it online directly without going over to another 3rd party e-commerce website like Amazon or Sistic ticketing an effective ways in reducing information asymmetry. Would you agree that referrals, like this veterinary experiences website, is more valuable than advertisements: http://www.petschannel.com/forum/?page=topic&topicID=8475&start=31 ? Some interesting e-business statistics (2010): on an average day, 78% of US adults go online. 62% send e-mail, 49% use a search engine, 43% for news, 38% on social network, 26% on online banking, and 23% watch online video. Cloud computing and web services (Apps) will expand B2B businesses reducing the cost of e-business infrastructure. And we are just only at the beginning of a new revolution! Laudon suggested that while e-business is less than 2 decades old now, it is, however can be equated as the first 30 seconds of the history of e-business era! Traditional commerce traditional e-commerce social e-commerce New business models provide new channel of distributions and new types of products and services are spawned such as EBay, Amazon, Boo. The idea was so good there thousands and thousands of Internet companies were born by 1999. Called the DOT.COM era, there was a mad rush to start new Internet businesses. But alas, the euphorbia is followed by a crash in 2000. Hundreds of billions of dollars were lost in the euphorbia as many web start-up firms failed (see chapter-4). However, Internet influences on electronic business models remain important even today.
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UK B2B national centre: e-Business is the term used to describe the information systems and applications that support and drive business processes, most often using web technologies. e-Business allows companies to link their internal and external processes more efficiently and effectively, and work more closely with suppliers and partners to better satisfy the needs and expectations of their customers, leading to improvements in overall business performance. (http://www.nb2bc.co.uk/what_is_ebusiness/) Laudon differentiated e-commerce (which are digitally enabled transactions and processes that generate revenue that occurred with OUTSIDE businesses and consumers) and e-business (which include both OUTSIDE and WITHIN the firm digitally enabled processes that do not directly generate revenue such as inventory control and inter-organisation activities). For the purpose of our UOL study, we treat e-commerce and e-business as synonyms, and shall not be bothered with trying to differentiate between them (unless specifically being asked for)..
Today, the world is a networked society. The physical geographical boundary is becoming immaterial. In fact, the new geographical boundary can be represented by just a big DOT. Time, distance, places between businesses and people in different countries are no more major problems. The new business enterprise increasingly takes on the form of a network structure (spatial i.e. space-like) rather than a hierarchy of offices. Communication networks are open-ended and they have no clear limits and are able to expand, contract in relation to external changes. They have indefinite boundaries and for the most part have no definite spatial form. Information communication revolution is responsible for much of the framework for the new society where society activities have moved from spaces of places to spaces of flows. IT is a fact that the web (the Internet) is now indispensable in both business and everyday life as we use it to search for information on anything from cinema times to share prices and medical information. And now (in 2010), web 2.0 (see chapter-8) offers the prospect of taking all these developments a stage further with social networking, wikis and blogs. For virtually all of us, e-business has quite simply changed our lives. Look around, assess the change taking place around you. Is the list of top 20 global firms in 2001 the same list as today? (see TopFortune20.pdf). Firms that fail to manage and exploit the changes around them will eventually lose out. Can you quickly name a handful of successful e-business models? eBay, Facebook, Netflix, Apple, Trip Advisor, SAP, Amazon.com, octopus, Zuji.com, Agoda, Flextronics, Priceline.com, Sistic, Groupon, Google? Of course, there are also many that failed like online grocer WebVan, Pet.com, delivery service Kozmo.com, online currency Flooz and RocketCash, Kodak, and Boo.com (re: http://www.cnet.com/1990-11136_1-6278387-1.html. Why and what were the reasons for success and failures? (http://en.wikipedia.org/wiki/Boo.com). Well, we shall discussed about these in the next lectures. Why e-business technology is attractive? There are at least 8 key features that has made e-business attractive. The 8 unique features of e-business technology challenge traditional business thinking and intensify interest in e-business. Watch an internet video to understand how BlendTec uses rich media and viral marketing (pg 25, Chaffey 2011) to grow awareness and sales to grow by 500%: http://www.youtube.com/watch?v=qg1ckCkm8YI
The 8 unique features refers to ubiquity, global reach, universal standards, richness, interactivity, information density, personalisation/customization, and power of social network technologies. 1. Ubiquity (availability is everywhere, anytime beyond physical boundaries o f market space space of flows rather than marketplace space of places. Ease of creating new markets everywhere); Page 7/ 153
Global Reach (distance is no more a problem); Universal standards (open standards available to all, inexpensive connectivity technology, hence lowers barrier to entry), 4. Richness (webpages and messages can carry text, graphic, audio, animation, video); 5. Interactivity (consumer dialog, online chats. Video chats); 6. Information density (processes & storage technology enables access to large quantity of relevant, timely, accurate information, reduce information asymmetry between buyers and sellers); 7. Customization (selective messages specific to consumer interest or group interest); and 8. Social technology (facilitates social networks and user content creation sharing e.g. facebook) Now, on your own, please do some research and identify a few websites that have some or all of these unique features. It is important to take note that the 8 unique features of e-business technology will influence the industry structure, business strategy and processes. Industry structure refers to the nature of the players and environment in the industry, characterised by the 5 forces (rivalry, substitute products, barriers to entry, bargaining power of customers and suppliers) as stipulated by Michael Porter. Industry structure analysis tools include Value chain, BPR. Business strategy is a set of plans to achieve long-term returns on invested resources. Some strategies: product/service differentiation, commoditization based on price, scope (compete in all markets) and focus. Essentially, e-business technology opens the door to at least 6 new types of digital media channels. (Chaffey, 2011, from pg 17). They provide exciting opportunities for inclusion in the firms e -business marketing communications strategy. They are: 1) Marketing through search engine 2) Online PR 3) Online partnerships 4) Interactive advertising 5) Opt-in email marketing 6) Social media marketing All these ongoing developments in e-business technology facilitates innovations and new ways of reaching out to the markets and new business models. A proposed list of innovation in new business models and marketing communication is found in chaffey, 2011, pg 5 What are the key considerations in building a successful e-business model? (references: Chaffeys Chapter-2 from page 71, Laudons Chapter-5) 8 key elements are proposed: Value proposition, revenue model, market opportunity, competitive environment, competitive advantage, market strategy, organisational development, and management team. Value proposition (why should customer buy from you?). This involves the identification of the unique features, from the point of the target segmented consumers, of the product/s and/ or services offered. Some examples include product personalisation, and cost /time reduction in search, contract and control services. Revenue model (how would the money be earned?). Advertising, transaction, affiliate, catalogue, subscription, digital content, sales. Re: http://www.zainbooks.com/books/computer-sciences/e-commerce_1_e-commerce.html The Advertising revenue model earns its revenue and profits from advertisement fees for clients display and video advertisements. The fee earned is a factor of the size of viewership, nature of specialisation, retention ability.
2. 3.
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The Transaction fee revenue model receives a small fee for enabling or executing a transaction. eBay, Octopus.com, and AsiaRooms.com are examples. The Affiliate model relies on referral fee (like commission) for each customer introduced to the principal firms product or services. Would the case of ERA, Knight Frank and other property agent firms marketing a new condo on behalf of a developer, says Capital Land, fall into this category? This is the same too for Ctrip and Elong.com, both are Chinese online portals selling air-tickets of Chinese airlines for a small referral fee. The Catalogue revenue model (also known as web catalog) is really the same as a mail order revenue model, just the catalogue is on line instead of in book form. As with a mail order catalog, the model is about getting your brand known and creating an image for it, and then distributing it. The Subscription revenue model depends on subscribers paying a regular monthly or periodical fee for the content and services used. Match.com, Xboxlive.com, BT Online are examples. Their contents have to be high valued added, not easily available elsewhere. The Digital content revenue model. Refer to e-businesses that offer various types of customized information services such as corporate, government related, business news, resources of reputed libraries. E-Publishing also eliminate high costs of paper, printing and delivery processes. iTunes, online gaming kongregate.com are examples. Some overlapping of this model with subscription revenue model is acknowledged. The Sales revenue model involves the selling of goods, services, or information to consumers. The goods sold needed not be goods manufactured by themselves. Examples Amazon, Harvey Norman, and Singtel. Market opportunity (which target market/s and its size?). The intended marketplace or market segment/s which has the potential financial opportunities for the firm as compared to the overall market potential in the various possible segments e.g. in training we can say there are 2 main segments: computer-based and instructor-led. Competitive environment (who are your competitors?). Know the environment you are competing in. Know who are the direct and indirect competitors. For examples AsiaRooms, TravelAsia and Octopus are direct competitors, while Youtube and CNN are indirect competitors competing for consumer online time but not selling the same product. Know the potential substitute products and new entrants, as well as the power of customers and suppliers over your business. Understanding and the application of the 5-forces by Prof Michael Porter is relevant here. A fish monger at Blk 216 Bedok North only opens his stall after 9am daily. His prices are the highest there. Yet, he immediately draws all the customers away from all his competitors. Why? Competitive advantage (what are your special qualities?). In an imperfect market, competitive advantages come in the form of special unique product or service features (iPhone, Facebook), low price with higher added value chain achieved through special production (Flextronics) and distribution techniques (Dell, Amazon). Shutterfly has acquired Kodak (2012). Will this gives Shutterfly unfair competitive advantage? Did Kodak commanded trust, quality, reliability and loyalty with its customers then? Are these easy to copy or imitate? Unique competitive advantage is derived from being the first mover advantage, examples are Apples iTunes, American Airlines OLT system, and Amazon. Another is the unfair competitive advantage where a firm developed or acquired a factor that other competitors will not be able get their hands on such as a brand-name like Apple, Angry Bird, made in Japan, and Coke. Asymmetries competitive advantage refer to firms which either have larger financial muscles, better terms with suppliers over their competitors or intense employee loyalty (Apple), hence giving these firms an instant edge over others. Firms are said to leverage their competitive assets when they use their competitive advantages to achieve more advantage in related markets, example of Amazon moving from their original online book sales to electronics and
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grocery, thus leveraging on their existing huge customer database and special knowledge gathered over the years of ecommerce experience. Market strategy (how are you going to attract the target customer?). The best business idea will fail if its marketing plan to potential customers is not effectively promoted and marketed. The plan should show how to enter the new market and attract new customers. Twitter marketing strategy was to attract huge group of customers to post for free to their friends and worldwide audience the latest news, activities, and gossips so as to build a unique social network of micro-blogs and who acts as the marketing agent? Well, the customers themselves! Organisational development (How would the business be structured?). Identification of support staff and organisation structure needed for the implementation of the new strategy and the ability to handle future growth. Management team (What are the important qualities and experiences of the leaders?). Management team and key people are the most important factor of a business model. This is the team that will ensure the model work. The team must exude strong leadership, visible credibility to investors, business and technical knowledge. Questions: Who are the successful and influential people that you can name? (refer to doc: A quick classification at e-Business models of B2C, B2B As food for thought, take a quick look at Laudons general classification below of selected B2C business models (of course, the classification is not 100% perfect and debatable between authors like Chaffey or UOL (which generalised into 2 basic models of vendors and brokers): a) E-Tailer - Amazon, Walmart, Dell. Revenue: Sales b) Content provider - CNN, ESPN, CNA, Asiaone, Netflix, CinemaNow, Dun & Bradstreet. Revenue model could be one, combination, or all of the these: Advertising, Subscription, Affiliate c) Portal - Yahoo, AOL, MSN, Google, Bing. Revenue model could be one, combination, or all of the these: Advertising, subscription, affiliate referral d) Transaction broker: Ctrip.com, Octopus, DBSVOnline.com. Revenue: Transaction fees e) Market creator (to create markets and bring buyers/sellers together): eBay, Priceline. Revenue: transaction fees f) Service provider (selling a service rather than product): VisaNow, hnksg.com. Revenue: Sales of services g) Community provider: Facebook, Twitter. Revenue model could be one, combination, or all of the these: Advertising, subscription, affiliate referral. Here is another Laudons classification of selected B2B business models (again, it is not 100% perfect and often subject to debates). But do note that B2B is at least 10 times larger, worth more than four trillions annually, as compared with B2C business: a) E-Distributor: Grainger. Revenue: Sales of goods b) E-procurement (also known as B2B service provider): Ariba, Perfect commerce. Revenue: Fee for market making services, SCM services c) Exchange: OceanConnect. AliBaba, ChemConnect. Revenue: Transaction fee, Commissions d) Industry consortium (often industry-owned vertical marketplaces): Exostar, Quadrem, NETS, 1Sync. Revenue: fees and commissions Vertical marketplace refers to specific industries, not involving upstream or downstream players
Dr. Antonio on Why e-business? During this years EBIZ revision by UK examiner Dr. Antonio Cordella, he underlined that e-business provides abandon opportunities and challenges for firms to compete in the online marketplace to gain market share and move up the market hierarchy. He stressed that a key objective of deploying e-business technology for firms is to achieve Set 1 of 3 sets of Ebiz study notes Page 10/ 153
competitive advantages and reducing the number of competitors in the marketplace ! The goal is to achieve a pure monopoly market situation, and eventually capturing most, if not all, of the market share (Apples iPhone and iPad). This requires firms to know their markets well. Firm must conduct thorough analysis and assessment of their competitors, customer bases, intermediaries and the effective application of technologies and the Internet as part of their development strategy. Understanding your customer base allows for application of appropriate marketing strategies to capture customer loyalty, identify uniqueness of product and services, customer segmentation, acquisition, value chain to value creation, increase barriers to entry, internalization of core knowledge, increase uncertainty to reduce new competitor entry, and lock-in of customers. Market types What is the various market types and how the competition, price and product quality/quantity works? Perfect competition : Many producers, sellers, many buyers, one price, one product. Such market is unrealistic and not fully achievable. No producer or buyer has the market power to influence prices or control market direction. Imperfect competition: A market where information is not quickly disclosed or available to all participants in a transaction. The matching of buyers and sellers is not easily available. In practice, the imperfect market is the only kind that really exists in the democratic economic world. Even in the United States, the most advanced financial market in the world, there are still numerous cases of price corruption, improperly disseminated information and other market inefficiencies. Market comprises many sellers, many products, many buyers, many different prices Oligopoly: Market has small number of sellers but many buyers leading to increase market share and lock in opportunities. Because there are few sellers, each oligopolist is likely to be aware of the actions of the others. The decisions of one firm influence, and are influenced by, the decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market participants. In some situations, the firms may employ restrictive trade practices (illegal collusion between partners to limit competition, market sharing etc.) to raise prices and restrict production quite similar to a monopoly. Would you agree that Microsofts OS kernel, Intel, BT business news, McDonalds, Oil Cartel OPEC are examples? Oligopsony: Market is dominated by a small number of buyers while the number of sellers (suppliers) in theory could be large. This typically happens in a market where numerous suppliers are competing to sell their product to a small number of (often large and powerful) buyers. Such powerful buyers lie in the example of Cargill, Archer Daniels and Callebaut who together buys 90% the world cocoa production from thousands of small farmers around the world. Another is Altria and Lorillard Tobacco who together buy most of the tobacco grown in US. Oligopsony contrasts with an oligopoly, Pure monopoly: Market has one major seller, one product, one price likely high. Seller is able to constrain supply and install barriers to entry, lock-in buyers, raise prices without adversely affecting demands for its products or services. Firms can achieve pure monopoly via innovations, acquisitions, continuous environment scanning. In USA, there are proper legislations or controls to regulate pure monopoly situation where monopoly firm possesses the power to excessively manipulate market conditions through price fixing, dumping and other technological and economic barriers to eliminate competition. OPEC, Apple, Microsoft and Intel are organisations that are close to this status. Often these firms are targets of legal proceedings for violating the Anti-trust laws.
