Chapter 1

INTRODUCTION TO E-BUSINESS AND E-COMMERCE

Abul Khayer, Lecturer International Business

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Learning outcomes
Define the meaning and scope of e-business and e-

commerce and their different elements

Summarize the main reasons for adoption of e-

commerce and e-business and barriers that may restrict adoption

the Internet as a communications medium for consumers and businesses business and e-commerce to an organization.

Use resources to define the extent of adoption of

Outline the business challenges of introducing e-

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Management issues
How do we explain the scope and implications of e-

business and e-commerce to staff?

What is the full range of benefits of introducing e-

business and what are the risks?

How great will the impact of the Internet be on our

business? What are the current and predicted adoption levels?

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E-business opportunities
Reach: Over 1 billion users globally Connect to millions of products

Richness Detailed product information on 20 billion + pages indexed by Google. Blogs, videos, feeds Personalised messages for users
Affiliation Partnerships are key in the networked economy

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E-business Risk
Strategic risks: making wrong decisions about e-

business investments
practical risks: bad stories which may lead to change

the company reputation

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

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

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

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E-Commerce
E simply means anything done via the internet and commerce means buying and selling products, services and information. So, E Commerce refers to the process of buying and selling or exchanging of products, services, or information via computer networks including internet.

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E-Commerce
E-commerce is associated with buying and selling of information, products and services via computer networks to-day and in the future via any one of the myriad of networks that make up the Iway. E-commerce concerns the processes for buying and selling goods and services electronically

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

The Growth of E-Commerce

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

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Key Concepts in E-Commerce

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

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

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Key Concepts in E-Commerce

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

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E-Commerce
E-commerce involves digitally enabled commercial

transactions between and among organizations and individuals.

Digitally enabled transactions include all transactions mediated by digital technology

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

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

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Electronic Commerce from the different perspective

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

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Electronic Commerce from the different perspective

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

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

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Electronic Commerce from the different perspective

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

The Scope of E-Commerce

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

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Different types of Sell-side E-commerce

Transactional e-commerce sites: These enables

purchase of products online. The main business contribution of the site is through sale of these products. It also provides information to the customer about the products
Services-oriented relationship-building web

sites: provide information to stimulate purchase and build relationship. Products are not typically available here for purchase.

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Brand-building sites: Provide an experience to

support the brand. Their main focus is to support the brand by developing an online experience of the brand.
Portal or media sites: provide information or

news about a range of topics. Portal refers to a gateway of information. These information both on the site and through links to other sites.

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

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

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

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UK rate of adoption of different digital media

Source: MORI Technology Tracker, January 2006. See www.mori.com/technology/techtracker.shtml for latest details

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Drivers of consumer Internet adoption

Driver
COST

Marketing approach
TRANSPORTATION STAFF TIME SAVING PAPER LESS FASTER Demand Increasing market place share Services Quality (R&D) customer demand. Improving the range and quality of services offered. Avoid losing market share to business already using e- commerce

CUSTOMER SATISFACTION

COMPETITIVENESS

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Barriers to consumer adoption

No Perceived Benefit Lack of Trust Security Problem Lack of Skill Cost

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Drivers of business internet adoption

Cost/efficiency drivers

Increasing speed with which supplies can be obtained Increasing speed with which goods can be dispatched Reduced sales and purchasing costs Reduced operating costs. Customer demand Improving the range and quality of services offered Avoid losing market share to businesses already using ecommerce.

Competitiveness drivers

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Tangible and intangible benefits

Tangible benefits

Intangible benefits

Increased sales from new sales leads giving rise to increased revenue from: new customers, new markets existing customers (repeat-selling) existing customers (cross-selling). Marketing cost reductions from: reduced time in customer service online sales reduced printing and distribution costs of marketing communications. Supply-chain cost reductions from: reduced levels of inventory increased competition from suppliers shorter cycle time in ordering. Administrative cost reductions from more efficient routine business processes such as recruitment, invoice payment and holiday authorization.

Corporate image communication Enhancement of brand More rapid, more responsive marketing communications including PR Faster product development lifecycle enabling faster response to market needs Improved customer service Learning for the future Meeting customer expectations to have a web site Identifying new partners, supporting existing partners better Better management of marketing information and customer information Feedback from customers on products

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Attitudes to business benefits of online technologies

Source: DTI (2002)

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North West Supplies Ltd site (www.northwestsupplies.co.uk)

Source: Opportunity Wales

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Adoption of Internet and e-business services across Europe

Source: Eurostat, Community Survey on ICT usage in enterprises, eEurope (2005) Information Society Benchmarking Report, European Communities 2005, http://europa.eu.int/information_society

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Barriers to development of online technologies

Source: DTI (2002)

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The McKinsey 7S framework

Source: Adapted from Waterman et al. (1980)

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7S Framework
Strategy new strategic responses are required Structure new structures and responsibilities may

be required Systems new information systems and new processes will be required Style less likely to change, but some organizational styles are more responsive to change

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Staff new responsibilities Skills new skills Super ordinate goals higher level aims may be

updated depending on the business.

Thanks All