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4
Qantas AirwaysA New Way to Compete

• The Problem
• Increased fuel costs placed pressure on the
  airline industry
• Qantas faced two major competitors and higher
  fees at Sydney Airport
• Air traffic dwindled after September 11th
• Qantas needed to replace aircraft in order to
  stay competitive
• Australian economy slowed down

5
Qantas Airways (cont.)

• The Solution
• Bought fuel contracts for future dates
  (traditional response)
• Took major steps to implement e-commerce (EC)
  involving buying, selling, and exchanging goods,
  services, information, and payments electronically

6
Qantas Airways (cont.)

• Business-to-business (B2B)

• E-marketplace member
• Joined Airnew Co.links major airlines with
  suppliers
• Fuel
• Fuel services
• Light maintenance services
• Catering

• Joined Corporcure.com.au with 13 other large
  Australian corporations
• Electronically purchase general goods and
  services
• Office supplies
• Light bulbs
• Maintenance services

7
Qantas Airways (cont.)

• Formed Pan-Pacific exchange
• E-marketplace
• Business-to-business-to-consumer (B2B2C)
• Provides
• Full spectrum travel services
• Products and services to business partners
• Travel agencies who can use this marketplace to
  sell directly to consumers

8
Qantas Airways (cont.)

• Business-to-customer (B2C)
• Online booking
• E-mails to frequent-flyer members
• Mileage bonuses and opportunities to win 10,000
  AU
• Wireless communications

• Business-to-employee (B2E)
• Online training
• Online banking

B2C B2E
9
Qantas Airways (cont.)

• The Results
• Qantas expects to see an estimated 85 million AU
  in cost reductions per year by 2003
• Qantas expects to increase annual revenues by
  700 million AU from nontravel sales
• Outlasted one competitor

10
EC Definitions Concepts

11
EC Definitions Concepts

• Electronic Commerce (EC) is the process of
  buying, selling, or exchanging products,
  services, and information via computer networks
• EC defined from these perspectives
• Communications
• Business process
• Service
• Online
• Collaborations
• Community

EC
12
EC Definitions Concepts (cont.)

• E-business is a broader definition of EC that
  includes not just the buying and selling of goods
  and services, but also
• Servicing customers
• Collaborating with business partners
• Conducting electronic transactions within an
  organization
• Pure vs. Partial EC based on the degree of
  digitization of product, process, delivery agent

13
Exhibit 1.1The Dimensions of Electronic Commerce
14
EC Definitions Concepts (cont.)

• Traditional commerce all dimensions are physical
• Brick-and-mortar organizations
• Old-economy organizations (corporations)
• Perform all business off-line
• Sell physical products by means of physical agents

15
EC Definitions Concepts (cont.)

• Pure EC all dimensions are digital
• Pure online (virtual) organizations
• New-economy organization
• Sell products or services only online
• Partial EC a mix of digital and physical
  dimensions
• Click-and-mortar organizations
• Conduct EC activities
• Do their primary business in the physical world

16
EC Definitions Concepts (cont.)

• Internet vs. Non-Internet EC
• VANsvalue-added networks
• LANslocal area networks
• Single computerized machines
• Using a smart card in a vending machine
• Using a cell phone to make an online purchase

17
Electronic Markets vs. Interorganizational
Systems

• E-markets
• Buyers and sellers meet to exchange
• Goods
• Services
• Money
• Information

• Interorganizational Information Systems (IOS)
• Between two or more organizations
• Routine transaction processing
• Information flow

18
Exhibit 1.2A Framework for EC
19
Classification of EC by the Nature of the
Transaction

20
Classification of EC by the Nature of the
Transaction

• Business-to-business (B2B) EC model in which
  all of the participants are businesses or other
  organizations
• Business-to-consumer (B2C) EC model in which
  businesses sell to individual shoppers
• Business-to-business-to-consumer (B2B2C) EC
  model in which a business provides some product
  or service to a client business the client
  business maintains its own customers, to whom the
  product or service is provided

21
Classification of EC by the Nature of the
Transaction (cont.)

• Consumer-to-business(C2B) individuals who use
  the Internet to sell products or services to
  organizations and /or seek sellers to bid on
  products or services they need
• Consumer-to-consumer (C2C) consumers sell
  directly to other consumers

