Chapter 5 and Module BChapter 5 and Module B

ELECTRONIC COMMERCE: ELECTRONIC COMMERCE: Strategies For The New Strategies For The New

Economy Economy &&

THE WORLD WIDE WEB AND THE WORLD WIDE WEB AND THE INTERNETTHE INTERNET

WWW and the InternetWWW and the Internet

World Wide WebWorld Wide Web InternetInternet Web siteWeb site Web pageWeb page URL (uniform resource locator)URL (uniform resource locator) Link (hyperlink)Link (hyperlink) Top-level domainTop-level domain

Understanding AddressesUnderstanding Addresses

Consider Consider www.uts.edu.au (University of (University of Technology in Sydney)Technology in Sydney) http:// - starts most addresses but may be http:// - starts most addresses but may be

left offleft off www – World Wide Webwww – World Wide Web uts – the organizationuts – the organization edu – edu – top-level domaintop-level domain (organization type) (organization type) au – country location (if none, then current au – country location (if none, then current

country) country)

Top-Level DomainsTop-Level Domains

com – commercial or com – commercial or for-profit businessfor-profit business

coop – cooperativecoop – cooperative edu – educational edu – educational

institutioninstitution gov – U.S. government gov – U.S. government

agencyagency mil – U.S. military mil – U.S. military

organizationorganization net – Internet net – Internet

administrative administrative organizationorganization

int – International int – International treaties organizationtreaties organization

info – general info – general informationinformation

biz – businessbiz – business museum – accredited museum – accredited

museummuseum name – personalname – personal pro – Accountant, pro – Accountant,

doctor, lawyer, etc.doctor, lawyer, etc. Many moreMany more

WEB 2.0WEB 2.0 Web 2.0 (Live Web)Web 2.0 (Live Web) – second generation of the – second generation of the

Web; focuses on online collaboration, users as Web; focuses on online collaboration, users as both creators and modifiers of content, dynamic both creators and modifiers of content, dynamic and customized information feeds, etc.and customized information feeds, etc. WikisWikis Social networking sitesSocial networking sites BlogsBlogs RSS feedsRSS feeds PodcastingPodcasting Many othersMany others

The Internet BackboneThe Internet Backbone Network access point (NAP)Network access point (NAP)

Network service provider (NSP)Network service provider (NSP)

Internet service provider (ISP)Internet service provider (ISP)

INTERNET TECHNOLOGIESINTERNET TECHNOLOGIES

Internet backboneInternet backbone – major set of – major set of computer connections on Internetcomputer connections on Internet

Internet ServersInternet Servers

Internet ServersInternet Servers

Internet server computerInternet server computer – provides – provides information and services on the Internetinformation and services on the Internet

Web serverWeb server – provides information and – provides information and services on the Webservices on the Web

Mail serverMail server – provides e-mail services – provides e-mail services ftp (file transfer protocol) serverftp (file transfer protocol) server – –

maintains files you downloadmaintains files you download IRC (Internet Relay Chat) serverIRC (Internet Relay Chat) server – –

supports discussion groups and chat rooms supports discussion groups and chat rooms

Communications ProtocolsCommunications Protocols Information moves on the Internet Information moves on the Internet

according to communications according to communications protocolsprotocols

Communications protocol Communications protocol (protocol)(protocol) – set of rules that every – set of rules that every computer follows to transfer computer follows to transfer informationinformation

Most widely usedMost widely used TCP/IPTCP/IP httphttp ftpftp

Telecommunications Telecommunications HardwareHardware

To access and use the Web, you also To access and use the Web, you also need hardwareneed hardware

Mainly, some sort of modemMainly, some sort of modem TelephoneTelephone DSLDSL CableCable SatelliteSatellite

WHAT’S REPLACING THE DAY AFTER WHAT’S REPLACING THE DAY AFTER THANKSGIVING FOR SHOPPING THANKSGIVING FOR SHOPPING

SALES?SALES?Black Friday Black Friday is traditionally a big day is traditionally a big day for retailersfor retailers

But Black Friday may soon be But Black Friday may soon be replaced by Cyber Mondayreplaced by Cyber Monday

Cyber Monday Cyber Monday is the Monday after is the Monday after Thanksgiving when people go back to Thanksgiving when people go back to work and buy products onlinework and buy products online

WHAT’S REPLACING THE DAY AFTER WHAT’S REPLACING THE DAY AFTER THANKSGIVING FOR SHOPPING THANKSGIVING FOR SHOPPING

SALES?SALES? The “e” in e-commerce changes a lot of The “e” in e-commerce changes a lot of

thingsthings For example, Black Friday is a brick-and-For example, Black Friday is a brick-and-

mortar concept; Cyber Monday is an “e” mortar concept; Cyber Monday is an “e” (electronic) concept(electronic) concept