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Conclusion This chapter provides a brief insight into the popularity, growth of e-business, and influence of social network. The viability and effectiveness of an e-business operation will depend on 8 key factors. An explanation why Dr.Antonio related oligopoly and pure monopoly to success of e-business strategy. Group Mini-research Assignment Group Mini-research Assignment Subject: e-Business model of TripAdvisor.com (or Netflix.com or Facebook). Useful URLs: http://data.cnbc.com/quotes/trip , http://investing.businessweek.com/research/stocks/private/board.asp?privcapId=140233 Form a group of 2 members (or 3 maximum). Select a group leader and a secretary. Conduct a research and write a mini-research report, and post it on the Internet. The mini-report should, at least, explain briefly the nature of its business, how the 8 key elements of the business model are addressed by the firm, and your opinions of the firms strategy Sample layout-format of the report is available at URL: www.uol-ebiz.blogspot.com The leader shall email, with cc to all their members, the url-link of the mini-report by lecture-4 to Jack Koh (jackkoh@singapore.com and/or jackkoh20@gmail.com ). Schedule: Start-date: Lecture-1 Due/Deadline: Lecture-4 (to post mini-research report on the Internet. How to post? Refer to Appendix-3) Important: Submission of this assignment allows the lecturer to capture all student names & emails for future auto-mailing of the "eBiz bible" and updates. Note: This internet assignment is recommended by UOL in that EBIZ students must, at least, know how to create a simple website Suggested work schedule for members: - analyse background - analyse 8 factors (split between members) - write opinion/ comparison - draft report on word processor - created website - email link,cc members, to lecturer
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Lecture-2 & 3 Supporting notes: Chapter-4/ Business-to-consumer (B2C) systems and strategies (All text in italics are extracted directly from the UOL Study Guide, for your easy references) Essential reading a) Chaffey, D. E-business and e-commerce management. (Harlow: FT/ Prentice Hall, 2009) fourth edition [ISBN 9780273719601]. See chapter-1 and chapter-2. b) Kenneth C Laudon, E-Commerce 2011s chapter 11 c) Riggins, F.J. A framework for identifying web -based electronic commerce opportunities, Journal of Organizational Computing and Electronic Commerce 9(4) 1999, pp.297310. (Abstract: Companies are finding that the development of World Wide Web presence sites is becoming a competitive necessity, particularly the need to establish online storefronts. Even so, there are few useful frameworks in the electronic commerce (EC) literature to help managers identify online opportunities and what types of applications can add business value to the user. I expand on an existing framework originally developed by Hammer and Mangurian [1] to identify opportunities from Web-based EC applications. I argue that firms compete along 5 dimensions of commerce: By using various modes of interaction, firms compete over both time and distance to provide some product or service to their customers through a chain of relations. In addition, new investments in information technology are typically justified using 3 different criteria-generating efficiency, effectiveness, and/or strategic benefits. These 2 perspectives can be combined to create the Electronic Commerce Value Grid, which identifies 15 areas in which managers can use Web-based electronic storefronts to add value for their customers) d) http://www.zainbooks.com/books/computer-sciences/e-commerce_1_e-commerce.html Aims of the chapter This chapter focuses on the B2C, or retail, side of e-business, which drove the development of most of the early websites, such as Amazon and eBay. The aims of this chapter are to provide a summary of the basic concepts of business-to-consumer (B2C) e-business and to examine the lessons learnt in this area. Here we describe the most common business models, such as pure play and clicks-and-mortar, and revenue models, such as catalogue and subscription. We identify the key revenue strategy issues and relate them to the newer business models available in the digital economy. B2C is a relatively mature field that has seen a number of high-profile commercial successes, as well as various failures. Last but not least, this chapter reviews the practical challenges of implementing B2C systems emerging from a variety of factors, including security, privacy, service quality and legal protection, online consumer behaviour, and regional and cultural differences. Key concepts in this area are: Business models Revenue models Revenue strategy issues Understanding shoppers Website usability and design e-Payment systems Case studies (of mature and successful companies) Failures/ problems Critical success factors Innovation.(see Chaffey 2011, table 1.1 pg 5 on list of innovations) Learning outcomes By the end of this chapter, and having completed the essential reading and activities, you should be able to: identify the business models and revenue models of individual B2C companies, as a prelude to further analysis analyse the revenue strategy issues that pertain to any given B2C operation Set 1 of 3 sets of Ebiz study notes Page 13/ 153
identify the roles of website visitors to any particular site analyse why some websites are successful in terms of consumer adoption and purchases, while others are less successful distinguish the quality of different websites in terms of their usability from the perspective of consumers advise B2C start-up companies concerning the factors that are important for success in this highly competitive field. Introduction The start of commercial web-based e-business is usually dated back to 1995 at the very beginning of the dot.com boom. The business-to consumer (B2C) retail market was the first to be targeted. The glamour of online retail beckoned and e-business entrepreneurs flocked to try to grab a piece of the action, backed by thousands of investors. In that year, companies like Amazon, eBay and Yahoo began operations and, at the time of writing (2010), these old giants are still forces to be reckoned with in the market, albeit in varying degrees of financial health. As B2C dates back to the mid-1990s, we can no longer say that it is a new phenomenon, although in many parts of the world it began much later. However, we would argue that it is not a mature commodity, like much of IT (e.g. personal computers). Rather, it is well established but still evolving. It is a recognised sales and marketing channel for, among others,air tickets, books, computers, groceries and share trading, such that it is the first port of call for many consumers in these markets. How big a slice of the total retail market belongs to e-business? This is a difficult question, as statistics vary. It all depends on what you consider comprises the total retail market and how you count it as well as the e-business part. The figures currently given for the UK and USA vary between around 5 per cent and 17 per cent but, even at the lower end of the scale, you can see that e-business makes up a substantial proportion, although the forecasts swirling around the dot.com era that by 2015 it would account for over half of all retailing are likely to remain pipedreams. Nevertheless, the statistics from Data Monitor (2009) shown in the table below are impressive (see also Fomin et al., 2005). USA /UK Market value (2007) USA: $142 bn (8% of retail sales), UK: $29 bn Increase over 2006 USA: 24%, UK: 35% Forecast (2012) USA:$277 bn UK: $90 bn (Forecast increase over 2007 USA: 96% UK: 205%) Although, Forrester Research estimates that the United States online retail industry will be worth $279 billion in 2015 Market segmentation USA: 19% electronics, UK: 41% books, music, videos Overall Market USA has 65% of global online retail market, UK accounts for 39% Question: Can you name the top 3 online B2C retailers (by sales), in their correct order? Apple, Walmart, Dell, Sears, Netflix, eBay? http://www.internetretailer.com/top500/list/ http://www.thestreet.com/story/10592741/1/top-50-online-retailers-revealed.html B2C business models across the world also continue to change drastically with the advent of e-Business technology and this change is not just restricted to USA. Other countries are also contributing to the growth of e-Business. For example, the United Kingdom has the biggest e-Business market in the world when measured by the amount spent per capita, even higher than the USA.
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Amongst emerging economies, China's e-Business presence continues to expand. With 384 million internet users, China's online shopping sales rose to $36.6 billion in 2009 and one of the reasons behind the huge growth has been the improved trust level for shoppers. E-Business is also expanding across the Middle East. Having recorded the worlds fastest growth in internet usage between 2000 and 2009, the region is now home to more than 60 million internet users. Retail, travel and gaming are the regions top e-Business segments. Clearly, e-Business systems change the traditional ways of conducting transactions in the marketplace and the cost of transacting. The traditional commerce basically relies on bricks and mortar infrastructure space of places physical market places to conduct the exchanges. Whereas, with the advances of e-Commerce technology, exchanges are now conducted over online virtual market places space of flows. Technically, it is a new way to re-organise & reengineer market processes. A key goal of B2C systems is disintermediation. Other goals: visibility, expand market reach, enhance responsiveness, new services, strengthening business relationships besides cost. Disintermediation is the removal of intermediate business process layers such as middlemen, broker agent or intermediaries. This results in lower brokerage costs yet with increased speed of transaction processing. Business models The Business model describes how a company functions, how it provides a product or service, how it generates revenue, target customers and how it will create and adapt to new markets and technologies. You will recall the 8 key factors hence make up the content of the business model: value proposition, revenue model, market opportunity, competitive environment, competitive advantage, market strategy, organisational development, and management team. Certain basic business models are widely (broadly) used to classify B2C companies and their operations (by no mean, the perfect definition and classification of e-business models here. If you read other authors and web information, be ready to be confused by a whole cluster of different ways of naming and defining e-business models). a. Pure play companies only operate online space of flows . These could be e-tailer or virtual storefronts (such as Amazon.com, TigerAirways) , or online marketplace (e.g eBay.com). Pure play companies have the advantage of being able to specialise in e-business and focus on their online offerings (e.g.iTune). b. Clicks-and-mortar companies operate using both channels of online space space of flows and physical locations space of places such as Tesco. Clicks-and-mortar companies have the advantage of co-specialised assets (e.g. shared warehouses, economies of scale and their existing brand power and consumer base). c. Vendors companies sell directly to consumers (e.g. Tesco, NTUC fairprice). Vendors may sell content (e.g. Business Times, Today, Neilsen), products (e.g. NTUC fairprice, Tesco), and/or services e.g. AsiaRooms, ebanking) d. Brokers provide matching services between buyers and sellers. Type of brokerage services include information brokers (e.g. pricehead, tripadvisor), transaction broker (e.g. cTrip, Asiarooms, Zuji, DbsvOnline, UOB-KayHian), e. Specialised - niche suppliers for highly specific markets (e.g. Nielsen) f. Generalised suppliers of a few products or/and services (e.g. Amazon). These firms may offer only information about their products or services or provide long-term after-sales support on their website or portal. http://software.ucv.ro/~cbadica/didactic/ce/documente/ModeleEBusiness.pdf The popularity and low cost characteristics (amongst other reasons) of Internet are giving rise to definition of new ebusiness models and hence we do expect different authors and writers may define models that seemed overlapping with one another and can be confusing. We have learnt that the popularity of the web is attributable to 8 unique features (refer to chapter-1 notes) of ubiquity, global reach, universal standards, richness, interactivity, information density, personalisation/ customization, and power of social network technologies. There is a ninth feature we can now add, i.e Cost, in relation to the search/contract/control cost. Time and money spent locating suitable products or services
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are greatly reduced now. Users perform logical search, contract negotiations and follow through activities instead physically travelling to several vendors to source/complete procurement information/commitments. Internet forces organizations to rethink and create profits in new ways with low-cost, innovative services and to sustain their competitive advantage. Revenue models and Revenue strategy issues As mentioned in earlier lecture, the possible revenue models (how would the money be earned?) are Advertising, transaction, affiliate, catalogue, subscription, digital content, sales. Newer revenue models may be strategized as ebusiness grows into the future. However, there are three issues that need consideration regarding revenue issue for e-business model, especially pertinent to B2C, as compared to conventional retailing, include: 1) Channel conflict and cannibalisation This occurs when the new online sales channel does not attract new business b ut merely cannibalises (takes sales away from) an existing channel (e.g. a firms traditional shops). The online channel may be cheaper per transaction for the firm but two channels are necessarily more expensive to operate than one. One solution is to move resources away from the conventional channel, but this may mean a reduction in service quality (fewer staff, reduced opening hours) and a consequent loss of revenue. A good example of this is banking. With online banking, should banks close branches, reduce opening hours and cut staff in branches, or tolerate the increased costs of the additional channel? A possible strategy is to examine the value proposition for the various customer segments and differentiate the channels, setting incentives and constraints to persuade particular segments to shift to a particular channel. 2) Alliances Online retailers may have considerable expertise in the design and operation of websites, and perhaps in one particular product line (e.g. Amazon and books), but they have the capacity to sell other product lines (e.g. electronics). A common strategy is for the online retailer to partner with a category manager with expertise in, say, electronics. Similarly, order fulfilment involves the online retailer providing the customers while the partner attends to distribution and logistics, e.g. iKEA, GM. You will note though that there are some organisations that choose to do everything like Flextronics and Apple computer. 3) Customer acquisition Unlike conventional stores that have a physical presence on the high street and can attract passing trade, B2C ebusiness relies on extensive advertising and marketing efforts to attract customers to the website. The customer acquisition cost (CAC) can be very expensive to sustain especially the acquisition of new customers is very slow. Hence, the importance of a sound, effective marketing strategy (chapter-5). 4) Suitability of products/services. Firms should carefully assess their revenue potential to develop their revenue strategy. Eight areas that deserve thorough examination are: 1) Business strategy: What is the vision, mission, business model, funding and operating model? 2) Offerings: Examination of the firms products, services, technologies, problems and solutions: 3) Intellectual property (IP): What is the firms IP and the IP strategy to generate more revenues. 4) Market competitive positioning. What market forces are affecting the firm? Market size, customers and segments versus competitor offerings and substitutes. 5) Marketing, sales and distribution: marketing strategy, pricing models, effectiveness of distribution. 6) Key relationships: How well firm leverage market synergies with major clients, partner ecosystem?
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7) Untapped revenue: Is firm overlooking revenue opportunities? Is there possible alternative applications of firms offerings. 8) Revenue quality: Where will firm need to invest in order to grow the firms revenues and realise full market potentials Understanding shoppers In any retail operation, it is essential to understand shoppers (or consumers), but B2C e-business is arguably slightly different from conventional retailing. For example, website visitors may be less likely to purchase products or services, compared to most conventional shops. Just because people visit a website does not mean they are likely to buy a product. These visitors have various roles, partly because accessing a website is much easier than having to spend time and energy travelling to a conventional shop. Roles of website visitors Browsers: These visitors are just looking; they are very unlikely to buy. They may be surfers who like to surf around the web, looking for entertainment, or seekers who require particular information but are unlikely to pay for it. According to Kenneth C Laudon (2011), 72% of online users are online buyers (i.e. shoppers), 16% uses online search (browsers) but may buy offline. These 88% online audience are interesting for marketers. Buyers: They already know exactly what they want and they are ready to make their purchase. Typically they require quick, easy service. Shoppers: They are interested in the product (e.g. a digital camera) and will probably buy one eventually somewhere. They usually require product reviews, comparison tools and feature lists to help them decide which product is the best for them. People obviously change roles, depending on the context, but those three described above are the main roles. However, researchers have identified four additional roles: o Simplifiers - experienced Internet users who seek convenience and low prices. o Surfers an innovative minority who enjoy buying niche items and experiences based upon their own initiative. o Bargainers price sensitive surfers looking for the best price. o Connectors those new to the Internet who want to connect with others via Facebook and Twitter, with little knowledge to go much further. o Routiners - who have a small number of favourite sites which they visit often, such as online banking for example. o Sportsters - who spend most of their time looking at entertainment and sport. Which of the above best represent you and your buyer behaviour when you are online? Focusing on the shoppers, it is important to realise that shopping is not the same as procurement, where the latter concerns companies purchasing raw materials, components or consumables as part of their everyday business operations (Chapter 6). Procurement means all the steps that a company takes in order to purchase goods and services from its suppliers. E-procurement is defined in Chaffey (2009) as the electronic integration and management of all procurement activities including purchase request, authorisation, ordering, delivery and payment between a purchaser and supplier (lecture-5 or UOL SG chapter-6)
Conventional Shopping is much more a leisure activity some (but not all) people enjoy shopping. It is often a social or family activity where part of its function is meeting friends, who are also shopping. This may be the one occasion when a family regularly goes out together. Walking around the shops is a useful source of exercise for those with sedentary occupations. Furthermore, it can be a source of sensory stimulation (e.g. a modern boutique or music shop), Set 1 of 3 sets of Ebiz study notes Page 17/ 153