22
Classification of EC by the Nature of the
Transaction (cont.)

• Mobile commerce (m-commerce)EC transactions and
  activities conducted in a wireless environment
• Location-commerce(l-commerce)
• m-commerce transactions targeted to individuals
  in specific locations, at specific times

23
Classification of EC by the Nature of the
Transaction (cont.)

• Intrabusiness (organizational) EC EC category
  that includes all internal organizational
  activities that involve the exchange of goods,
  services, or information among various units and
  individuals in an organization

24
Classification of EC by the Nature of the
Transaction (cont.)

• Business-to-employee (B2E) EC model in which an
  organization delivers services, information, or
  products to its individual employees
• Collaborative commerce (c-commerce) EC model in
  which individual or groups communicate or
  collaborate online
• E-government Government-to-citizens (G2C) EC
  model in which a government entity buys or
  provides good, services, or information to
  businesses or individual citizens

25
Classification of EC by the Nature of the
Transaction (cont.)

• Exchange (electronic) a public e-market with
  many buyers and sellers
• Exchange-to-exchange (E2E) EC model in which
  electronic exchanges formally connect to one
  another for the purpose of exchanging information

26
Interdisciplinary Nature of EC

• Management information systems
• Accounting and auditing
• Management
• Business law and ethics
• Others

• Marketing
• Computer sciences
• Consumer behavior and psychology
• Finance
• Economics

27
Business Models

28
Business Models

• A method of doing business by which a company can
  generate revenue to sustain itself
• Spells out where the company is positioned in the
  value chain
• Business models are a component of a business
  plan or a business case

29
Business Plans Business Cases

• Business plan
• A written document that identifies the business
  goals and outlines the plan of how to achieve them

• Business case
• A written document that is used by managers to
  garner funding for specific applications or
  projects its major emphasis is the justification
  for a specific investment

30
The Content of a Business Plan

• Marketing and sales plan
• Operations plan
• Financial projections and plans
• Risk analysis
• Technology analysis

• Mission statement and company description
• The management team
• The market and the customers
• The industry and competition
• The specifics of the products and/or services

31
Structure of Business Models

• All business models must specify their revenue
  model (the description of how the company or an
  EC project will earn revenue)
• Revenue sources are

• Transaction fees
• Subscription fees
• Advertisement fees

• Affiliate fees
• Sales
• Other models

• Value proposition is the description of the
  benefits a company can derive from using EC

32
Typical Business Models in EC

• Online, direct marketing
• Electronic tendering systems
• Reverse auction is a tendering system sellers are
  invited to bid on the fulfillment of an order to
  produce a product or provide a service the
  lowest bid wins
• Name your own price
• Find the best price

33
Typical Business Models in EC (cont.)

• Affiliate marketing is an arrangement whereby a
  marketing partner (business, organization or
  individual) refers consumers to the selling
  companys Web site
• Viral marketing is word-or-mouth marketing in
  which customers promote a product or service to
  friends or other people by using the Internet

34
Typical Business Models in EC (cont.)

• Group purchasing is getting many small buyers
  together to by in large quantities
• Online auctions
• Product and service customization
• Customization is the creation of a product or
  service according to the buyers specifications
• Electronic marketplaces and exchanges
• Vertical marketplace is a marketplace that
  concentrates on one industry also called
  vertical portals or vortals
• Supply chain improvers

35
Exhibit 1.3The Business Model of 7dream.com
36
The Limitations of EC

• Technical limitations
• There is a lack of universally accepted standards
  for quality, security, and reliability
• The telecommunications bandwidth is insufficient
• Software development tools are still evolving
• There are difficulties in integrating the
  Internet and EC software with some existing
  (especially legacy) applications and databases.
• Special Web servers in addition to the network
  servers are needed (added cost).
• Internet accessibility is still expensive and/or
  inconvenient

37
Electronic Marketplaces

38
Electronic Marketplaces

• Markets facilitate exchange of
• Information
• Goods
• Services
• Payments

• Markets create economic value for
• Buyers
• Sellers
• Market intermediaries
• Society at large

