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Electronic Commerce
Lecture 4
Traditional Businesses Microprocessor Technology
Internet Technology
Internet
Global Digital Community
e-Commerce
WebMDOfficeMax
e-Publisher
Consumers
Consumers Businesses Governments
Traditional Businesses Intel/Motorola/Sun/IBM
Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …
Internet
ee-Consumers
Consumers
Internet
ee-Store
Consumers
…
Should We?
Entrepreneurs & Small Businesses Attractive channels in reaching
customers Easy Delivery of innovative products Cost Effective channels for marketing
Big Corporations A threat, an opportunity -> a must Further explore procurement & supply
chain management
Whoever You are…
Could only be better Cutting costs, increase
productivity, … Models from information providers,
products and services providers (e-tailers), e-business, e-enterprise, e-industry,…
Pessimism Out There?
Business is business; can’t afford to be…
Lack of social interactions; generation to generation
One language: :> +,) ?
Internet Business Strategy
Commerce & Technology Revolutions calendar years vs internet years local/regional vs global competition: across/down the street vs unseen
and everywhere; playing field is getting invisibly large
Internet Value transform customer relationships traditional sources of business value disappear
The Commerce Value Chain
o Introduce the idea of Value ChainValue Chaino A value chain from the raw material supplier to
the final product, or from the product on the market to the buying customer
o Using a generic value chain, four stages are identified
o Attracto Interacto Acto React
Stages in a Value Chain
Attract Advertising Marketing
Interact Catalog Sales
ActOrder capturePaymentFulfillment
ReactCustomer serviceOrder tracking
This should be compared to the traditional business practice.
What Strategy?
Channel Master : CiscoSold more than $1.0 billion online out of a total $6.4 billion
worth of routers, switches, and other network interconnect devices (1997)
Customer Magnet : TripodTarget certain consumer group with a selected range of
products to meet their needs
Value Chain Pirate : ONSALE Digital Distributor : Classifieds2000 Others…
ee-Business Models
Consumer retail (c-to-b, c2b) Business-to-business (b-to-b, b2b) Information Commerce Services Commerce??
Bank? Social?
B2C Electronic Commerce
b2c e-commerce or retailing in the Internet company retailing sites, such as B&N, Gateway
, Wellcome domain portal sites, such as WebMD, Expedia,
Amazon.com (not sure…) general portal sites, such as Yahoo! Business contacts/buyers-sellers/market place,
such as Go.com, JobDB.com, www.hkjobs.com newspapers
Will it work b2c ec
one in five persons have made some purchases over the net
50% used e-tickets 60% of Charles Schwab trading via Web distance learning US$8 billion 1998 to estimated US$20
billions in 1999 Internet retailing revenue: implications?? No more traditional shopping malls?
Analysis of B2C EC
threshold of users implies success transaction costs reduced? supply and demand presentation WOULD YOU USE IT?
B2C e-tailers(Tresse, chapter4)
Benefits Ability to reach a global market
(marketspace: critical mass maybe reached quickly)
Reduced marketing and selling expenses (update is easy; no re-printing)
Increased efficiency of operation (specialized personnel)
Ability to target consumers more precisely Ability to convey more accurate product and
availability information
B2C e-tailers
Attracts: advertising, e-coupons, sales, promotions, frequent buyer programs, one-to-one marketing (individualized product announments)
Interact: content development and interactivity
Act: Order processing (one-click ordering) – shopping
cart, order validation and modifications, discounts, cross-selling (this with that), taxes (not applicable), shipping & handling charges, records and receipts
Continued
Act (cont’d) Payment: Cash, credit/debit cards,
check, e-wallets?, currencies? Fulfillment: how? Logistics?
React: customer service – self help, discussion group, track and trace, multiple-language support.