as well as a source of status and authority, where consumers expect to be served by s hop assistants and, in some cultures, haggling over prices is normal. Shopping can also be seen as a subtle part of a persons identity construction as we are all influenced by the products we purchase and the retailers we frequent. It often gives us particular pleasure to be seen by the neighbours as we carry home bags from fashionable (perhaps expensive) shops. Finally, conventional shopping normally provides an opportunity to examine (or try on) goods, as well as providing the immediate satisfaction of receiving the goods straight away. All these aspects of conventional shopping are extremely difficult to replicate online and represent a formidable barrier for B2C e-business to overcome. Nevertheless, B2C offers an attractive channel: for those who are particularly cash rich and time poor (no queue-time, armchair browsing/search) where travelling to the particular shop is very difficult where the type of shopping is rarely pleasurable (e.g. groceries). (Many textbooks and website dictionaries make no effort to differentiate between the different roles, although it is useful when planning marketing strategy chapter-5). Longman, and Business Dictionary define online shopper as one who purchase products or services over the Internet. With Online shopping, shoppers find it convenient and easy to bargain shop from the comfort of their home or office. One of the most enticing factor about online shopping, particularly during a holiday season, is it alleviates the need to wait in long lines or search from store to store for a particular item). Reasons for consumer adoption As Chaffey Chapter 1 explains, B2C companies need to be able to innovate with new technologies to create a buying experience for customers that will foster increased buying online. In other words, companies need to generate an online value proposition which doesnt cannibalise their offline channel; instead it induces new customers to buy their goods and services. Broadly speaking, value for customers can be created around what Chaffey (2011, pg 39) calls the Six Cs: 1. Content detailed drilled-down content which has informational value that supports the buying process (either online or offline). 2. Customisation companies need to find ways to tailor and personalise their wares for each customer. This can be quite targeted and also forms a part of marketing (see the next chapter of this subject guide). DBSVickers (watchlists), eSobi (selective news feed), PropertyGuru (Property watchlists) 3. Community businesses can focus on the community around products and services, where consumers can discuss the strengths of the companies and their offerings as well any issues that might arise (like iPhone). Many companies use blogs, wikis and other forums, including Twitter. (see Chapter 8 of this subject guide), to create a community but also as a device to gather information on their customers and what they like (or dont like). 4. Convenience & Availability one of the oldest but probably key arguments in favour of online buying is the ability it gives consumers to choose, buy and, in many cases, use products at any time the classic 24 7 365 availability of a service. Ebay, Amazon, Asiatravel, eLong are classic examples of services that never sleep is this a critical success factor? [Always availableyes?]. But can devices fail?. 5. Choice of range of related products and services online selling has opened up more possibilities for sellers to differentiate themselves but it also gives more choice to consumers. Tesco, NTUC fairprice and indeed other supermarkets, allows consumers to buy food and drink online but at the same time also offers insurance, mobile phone contracts, travel, etc. Another case is Asiarooms, Octopus and other travel agencies allows consumers to book hotel rooms but also airtickets, insurances, holiday packages, etc
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6. Cost reduction companies often offer lower priced items online, which is a strong mechanism for encouraging sales. We tend to take it for granted now that items and services purchased online will be less expensive than those bought offline. A case of disintermediation and understanding of transaction cost (chapter-3). Compare these 6Cs to the earlier 8 unique features of e-business technology. What are your thoughts? Alongside creating value, companies must also keep in mind other factors that influence online buying behaviour (next section). Consumer buying behaviour Various factors either encourage or hinder consumer online buying. They include: Ease of use and responsiveness, including personalisation and the attractiveness of the site. This is usually summarised as the buying experience. Trust, security and privacy this issue is particularly important in e-business as surveys suggest that fears in this area more than any other deter consumers from buying from websites. Take eBay online auction, why should a buyer pay first or the seller despatch his goods first without receiving payment. Both parties are strangers to each other, so why should they trust each other. In the case of online banking transactions, how could security be guaranteed? Would you accept the deal in the example below? (In Chapter 10, the security issues are discussed in greater details).
From: "Paypal Payment Confirmation" <paypal2payment.customerservices@yahoo.com> To: "Jack koh chin guan" jackkoh20@gmail.com <<= seller CC: Subject: Re: **PAYING FOR EBAY ITEM #5812042818 THROUGH PAYPAL** Date: Tue, 4 Oct 2005 12:38:43 -0700 (PDT)
Hello Mr jack, We are Glad to hear from you sir, i am in charge of the payment dispatch for paypal customer care, so we have receive your payment from the ebay customer who purchase from you. You will have your Postal Order Receive immediately you have the Tracking Number Send to us, cause we are doing this for security reason. Also be warned that you will not have the Tracking number send to the buyer,also for security reason. Kindly get back to us with the Tracking Number in which you use to ship the Item to the Buyer Address,so you will then be notify that you will recieve your payment in 3 working days. Please refer to attach document for details of shipping and dispatch guidelines. Best Regards, Paypal Customer service A subsequent check on the buyer with e-Bay reveals this:
Kenwood compact 10-CD auto changer KDC-C715 Ended: 30-09-2005 11:44:22 AM SGT
Item Number: 5812042818
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History:
7 bids (Starting price: S$ 10.00) robinho987 ( 0) <<== buyer (as it turned out, this guy is a Nigerian. He claimed he was on study leave in Baywaters, UK). He has requested that item be sent via DHL or UPS to his pastor wife at a Nigerian address) No longer a registered user (feedback from ebay on 5th Oct 2005)
Winning bidder:
Product, price and branding. The quality and functionality of the product can be questionable. Does the price reflects the quality of the product? Because of the ubiquity of the distribution platform, ascertaining the accuracy of the brand may be questionable. Fulfilment the efficiency, reliability of distribution and the facilities for returning unwanted goods. Questions on the effectiveness in claims on broken goods or incorrect products. Information quality information about the offerings needs to be comprehensive, relevant, accurate, timely, up-todate and easily accessible. Case of information asymmetry persist. Consumer characteristics of the consumer such as personality, culture, risk aversion, lifestyle and inertia all impact on buying decisions. It follows that websites need to be designed carefully if they are to achieve significant sales. Lohse and Spiller (1998) relate the design of B2C websites to that of conventional shops. In particular, usability is important if the website is difficult to navigate, then customers will inevitably go elsewhere, if they have an unhappy experience. Website usability and design Useful reference: http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075384029&r.l1=1073861197&r.l2=1073866263&r.l3=1 075383789&r.s=sc&type=RESOURCES Seminal work in the area of website usability was carried out by Jakob Nielsen, who defines usability as a quality attribute that assesses how easy user interfaces are to use. The word usability also refers to methods for improving ease-of-use during the design process (Usability 101, Nielsen). The key issues of usability are as follows: Usability is a design issue an attractive site is likely to gain customers (AsiaTravel), while a poor site can damage a firms reputation and sales. Be enjoyable to use something to which the target audience can relate.Be compatible with the users systems and technology platform. (check out sites of DBSvickers Vs UOBKH; PropertyGuru Vs STProperties to search for Waterfront waves) Design for website visitors/customers this implies that the company knows the characteristics, needs and expectations of their customers (e.g. SgCarMart, Ctrip, StandardChartered). With StandardChartered, the payment and transfer functions displayed the balance $ available against the selected accounts, whereas with DBS, the user has to guess the account to use. The buying experience and website atmosphere the site should be easy to use (e.g. Ctrip, ebay, propertyguru), without being dull. The use of graphics, videos and animation should support the buying experience and not be a distraction ((e.g. OCBC is long winded). The limitations of computer screens, including mobile phones, need to be considered. The web is not mass media, nor is it exactly personal contact it falls somewhere in-between! DBS and iOCBC once demanded that the users change their password every 60 days with strict requirements: minimum 10 characters/digits, Set 1 of 3 sets of Ebiz study notes Page 20/ 153
no reuse of past passwords, adjoining characters/digits not allowed, at least 2 digits in the password. The requirements were is too personal and exacting for the user to upkeep.. Design goals vary according to the context but may include: Creating an impression consistent with the organisations desired image, which could be youthful or well -established, exciting or secure, zany or efficient, etc. Allowing visitors to experience the site in different ways and at different levels (e.g. it should cater for both regular customers and first-time visitors). PropertyGuru website is a good example which offer various levels - from a broad based search to a very detailed, specific level. Providing visitors with a meaningful, two-way (interactive) communication (i.e. it should provide relevant information to visitors but also obtain data about them for marketing purposes). Again PropertyGuru invites visitors to keep a shortlist of their interested target properties. This is useful for later marketing purposes. Sustaining visitor attention and encouraging return visits. JetStarAsia uses Fridays of the year for announcement of special discounted rates for online users. EBay periodically sent information of latest attractive items on auction. Others like Ctrip, Elong, HolidayInn awards points for every sales so as to encourage customers to return to collect more points. Offering easily accessible information about products and services and how to use them. Encouraging trust and loyalty. Again, membership and point award system works here. SIA SingaporeAir s loyalty KrisFlyer points, NTUC membership linkpoints. To achieve the aim of increased sales, certain design guidelines are often recommended. We sum them up here again: ensure simple, fast access to information via laptop and mobile devices provide simple, clear, consistent navigation avoid jargon and excessive propaganda acknowledge the need for multiple languages (including navigation) as not everyone speaks English. Ctrip, eLong, DBS (Chinese & English) versus Expedia (strictly English only). AsiaRooms & OctopusTravel/HK (multiple languages Chinese, English Spanish, French, German, Bahasa) avoid unpleasant colour combinations, too small text and irritating pop -ups. Design decisions typically imply trade-offs, usually between originality, simplicity and functionality. For example, functionality (especially excessive functionality) often implies complexity (the opposite of simplicity), while originality (implying unfamiliarity) may not be simple or particularly functional. Site design and structure This refers to the overall structure of a site. Chaffey (2011, from pg 614) discusses site style, organisation and navigation schemes where style refers to the personality of the site. If it is a formal message for a formal audience, then the site should reflect the same attitude. Much of this sounds like common sense, yet the internet is full of websites that are poorly constructed, with little content and the wrong personality for the audience and content. Site organisation refers to organising the content in a clear manner which lends itself to some obvious categorisation for instance, sorting product ranges alphabetically. Finally, site navigation explains how users can navigate their way from one page to another (or back again) in an easy flow. There are basically two approaches to creating a flow: narrow and deep implies less information on each page but provides links to other pages, while the broad and shallow approach has fewer pages but each one contains a lot of content. This is a design issue and each company needs to assess how best to help customers navigate their website. Page design
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This refers to the layout of each Web page. Attention must be given to the title, navigation and content. Chaffey explains that page elements, the use of frames, resizing, consistency and printing are issues that the designer needs to keep in mind when creating the e-business B2C website. Content design The key point here is never to include too much information on one page, use hyperlinks to give the reader a choice about exploring content further without unnecessarily crowding the page with too much content, and set out content in small, readable chunks of text that can be scanned easily. Any new website design should be prototyped and tested with real users,just to evaluate their reactions. Ives and Piccoli (2003) demonstrate how a good knowledge of users can inform website design, while Treiblmaier (2007) discusses the evaluation of websites. Although there are many, often fairly obvious, design guidelines (Usability 101, Nielsen), it must be remembered that artists break the rules. In other words, exceptional website designers can and do fail to follow what appear to be obvious guidelines and yet, through their design talents, they still manage to produce exceptionally attractive and innovative designs (e.g. www.agencywork.com.my/nokia2600 ; www.nexteinstein.org ; and www.adultswim.com/music/ghostlyswim/index.html ) Relevant capabilities of e-commerce website include e-commerce payments, secured payment gateways, shopping cart, customer satisfaction surveys, market research, e-voting, VoIP (live chat), data collection and processing, translation services. Product suitability for e-business Certain products/services appear more suitable for online sales and others remain more suitable for offline sales. The most successful purely virtual companies deal with digital products, including information storage, retrieval, and modification, music, movies, education, communication, software, photography, and financial transactions. Virtual marketers can sell some non-digital products/services successfully. Particularly products that arouse wild imaginations and cause potential embarrassing purchases, and products target at people in remote locations, and those typically purchased by shut-ins. Pornography and other sex-related products and services appear to fulfil the requirements. Not unsurprisingly, such services have become the most profitable segment of e-Commerce. Products such as spare parts, both for consumer items like washing machines and industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets - this means that e-commerce solutions in this area do not compete with retail stores, only with other ordering systems. A key element for success in this niche consists of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number. Products which are less suitable for e-commerce may include products that require the senses of smell, taste, or touch. Products that need trial fittings, and products where colour integrity appears important and products with a low valueto-weight ratio. Payment Systems of e-Commerce Many payment systems via electronic means have since been developed for e-business. This promotes e-commerce further with saving in the financial transactions that follow the sales and purchases. Payment systems using credit card and electronic billing presentation & payment (EBPS) have been most succe ssful. Some others like accumulated payment via micropayment system witness the demise of startup like RocketCash, an enterprise started in 2000 to provide such services (http://www.clickz.com/showPage.html?page=447471)
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Credit card accounts is most successful and it accounts for 95% of e-commerce payments. Credit cards are easily available credits from financial institutions to qualified person with a certain minimum annual income. VISA, and Mastercard are examples. Digital Wallet works like physical wallet where key personal and banking data about individual is pre-stored. Digital wallets greatly increase the convenience of online shopping by eliminating the need to constantly re-enter payment information every time a purchase is made or handle physical cash. Users simply store their payment information with the merchant through secured online transmission. In a way, this operates like leaving a blank cheque with the merchant. Unfortunately, adoption of digital wallets has been slow. Examples are Amazon.Com and AOL. Accumulated Balance Payment is designed to serve micropayment purchases of small values. An example is the purchase via m-commerce for can drinks from vending machine. A company called RocketCash was set up to support this system in 2000. However, it has since become history. Another company called eCoin.Net is struggling and is not signing any new members now. eCoin.Net is an associate of PayPal. Stored Value Payment Customers subscribed with an acceptable minimum deposit in their accounts. Their values of transactions are then deducted from these accounts e.g. e-Trading houses like Finatiq and FundSupermarket. Digital cash operates like physical cash. Holder is linked to a registered account (eCoin.Net). eCoin has not be quite successful. In Singapore, some banks have started with Debit card which is linked to the consumer bank account. This has been quite successful so far. NETS is similar to digital cash. Peer2Peer is supposed a payment system where buyer elec tronically pays directly to seller without any store -forward action involvement of intermediaries. P2Pcash is the closest example. PayPal claimed to be so too, but actually its hold the payment from the buyer, storing it, forwarding it to the seller after shipping confirmation details were received. PayPal, however, has been quite successful in its operations so far. The buyer provides his bank account to the peer2peer systems to complete the transaction. PayPal. PayPal is a global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders. some time in 2010 or early 2011, PayPal began to require a verified bank account after the account holder exceeded a predetermined spending limit. After that point, PayPal will attempt to take funds for a purchase from funding sources according to a specified funding hierarchy. The funding hierarchy is (1) a balance in the PayPal account; (2) a PayPal credit account, (3) a verified bank account. Digital check works like physical check. However, it is electronically encrypted and secured before being sent electronically to the recipient. Western Union provides this service to customers in many countries. Customers pay with their credit cards. Standard chartered provides his service to their customers who have Internet banking accounts with them. Electronic Billing Presentment & Payment (EBPP) facilitates electronic payments without consumers having to pay with physical cash or pay for purchases immediately. Often the use of credit card is not allowed. In Singapore, GIRO and Shell Station bills are examples. The main concern of organizations and consumers is to make digital payments secured, safe, trustworthy and privacy! A major barrier to e-commerce is consumers' lack of trust. A research paper by Hoffman, et al from Vanderbilt University found:
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At its core, the reason online consumers have yet to shop online in large numbers, or even provide information to Web providers in exchange for access to information offered onsite, is because of the fundamental lack of faith that currently exists between most businesses and consumers on the Web today. In essence, consumers simply do not trust most Web providers enough to engage in relationship exchanges with them. This lack of trust is due in large part to the sensitive nature of the data being collected. It encompasses both physical security (e.g. is the data encrypted when stored and transferred over the Internet?) and user privacy (e.g. who has access to my data and will they sell my information to third parties without my knowledge?). Convenience and Trust -- both need to be improved before e-commerce can reach its full potential. Fortunately, solutions are starting to emerge. Note: Some authors, including some UOL examiners defines e-Commerce payment as slightly differently from electronic payment or e-payment. E-Commerce payment involves trading over the Internet or telecommunication networks. E-Payments are merely payments make to electronic machine (in place of human resources). E-Payments includes car-park (where tickets at the car-park entrance are issued automatically and the collection of fees using unmanned payment machines that accept notes and coins), and Bus/MRT ticket vending kiosk (where the machine automatically computed the fare and issue tickets on receipt of coin or notes as payment). Generally though, many commercial websites make no difference between them because most have expanded their systems to allow payment with cash-card or VISA credit cards (electronic money). Case studies of successful eBusiness companies 1) Amazon.com (chaffey 2011, pg 695-700, 156-157) Amazon.com went online in 1995 in the US. It is now gone global with separate retail website in canada UK, france, Germany, Italy, Spain, Japan , China and many more. Amazon.com started by Jeff Bezos. It started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry. Because the company does not have to hold physical stocks of books, it can offer a vast catalogue of titles (much larger than even the largest traditional bookshop) and previously unprofitable transactions become profitable using e-business. Whereas even a large conventional bookstore only offers 130,000 top titles, at one point, one-third of Amazons book sales came from outside these top 130,000. When the dot-com bubble burst, and many e-companies went out of business. Amazon persevered, and finally turned its first profit in the fourth quarter of 2001:US $5 million, on revenues of more than US$1 billion. The profit, although it was modest, served to demonstrate that the e-business model could be profitable. Amazon product lines now include books, music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, groceries, and has its own auction website. In November 2007, Amazon launched Amazon Kindle, an e-book reader. In September 2011, Amazon announced its entry into the tablet computer market by introducing the Kindle Fire, which runs a customized version of the operating system Android. Amazon launched Amazon Web Services (AWS) in 2002. In 2008 Amazon expanded into film production. Amazon.com operates merchant partnerships for retail web sites of Sears Canada, bebe Stores, Timex, Marks & Spencer, Mothercare, Lacoste, and many others.
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Amazon sells directly to its customers but it also make use of affiliate associates. It derives about 40% of its sales from affiliate marketing called "Amazon Associates" and third-party sellers who sell products on Amazon. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon, if the referral results in a sale. Worldwide, Amazon has "over 900,000 members" in its affiliate program. Associates can access the Amazon catalog directly on their websites by using the Amazon Web Services (AWS) XML service. Customer Relationship Management (CRM, discussed in Chapter-7) and Information Management (IM) support Amazons business strategy. The core technology that keeps Amazon running is Linux-based. As of 2005, Amazon had the worlds three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB Amazon employs a multi-level ebusiness strategy. Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions. It now also facilitates customer to customer with the provision of the Amazon marketplace which act as an intermediary to facilitate consumer to consumer transactions. The company lets almost anyone sell almost anything using its platform. In addition to affiliate program that lets anybody post Amazon links earn a commission on click through sales, there is now a program which let those affiliates build entire websites based on Amazons platform Amazon has developed a customer base of around 30 million people. Amazon.com is primarily a retail site with a sales revenue model. Amazon makes its money by taking a small percentage of the sale price of each item that is sold through its website. Amazon also allows companies to advertise their products by paying to be listed as featured products. Remember also that Amazon is an excellent example of long tail economics, the shift from mass markets to niche markets (Chaffey, 2011, Chapter 8 pg 421). Note also how Amazon has branched out from books to music, electronics, clothing, web services and even (in the USA) luxury foodstuffs. Interestingly, Jeff Bezos, the founder of Amazon, said in an interview some years ago that the secret of the company s success is not the business model or the website but efficient inventory management. Note on Long Tail economics: The term Long Tail describes the retailing strategy of selling a large number of unique items with relatively small quantities sold of each usually in addition to selling fewer popular items in large quantities. The Long Tail was popularized by Chris Anderson in an October 2004 Wired magazine article showing it effects it might have on future business models. Anderson later extended it into the book The Long Tail: Why the Future of Business is Selling Less of More (2006). It argues that the total volume of low popularity items exceeds the volume of high popularity items. Researchers did find that a large proportion of Amazon.com's book sales come from obscure books that were not available in brick-and-mortar stores. Question: Would you agree high order frequency and large order size are more important than large customer base? Check out Customer-Acquisition Costs (CAC) relevance to this question. Besides Amazon.com, Anderson mentioned Apples Tunes store, ebay, Yahoo!, Google, and Netflix (video rental) as examples of businesses applying this strategy. These pure-play digital retailers also have almost no marginal cost, which is benefiting the online services, unlike physical retailers that have fixed limits on their products. The internet can still sell physical goods, but at an unlimited selection and with reviews and recommendations. The internet has opened up larger territories to sell and provide its products without being confined to just the "local Markets" such as physical retailers like Target or even Walmart. 2) Dell (Chaffey 2011, pg 425-427, 108), http://www.indiana.edu/~tisj/readers/full-text/16-1%20kraemer.pdf
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The B2C Dell story is well-known in the business world: a young Michael Dell, while attending the University of Texas in Austin, pioneered a computer sales company in 1984 that eventually revolutionizes the PC industry. Dell Computer Corporation designs, manufactures, markets, services, and supports a wide range of computer systems, including desktop personal computers, notebook computers, and network servers. In addition, computer hardware and software, as well as service and support programs. The success of Dell Computer Corporation can be traced to Michael Dells strategic vision and distinctive competency. The exceptional performance of Dell Computer in its early years illustrates an innovative response to a fundamental competitive factor in the personal computer industrythe value of time. Product life cycles in the personal computer (PC) industry have shrunk from about 22 months in 1988 to 6 months in 1997 (Mendelson & Pillai, 1998) Dells strategies of direct sales and build-to-order production have proven successful in minimizing inventory and bringing new products to market quickly, enabling it to increase market share and achieve high returns on investment in a highly competitive industry. UOL study guide states. Dell Computers offers customers a build-to-order service, so that the computer is built according to the customers specification. Dell mana ges this process highly efficiently, representing a triumph of information over inventory. In an interview, Michael Dell attributed Dells success to consistent execution (in other words, repeatedly getting it right) through world -class manufacturing Dells use of information technology (IT) has been vital to executing both elements of its business model - direct sales (complete disintermediation) and build-to-order - and provides valuable insights into how IT can be applied to achieve speed and flexibility in an industry in which time is critical. The rapid technological improvements in microprocessors, semiconductors, storages device and other hardware have been matched historically by increased complexity of software, creating demand for the latest hardware. This means that time is a critical competitive factor in the industry in two ways: first, excess inventory loses value and costs money; second, products incorporating the most advanced technologies are in high demand and carry a price premium. As a result, companies that minimize Just in time (JIT) inventory and bring new products to market faster can reduce costs, increase market share, and maintain higher margins. Because the modular nature of PC and its industry is dominated by a few large standards players (like Intel, Microsoft), with standard components and common architectural interfaces, PC makers mostly outsource their productions from a well-established production network of contract manufacturers and components suppliers. The difference among PC companies was increasingly being determine by a key factor - the structure of distribution. Dell exploits this position to introduce new PCs with the most advanced technologies quickly to the end users - building the PC only when an order was received. Selling directly removes two links in the supply chain where inventory could build up and also enables Dell to know its final customers, provide better service to them, and promote repeat or expanded sales to them. Build-to-order production allows Dell to introduce new technologies as soon as customers want them and makes it possible to adjust production to demand very quickly. Dell provides customers with a 24-hour hotline for complaints and guaranteed 24 to 48 hour shipment of replacement parts. The drawback of direct sales is that Dell lacks the extensive reach of the channel, which has thousands of large and small retailers providing sales, marketing, service, and support to customers of all sizes in all markets. To overcome this problem, Dell has segmented the market by size and focused much of its own marketing efforts on large customers who could be reached directly by Dells sales force. Only after establishing a strong brand name with larger customers and developing the online infrastructure to reach new customers at a low marginal cost has Dell seriously targeted the widely diffused small business and consumer markets. Dell segments its customers into Relationship, Transaction, and Public/International customers. Dells segmentation of customers helps it respond to changes in demand among different customers, to develop new customer segments, and to grow the most profitable segments. Relationship customers are Fortune 1000 companies (such as Exxon, Ford,
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Microsoft, Oracle, Toyota, Walmart) that purchase at least $1 million annually. Transaction customers, which represent 30% of U.S. sales, are small and medium-sized enterprises (about 20%) and home/office customers and consumers (about 10%). Many of the insights gained from this case can be applied more generally to other time-dependent industries, such as fashion clothing, publishing, transportation, food service, flowers, and many segments of the electronics and communications industry. 3) EBay (Chaffey 2011, pg 40-43) http://www.ebayinc.com/list/milestones Another case study well worth reading is that of eBay (Chaffey, 2009, Case Study 1.3), founded in 1995, which is remarkable not just for the worlds online marketplace facilities it provides consumers to sell unwanted goods, but also for the way it has extended over the years from auctioning second-hand goods to selling new goods at fixed prices. Today tens of thousands of small businesses in Europe rely on eBay as a sales channel. Is eBay the centre of a unique business ecosystem? Pierre Omidyar, a 28 year old French-born software engineer living in California coded the site while working for another company, eventually launching the site for business on Monday, 4 September, 1995 with the more direct name Auction Web. The site became eBay in 1997. In 2002, eBay acquires X.com's PayPal payment service and, by then, have expanded internationally worldwide including China, UK, Germany, Australia, Canada, france, Austria, Taiwan, Singapore, Switzerland, Italy, South korea. The peak traffic in 2004 was 890 million page views per day and 7.7 gigabits of outbound data traffic per second. By 2005, eBay has acquired Rent.com, Skype, and Shopping.com In 2009, ebay had 90 million active users globally, with the total worth of goods sold on eBay $60 billion which is equivalent to $2,000 every second. eBays scalable component architecture comprises of web servers, web clients, databases, security servers, application servers, proxy servers, transaction servers that efficiently manages more than 250 billion registered users, 1 billion photos, 10,000 live applications, 1 billion page views per day, and more than 45 billion SQL search execution per day. eBay Mission. eBay describes their purpose as to pioneer new communities around the world built on commerce, sustained by trust, and inspired by opportunity eBay Objectives and strategy. The overall eBay aims are to increase the gross merchandise volume and net revenues from the eBay Marketplace through acquisition of new registered users, activation, and activity. After Meg Whitman became the CEO in 1998, eBay promotes itself as a company in the business of connecting people, not selling them things. They quickly shed the image of only auctioning collectibles and moved into an array of upscale markets where the average sale price (ASP) is higher. ASP is a key metric in determining eBay's transaction fees, so increasing the ASP became an important item. By forging partnerships with namebrands such as GM, Disney and Sun, eBay has managed to do exactly that. Sun has sold $10 million worth of equipment and it now lists between 20 and 150 items per day. eBay Revenue model. The vast majority of eBays revenue is for the listing and commission on completed sales. For Paypal purchases an additional commission fee is charged. Margin on each transaction is phenomenal since once the infrastructure is built, incremental costs on each automated transactions are tiny between buyers and sellers. Advertising and other non-transaction net revenues represent a relatively small proportion of total net revenues and the strategy is that this should remain the case Advertising and other net revenues totalled $94.3 million in 2004 (just 3% of net revenue).
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What are the building blocks of the auction giant's extraordinary and persistent success? The obvious answer is that eBay's first-mover advantage allowed it to dominate the online auction space. The so-called "network effect" has bred a critical mass of customers, a group divided into buyers and sellers. If the market were fragmented among several online auction companies, as it once seemed on the verge of becoming, eBay would not reap such hefty revenues. EBay was the first at their particular business: conducting auctions with no inventory. Other companies were involved in buying inventory and auctioning it off, but that's a totally different business model. At any rate, whether through first-mover momentum or superior service, eBay has capitalized on the network effect to a greater extent than any other e-commerce company. Large and small merchants gravitate to eBay because that is where buyers are clustered. Consumers flock there because of the great product selection and site reliability. Globalization has played a big part in eBay's success too. The result is a massive barrier that has vanquished latecomers, such as Yahoo! Auctions and Amazon Auctions. Hence, EBay's value proposition is simple - the company merely provides virtual space, software and community tools. This widens its operating margins, leaving its balance sheet unencumbered by warehousing and distribution costs. Other case-studies worth reviewing An industry sector that has been transformed by B2C is the travel industry see Chaffey (2009) for case studies of Lastminute (Case study 2.2) and easyJet (Case study 8.1). This transformation has been so successful that it has been calculated that B2C accounts for more than half of the total US travel market. Customers are increasingly happy to research their travel plans online and make their own bookings, without any personal contact with a traditional travel agent. Case studies of B2C failures Kent German, Cnet said The most astounding thing about the dot-com boom was the obscene amount of money spent. Zealous venture capitalists fell over themselves to invest millions in start-ups; dot-coms blew millions on spectacular marketing campaigns; new college graduates became instant millionaires and rushed out to spend it; and companies with unproven business models executed massive IPOs with sky-high stock prices. We all know what eventually happened. Most of these start-ups died dramatic deaths. These are the celebrity victims of the new-economy bust 1. Webvan: A core lesson from the dot-com boom is that even if you have a good idea, it's best not to grow too fast too soon. But online grocer Webvan was the poster child for doing just that, making the celebrated company our number one dot-com flop. Webvan was founded in the heyday of the dot-com bubble in the late 1990s by Louis Borders, who also cofounded the Borders bookstore in 1971. Webvan was an online "credit and delivery" grocery business that went bankrupt in 2001. In a mere 18 months, it raised $375 million in an IPO, expanded from the San Francisco Bay Area to eight U.S. cities, and built a gigantic infrastructure, including multi-million dollar group of high-tech warehouses, a fleet of delivery trucks and sophisticated cluster of servers, networks and computers. It promised to deliver products to customers' homes within a 30-minute window of their choosing. Webvan came to be worth $1.2 billion within a year (or $30 per share at its peak). At its peak, it offered service in ten U.S. markets including San Francisco Bay Area, Dallas, San Diego, Los Angeles and chichago. The company had originally hoped to expand to 26 cities However, as the grocery business has razor-thin margins to begin with, it was never able to attract enough customers to sustain its huge infrastructure and justify its spending spree. The company closed in July 2001, after less than 2 years of operations, putting 2,000 out of work and leaving San Francisco's new ballpark with a Webvan cup holder at every seat.
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It is now taken over, owned and operated by Amazon.com. 2. Pets.com Pets.com was former dot-com enterprise that sold pet accessories and supplies directly to retail customers. After its start by Greg McLemore, the site and domain was purchased in early 1999 by leading venture capital firm Hummer Winblad. It began operations in August 1998 and closed in November 2000. The lesson learnt was that advertising, no matter how clever, cannot save the firm. The company rolled out a regional advertising campaign using a variety of media (TV, print, radio and eventually a Pets.com magazine). It started with a five-city advertising campaign rollout and then expanded the campaign to 10 cities by Christmas, 1999. The company succeeded wildly in making its mascot, the Pets.com talking sock puppet, well known. Its talking sock puppet mascot became so popular that it appeared in a multimillion-dollar Super Bowl commercial, and TV talk shows. But as cute--or possibly annoying--as the sock puppet was, Pets.com was never able to give pet owners a compelling reason to buy supplies online. After they ordered kitty litter, a customer had to wait a few days to actually get it. For example, when a customer needed kitty litter, he cannot wait a few day for the kitty litter. Moreover, because the company had to undercharge for shipping costs to attract customers, it actually lost money on most of the items it sold. Pets.com made significant investments in infrastructure such as their warehousing, computers. The company needed to get to at least a revenue run rate of US$300 million annually to support the infrastructure and operations. They projected it will take four to five years to hit that run rate. Although it was successful in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com. During its first fiscal year , Pets.com earned revenues of $619,000 but spent $11.8 million on advertising alone. Despite venture funding by Amazon.com in raising $82.5 million in an IPO in February 2000, Pets still collapsed nine months later. 3. Flooz.com Flooz is an Arabic term for money. It was started by iVillage co-founder Robert Levitan. Flooz was meant to be a unique internet online currency that would serve internet merchants acting like the point systems, and as an alternative to credit cards. After buying or accumulating (sales and promotions) a certain amount of Flooz $, the customer could then use it at a number of participating retail partners. Hollywood star Whoopi Goldberg also pushed Flooz in a series of TV advertisements. Flooz raised a staggering $35 million from investors and signing up retail giants such as Tower Records, Barnes & Noble, and Restoration Hardware. However further adoption of flooz by both merchants and customers proved limited, and it never established itself as a widely recognized medium of exchange, which hindered both its usefulness and appeal. It was also inadvertently got involved in a Russian organized crime syndicate was using Flooz and stolen credit card numbers as part of a moneylaundering scheme, in which stolen credit cards were used to purchase currency and then redeemed. This accounted for 19% of Floozs transactions. Flooz went bankrupt in August 2001 along with its competitor Beenz.com. Flooz was an example of a really terrible bad eBusiness model. 4. Boo.com (chaffey 2011,Chapter-5, pg 293)