39
Electronic Marketplaces (cont.)

• 3 main functions of markets
• Matching buyers and sellers
• Facilitating the exchange of information, goods,
  services, and payments associated with market
  transactions
• Providing an institutional infrastructure

40
Market space Components

• Market space
• a marketplace in which sellers and buyers
  exchange goods and services for money (or for
  other goods and services), but do so
  electronically
• Market Space Components
• Customers
• Sellers
• Goods (physical or digital)

41
Market space Components

• Infrastructure
• Front-end
• Back-end
• Intermediaries/business partners
• Support services

42
Market space Components (cont.)

• Customers
• Web surfers looking for
• Bargains
• customized items
• Collectors items
• entertainment etc.
• Organizations account for over 85 percent of EC
  activities
• Sellers
• Hundreds of thousands of storefronts are on the
  Web
• Advertising and offering millions of Web sites
• Sellers can sell
• Direct from their Web site
• E-marketplaces

43
Market space Components (cont.)

• Products
• Physical products
• Digital productsgoods that can be transformed to
  digital format and delivered over the Internet
• Infrastructure
• Hardware
• Software
• Networks

44
Market space Components (cont.)

• Front-end business processes include
• Sellers portal
• Electronic catalogs
• shopping cart
• Search engine
• Payment gateway
• Back-end activities are related to
• Order aggregation and fulfillment
• Inventory management
• Purchasing from suppliers
• Payment processing
• Packaging and delivery

45
Market space Components (cont.)

• Intermediary
• a third party that operates between sellers and
  buyers
• Other business partners
• collaborate on the Internet, mostly along the
  supply chain
• Support services such as
• Certification and trust services
• Knowledge providers

46
Types of Electronic Markets

47
Types of Electronic Markets

• Electronic storefronts
• a single companys Web site where products and
  services are sold
• Mechanisms for conducting sales
• Electronic catalogs
• Payment gateway
• Search engine
• Shipment court
• Customer services
• Electronic cart
• E-auction facilities
• Electronic malls (e-malls)an online shopping
  center where many stores are located

48
Types of Electronic Markets (cont.)

• Types of stores and malls
• General stores/malls
• large market spaces that sell all types of
  products
• Public portals
• Specialized stores/malls
• sell only one or a few types of products
• Regional vs. global stores
• Pure online organizations vs. click-and-mortar
  stores

49
E-Marketplaces

• E-marketplaces
• online market, usually B2B, in which buyers and
  sellers negotiate
• Types of e-marketplaces
• private
• public
• consortia

50
E-Marketplaces

• Private e-marketplaces
• online markets owned by a single company
• Sell-side
• company sells either standard or customized
  products to qualified companies
• Buy-side marketplaces
• company makes purchases from invited suppliers
• Public e-marketplaces
• B2B markets, usually owned and/or managed by an
  independent third party, that include many
  sellers and many buyers (exchanges)

51
Intermediation in E-Commerce

• Intermediaries provide value-added activities and
  services to buyers and sellers wholesalers,
  retailers, infomediaries
• Roles of intermediaries
• Search costs databases on customer preferences
• Lack of privacy anonymity of sellers and buyers
• Incomplete information gather product
  information
• Contract risk protect sellers against
  non-payment
• Pricing inefficiencies induce appropriate trades

52
E-Distributors on B2B

• E-distributor
• an e-commerce intermediary that connects
  manufacturers (suppliers) with buyers by
  aggregating the catalogs of many suppliers in one
  place (the intermediarys Web site)
• E-distributors also provide support services
• Payments
• Deliveries
• Escrow services
• Aggregate buyers and or sellers orders

53
Syndication as an EC Mechanism

• Syndication
• the sale of the same good (e.g., digital content)
  to many customers, who then integrate it with
  other offerings and resell it or give it away
  free

54
Competition in the Internet Ecosystem

• Competition in the Internet ecosystem (business
  model of the online economy)
• Inclusive with low barriers to entry
• Self-organizing
• Old rules may no longer apply
• Competition is tense
• Lower buyers search cost
• Speedy comparisons
• Differentiation and personalization