No matter, any kind of commerce is still No matter, any kind of commerce is still just commercejust commerce

And all businesses must execute well to And all businesses must execute well to survive and thrivesurvive and thrive

Electronic CommerceElectronic Commerce E-commerce is changing everythingE-commerce is changing everything

Electronic commerce (e-commerce)Electronic commerce (e-commerce)

Electronic business (e-business)Electronic business (e-business)

Mobile commerce (m-commerce)Mobile commerce (m-commerce)

Types of BusinessesTypes of Businesses

Brick-and-MortarBrick-and-Mortar

Click-and-Mortar (or Bricks-and-Click-and-Mortar (or Bricks-and-Clicks)Clicks)

Dot-Coms (or Pure Plays)Dot-Coms (or Pure Plays)

E-COMMERCE BUSINESS E-COMMERCE BUSINESS MODELSMODELS

B2B E-CommerceB2B E-Commerce

Business to Business (B2B) e-Business to Business (B2B) e-commercecommerce Where all the e-commerce money isWhere all the e-commerce money is Basically, it’s about businesses doing Basically, it’s about businesses doing

business with other businessesbusiness with other businesses Supply chain management (from Chapter Supply chain management (from Chapter

2) is a big part of B2B e-commerce2) is a big part of B2B e-commerce

B2C E-CommerceB2C E-Commerce

Business to Consumer (B2C) e-Business to Consumer (B2C) e-commerce commerce B2C is the glitzy e-commerce like iTunes, B2C is the glitzy e-commerce like iTunes,

eBay, etceBay, etc

C2B E-CommerceC2B E-CommerceConsumer to Business (C2B) e-Consumer to Business (C2B) e-commerce commerce True economic inversion of the B2C modelTrue economic inversion of the B2C model Fotolia is a good example (Fotolia is a good example (www.fotolia.com)) There you can post photos and videos and There you can post photos and videos and

businesses will pay you a royalty to use them (if businesses will pay you a royalty to use them (if they like what you offer)they like what you offer)

You can also advertise businesses on your You can also advertise businesses on your personal Web site (called an personal Web site (called an affiliate programaffiliate program) ) and receive monies for visitors who jump from and receive monies for visitors who jump from your site to the business’ Web sitesyour site to the business’ Web sites

C2C E-CommerceC2C E-Commerce

Consumer to Consumer (C2C) e-Consumer to Consumer (C2C) e-commercecommerce You selling to another person (or the You selling to another person (or the

reverse)reverse) Usually occurs through an intermediary Usually occurs through an intermediary

such as eBaysuch as eBay

B2G E-CommerceB2G E-Commerce

Business to Government (B2G) e-Business to Government (B2G) e-commercecommerce Lockheed providing products and services to Lockheed providing products and services to

DoDDoD Fairly large e-commerce model in terms of Fairly large e-commerce model in terms of

revenuerevenue Most U.S. government entities (for sure at Most U.S. government entities (for sure at

the federal level) won’t do business with the federal level) won’t do business with your business if you can’t do it electronicallyyour business if you can’t do it electronically

C2G E-CommerceC2G E-Commerce

Consumer to Government (C2G) Consumer to Government (C2G) e-commercee-commerce You selling something to the governmentYou selling something to the government This market is quite smallThis market is quite small Most times, “you” must register as a Most times, “you” must register as a

business before selling something to the business before selling something to the government, which would then become government, which would then become B2G e-commerceB2G e-commerce

G2B E-CommerceG2B E-Commerce

Government to Business (G2B) e-Government to Business (G2B) e-commercecommerce SBA providing surety guarantees, disaster SBA providing surety guarantees, disaster

assistance, etc to small businessesassistance, etc to small businesses TSA holding auctions and selling off TSA holding auctions and selling off

confiscated items (most times, you must be confiscated items (most times, you must be a “business” to participate in these auctions)a “business” to participate in these auctions)

U.S. Geological Survey (DOI) selling detailed U.S. Geological Survey (DOI) selling detailed survey data to businessessurvey data to businesses

G2C E-CommerceG2C E-Commerce

Government to Consumer (G2C) Government to Consumer (G2C) e-commercee-commerce Does not fit well at all within the Does not fit well at all within the

traditional supply-and-demand e-traditional supply-and-demand e-commerce notioncommerce notion