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(http://www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Boo.com-case-study/ http://www.smartinsights.com/digital-marketing-strategy/online-marketing-mix/boo-com-case-study-a-classicexample-of-failed-ebusiness-strategy/ ) Founded in the United Kingdom as an online global sports fashion site in 1998 by three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Malmsten and Leander who had previous business experience in publishing where they created a specialist publisher and had also created an online bookstore, bokus.com, which in 1997 became the worlds third largest book e-retailer behind Amazon and Barnes & Noble. According to Malmsten (2001), the boo brand name originated from filmstar Bo Derek. Boo launched its virtual doors in both Europe and America with a view to amazoning the sector. This is in contrast to Amazon, who did not launch simultaneously in all markets. Rather it became established in the US before providing local European distribution through acquisition and re-branding of other e-retailers in the UK. The audience targeted by boo.com can be characterized young, well -off and fashion-conscious 18 to 24 year olds. The concept was that globally the target market would be interested in sports and fashion brands stocked by Boo.com. The thinking was that sports clothing has more standardized sizes with less need for a recise fit that designer clothing. Boo.com was beset with problems and mismanagement from the start. A large investment was required in technology with several suppliers being replaced before launch which was 6 months later than promised to investors, largely due to problems with implementing the technology. Its complicated Web site, which relied heavily on JavaScript and Flash, was very slow to load at a time when dial-up Internet usage was the norm. Clothing the mannequin and populating the catalogue was also an expensive challenge. Boo spent wads of cash to market itself as a global company but then had to deal with different languages, pricing, and tax structures in all the countries it served. Some manufacturers already had a well-established distribution network through large high street sports and fashion retailers and many smaller retailers were reluctant to participate. The company also mysteriously decided to pay postage on returns. But importantly, sales never reached expectations and were going at rate as low as 4 placed orders to every 1000 visits. Boo.com eventually burned through $160 million before liquidation in May 2000 Other B2C failures worth reviewing Another failure was the US company Fingerhut (see Phan et al., 2005 for a clear narration of the story), which had been a very successful mail-order catalogue retailer since the 1950s. Part of its success was due to its sophisticated use of IT, including extensive data mining and database marketing. Its move into B2C e-business and credit cards in 1998 was welcomed by Fortune magazine, which regarded the company as one of the ten companies that get it. Shortly afterwards it was acquired by Federated Stores, a US chain, but then things started to go wrong. Fingerhuts traditional customers were largely sub prime (low income) and at the time they were not e -business users. Nor were they particularly creditworthy, which affected their ability to use credit cards. At the same time, Fingerhut lost control of its IT systems, such that IT failures began to hit order fulfilment, peaking during the crucial retail period of Christmas 1999. The company lost trust and credibility, sales dropped and the business closed down in 2002, although it was revived later. RocketCash, a micro-cash payment eBusiness model, somewhat similar to Fingerhut, also failed as their poor customers cannot afford to pay up.
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Another interesting failure was UKeU, a UK e-learning initiative launched in 2000. Most of the 50m investment was spent developing the software for the learning platform and insufficient attention was paid to developing a business strategy. This type of operation has high fixed costs, payable up-front, and the failure to attract more than 900 students, against a target of 5,600, saw the project scrapped. B2C problems (read Chaffey 2011, Chapter-5, pg 291-293) 1. Unproven business models. Any business has to have a reliable revenue stream and eventually to make profits it took companies like Amazon a number of years before they showed a profit. Investors will not wait forever. 2. Discount environment. Consumers expect discounts and bargains through B2C and in this environment, large sales volumes and strict cost control are needed. Competition is fierce especially amongst e-tailers with low margin and new entrants easily established. 3. Cost-efficiency problems. B2C is not necessarily efficient and cost effective, compared to traditional retail. Much depends upon the product market. Nowadays consumers expect attractive websites, backed up by superior support and distribution networks and these are not cheap. Hence, compared to the dot.com boom, entry costs (and operating costs) are no longer low. 1. Theres not always a global market. Different countries have different cultures, preferences and regulations, such that a product that is a best-seller in the West may be unacceptable elsewhere. For example, alcohol is prohibited in many Muslim countries and its transport across state borders is a problem in parts of the USA, as a firm called wine.com found out to its cost. 2. Security and privacy overheads. B2C retailers have to be particularly careful to maintain high (and expensive) levels of website security to prevent customer details (e.g. credit card details) being accessed illegally. 3. Channel confusion and cannibalisation. As discussed above, B2C is a new channel and if it is merely cannibalising customers from existing channels, it is unlikely to be successful. 4. Customer-Acquisition Cost (or Cost Per Acqusition, chaffey 2011, pg 467-480) can be huge, particularly in the early years (average $30 to $100 per new customer), given the new website is unknown to consumers. Customer acquisition cost = total spent on advertising and marketing divided by total number of new customers obtained. In 2010, CAC for Amazon is $27.60, Priceline is $32.30, and Barnes & Noble.com is $42. 5. Often, customers switching costs are tiny, and lock-in is difficult and expensive to construct. For example IE, Chrome browsers. 6. Investors may run out of fund and patience. Building trust and customer relations need time while high cost of warehousing and distribution burn out existing capital. Key success factors (read Chaffey 2011, pg 291-293) However, with so many B2C websites, covering a multiplicity of different markets, it is impossible to identify specific success factors, as these are highly context dependent. Product and service markets vary considerably among industries and regions of the world. However, there are a number of high level factors that do seem consistently important: 1. Innovation In most cases, B2C is competing against traditional retail operations and, in order to encourage customers to switch away from the familiar traditional channels, the new B2C operation must offer something extra and innovative. This could be the personalisation and reviews offered by Amazon, transaction brokers like travel agencies (Asiatravel, ctrip) or Shares trading (UOBKH), the build-to-order of Dell or the convenience and discounts of easyJet. In addition to these well-known cases, there are myriad smaller companies, offering innovative solutions in highly niche markets, from Chinese cosmetics to concert tickets (e.g. SiSTic) and from violin repairs to virtual pets. Certain business models involving business eco-system strategy (although complex in structure) offer competitive edge with building of powerful barriers against competitors. Understanding shoppers
2.
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It is essential, as we noted above, that B2C retailers build up a good understanding of the different types of consumer (segmentation) and their needs, expectations and purchase behaviour. Please see also the following chapter of this subject guide on e-marketing. 3. Understanding the product and the industry (Not all product and services can B2C!) As we have argued, the success of B2C is highly context dependent and it is essential that B2C retailers have a good understanding of the products or services that they are offering. Some products are very easy to individuate (e.g. a particular book has a title and an author), others are much more difficult (e.g. potatoes). Products with well-known (and well understood) features, such as electric kettles, are easier to sell at a distance than innovative, highly novel products which the consumer will really want to examine before buying. The latter is also the case with high touch items such as clothing. Consumers are usually happier buying very expensive products (e.g. cars) through traditional channels with their personal touch, although they often research the features of such products extensively on the web before making a purchase. Where a purchase is time critical (e.g. medicine for someone who is ill) or where the product is widely available on the high street, it is difficult for B2C to compete. As we have already remarked, where physical products are concerned, B2C retailers have to worry about logistics (including inventory control, distribution and returns) as much as their conventional counterparts. Similarly, they need to understand the industry structure in terms of dominant brands, comp etitors strategies and industry regulations (especially in, say, the pharmaceutical industry). As we discussed in Chapter 3 of this guide, e-business often leads to a widespread restructuring of the industry in terms of disintermediation and infomediation and B2C retailers need a good appreciation of such structures and the changes taking place. 4. Understanding the technology to enhance store experience. Consumers expect the easy-to-use website to be available 24 7 365 and any extended downtime is lik ely to result in a significant loss of business. Hence, B2C retailers need to be expert in all aspects of hardware and software, especially in understanding the limitations, vulnerabilities and reliability of particular components of their technical system to ensure the buyers have a enjoyable and worthwhile shopping experience with each site visit. 5. Branding find effective ways to build a strong brand. Approaches include unique design, strong social network, deploy multiple display advertising campaigns, Q&A sites, showcase of testimonials and reviews of your products unique selling features (e.g. price, quality, functions, support). 6. Customer acquisition and retention. The business will need to build a big base of loyal customers. A loyal customer is also the marketing agent for the firm, spreading good words through various social networks. 7. Multi-channel approach. There are opportunities lying everywhere in the Internet. Some businesses are making millions from Facebook and eBay, while some with search engine marketing. Be receptive with a marketing strategy involving many channels like email marketing, affiliate marketing, referral marketing, social media, and offline media to diversify reach. Multi-channel. Bricks-and-clicks firms have a network of physical stores as their primary retail channel, but also have online offerings. Firms such as Walmart, Sears, JCPenney, and Target. While bricks-and-clicks merchants face high costs of physical buildings and large scales staffs, they also have many advantages such as a brand name, a national customer base, warehouses, large scale (giving them leverage with suppliers), and a trained staff. Acquiring new customers is less expensive because of their brand names, in-place procurement and inventory control systems.
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Article worth reading: Great growth potential for Latin-American B2C-E-Commerce http://www.emarketservices.com/start/News/International/news/Great-growth-potential-for-Latin-American-B2C-ECommerce.html?xz=0&cc=1&sd=1&ci=4109 Understanding critical success factors Critical success factors are variables or conditions that are essential for an organization's success. It is a critical factor or activity required for ensuring the success of a company or an organization. For example, a CSF for a successful eBusiness project is user involvement. Details to consider when identifying critical success factors include the type of industry or product, the business model or strategy of the company, and outside influences, such as the environment or economic climate. Critical success factors should be periodically evaluated and adjusted as necessary to account for changes in those identifiers that might affect the company's success. Critical Success Factor is not key performance indicator (KPI). Critical success factors are activities that are vital for a strategy to be successful. A critical success factor drives the strategy forward, it makes or breaks the success of the strategy. A simple way to identify CSF is to ask Why would customers choose our product or services?. KPIs, on the other hand, are measures that quantify a strategic performance, usually setting a target like inventory turnaround of 4 times instead of 12 or sales increase by 50% over the next 12 months. Market Process Re-engineering (MPR) Market process re-engineering operates as a virtual marketplace (i.e. virtual marketSPACE). Unlike traditional transactions where suppliers and buyers have to meet in the same place and at the same time to conduct the transaction, e-commerce suppliers take their products and services to the virtual marketplace. Sellers are connected to the buyers through communication networks that allow for faster and more efficient information flows. Products actually move from the seller to the buyer only after the online transactions are completed. We can equate the implementation of e-business as market process re-engineering. Amazon.com is one such enterprise that re-engineers the traditional business processes of inventory control, marketing, order processing and shipment. Traditionally, a building, a shop or some retail physical space is needed in order to carry out any sales transaction. With e-business, every marketing and customer order process is carried out in the virtual marketspace with direct participations by the customers. They are done online with their B2C ebusiness model. Amazon is able to virtually keep very low inventory of their products (books, magazines, CDROM). Supplies are requested only when customer orders are received online. Amazon is able to reduce search cost, contract cost, regulation cost for both their company and their customers. We can say that Amazon has successfully re-engineered what were traditionally business processes to market processes. Today, there are many organizations installing customer order processing system that talks to their customers. Customers can make direct enquiries on prices and status of their orders without the intervention of human workers. Sales invoices and reminders of outstanding payments are automatically created and dispatched to customers. E-Business processes are aimed at decoupling product flows through traditional market processes through intermediaries or brokers, with online transactions. Dell sold millions of computers every year directly to their customers. Yet they do not have own any manufacturing plant to produce the computers, sales outlets to promote their products and transport department to deliver the goods to their customers.
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How could this be possible? Well, Dell re-engineer all the business processes by decoupling their product flows to market processes. It is correct to say, Dell de-internalise their business processes (traditionally performed inside the firm) to some external specialists in the marketplace - for example, the manufacturing and inventory processes to Flextronics, deliveries to Fedex and DHL, and sales to its e-Commerce website. As decoupling product flows become feasible, enterprises began to concentrate on their core competencies so as to achieve better product design and customer services, and outsource of non-core competencies. Baxter Healthcare is one example where they show it is more cost beneficial to de-internalize. Baxters hospital customers were earlier involved in monitoring and controlling their inventories checking on replenishment levels, placing new orders and sorting out replenished items. The processes were lengthy, time consuming. The activities were non-core processes to the hospitals. Baxter convinces their clients to de-couple the product flow (their inventory processes) to Baxter (as the market intermediary). The purchasing officers (the end-users of the computer system) of hospital clients were networked to Baxter computer system and they now simply place their purchases directly to Baxters computer system (which automatically handles the replenishment order and supplies, within 24 hours). Indirectly, the workers in the hospital clients were empowered to directly deal with Baxter, the supplier. Today, many banks and large organizations (like the government statutory boards) use call centers as intermediary to handle all their customer enquiries. All incoming calls were channelled to the centralised call centre. The call centre may be located many thousand miles away and in another country. IT and e-Business have enabled these traditional business processes to be decoupled from the organization and be seamlessly taken over by an outsource third party. Since e-Business and computer networking technologies increase the total amount of information, the upshot is that they reduce the search costs associated with the identification of the parties with which one wishes to conduct the transaction. We can also appreciate that once the search is completed, the follow through stages of negotiation, contracting, execution and monitoring of contractual obligations could easily be facilitated with e-commerce. Therefore, e-Business through the Internet and other computer networking technologies slash the transaction costs. This enthuse a more intensive use of electronic markets rather than electronic hierarchies (in-house processing). In other words, e-commerce may be viewed as the result of the wide adoption of the Internet and other IT infrastructures which, by reducing the transaction costs, make the uses of market processes and transactions more efficient than firm transactions. Hence, re-engineering of market processes (MPR) can result in lower transaction cost for the following processes: Searching, and collating information Sales order processing Transportation & distribution Negotiations and contract writing Enforcement of terms and conditions Customer services and maintenance Agency cost: Supervision, coordination, monitoring, control Procurement
Conclusion B2C e-business is growing and maturing; in industries like travel, this has happened rapidly. Nevertheless, opportunities for innovation remain, although many of these have taken on the flavour of web 2.0, social networking