55
Competition in the Internet Ecosystem

• Differentiation
• providing a product or service that is unique
• Personalization
• the ability to tailor a product, service, or Web
  content to specific user preferences
• Lower prices

56
Competition in the Internet Ecosystem

• Customer service is an extremely important
  competitive factor
• Some competitive factors are less important as a
  result of EC
• Size of company is no longer significant
• Geographical location is insignificant
• Language barriers are being removed
• Digital products do not have normal wear and tear

57
Competition in the Internet Ecosystem

• EC supports efficient markets and could result
  in almost perfect competition with these
  characteristics
• Many buyers and sellers must be able to enter the
  market at no entry cost
• Large buyers or sellers are not able to
  individually influence the market
• The products must be homogeneous
• Buyers and sellers must have comprehensive
  information about the products and about the
  market participants demands, supplies, and
  conditions

58
E-Market Success Factors

• Contributors to e-market success
• Product characteristics
• Type
• Price
• Availability of standards and product information
• Industry characteristics
• Brokers currently necessary
• Intelligent systems may replace brokers
• Seller characteristics
• Consumers find sellers with the lowest prices
• Low-volume, higher-profit-margin transactions
• Consumer characteristics
• Impulse buyers
• Patient buyers
• Analytical buyers

59
Electronic Catalogs

• Electronic catalogs
• the presentation of product information in an
  electronic form
• the backbone of most e-selling sites
• Evolution of electronic catalogs
• Merchants advertise and promote
• Customers source of information and price
  comparisons
• Consist of product database, directory and search
  capability and presentation function
• Replication of text that appears in paper
  catalogs
• More dynamic, customized, and integrated

60
Classifications of Electronic Catalogs

• Dynamics of information presentation
• static or dynamic
• Degree of customization ready-made or customized
• Electronic catalogs allow integration of
• Order taking and fulfillment
• Electronic payment
• Intranet workflow
• Inventory and accounting system
• Suppliers extranet
• Relationship to paper catalogs

61
Customized Catalogs

• Assembled specifically for
• A company
• An individual shopper
• Customization systems can
• Create branded, value-added capabilities
• Allows user to compose order
• May include individualized prices, products, and
  display formats
• Automatically identify the characteristics of
  customers based on the transaction records

62
Electronic Catalogs at Boise Cascade

63
Search Engines, Intelligent Agentsand Shopping
Carts

• E-commerce users use both search engines and
  intelligent agents
• Search engines find products or services
• Software agents conduct other tasks (comparisons)
• Electronic shopping cart
• an order-processing technology that allows
  customers to accumulate items they wish to buy
  while they continue to shop

64
Search Engines, Intelligent Agentsand Shopping
Carts

• Search engine
• a computer program that can access a database of
  Internet resources, search for specific
  information or keywords, and report the results
• Software (intelligent) agent
• software that can perform routine tasks that
  require intelligence

65
Auctions

• Auction
• a market mechanism by which a seller places an
  offer to sell a product and buyers make bids
  sequentially and competitively until a final
  price is reached
• Auctions deal with products and services for
  which conventional marketing channels are
  ineffective or inefficient

66
Auctions

• Limitations of Traditional Auctions
• Traditional auctions are generally a rapid
  process
• It may be difficult for sellers to move goods to
  the auction site
• Commissions are fairly high

67
Electronic Auctions

• Electronic auctions (e-auctions)
• Auctions conducted online
• Host sites on the Internet serve as brokers
  offering
• Services for sellers to post their goods for sale
• Allowing buyers to bid on those items
• Many sites have certain etiquette rules that must
  be adhered to in order to conduct fair business

68
Electronic Auctions

• Major online auctions offer
• Consumer products
• Electronic parts
• Artwork
• Vacation packages
• Airline tickets
• Collectibles
• Excess supplies and inventories being auctioned
  off by B2B marketers

69
Dynamic Pricing

• Dynamic pricing
• prices that change based on supply and demand
  relationships at any given time
• The four major categories of dynamic pricing are
  based on the number of buyers and sellers
  involved
• One buyer, one seller
• One seller, many potential buyers
• One buyer, many potential sellers
• Many sellers, many buyers

