Introduction to e-business and e-commerce

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Chapter 1

• Introduction to e-business and e-commerce
• Professor Nabil Elmjati

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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
• Outline the ongoing business challenges of
  managing e-business and e-commerce in an
  organization.

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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 do we evaluate our current e-business
  capabilities?

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E-business innovation

• Discussion
• Which company / website impacted on Internet or
  the web?
• How do we measure their success?
• What made them successful?

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Figure 1.1 Google circa 1998Source Wayback
machine archive http//web.archive.org/web/199811
11183552/google.stanford.edu
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The impact of the Internet on business

• Andy Grove, Chairman of Intel, one of the early
  adopters of e-commerce, has made a meteorological
  analogy with the Internet.
• He says
• Is the Internet a typhoon force, a ten times
  force, or is it a bit of wind? Or is it a force
  that fundamentally alters our business? (Grove,
  1996)

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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
• Personalized messages for users
• Affiliation
• Partnerships are key in the networked economy

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Internet risks what can go wrong with a
transactional site?
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Internet risks what can go wrong with a
transactional site?

• Web sites that fail because of spike in visitor
  traffic
• Hacker penetrating the security of the system
• A company emails customer without receiving their
  permission
• Problems with fulfilment
• E-mail customer-service enquiries from the web
  site dont reach the right person

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What is e-commerce and e-business?

• Write down a definition for each
• E-commerce
• E-business

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What is e-commerce and e-business?

• E-commerce
• All electronically mediated information exchange
  between an organization and its external
  stakeholders (Chaffey)
• Digitally enabled commercial transactions between
  and among organizations and individuals

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What is e-commerce and e-business?

• E-business
• All electronically mediated information
  exchanges, both within an organization and with
  external stakeholders supporting the range of
  business process (Chaffey)
• Digital enablement of transactions and processes
  within a firm, involving information systems
  under firms control. Does not include commercial
  transactions involving an exchange of value
  across organizational boundaries (Laudon)

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What is e-commerce and e-business? Activity 1.2

• Use Google Syntax for
• 'E-business'
• 'E-commerce'
• 'Internet
• Marketing.
• 'E-marketing'
• 'Digital marketing'

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Figure 1.2 The distinction between buy-side and
sell-side e-commerce
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Figure 1.3 Three definitions of the relationship
between e-commerce and e-business
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What is e-commerce and e-business?

• Activity 1.3, P. 11
• DiscussionQuestion 1
• Intranet vs. Extranet

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Intranet vs. Extranet

• P. 11, Activity 1.3
• DiscussionQuestion 1

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Figure 1.4 The relationship between intranets,
extranets and the Internet
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Why Study E-commerce?

• E-commerce technology is different, more
  powerful than previous technologies
• E-commerce bringing fundamental changes to
  commerce
• Traditional commerce
• Passive consumer
• Sales-force driven
• Fixed prices
• Information asymmetry

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Unique Features of E-commerce Technology

• Global reach
• Universal standards
• Information richness
• Interactivity
• Information density
• Personalization/customization
• Social technology

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Origins Growth of E-commerce

• Precursors
• Electronic Data Interchange (EDI)
• 1995 Beginning of e-commerce
• First sales of banner advertisements
• Since then, e-commerce fastest growing form of
  commerce in the United States

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The Growth of B2C E-commerce
SOURCES eMarketer, Inc., 2009a U.S. Census
Bureau, 2009b
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The Growth of B2B E-commerce
SOURCES U.S. Census Bureau, 2009a authors
estimates.
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E-commerce A Brief History

• 19952000 Innovation
• Key concepts developed
• Dot-coms heavy venture capital investment
• 20012006 Consolidation
• Emphasis on business-driven approach
• 2006Present Reinvention
• Extension of technologies
• New models based on user-generated content,
  social networking, services

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Types of E-commerce

• Selling Side
• Transaction e-commerce sites
• Service-oriented relationship-building site
• Brand-building sites
• Portal, publisher or media sites

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Types of E-commerce

• Digital Marketing
• The management and execution of marketing using
  e-media in conjunction with digital data about
  customer
• Involves using digital technology
• To achieve these objectives
• ..
• Through using these marketing tactics
• ..