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and user-generated content (discussed in Chapter 8 of this guide). Furthermore, growth can be unpredictable, as can be seen from Amazons diversification away from books, eBays move into fixed -price new goods and Googles transformation from a search engine into the worlds largest advertising agency (see the following chapter of this guide). This implies that B2C retailers need to be flexible and agile,especially when the critical success factors are often hidden and may reside more in logistics and manufacturing than IT (see the cases of Amazon and Dell referred to above). Other Market sectors and Classification of e-Business Models Kenneth C Laudons e-Commerce 2011 explained that a business model is a set of planned activities (or processes) designed to ensure business viability (revenue stream and profitability) in the marketplace. There are many Ecommerce business models modelled around different market sectors (B2B, B2C etc), and many more are invented every other day, with some rather confusing but actually quite similar like B2C e-tailers and B2B e-distributors. Twitter, Facebook, Myspace, Youtube, and Flickr are examples of social network site business models which cost hundreds of millions each to develop and maintain. Twitter, the 140-character text micro-blogging site, is the latest of a series of unpredictable but wildly successful e-commerce social network developments on the Internet. But actually, Twitter is struggling to make sense of its revenue model and profitability. So, how do such social network sites like Twitter get their revenues? Twitter does it through Ads. Twitter attempts to make money from its users and their tweets (comments, observations, opinions, likes, dislikes). Twitter assets are its users and huge audience size (eyeballs per day). Twitters search engine mines these tweets for patterns. Users help Twitter to become a powerful alternative media platform for distribution of news, pictures and videos. Twitter users were the first to report on the terrorist attacks in Mumbai and the political violence in Bangkok. Twitter monetised these assets through various ads innovations: (1) Promoted tweets e.g. best buys, (2) Promoted trends e.g. Whats hot like ToyStory-3 banner, (3) @earlyBirds e.g. discounts, (4) temporal real-time search, e.g. combine search engine of google, yahoo, bing. Paul Grefen: Mastering E-Business, Routledge (2010). The author defined E -Business as the use of IT in the firms core (primary) activities that directly related to the existence of the business. That IT is used in an integrated fashion for both processing and communication, and that IT is crucial to its firm performances. Using IT to merely improve efficiency and effectiveness is NOT ebusiness. In short, E-Business is IT-enabled business. Grefen explained that before the rise of the Internet, high volume e-business activities typically relied on expensive, dedicated communication channels between pairs of dedicated partners whereas low volume activities were done through existing phone lines and modems to connect computers to each other. These implied that only long term, stable business collaborations between pairs of large organisations could function well. In all, E-Business relations were far from dynamic. The rise of the Internet changed the landscape dramatically a ubiquitous and inexpensive infrastructure became available for business transactions. Grefen declared that the term e-commerce and e-business is often used as synonymously BUT he saw ecommerce as a subset of e-business. All e-commerce is e-business but not the other way. E-Commerce implies explicit trading of both physical and non-physical objects. In e-business field, the business developments follow technology. Unlike other fields, business requirements create new requirements of technology. Business pushes technology. Whereas in e-business, enabling technology created the opportunity e.g. the Web came, and e-retailing was borne and developed to exploit the Web. Technology pushes eBusiness. The Web was not created because business demanded it, but the mere existence of the Web has pushed business into new directions. In short, developments of e-business are driven by two concurrent forces: market pull (i.e. requirements pull, consumers pull) and technology push.
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Technology Push
e-Business
Requirements pull
Grefen conceptualised 4 mutually independent dimensions which determines the basic characteristics of classifying and analysing e-business scenarios, namely: a) b) c) d) Who are the parties in the e-business : business/commercial firm, individual consumer, government Type of objects of e-business Time scope, duration of relationships between e-business parties Four key aspects of e-business
a, b, c dimensions are external related, while the four aspects of the d-dimension are related to the internal aspect of the firm itself. a) Identifying Who are the parties results in this possible mix Responder Business B2B C2B G2B
Initiator Business Consumer Government
Consumer B2C C2C G2C
Government B2G C2G G2G
B2B and B2C the main classes in the e-business world. The other e-businesses in italic draws little importance/impact and will not be discussed. B2B is the more important class if we look at the financial value of the turnover and complexity. B2B e-businesses are found in supply chain, industry marketplace (e.g. Ali Baba), interbank financial traffic. In B2B, some level of symmetry exists between parties where the complexity of the business processes and supporting IT processes is divided between them. B2C most familiar transaction is the web e-tailing where a variety of goods can be purchased. Another is e-banking and e-ticketing. Asymmetry lies between parties. The complexity of the e-business lies in business end whereas the consumer end typically has simple processes and limited information structure involving a web browser. In C2C e-business, consumers perform transactions among one another through electronic channel. Mostly a third party, like eBay, is involved as the facilitator who as the mediator provides the mean to realise an e-business information systems that harness the volume generated by the consumers. Interestingly, what is the difference between C2C and another called P2P (peer-to-peer). P2P technology enables users to share files and computer resources and in its purest form, no intermediary is required although most P2P networks make use of some intermediate servers to speed operations like BitTorrent, eDonkey,ThePirateBay, Limewire. In G2B and G2C, the government agencies are the main players often refer to as e-Government. These government agencies process permits, license, port clearance documents, corporate tax bills, employer CPF obligations, etc. G2B the Singapore government provides a one-stop e-government portal for business, do check http://www.egov.gov.sg/egov-programmes/programmes-by-businesses/obls. G2C the Singapore government provides a one-stop portal for its citizens, do check up http://www.ecitizen.gov.sg/ b) Basic classes of objects dimension of the e-business are physical goods (tangible), digital goods, services (such as security, transport, maintenance), financial goods (such as e-payments) Set 1 of 3 sets of Ebiz study notes Page 36/ 153
c) Time scopes determines the nature of the collaborations between the parties either static (long lasting i.e strategic decision), semi-dynamic (change periodically, i.e. tactical decision), dynamic (change by each e-business order i.e. operational decision). With static time-scope, relationship defined by relationship between parties not by execution of individual e-business order. This often involved technical infrastructure linkup like Electronic data interchange (EDI) connection or the uniqueness of requirements of one of the party. Order size would be large. With semi-dynamic time-scope, the nature of the collaboration is defined both by the relation between parties and current market circumstances, typically for some period of time. With dynamic time-scope, you will see the typical web-shop scenario. Consumers decide per e-business order at the last moment. Comparison websites further simulates this dynamic, just-in-time behaviour. d) Four aspects of e-business: BOAT = Business, Organisation, Architecture, Technology where the B aspect describes the business goals, the O aspect describes organisational structure, processes, functions (value chain), change management to support the business goals. The A aspect covers conceptual architecture of the new automated information systems necessary to make the firm achieved the O aspects while the T aspect covers the physical technology needed such as Web 2.0, communication networks, security cryptography, mobile technology, payment technology, software, hardware, regulatory needs, to support the Architecture. The BOAT framework and the strategic alignment model (of 4-quadrants of Business strategy, business plans, IT strategy, IT plans) have some commonality in between them and hence can be related to one another. Venkatranman (1993), discussed his 5-level of strategic structures where strategic fit between the firm in a marketplace and its internal structure is a dynamic consequence of the market developments, is another strategic alignment model. B aspect on the business goals cover areas why e -business, analysis of supply chain, business models considerations (e-retailing, integrator-only which integrates products of other companies only, crowdsourcing where crowd produces a product like Wikipedia, Innocentive ), nature of clicks -brick, disintermediation-reintermediation)
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Lecture-4: Tutorial-1 questions 1. Why do you believe that business-to-consumer (B2C) e-business has grown steadily in countries such as the UK? Illustrate your argument with examples. 2. Companies engaged in business-to-consumer (B2C) e-business need to understand shoppers, technology and their industry. Discuss with examples 3. In business-to-consumer (B2C) e-business the critical success factors may be hidden and the growth path unpredictable. Discuss with examples. 4. The South London Museum of Art, a small local museum, has a website that only provides basic information, such as opening hours and location. The director feels there must be a way to use it to increase revenue. How would you approach this problem? What would you advise her? 5. What is the general online value proposition for business-to-consumer e-business? Illustrate this value proposition by applying it to one particular sector (e.g. books). Describe the problem of channel conflict and cannibalisation. How can retailers alleviate this problem?(2011) 6. Business-to-consumer (B2C) e-business is now some seventeen years old in the more mature markets of Europe and North America. Why does it only account for a relatively small share of total retail sales in these markets? (2012) 7. Compare and contrast the business models adopted by social networking sites that are free to users. (2012) 8. Shopping is not the same as procurement. What does this statement mean in the context of e -business? Discuss the impact this has on business-to-consumer e-business. How can e-business retailers counteract this problem? Illustrate your answer with examples (2011)
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Lecture-5: Supporting notes for Chapter-6 Business-to-Business (B2B) models and strategies (All text in italics are extracts from the UOL Study Guide, for your easy references) Essential reading a) Chaffey, D. E-business and e-commerce management. (Harlow: Financial Times/Prentice Hall, 2009) fourth edition [ISBN 9780273719601] Chapter 7. b) Kenneth C Laudon, E-Commerce 2011s chapter 12 c) Riggins, F. J. and S. Mitra An e-valuation framework for developing net-enabled business metrics through functionality interaction, Journal of Organizational Computing and Electronic Commerce 17(2) 2007, pp.175203. (Abstract: Managers engaged in net-enabled business planning seek metrics to help them analyze the success of their e-business investments. Likewise, researchers require metrics to build analytical models and conduct empirical research on the impact of e-business strategies on firm performance. In this article, the authors develop a comprehensive E-Valuation Framework for identifying net-enabled applications and their resulting userbased functionalities for activities across the value chain. The authors propose that the real value from net-enabled applications can be found in functionality interactions, where one application enables or enhances functionality in another application. The comprehensive framework can be used to generate three types of metrics managers can use to evaluate their net-enabled strategic initiatives. Further, a classification of net-enabled organizations provides the basis for selecting applications critical to a firm's strategic thrusts. We make use of the resourcebased view of the firm and real-options analysis to discuss how successful application deployment is based on the resources and assets the firm possesses as well as managing the rollout of an applications portfolio over time. The framework allows managers to map their organization's net-enabled initiatives into a coherent, easily understood visual representation and provides direction for researchers evaluating the efficacy of net-enabled business strategies). Aims of the chapter This chapter discusses the various B2B models and strategies that have been developed over recent years. The different organising structures of B2B activities (buyer-oriented, seller-oriented and intermediary-oriented) are presented and compared, together with an analysis of some of the important issues arising from implementing these structures. In addition, we discuss e-procurement, the application of e-business technology to the procurement process whereby businesses obtain supplies of raw materials, components and the operational goods and services needed to run the companies. Key concepts are: B2B structures key attributes of e-marketplaces e-procurement benefits of B2B systems and e-procurement e-procurement methods. Learning outcomes By the end of this chapter, and having completed the essential reading and activities, you should be able to: distinguish between B2C and B2B e-business systems explain how B2B and B2C systems overlap in certain cases discuss the strategies behind B2B systems explain how e-business technology supports B2B systems explain the basic concepts behind e-procurement apply B2B models to real world marketplaces. Introduction Business-to-business (B2B) e-commerce involves the sale of goods and services between businesses. B2B covers a spectrum of applications that enable an enterprise or business to form electronic relationships with their distributors, Set 1 of 3 sets of Ebiz study notes Page 40/ 153
suppliers and other partners. Examples of B2B e-commerce include websites such as alibaba.com, NETS, mySAP.com and ariba.com. B2B strategies are largely of two types: - Application of IT to pre-existing relationships This is represented by B2B developments designed to reduce the costs of performing existing business transactions. In this case, ICTs support existing economic relationships. They enable a company to reduce the costs of doing business and hence increase the volume of business possible and its profitability. - Creation of new marketplaces by using IT support systems Here ICTs are designed to create business transactions which did not exist before. In this case they create a new economic environment, often called a marketplace. By exploiting the power of ICTs in distributing, managing and sharing information, a marketplace can make possible sustainable economic relationships which could not have been coordinated without the use of ICT. The crucial point about B2B is that it relies on the internet and other networking technologies to either sustain or enable economic relationships between business organisations. Since these technologies increase the total amount of information, the upshot is that they normally reduce the search costs associated with the identification of the parties with which one wishes to conduct the transaction. Therefore, they slash the transaction costs and lead to a more intensive use of electronic markets rather than electronic hierarchies (see UOL SG Chapter 3 or http://is.esade.edu/faculty/wareham/Teaching/StratNetComp/Readings/Electronic%20Markets%20and%20electronic% 20Hierarchies.pdf ). In other words, B2B may be viewed as the result of the wide adoption of the internet and other ICT infrastructures which, by reducing the transaction costs, make electronic transactions more efficient than those conducted in the physical market (such a claim is valid, yet we know from Picot et al.(1997) that it is just as possible to use ICTs to reduce transparency (e.g. meet legal requirements) and thus increase transaction costs. You may also conceptualise the implementation of B2B as a process aimed at changing the organisation of exchange processes. B2B thus decouples the exchange of products from the business transaction that defines the contractual agreements which, in turn, define the details of the transaction. In traditional transactions, suppliers and buyers had to meet in the same place and at the same time in order to conduct the exchange. B2B marketplaces operate as virtual marketplaces where suppliers are connected to buyers through communication networks that allow for faster and more efficient information flows, and products actually move from the seller to the buyer only after the online transactions are completed. Online transactions are more efficient and less time consuming than offline ones because ICTs support many activities needed to make the exchange possible. ICTs in fact allow more information to be communicated in the same amount of time, at much lower costs, reducing the time and costs borne by the businesses involved in the exchange. All the details about products, information about buyers and sellers, and specifications of price, time of delivery, etc., can easily be accessed and exchanged, reducing the costs and time involved in setting up contracts (again see Picot et al., 1997, for a critique of such statements). Similarly, ICTs allow many potential buyers and sellers of a given good to be matched in a more efficient and effective way, facilitating more efficient brokerage between buyers and sellers. There is more information available about possible buyers and sellers. ICTs make it easier to extend the boundaries of a traditional market of buyers and sellers. B2Bs are by definition global; there are no formal boundaries restricting those markets that sellers or buyers have access to. This makes the use of electronic marketplaces more convenient and explains the proliferation of B2B.
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Different B2B structures or e-marketplaces (chaffey, 2011, pg 371) UOL SGs B2B structures look at the way in which electronic marketplaces are organised and we can identify several main B2B marketplace orientations: supplier oriented market buyer oriented market intermediary / independent oriented market. vertical and horizontal oriented market. A B2B e-marketplace is a virtual online market where firms register as buyers or sellers to conduct business-tobusiness e-commerce over the internet. They can be operated by an independent third party, or be run by some form of industry consortium that has been set up to serve a particular sector or marketplace. The orientation of the marketplace is normally determined by the organisation (or organisations) that finance the investment in implementing and running the technological platform which supports the B2B marketplace. We have to keep in mind that an investment in setting up electronic links is normally justified in financial terms by the possibility of modifying the market structure to a companys advantage (Porter and Millar, 1985). It is, in fact, very expensive and demanding to implement and maintain a B2B marketplace and these costs are only justifiable if they are generating economic advantages for the company. Thus, the different orientations of B2B marketplaces have to be examined in the light of the financial objectives of their financial backers. The types of e-marketplace include 1) Supplier-oriented e-marketplace, 2) Buyer-oriented e-marketplace, 3) independent e-marketplace, 4) vertical & horizontal e-marketplaces In the case of B2B supplier oriented marketplaces (re diagram below), also known as a supplier directory, this marketplace is set up and operated by a number of suppliers who are seeking to establish an efficient sales channel via the internet to a large number of buyers. They are usually searchable by the product or service being offered. Supplier directories benefit buyers by providing information about suppliers for markets and regions they may not be familiar with. Sellers can use these types of marketplace to increase their visibility to potential buyers and to get leads. The suppliers of the goods invest in ICT to create new business opportunities. Such marketplaces are associated with large powerful suppliers like Dell. In this case, the investment is made to create a marketplace which is structurally very similar to traditional B2C marketplaces. Firms invest in ICT to facilitate the purchase of their goods by existing buyers, and to make it easier for potential buyers to find their products. In so doing, they try to exploit the potential provided by ICT to reduce search, contracting and control costs (for their own goods and services by others) and therefore to create a more efficient market which, by reducing transaction costs, is generating more revenue for them (examples include Cisco and Dell). Buyer1