70
Dynamic Pricing
71
Dynamic Pricing

• One buyer, one seller uses
• Negotiation
• Bargaining
• Bartering
• Price will be determined by
• Each partys bargaining power
• Supply and demand in the items market
• Possibly business environment factors

72
Dynamic Pricing

• One seller, many potential buyers
• Forward auction
• an auction in which a seller entertains bids from
  buyers
• English auction
• an auction in buyers bid on an item in sequence
  and the price increases with time
• Yankee auction
• auction of multiple identical items in which
  bidders can bid for any number of the items
  offered, and the highest bid wins

73
Dynamic Pricing

• Dutch auction
• auction of multiple identical items, with prices
  starting at a very high level and declining as
  the auction time passes
• Free-fall (declining price) auction
• a variation of the Dutch auction in which only
  one item is auctioned at a time
• the price starts at a very high level and
  declines at fixed time intervals, the winning bid
  is the lowest one when the time expires

74
English Auction, Ascending Price

75
Dynamic Pricing (cont.)

• One buyer, many potential sellers
• Reverse auction (bidding, or tendering system)
• auction in which the buyer places an item for bid
  (tender) on a request for quote (RFQ) system,
  potential suppliers bid on the job, with price
  reducing sequentially, and the lowest bid wins
• primarily a B2B or G2B mechanism

76
The Reverse Auction Process

77
Dynamic Pricing (cont.)

• One buyer, many potential sellers (cont.)
• Name-your-own-price model
• Consumer-to-business (C2B) model
• Many sellers, many buyers
• Double Auction
• buyers and their bidding prices and sellers and
  their asking prices are matched, considering the
  quantities on both sides

78
Limitations of Electronic Auctions

• Possibility of frauddefective goods or receive
  goods/services without paying
• Limited participationinvitation only or Open to
  dealers only
• Lack of securityC2C auctions sometimes not done
  in an unencrypted environment
• Limited softwareonly a few completeor
  off-the-shelf market-enabling solutions

79
Impacts of Auctions

• Auctions as a coordination mechanism
• Auctions as a social mechanism to determine a
  price
• Auctions as a highly visible distribution
  mechanism
• Auctions as a component in e-commerce

80
Online Negotiating

• Online negotiation
• electronic negotiation, usually done by software
  (intelligent) agents that perform searches and
  comparisons improves bundling and customization
  of products and services
• Dynamic prices can be determined by negotiation
• Negotiated prices result from interactions and
  bargaining among sellers and buyers
• Expensive items like cars and real estate
• Deal with non pricing terms like payment method
  and credit

81
Online Negotiating (cont.)

• Three factors that facilitate negotiated prices
• Intelligent agents that perform searches and
  comparisons
• Computer technology that facilitates negotiation
  process
• Products and services that are bundled and
  customized

82
Retailing in E-CommerceProducts and Services

83
Amazon.com King of E-Tailing

• The Problem
• Amazon.com has recognized that it must
  continually enhance its electronic store by
  expanding product selection and improving the
  customer experience
• The Solution
• Amazon.com now offers specialty stores
• Professional and technical store
• Expanded book editorial content
• Increased product selection

84
Amazon.com (cont.)

• Some key features of the Amazon.com are
• Easy browsing and searching
• Useful product information
• Low prices
• One-Click order technology
• Features that make the online shopping
  experience more enjoyable
• Gift ideas
• E-cards

85
Amazon.com (cont.)

• Various marketplace services
• Amazon Auctions
• zShops service hosts electronic storefronts for a
  monthly fee
• Customer relationship management
• Creates interesting and informative front-end
• Highly automated and efficient back-end support
• Personalized service
• Diversification through business alliances

86
Amazon.com (cont.)

• The Results
• Financial performance
• annual sales for Amazon.com have trended upward,
  from 15.7 million in 1996 to 4 billion in 2002
• Offers several features for international
  customers
• Declared its first profit for the 2001 first
  quarter
• Yet the companys financial success is by no
  means assured

87
E-Tailing and B2C Market Growth

• A retailer is a sales intermediary, a seller that
  operates between manufacturers and customers
• Electronic retailing (e-tailing)retailing
  conducted online, over the Internet
• Catalog sales free a retailer from the need for a
  physical store
• Manufacturer sells directly to the customer,
  cutting out the intermediary