B2B EC
actual business transactions and connection of organizations
types: selling/buying between business - company sites target other business partners
types: portal sites but for businesses; cybercash, security system integration,…
B2BEC - US$43 billion in 1998; expect to hit US$1.3 trillion by the end of 2003
B2B Models(Turban, et al)
Supplier-oriented Marketplace www.cisco.com
Buyer-oriented Marketplace Tpn.geis.com
Intermediary-oriented Marketplace Www.industry.net
Traditional Businesses Intel/Motorola/Sun/IBM
Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …
Internet
ee-Consumers
Consumers
Internet
ee-Store
…
Selling-Chain Management CRMCRM
Enterprise Resource Planning (ERP)/IT
e-Procurement Supply Chain Management
Elements of ERP(p 169)
Sales, Distribution (Order Entry) Human Resources Accounting and Financials Integrated Logistics Production Planning Customer/Employee
Enterprise Resource Planning (ERP)
To improve sutomer order processing To consolidate and unify business functions
such as manufacturing, finance, distribution/logistics, and human resources
To integrate disparate technologies, along with the processes they support, into a common denominator of overall functionality
To create a new foundation on which next-generation applications can be developed
E-Commerce
Example: e-Procurement(chapter nine of A)
A typical procurement process: Identify sellers/vendors Make a request Receive approval Fill up a Purchase Order Wait for Business/Procurement Office to
interface with supplier Wait for the delivery of products Receiving report to Business/Procurement
Office
e-Procurement Solutions
http://www.buyingchain.com/buying_chain/default.asp
http://www.walker.com/products_services/eprocurement/
Benefits of e-Procurement
Efficiency: “lower procurement costs, faster cycle times, reduced maverick or unauthorized buying, more highly organized information, and tighter integration of the procurement function with key back-office systems” (p234)
Effective: “increased control over the supply chain, proactive management of key procurement data, and higher-quality purchasing decisions within organizations”
Other e-Procurement Solutions
Buy-side: linking the buying party with suppliers and back-office systems Fire up browser and login Browser products catalog Select Products and obtain quotes Create On-line PO Get On-line Approval Send PO to Supplier for fulfillment Start order tracking and ready for receipt
CU Business Office
Browser
Quote1 Quote2 Quote3
Quote1 Quote2 Quote3
Approve and Generate P.O.
Other e-Procurement Solutions
Sell-side: Vertical product trading community
www.chemdex.com www.sciquest.com
Supply Chain Management
Too much to read… For a company For inter-enterprises
Other ‘possibilities’ of EC
Industrial E-Commerce: logistic centers, a case in point; third-party or company-owned? Governmental agencies involvement?
Person-centered e-commerce: improves one’s own life and better quality of life overall?
Empowered an individual? Networking...
Two Views of Where EC is Going
acquisition of information vs conduct of actual business transactions
connection of persons vs connection of organizations
“The Future of E-Commerce: Integrate & Customize”Choi & Whinston, ComputerComputer, Jan, 1999.
Traditional Businesses Intel/Motorola/Sun/IBM
Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …
Internet
ee-Consumers
Consumers
Internet
ee-Store
…
Selling-Chain Management CRMCRM
Enterprise Resource Planning (ERP)/IT
e-Procurement Supply Chain Management
Traditional Businesses Intel/Motorola/Sun/IBM
Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …
Internet
ee-Consumers
Consumers
Internet
EE--BusinessesBusinesses
Personal Integrator
Get Started: Planning
Questions to Ask: How is EC going to change our business or
create new channel for new business? How do we uncover new types of business
opportunities? How can we take advantage of new
electronic linkages with customers and trading partners? (Extended Enterprise)
Do we become intermediaries ourselves? (Shrink and Specialize; Expand and Capture)
Planning
How do we bring more buyers together electronically (and keep them there)?
How do we change the nature of our products and services or create new ones?
Why is the Internet affecting other companies more than ours?
How do we manage and measure the evolution of our strategy?
How to assess the success of EC?
What to do?
Mougayar (1998, Opening Digital Markets)
1. Conduct Necessary Education and Training2. Review Current/New Distribution and
Supply Chain Models3. Understand What Your Customers and
Partners Expect from the Web4. Re-evaluate the Nature of Your Products
and Services5. Give a New Role to Your Human Resources
Department
What to do?
6. Extend Your Current Systems to the Outside
7. Track New competitors and Market Shares
8. Develop a Web-Centric Marketing Strategy
9. Participate in the Creation and Development of Virtual Marketplaces
10. Instill EC Management Style
Four System Architechure (Hsu)
Document Connectivity HTML, …
Applications Connectivity CGI, Javascript, …
Database Connectivity ODBC/JDBC, databases
Enterprise Connectivity Java, CORBA
Five Elements of an EC System(Hsu)
Web Server Applications Server Database Server Internal Networking Internet Connection
To Implement the Site
E-business Plan and Design
Web-based Enterprise Computing
(article 20)
DB
db engine
ODBC/JDBC compliant
WebServer-received request-Invoked applications
APIWeb-based
Applications
WebBrowser
Web-based Enterprise Computing
Client-server computing ODBC- & JDBC- compliant DBMS Static vs Dynamic HTML
pages Java COM CORBA Drumbeaat 2000 X/Open Informix, Sybase, Oracle
CGI programs (Unix shell scripts, C and/or Perl programs)
HTTP Applets vs Servlets API ASP vs JSP Lotus Domino, Netscape
Enterprise, IIS, … SQL ColdFusion/CFML XML
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