Buyer2
Supplier
Buyer3
Suppliers products catalogue
customers order information
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B2B buyer oriented e-marketplace. A buyer-oriented e-marketplace is normally run by a consortium of buyers in order to establish an efficient purchasing environment. If you are looking to purchase, participating in this sort of emarketplace can help you lower your administrative costs and achieve the best price from suppliers. As a supplier you can use a buyer-oriented e-marketplace to advertise your catalogue to a pool of relevant customers who are looking to buy. Firms invest in creating B2B buyer oriented marketplaces (re diagram below) to reduce their procurement costs. Buyers invest in ICT to create a procurement platform which makes it easier for potential suppliers to provide what the firm needs. Supplier1
Supplier2
Buyer
Supplier3
Buyers products catalogue
Suppliers bid information
In this case, ICT is implemented to reduce the dependency of firms on their suppliers by increasing the potential number of suppliers they can call upon. By reducing the search, contracting and control costs of the procurement procedure, firms are able to find more potential suppliers. An increased number of suppliers leads to a more competitive market. The different suppliers compete to win the procurement contract. More competition between suppliers generates better business opportunities for buyers which justify the costs they face to maintain the electronic marketplace. Given the nature of these marketplaces, only firms which have large procurement needs can invest in these B2B platforms. In fact, only large procurement volumes can justify the costs of running such platforms and generating such adva ntages (see, as an example, GE Lightnings Trading Process Network (TPN) (Presutti, 2003)). B2B Intermediary oriented marketplaces, also known as Independent e-marketplace (re: diagram below) are where a third party invests in ICT to create a neutral marketplace where buyers and sellers can trade. An independent emarketplace is usually a business-to-business online platform operated by a third party which is open to buyers or sellers in a particular industry. By registering on an independent e-marketplace, you can access classified ads or requests for quotations or bids in your industry sector. There will typically be some form of payment required to participate or register as member sellers or buyers. Supplier1 Buyer-1
Supplier2
3rd party
Buyer-2
Supplier3
Buyer-3
Suppliers products catalogue
Shared product catalogues
Customers order information
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The main justification for the existence of these marketplaces is the neutrality created for both buyers and suppliers (and an income for the intermediary through the increased dependency of both buyers and suppliers on its platform). Buyers and sellers do not have to bear the cost of running the marketplace and maintaining the technology. The neutrality of these marketplaces makes them unbiased towards both buyers and sellers, so that neither is exposed to the others strategic interest. Intermediary oriented marketplaces help to match buyers and sellers in a virtual environment which provides lower transaction costs for both parties without creating any bias in favour of one or the other. Typical intermediary oriented marketplaces are electronic hubs (examples include Alibaba and Covisint Chaffey, 2011,pg 373-375)). B2B Vertical and Horizontal e-marketplaces Vertical e-marketplaces provide online access to businesses vertically up and down every segment of a particular industry sector such as automotive, chemical, construction or textiles. Buying or selling using a vertical e-marketplace for your industry sector can increase your operating efficiency and help to decrease supply chain costs, inventories and procurement-cycle time. A horizontal e-marketplace connects buyers and sellers across different industries or regions. You can use a horizontal e-marketplace to purchase indirect products such as office equipment or stationery. What are Catalogues and directory listings? Catalogues and directories are used in many e-marketplaces, providing searchable databases of information about suppliers, products and services. Catalogues: There are various types of catalogue including: lists of general product information detailed product information information sources promotional catalogues Pricing information is sometimes only available to registered users of the e-marketplace. Some e-marketplaces provide a single catalogue of all suppliers and products, while others have links to individual supplier catalogues. With emarketplace catalogues, customers can research a wide range of products and suppliers from a central source. They can then buy in one transaction from a single site. Directories: Some e-marketplaces offer a directory of suppliers listed by products or services provided, with links to supplier websites. If you are listed in a directory, make sure your company is in the right industry sector, and that you are in all relevant listings, which will help customers find you and improve your website's search engine rankings and optimisation. Key attributes of e-marketplaces Some of the main attributes of electronic marketplaces are discussed briefly below (please see Turban et al., 2009, for more details): Biased versus neutral. As the name implies, electronic marketplaces can be either biased or neutral. This means that in the case of: the biased e-marketplace, the electronic marketplace favours either the buyer or the seller the neutral e-marketplace, the electronic marketplace does not favour the buyer or the seller. Aggregation versus matching. Electronic marketplaces can also be understood in terms of how they organise buyers and sellers. We have:
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aggregation: bringing together a large number of buyers and sellers under one roof to reduce transaction costs by creating the possibility of one-stop shopping matching: bringing together buyers and sellers to negotiate prices on a dynamic and real-time basis. Aggregation is best when: the cost of processing an order is high relative to cost of item specialised products are involved buyers and/or suppliers are highly fragmented there is unpredictable demand buyers are not sophisticated enough to understand dynamic pricing mechanisms most purchasing is done on the basis of pre-negotiated contracts a meta-catalogue can be created. Matching is best when: products are commodities or near commodities there are massive trading volumes products can be traded sight unseen purchasing is done on a spot/ transaction basis logistics and fulfilment can be conducted by third parties demand and prices are volatile. Benefits of e-marketplace The potential advantages to be gained by joining an e-marketplace will vary between industries and businesses, and indeed between buyers and sellers. General business benefits There are greater opportunities for suppliers and buyers to establish new trading partnerships, either within their supply chain or across supply chains. E-marketplaces can provide greater transparency in the purchasing process since availability, prices and stock levels are all accessible in an open environment. Time constraints and problems with different office hours for international trade are removed as it is possible to operate on a round-the-clock basis. Benefits for the buyers Updated information on price and availability makes it easier to secure the best deal. E-marketplaces offer a convenient way to compare prices and products from a single source rather than spending time contacting each individual supplier. Established e-marketplaces provide a level of trust for the buyer as they are dealing exclusively with suppliers who are members. Benefits for the sellers Regular requests for quotations from both new and current customers are possible. It provides an additional sales channel to market and sell products. E-marketplaces can offer reduced marketing costs when compared with other sales channels. The use of international e-marketplaces can provide opportunities for overseas sales that you would not otherwise be aware of. Considerations before participating in B2B e-marketplaces The following issues need to be considered when assessing how appropriate it is for your business to participate in an emarketplace.
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Industry fit: What is the purpose of the e-marketplace and is it compatible with your business strategy? Ensure that you understand who buys from the e-marketplace and that your business is likely to fit the profile of the sellers and/or buyers on there. Management of the e-marketplace: It is important to establish the ownership of the e-marketplace. Successful emarketplaces require a sound financial backing to ensure their success and longevity. So, you need to know who shares the profits and the risks. Equally, you do not want to be involved in a marketplace if your competitor is the major owner. Costs: What does it cost to participate in the e-marketplace? Possible charges include commissions for completed transactions, membership fees and listing fees. You should also establish if there are any costs associated with changing to another e-marketplace should your original choice not live up to expectations. Also establish if there are any costs associated with making your own IT systems compatible with the systems used by the e-marketplace and the cost of training staff. Marketing: Does the e-marketplace have a strong brand or image that will assist in marketing activities? What are the marketing plans, how aggressively will the marketplace be promoted and is it likely to attract the attention of the right types of customer for your own business? E-marketplace design: Does the overall design and functionality of the e-marketplace make it easy for would-be purchasers to locate and buy products? Does it take account of good website design principles? You should also establish how your presence will be displayed on the site. Will your logo and brand image be clearly displayed? Technical issues: Is the e-marketplace adequately staffed to ensure that services are maintained on a round-the-clock basis, since any down time will impact directly upon your own business? The implications of e-marketplace on buying cycle e-marketplaces, online auctions and exchanges have played an important role in the growth of e-purchasing within businesses of all sizes and types. There are two parts to the buying cycle - e-procurement and e-sourcing (the more established of which is e-procurement, but at times rather confusing between different authors). This has been developed in recent years to deal with the process element of electronic purchasing. E-procurement is the use of the internet to operate the transactional aspects of requisitioning, authorising, ordering, receipting and payment processes for the required products or services. A number of e-marketplaces offer transaction services that automate many aspects of the procurement cycle for both the buyer and the seller. E-procurement covers the following areas of the buying process (for full details, see segment below): requisition against order authorisation order receipt payment E-sourcing: The other element of the e-purchasing cycle is e-sourcing. E-sourcing is the use of the internet to make decisions and form strategies regarding how and where services or products are obtained. E-marketplaces can play an important role in this activity, since the price and availability of products from multiple suppliers can be checked from a single point. E-sourcing covers the elements of the buying process which are at the discretion of specialist buyers, including: knowledge specification request for quotation/e-tender/e-auction evaluation and negotiation agreeing contractual terms
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One of the attractions of e-marketplaces in terms of product sourcing is that not only do they provide detailed product information from existing suppliers, they also give access to many new potential partners and suppliers. Furthermore, the use of reverse auctions and online exchanges enables procurement officers to obtain better prices as they encourage competitive bidding between suppliers. In a nutshell, in large organisation, sourcing is just a small part of the overall procurement process. E-procurement (essential reading: Chaffey 2011, Chap-7) Here is a full video lecture on the topic (but some complained they can understand a word!): http://www.youtube.com/watch?v=cVtPU5qsYXM This e-procurement video is shorter but easier to digest: http://www.youtube.com/watch?v=whC6OAMlYq4&feature=results_main&playnext=1&list=PLBE8AF2EF12B80F9 A Procurement is more than just purchasing as it encompasses specifications development, value analysis, supplier market research, negotiation, marketing, buying activities, administration of contract, and control of inventory, traffic, receiving and stores. Read more: http://www.differencebetween.com/difference-between-sourcing-and-vs-procurement/ E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation of E-Procurement is now on-demand or a software-as-a-service (SaaS), i.e. vendors like SAP AG and Coupa have on-demand and SaaS offerings. The e-procurement value chain consists of Indent Management, eTendering, eAuctioning, Vendor Management, Catalogue Management, and Contract Management. Indent Management is the workflow involved in the preparation of tenders. E-procurement involves the use of electronic methods in every stage of the purchasing process, including: advertising contracts managing contracts evaluating tenders paying suppliers reverse auctions - where the lowest bidder wins dynamic purchasing systems - an open electronic catalogue where prices can be updated without introducing a new tender As Chaffey has pointed out, management literature did not focus on procurement until fairly recently and its relevance has grown with the rise in e-procurement. Procurement, very simply, means all the steps that a company takes in order to purchase goods and services from its suppliers. E-procurement is defined by Chaffey as the electronic integration and management of all procurement activities including purchase request, authorisation, ordering, delivery and payment between a purchaser and supplier. The term Purchasing, which is not equate to procurement, refers to the process of ordering and receiving goods and services. It is a subset of the wider procurement process. While Chaffey tends to use the terms B2B and e-procurement interchangeably, we prefer greater clarity, such that eprocurement refers to a buyers view of a B2B market. However, we agree with Chaffey that a good way of understanding e-procurement is to question what is bought and how it is bought. What is bought? This can be categorised as either production-related or operational procurement. The former relates to procurement by a company of supplies for the production of its own products. Operational procurement is the purchasing of goods and services needed in order to run the business, such as stationery, furniture and office supplies.
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How are goods or services bought? Again, Chaffey suggests two methods: systematic sourcing and spot sourcing. Systematic sourcing implies long-term relationships through contracts with known and/or regular suppliers. Spot sourcing is when a company needs something urgently and/or the good or service concerned is generic (or a commodity) that can be bought from any supplier with few repercussions. Also, take a look at the Cambridge Consultants case study on e-procurement in Chaffey (2011, Case study 7.1, pg 362-364). Additional reading on e-procurement: http://www.eprocurement.gov.in/ http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073792572&type=RESOURCES
Procurement participants (chaffey, 2011, pg 359-360) Procurement sounds straightforward enough but it is a very complex process, partly because of the number of participants involved in a process and their interconnections. Riggins and Mitra (2007) discuss eight different kinds of partners, starting with traditional manufacturers, direct sales manufacturers, value-added procurement partners, online hubs, knowledge experts, online information services, online retailers and finally, portal communities. The first seems self-explanatory but, as you go through the list, the rising level of complexity will dawn on you. To get a better idea of the various participants, you should study the Riggins and Mitra (2007) paper which is summarised by Chaffey (2011, pg 359-360). However, as examples, here we examine two of the partner types briefly to provide you with a flavour of the roles of different intermediaries. Value added procurement partners are intermediaries that connect various partners and provide some added value through bringing trust, reliability, security or some other added service, for example a travel agent. Portal communities are electronic interfaces that bring together many services and a range of information in a customised fashion. Some of the categories of partners mentioned are quite similar from their descriptions but there are subtle differences in their focus or the sort of functionality they offer. The complexity that comes with e-procurement may well be difficult to manage, yet on the whole the advantages tend to outweigh the problems. This helps to explain the growing popularity of e-procurement. Benefits of e-procurement Chaffey (2011, pg 361-364) identifies the following benefits: Shortening or reduction in purchasing cycle time and cost traditional intermediaries are no longer needed because they are replaced by technology. This helps the buyer to cut costs and cycle time as much of the work can be automated. Improved control over the budget with greater use of technology there is more transparency and the buyer can see better where funds are being used and the areas where an association with another intermediary would help to cut costs. Reduction in administrative errors again, technology and the transparency it brings help to identify problems quicker and often technology will prompt the user to make sure the action taken is indeed what is needed. Enabling an improvement in buyers productivity the buyer, if technology is used well, can smooth the flow of supplies such that time,warehouse space and effort are not wasted. Driving down prices through standardisation of products the products and the intermediary connections are standardised so that both suppliers and buyers can choose their partners and are not locked-in. This forces the cost of buying supplies down, as it improves the choice available to buyers (with the increased number of interchangeable suppliers). Better management of information technology is able to retain, manage, organise and archive information much better than humans using paper formats.
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Greater integration of payment systems again, technology is very useful as it connects various other electronic systems and allows them to speak to each other and improve the speed of work through better integration. Riggins and Mitra (figure 7.3. e-business e-value grid, Chaffey pg 361)) provide a framework which serves to evaluate the sort of benefits (from e-procurement and e-SCM) that can be gained at various dimensions or stages, and the sort of steps a company can take in order to achieve them. This is an interesting framework and quite useful because it provides a pictorial view of where value is created (and what kind efficiency, effectiveness or strategic) in relation to the dimensions of e-procurement and e-SCM (i.e. during planning, development, inbound, production, outbound).