88
What Sells Well on the Internet?

• Health and beauty
• Entertainment
• Apparel
• Cars
• Services
• Others

• Computers and electronics
• Sporting goods
• Office supplies
• Books and music
• Toys

89
Characteristics of Successful E-Tailing

• Brand recognition and guarantees
• Guarantee provided by highly reliable or
  well-known vendors
• Digitized products
• Inexpensive items
• Frequently purchased
• Commodities with standard specifications
• Well-known packaged items that cannot be opened
  even in a traditional store

90
E-Tailing Business Models

• E-tailing business models can be classified in
  several ways
• By the scope of items handled
• General-purpose
• Specialty e-tailing
• By scope of the sales region covered
• Global
• Regional
• Two main models
• Direct selling model
• Distribution channel

91
Classification by Revenue Model

• Product sales models
• Charge customers directly for products or
  services
• Subscription models
• Charge monthly or annual subscription fee for
  service
• Transaction-fee models
• Charge service fee based on the level of
  transaction offered
• Advertising-supported models
• Charge fee to advertisers instead of customers
• Sponsorship models
• Companies sponsor the business through donations
  (usually supplemental income)

92
Classification by Distribution Channel

• Direct marketing
• manufacturers sell directly from company sites to
  individual customers
• Pure-play e-tailers
• have no physical stores, only an online sales
  presence
• Click-and-mortar retailers
• traditional retailers with a supplementary Web
  site

93
Direct Marketing by Manufacturers or Mail-Order
Companies

• Direct marketing
• broadly, marketing that takes place without
  intermediaries between manufacturers and buyers
• marketing done online between the seller and the
  buyer
• Disintermediation
• removal of organizations or business process
  layers responsible for certain intermediary steps
  in a given supply chain

94
Exhibit 3.1 Disintermediation in the B2C Supply
Chain

95
Direct Marketing by Manufacturers or Mail-Order
Companies

• Parties in direct marketing have a greater
  opportunity to influence each other
• Make-to-order online
• direct sales by manufacturers are gaining
  popularity due to the ability to customize
  products or services

96
Virtual (Pure-Play) E-Tailers

• Virtual e-tailers sell over the Internet without
  a physical sales channel
• General purpose e-tailers (Amazon.com)
• Broad range of products
• Large number of consumers
• Specialty or niche e-tailers (CatToys.com)
• One specific product area
• High demand items in the area
• Effective practices for customer appeal

97
Buying Cars Online Build to Order

• Traditional systembuild-to-stock
• Manufacturers conduct market research to estimate
  which features and options will sell well
• Make the cars they wish to sell
• Cars are sold from stock at a loss when there is
  insufficient demand for a particular vehicle
• Auto giants intend to transform themselves from
  build-to-stock to build-to-order companies
• Cutting inventory requirements in half
• Giving customers exactly what they want

98
Buying Cars Online Build to Order

• Using a virtual car at jaguar.com
• Consumers custom configure their cars features
  and components, see it online, price it, have it
  delivered to a nearby dealer
• Web site helps with the research process
• The configuration is transmitted to the
  production floor
• Reducing delivery time
• Contributing to increased customer satisfaction

99
Click-and-Mortar Retailers

• Brick-and-mortar retailers
• retailers who do business in the non-Internet,
  physical world in traditional brick-and-mortar
  stores
• Click-and-mortar retailers
• brick-and-mortar retailers with a transactional
  Web site from which to conduct business
• Traditional retailing frequently involves a
  single distribution channel, the physical store
• may also operate a mail-order business
• Multichannel store
• firm that operates both physical stores and an
  online e-tail site

100
E-Tailers Working Backgrounds

• Travel and Tourism Services Online
• Corporate Travel
• Intelligent Agents in Travel Services
• The Employment Placement and the Job Market
• The Internet Job Market
• Matching Workers with Jobs in the Philippines
• Intelligent Agents in the Electronic Job Market
• Insurance Online
• Online Stock Trading
• Investment Information