Paying taxes, registering vehicles, etcPaying taxes, registering vehicles, etc

G2G E-CommerceG2G E-Commerce

Government to Government Government to Government (G2G) e-commerce(G2G) e-commerce Mainly about information sharing, not Mainly about information sharing, not

commercecommerce

E-COMMERCE RULES TO E-COMMERCE RULES TO LIVE BYLIVE BY

1.1. Understand your business, Understand your business, products, services, and customersproducts, services, and customers

2.2. Find customers and establish Find customers and establish relationshipsrelationships

3.3. Move money easily and securelyMove money easily and securely

1. UNDERSTAND YOUR BUSINESS, 1. UNDERSTAND YOUR BUSINESS, PRODUCTS, SERVICES, & PRODUCTS, SERVICES, &

CUSTOMERSCUSTOMERS To be successful, you must…To be successful, you must…

Define your products and servicesDefine your products and services Define your target customersDefine your target customers

B2B (other businesses)B2B (other businesses) B2C (individuals)B2C (individuals)

Define your customers perception of the Define your customers perception of the value of your products and servicesvalue of your products and services

Who Are Your Customers?Who Are Your Customers?

Business to BusinessBusiness to Business Other businessesOther businesses

Business to ConsumerBusiness to Consumer IndividualsIndividuals

Each is different and has different Each is different and has different needs and wantsneeds and wants

B2C: Convenience Versus B2C: Convenience Versus SpecialtySpecialty

ConvenienceConvenience Lower pricedLower priced Purchased frequentlyPurchased frequently Example: common food itemsExample: common food items

SpecialtySpecialty Higher pricedHigher priced Purchased less frequentlyPurchased less frequently Example: Stereos, computersExample: Stereos, computers

B2C: Commoditylike and B2C: Commoditylike and DigitalDigital

CommoditylikeCommoditylike Same no matter where you purchase itSame no matter where you purchase it Examples: books, music, moviesExamples: books, music, movies Price and ease of ordering are importantPrice and ease of ordering are important

DigitalDigital Purchased and delivered over the InternetPurchased and delivered over the Internet Best product type for B2C e-commerceBest product type for B2C e-commerce Examples: Music, softwareExamples: Music, software

B2C: Mass CustomizationB2C: Mass Customization

Mass customizationMass customization – the ability of – the ability of an organization to give its customers an organization to give its customers the opportunity to tailor its products the opportunity to tailor its products or servicesor services Dell – customized computer purchasesDell – customized computer purchases Apple iTunes – only the music you want Apple iTunes – only the music you want

(not necessarily the whole album) (not necessarily the whole album)

B2B: MRO Versus DirectB2B: MRO Versus Direct

Maintenance, repair, and Maintenance, repair, and operations (MRO) materials operations (MRO) materials (indirect materials)(indirect materials) – materials – materials necessary for running a company but necessary for running a company but do not relate to the company’s primary do not relate to the company’s primary business activitiesbusiness activities Similar to convenience items in B2CSimilar to convenience items in B2C Office supplies, repair parts, lubricating oilsOffice supplies, repair parts, lubricating oils

B2B: Horizontal Versus B2B: Horizontal Versus VerticalVertical

B2B e-commerce takes advantage of e-B2B e-commerce takes advantage of e-marketplacesmarketplaces

Electronic marketplaceElectronic marketplace (e-(e-marketplace)marketplace) – interactive business – interactive business providing a central market where multiple providing a central market where multiple buyers and sellers can engage in e-buyers and sellers can engage in e-commercecommerce Horizontal e-marketplacesHorizontal e-marketplaces Vertical e-marketplacesVertical e-marketplaces

2. FIND CUSTOMERS AND 2. FIND CUSTOMERS AND ESTABLISH RELATIONSHIPSESTABLISH RELATIONSHIPS

You must first find customersYou must first find customers Then establish relationshipsThen establish relationships Otherwise, you can’t make a saleOtherwise, you can’t make a sale B2C and B2B techniques are very B2C and B2B techniques are very

differentdifferent

B2C Marketing Mix ToolsB2C Marketing Mix Tools

Registering with search enginesRegistering with search enginesOnline adsOnline adsViral marketingViral marketingAffiliate programsAffiliate programs

Registering with Search Registering with Search EnginesEngines

Some search engines will list your site Some search engines will list your site for freefor free

Others charge a feeOthers charge a fee For an additional fee, your site can For an additional fee, your site can

appear at top of a search list (every appear at top of a search list (every time)time)

Online AdsOnline Ads

Online ads (banner ads)Online ads (banner ads) – small – small advertisements that appear on other advertisements that appear on other sitessites