Barriers, Problems, Risks of implementing e-procurement (chaffey, 2011, pg 366-370) In addition to points listed in chaffeys text, these, which apply equally to the sales side of B2B, include: Security and Reliability concerns regarding the channel of communication, payments and identity technology is very useful but we also know that if there is a breakdown or if it is hacked into, then the company may become very vulnerable due to the large amounts of information at risk. This vulnerability is usually much greater with electronic communication than with traditional means. Losing control of a companys payment system is as horrific as an individual losing their credit card. Imagine the credit-card information routing via NETS has been hacked! Organisational risks, such as not making a strong enough case to promote e-procurement strategies in the company. This is often because the cost benefits of moving to B2B are not easily distinguishable. This is an interesting issue because we tend to believe that most companies would welcome a move towards greater technology use, but this is not always true and sometimes for good reason (e.g. security risks). Such an investment needs to be justified in terms of real benefits, in both the short and long term. There can also be problems of resistance to change. Set 1 of 3 sets of Ebiz study notes Page 49/ 153
Technological risks include a lack of integration among B2B and internal systems that can create pools of information that are not used, and the duplication of records, waste, etc. In principle, technology helps to improve the integration of systems but not all systems are compatible. Incompatible systems can increase the cost of coordination and, at the same time, increase security risks (through the need for an added interface or layer of software). Business risks, such as the loss of preferential terms from a traditional supplier which, through B2B, makes those same terms available to competitors. Similarly, buyers may not wish to invest in a technology whereby their competitors gain disproportionate benefits.On the other side, suppliers may find their profit margins reduced as well as having to bear the costs of producing and constantly updating their electronic catalogues. Future of e-procurement (chaffey, 2011, pg 377) Chaffey believes the future task of searching for suppliers and products may be taken over by software agents with artificial intelligence built-in. Case study examples Chaffey (2011) provides a number of mini and longer case studies that you should read carefully to form a better picture of B2B and procurement in practice in the real world. The early years of the Alibaba1 case are sketched out in Chaffey (2011, pg 371). This case is a good example of entrepreneurial innovation. The Chinese market was not accustomed to the use of the Internet back in 1999, so when a young entrepreneur, Jack Ma, realised the power that the internet provides, he tried to carve out a niche market for his new company. However, it was only after 2002 that Alibaba very slowly began to make a profit. It was at this time that Ma turned his company around to focus on connecting businesses within China to create an e-commerce ecosystem. (please see Jack Mas video interview with the Financial Times2, re: http://www.youtube.com/watch?v=j8Qkapdnpik and tutorial video: http://www.youtube.com/watch?v=CNlD1gqVglA&feature=related ). Mas ambition is to create an innovative way of using the internet so that businesses can come together in his virtual marketplace and do business in other words, to create a global marketplace. His site provides, among many other facilities, platform services (Alibaba Cloud Computing) and secure payment services (Alipay) for companies to transact with each other. Alibabas early focus (1999) was facilitating Chinese small and medium enterprises (SMEs) but Ma has broadened the scope and wants to go global so that he can facilitate business between international companies. This is a very interesting case and we encourage you to read more on it by searching through The Economist and other credible sites. Covisint (Chaffey 2011, pg 373), the other case study we want you to read, is a marketplace, or as its owners now like to call it, a connectivity solution, created by three large car manufacturers Ford, GM and DaimlerChrysler for the motor industry. This B2B platform was not very successful (losing $350 million) so it was abandoned in 2003. It then went on to be acquired by Compuware (another B2B company) in 2004 and has now developed into more of a B2B site for healthcare, public sector and financial services. A number of reasons are hinted at as the cause of the early failure of Covisint. For example, Ford was also running a similar system called Everest in parallel (which also, incidentally, failed); the procurement system was far too complex; and the motivations of the auto giants were somewhat questionable. The Covisint case is described in some depth in Chaffey (2011, pg373-375). Also, read case study by DIW Berlin (2006): http://ec.europa.eu/enterprise/archives/e-businesswatch/studies/case_studies/documents/Case%20Studies%202004/CS_SR04_Transport_1-Covisint.pdf However, Covisint provides its users with some very interesting and important facilities, and these need your attention. Different procurement facilities have been customised for different customers using EDI and web EDI. They include: Accounts payable this facility provides users with the ability to archive payment history. In this way it becomes a repository that can be accessed in order to check past payments, what is due, due dates, and payment history.
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Cooperative raw material acquisition a facility that pools resources and information on best priced raw materials, thus providing better deals to buyers. This can offer operational cost benefits as well. Product catalogue compilation tool this is not only a distribution channel for products but also collects information on all a suppliers products to create a catalogue. In effect, it creates and updates the catalogue of products. Request for quote application this facility provides users with the ability to create an online request for quote (RFQ) and thus facilitates online responses. Supplier profile as the name suggests, this facility gives customers a complete and useful profile of information on the supplier. This helps the customer to make decisions about which supplier to work with, when and how. Having access to this information in an electronic and integrated manner ensures that different parts of the systems and various facilities can work together to give the customer access to useful and timely information. These facilities are useful on their own, but when you put them together, they give each user an integrated way of running their business on a daily basis. At the same time, these facilities allow users to gain a historical perspective on what the company has done, achieved, used and been successful at thus helping to mould the strategy for the future.
The earlier model of Covisint is similar to the joint information partnership of Honda, Vespa and Suzuki for the purpose of joint procurement of manufacturing parts. Conclusion This chapter provides a background to B2B and allows you to compare and contrast it with the ideas and characteristics of B2C. The strategies of B2B employed by companies are explained, as well as the motivation behind the choice of each strategy. This chapter employs transaction cost theory (discussed in Chapter 3 of the guide) in the B2B e-business context and introduces the notion of e-procurement, focusing on the buyer side of B2B. These concepts provide a conceptual foundation for the following chapter, which deals with the practical implementation of supply chain management.
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Lecture-6: Tutorial-2 Questions 1. 2. Self test: http://wps.pearsoned.co.uk/ema_uk_he_chaffey_ebus_4/123/31737/8124888.cw/index.html Case study: Pick one B2B structure and take the example provided either in the SG or in Chaffey (2009); better still, find your own from external material and draw a diagram representing its suppliers, buyers, etc. (depending on which structure you choose). This will require you to read beyond the subject guide to find out more about Dell, Cisco, Alibaba, etc. The purpose of this activity is to help you read case studies in detail and then visualise various B2B structures through diagram construction. Case study: Choose a company, again either from Chaffey (2009) or from other readings and, using your answers for the first activity in this chapter of the subject guide, think about the following: a. What sort of transaction costs are reduced, and for which company? b. What sort of transaction costs increase, and for which company? c. What sort of challenges can companies face when they set up this particular marketplace? B2B buyer, supplier and intermediary oriented marketplaces reflect different power relationships in electronic markets. Discuss, with examples, how and why these power relationships are shaped and maintained. Discuss how and why disintermediation occurs. Discuss, with examples, whether ICT based disintermediation is always sustainable. What are the main strategic reasons to support supplier oriented market or intermediary oriented market strategies in B2B (business-to-business)? Discuss making use of examples in your answer (2011) Discuss the main obstacles to B2B (business-to-business) e-commerce. Justify your answer with examples. (2011) In the literature, the impact of IT on markets is either seen as a reason for the reduction of the number of intermediaries or as a reason for an increased role played by intermediation in the exchange processes. Discuss. (2011) Imagine you are a consultant whose job is to design a new B2B strategy in a firm which intends to open a buyer oriented marketplace. Which factors would you consider in advising the firm whether it is worthwhile pursuing such a strategy? Justify your answer theoretically (2012)
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Appendix-1: Past Exam Papers BSc degrees and Diplomas for Graduates in Economics, Management, Finance and the Social Sciences, the Diplomas in Economics and Social Sciences and Access Route for Ext Students Management and Innovation of e-business 2790167 Zone-A: 10 June 2011 Candidates are required to answer any THREE of the following SIX questions. All questions carry equal marks.
1. Shopping is not the same as procurement. What does this statement mean in the context of e-business?
Discuss the impact this has on business-to-consumer e-business. How can e-business retailers counteract this problem? Illustrate your answer with examples. Effective supply chains depend upon the close integration of companies within the supply chain. Discuss how this has been achieved, making use of examples in your answer. What do you understand by the term web 2.0? Briefly describe the various collaborative components of web 2.0 and show how each one exhibits the participative nature of web 2.0. What are the main strategic reasons to support supplier oriented market or intermediary oriented market strategies in B2B (business-to-business)? Discuss making use of examples in your answer. In the literature, the impact of IT on markets is either seen as a reason for the reduction of the number of intermediaries or as a reason for an increased role played by intermediation in the exchange processes. Discuss. Transaction costs can be described as frictions in the market. How can ICT (information and communications technology) reduce these frictions? Discuss the theoretical model of transaction costs and explain how and why ICT can reduce or increase transaction costs.
2. 3. 4. 5. 6.
2790167 Zone-B: 10 June 2011 Candidates are required to answer any THREE of the following SIX questions. All questions carry equal marks. 1. What is the general online value proposition for business-to-consumer e-business? Illustrate this value proposition by applying it to one particular sector (e.g. books). Describe the problem of channel conflict and cannibalisation. How can retailers alleviate this problem? Uncertainty is often seen as the key problem for supply chain management. Why is this so? What types of uncertainty exist in a typical supply chain and what implications does uncertainty have for the design of a supply chain? What are the functions (i.e. purposes) of an organisational form (or structure)? Describe the problems inherent in traditional organisational forms. Using one or more examples of new organisational forms, discuss how information & communication technologies (ICTs) are used to address the problems of organisational structure. What problems are often encountered with new organisational forms? The impact of ICT on markets has been traditionally described in terms of disintermediation. Why have many authors recently argued in support of the idea that ICT increases the role played by intermediation in the exchange processes. Discuss, making use of examples in your answer. Discuss the main obstacles to B2B (business-to-business) e-commerce. Justify your answer with examples. Discuss the main technical and security related problems in internet based e-business activities. Critically discuss with examples.
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2790167 Zone-B: 27 Feb 2012 Preliminary Candidates are required to answer any THREE of the following SIX questions. All questions carry equal marks. 1. 2. 3. 4. 5. 6. What is B2B e-business? Discuss with examples the main advantages and risks of this business strategy? Supply chains benefit from cooperation between companies within the supply chain. Discuss how cooperation in supply chain can be facilitated and supported by ICT making use of examples in your answer. Do social networks reduce the costs of customer segmentation? Justify you answer using examples. When do ICT offers new market opportunities for intermediaries? Justify your answer using examples. What are the main security threats of business-to-consumer e-business? Describe the phases of the transaction lifecycle. Critically analyse, using examples, how ICT can reduce the transaction costs associated to ONE of these phases.
2790167 Zone-A: 23 May 2012 Candidates are required to answer any THREE of the following SIX questions. All questions carry equal marks. 1. Imagine you are a consultant whose job is to design a new B2B strategy in a firm which intends to open a buyer oriented marketplace. Which factors would you consider in advising the firm whether it is worthwhile pursuing such a strategy? Justify your answer theoretically. 2. Discuss the main human threats to e-business security. Support your answer with examples 3. Discuss why e-marketing can be considered a threat to privacy. Suggest how this threat can be reduced. 4. Business-to-consumer (B2C) e-business is now some seventeen years old in the more mature markets of Europe and North America. Why does it only account for a relatively small share of total retail sales in these markets? 5. Why are many companies beginning to use web 2.0 technologies? Give examples of web 2.0 technologies that companies are exploiting. 6. Discuss the benefits and drawbacks of mobile working. 2790167 Zone-B: 23 May 2012 Candidates are required to answer any THREE of the following SIX questions. All questions carry equal marks 1. Imagine you are a consultant whose job is to design a new B2B strategy in a firm which intends to open a supplier oriented marketplace. Which factors would you consider in advising the firm whether it is worthwhile pursuing such a strategy? Justify your answer theoretically. 2. Discuss the main organisational threats to e-business security. Support your answer with examples. 3. Online revenue contribution can be considered a key objective of an e-marketing plan. What are the factors that contribute to a companys online revenue? Support your answer with relevant examples. 4. Why is website design an important aspect of business-to-consumer (B2C) e-business? Make use of examples in your answer. 5. Compare and contrast the business models adopted by social networking sites that are free to users. 6. What are open source communities in the context of software development? What do they offer in this context? What are the problems in building and maintaining viable open source communities? Study guides Sample exam Qs 1. Why is supply chain management of growing importance in many industries? What are the problems with traditional supply chain management? Discuss how computer-based information systems are used to address these problems. 2. Companies engaged in business-to-consumer (B2C) e-business need to understand shoppers, technology and their industry. Discuss with examples. 3. What are the characteristics of most new organisational forms? Why are organisations adopting these forms? What are the implications for managers? What is the role of information systems in new organisational forms? Give examples.
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4. You have been asked, as a consultant, to begin work on an e-business strategy for a new pure-play, online, businessto-consumer retailer. What areas would you examine regarding this strategy? For each area, briefly discuss an issue that you feel is likely to be important in this context. 5. It has often been argued that information and communications technology (ICT) is disintermediating electronic marketplaces. Infomediaries are however increasing in electronic markets. Discuss with examples. 6. Transaction costs can be described as frictions in the market. How can ICT reduce these frictions? Discuss the theoretical model of transaction costs and explain how and why ICT can reduce or increase transaction costs.
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Appendix-2: How to publish your group mini- research report? Step-1: Go to www.blogspot.com to create a new blog. Create a gmail account so that all members can login (share).
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Step-2 Confirm your profile.
Should you get below message, you must logged of your other gmail accounts directly from gmail.com screen You have to go through the Google+profile steps (per above)
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Step-3: Click on new blog to create a new page
Step-4: Complete the Title-box and Address-box.
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Step-5: Start posting. You may cut and paste text from your word document.
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Step-6: Modify the layout
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When done, save the arrangement:
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Step 7: Select Post, followed by Select Publish
Result screen:
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Further modifications to current post/report: Simply select the usual IEs back arrow to go back to the previous screen, then select edit to bring back the old posting screen. Do not forget to click update each time to save the modifications. Then repeat the publish and View blog processes per step-7 to view the results. To Logout and Login To logout, you need to get back to this screen below.. This is the same screen you see first, when you login later (using step-1)
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(IS3167) MANAGEMENT AND INNOVATION OF E-BUSINESS (2012 Academic Year)

Management & Innovation of E-Business

Lecture1/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

** UOL recommended textbox

Lecture1/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

Jack koh Dr. Antonio Cordella Dr. S.Smithson

Lecture1/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

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What happened with e-business in the last two decades?

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e-business technologies challenge the old traditional way of doing business

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4) Richness Easy to attach Message with

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5) Interactivity Consumers can get immediate clarifications through

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7) Customization Selective information to be displayed Format e.g. color scheme, layout

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Why the mini research project? How to publish the report?

Lecture1/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

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Lect 2&3/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

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Only a guideby no mean, the perfect definition and classification..

Clicks-and-mortar Vendors Brokers Specialised Generalised

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differences between shopping and procurement

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Content Customisation Community Convenience Choice Lower

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Lecture-4/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

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Lecture-5/ EBIZ - Mgt & Innovation eBusiness(by JackKoh)

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