101
E-Tailers Working Backgrounds

• Banking Personal Finance Online
• Capabilities of Home Banking
• International and Multiple-Currency Banking
• Personal Finance Online
• Online Billing and Bill Paying
• On-Demand Delivery Service (ODDS)
• Digital Delivery
• Business Rating Sites Trust Verification Sites

102
Exhibit 3.5Virtual Job Employment Agent

103
Exhibit 3.6Online Electronic Stock Trading

104
Capabilities of Home Banking

• Get current account balances any time
• Obtain charge and credit card statements
• Pay bills
• Download account transactions
• Transfer money between accounts
• Balance accounts
• Send e-mail to the bank
• Expand the meaning of bankers hours
• Handle finances when traveling
• Additional services
• Free phone banking
• Waive checking fees

105
Implementation Issues in Online Financial
Transactions

• Using bank intranets
• Banks provide large business customers with
  personalized service by allowing them access to
  the banks intranet to access accounts,
  historical transactions, intranet-based
  decision-support applications
• Imaging systems
• allow customers to view images of all
• Incoming checks
• Invoices
• Other related online correspondence

106
Personal Finance Online

• Bill paying and e-checks
• Tracking bank accounts etc.
• Portfolio management
• Investment tracking
• Stock quotes and prices (past and current)
• Budget organization
• Record keeping
• Tax computations
• Retirement goals, planning and budgeting

107
Personal Finance Online

• Automatic transfer of mortgages
• This method has existed for several years
• The payer authorizes its bank to pay the
  mortgage, including tax escrow payments
• Automatic transfer of funds to pay monthly
  utility bills
• Paying bills from online banking account

108
Personal Finance Online

• A merchant-to-customer direct billing
• A merchant posts bills on its Web site
• Customers can view and pay their bill
• Using an intermediary
• A third party consolidates all bills related to
  each customer in one site in a standard format
• Collects a certain commission
• Makes it convenient to complete transactions

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Personal Finance Online

• Person-to-person direct payment
• Paypal.com (now an eBay company)enables you to
  send funds to another individual over the
  Internet
• Online billing and bill-paying can be classified
  into B2C, B2B, or C2C.
• Opportunities exist in B2B services
• can save businesses about 50 percent of billing
  costs

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On-Demand Delivery Service (ODDS)

• On-demand delivery service (ODDS)
• express delivery made fairly quickly after an
  online order is received
• On-Demand Delivery Services (ODDS)
• May own a fleet of delivery vehicles for regular
  deliveries and delivery within short time period

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Exhibit 3.7On-Demand Delivery Services Model

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Digital Delivery

• Digital (soft) goods
• Music, movies, videos, software, newspapers,
  magazines, graphics, etc.
• Can be delivered in hard or soft form
• Computer program on CD-ROM with owners manual
  and warranty card
• Download from Web site after payment

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Problems with E-Tailing Lessons Learned

• Profitability
• Lose money on every sale as they try to grow to a
  profitable size and scale
• Underlying cost and revenue models were not sound
• Long-run success requires financial viability
• Manage new risk exposure
• Local companies contend with local customers and
  local regulations
• National firms have more constituents
• Global firms deal with numerous cultural
  perspectives

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Problems with E-Tailing Lessons Learned

• Branding
• drive to establish brand can lead to excessive
  spending
• Starting with insufficient funds
• Keep it interesting
• Static design is a turn-off
• Dynamic sites with rich databases of information
  appeal most to customers

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Disintermediation Reintermediaries

• Disintermediation
• manufacturer sells directly to consumer
• Reintermediearies
• new intermediary roles in the digital environment
  offer new ways to
• Reach new customers
• Bring value to customers
• Generate revenues

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Intermediarys New Role

• Role will shift to one that emphasizes
  value-added services such as
• Assisting customers in comparison shopping from
  multiple sources
• Providing total solutions by combining services
  from several vendors
• Providing certifications and trusted third-party
  control and evaluation systems

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Cybermediation and Hypermediation

• Cybermediation (electronic intermediation)
• use of software (intelligent) agents to
  facilitate intermediation
• Hypermediation
• extensive use of both human and electronic
  intermediation to provide assistance in all
  phases of an e-commerce venture

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