Two variations are:Two variations are: Pop-up adPop-up ad – small Web page – small Web page

advertisement that appears on your screen advertisement that appears on your screen outside the current Web siteoutside the current Web site

Pop-under adPop-under ad – pop-up ad you do not see – pop-up ad you do not see until you close your current browser until you close your current browser windowwindow

Viral MarketingViral Marketing

Viral marketingViral marketing

Blue Mountain Arts (Blue Mountain Arts (www.bluemountain.com))

Send a cardSend a card Card has link so the other person can Card has link so the other person can

send you a card backsend you a card back

Affiliate ProgramsAffiliate Programs

Affiliate programAffiliate program

If viewers buy at the second site, the If viewers buy at the second site, the second site pays a small fee to the first second site pays a small fee to the first sitesite

Usually a percentage of the saleUsually a percentage of the sale Click-throughClick-through Conversion rateConversion rate

B2B MarketingB2B Marketing Much more personalMuch more personal Not usually done with generic ads Not usually done with generic ads

designed for mass distributiondesigned for mass distribution Often take place in e-marketplacesOften take place in e-marketplaces Once a contact is made, the Once a contact is made, the

relationship must be established; this relationship must be established; this often requires face-to-face meetingsoften requires face-to-face meetings

Must also integrate the IT systems to Must also integrate the IT systems to the supplier business and customer the supplier business and customer businessbusiness

3. MOVE MONEY EASILY 3. MOVE MONEY EASILY AND SECURELYAND SECURELY

In e-commerce, most money In e-commerce, most money moves electronicallymoves electronically

Security becomes very importantSecurity becomes very important

B2C Payment SystemsB2C Payment Systems

Credit cardsCredit cards Financial cybermediariesFinancial cybermediaries Electronic checksElectronic checks Electronic Bill Presentment and Electronic Bill Presentment and

PaymentPayment Smart cardsSmart cards

B2B Payment SystemsB2B Payment Systems

Business customers…Business customers… Make large purchasesMake large purchases Will not pay with credit card or Will not pay with credit card or

financial cybermediaryfinancial cybermediary Use financial EDIUse financial EDI Pay for many purchases at once Pay for many purchases at once

(perhaps the end of the month)(perhaps the end of the month)

B2B Payment SystemsB2B Payment Systems

Electronic data interchange (EDI)Electronic data interchange (EDI)

Financial EDIFinancial EDI

Security: The Pervading Security: The Pervading ConcernConcern

Security is very important when Security is very important when moving moneymoving money

Some security measures…Some security measures… EncryptionEncryption Secure Sockets LayersSecure Sockets Layers Secure Electronic TransactionsSecure Electronic Transactions Many, many othersMany, many others

E-BUSINESS TRENDSE-BUSINESS TRENDS

““E” is certainly changing many thingsE” is certainly changing many things Many trends in every part of your lifeMany trends in every part of your life Three important onesThree important ones

1.1. YouthYouth

2.2. M-commerceM-commerce

3.3. The Long TailThe Long Tail

E-Business Trend - YouthE-Business Trend - Youth Screenager Screenager – person who spends a lot – person who spends a lot

of time in front of a screen – TV, iPod, of time in front of a screen – TV, iPod, computer, cell phonecomputer, cell phone

Digital native Digital native – personal ushered into – personal ushered into this world alongside the digital revolutionthis world alongside the digital revolution

Most young people are screenagers and Most young people are screenagers and digital nativesdigital natives

They readily embrace technology and They readily embrace technology and therefore are most suited to running a therefore are most suited to running a business in the “e” worldbusiness in the “e” world

E-Business Trend – M-E-Business Trend – M-CommerceCommerce

M-commerceM-commerce – e-commerce – e-commerce conducted over a wireless deviceconducted over a wireless device

Mobility is key for the next generation Mobility is key for the next generation of e-commerce that will rely onof e-commerce that will rely on1.1. Knowing where we areKnowing where we are

2.2. Our ability to do anything from anywhereOur ability to do anything from anywhere

E-Business Trend – Long TailE-Business Trend – Long Tail

Long Tail Long Tail – first offered by Chris – first offered by Chris Anderson; explains e-commerce Anderson; explains e-commerce profitability in terms of a sales curveprofitability in terms of a sales curve

Brick-and-mortar businesses carry Brick-and-mortar businesses carry limited inventory, inventory that is limited inventory, inventory that is popularpopular

E-businesses can carry huge amounts E-businesses can carry huge amounts of “niche” inventory that may only sell of “niche” inventory that may only sell a couple of times a yeara couple of times a year