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Figure 1.5 First Direct Interactive
(www.firstdirect.com)
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Figure 1.6 Blendtec viral campaign micro-site
(www.willitblend.com)
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Web 2.0 and Beyond

• Web 2.0
• Features-p. 24
• Web 2 examples
• Web 3.0 Features-pp. 24-25 Box 1.1
• Research the web to discover what Web 3.0
  technology and features have been used by which
  company

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Figure 1.7 Evolution of web technologiesSource
Adapted from Spivack (2007)
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e-Commerce and SCM

• Whats Supply Chain Management (SCM)
• The coordination of all supply activities of an
  organization from its supplier and partners to
  its customers (Both the buy Side and Sell side)
• Value Chain
• The value chain is a related concept that
  describes the different value-adding activities
  that connect a companys supply side.
• We can identify an internal value chain within
  the boundaries of an organization and an external
  value chain where these activities are performed
  by partners.
• Note that in the era of e-business a company
  will manage many interrelated value chains, so in
  chapter 6 we also consider the concept of a value
  network.

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Business-Consumer Model of e-Commerce

• Classified by market relationship
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Classified by technology used
• Peer-to-Peer (P2P), e.g., BitTorrent and Napster
• Mobile commerce (M-commerce)

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Figure 1.8 Summary and examples of transaction
alternatives between businesses, consumers and
governmental organizations
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Mini Case Study

• How does Betfair gains profit
• Whats the challenges they may face

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Figure 1.9 Betfair peer-to-peer gambling exchange
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E-government

• What is it?
• E-government refers to the application of
  e-commerce technologies to government and
  public service.
• What are the benefits?
• Citizens-facilities for dissemination of
  information and use of online services at local
  and national levels. For example, at a local
  level you can find out when refuse is collected
  and at national level it is possible to fill tax
  returns.
• Suppliers-government departments have a vast
  network of suppliers. The potential benefits (and
  pitfalls) of electronic supply chain management
  and e-procurement described in chapters 6 and 7
  are equally valid for government.
• Internal communications _ this includes
  information collection and dissemination and
  e-mail and workflow systems for improving
  efficiency within government departments.

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E-Business Opportunities

• what goals does a business can achieve through
  e-business?

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Business Adoption of E-Commerce/Business

• Activity You are in a team of advisers at a
  local business link
• List
• Drivers to adoption of sell-side e-commerce by
  business and how you can reinforce these by
  marketing benefits
• Barriers to adoption of sell-side e-commerce by
  business and how you can reinforce these by
  stressing benefits

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Cost/efficiency and competitiveness drivers

• 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
• Competitiveness drivers
• Customer demand
• Improving the range and quality of services
  offered
• Avoid losing market share to businesses already
  using e-commerce

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E-business Risks and Barriers for Adoption

• Strategy level issues
• Practical risks

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Figure 1.12 Barriers to development of online
technologiesSource DTI (2002)
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Potential Limitations on B2C E-commerce

• Expensive technology
• Sophisticated skill set
• Persistent cultural attraction of physical
  markets and traditional shopping experiences
• Persistent global inequality limiting access to
  telephones and computers
• Saturation and ceiling effects

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Evaluating an Organizations E-business Capability

• Is any company ready for e-commerce?

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Figure 1.13 A simple stage model for buy-side
and sell-side e-commerce
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Figure 1.14 Variation in different online
activities by genderSource UK National
Statistics (2006) Individuals accessing the
Internet Report from the UK National Statistics
Omnibus Survey. Published online at
www.statistics.gov.uk
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Internet risks what can go wrong with a
transactional site?

• Web sites that fail because of spike in visitor
  traffic
• Hacker penetrating the security of the system
• A company emails customer without receiving their
  permission
• Problems with fulfilment
• E-mail customer-service enquiries from the web
  site dont reach the right person

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Case Study E-Bay