DOING BUSINESSDOING BUSINESS

ON THEON THE

INTERNETINTERNET

April 18, 2023 QUME 185 2

Some Implications

• Removes the impact of geography• Consumer has more power: Competitors are

only a click away• First impressions count• Small companies can look large and serve

global markets, allowing for specialization• Consumers have very high expectations• Fast response needed to stay competitive

April 18, 2023 QUME 185 3

Management Challenges

Internet provides many opportunities, but also challenges, such as:

• Electronic commerce & electronic business require a new way of thinking

• Finding a successful Internet business model

April 18, 2023 QUME 185 4

Internet Business Models

• Three basic categories of e-commerce

– B 2 C – Business to consumer

– B 2 B – Business to Business

– P 2 P – Peer to Peer

April 18, 2023 QUME 185 5

Retailers

• Retailers who have no physical presence eg. Amazon.com, (now over 10 years!)

• Retailers who have both physical stores and on-line stores eg. VIU Bookstore (Sometimes called Bricks and Clicks)

• Bricks, clicks, and catalogue – traditional mail-order business, plus physical store, plus on-line store eg. Mountain Equipment Co-op, L.L. Bean

April 18, 2023 QUME 185 6

Implications for Retailers

• Supply, inventory and delivery of physical goods.

• Technical capability of delivering digital products: – software titles– downloadable media

April 18, 2023 QUME 185 7

On-line auctions

• On-line auctions eg. E-Bay

• Revenue comes mainly from commissions

• Makes it easy for anyone to participate in on-line commercial activity

April 18, 2023 QUME 185 8

Information / Entertainment Providers

• Magazines eg. Slate and Salon

• Newspapers eg. New York Times

• Sports sites eg. ESPN

– Make money from a combination of advertising, subscriptions for premium content, affiliations with other sites

– Trend toward getting people to pay for content directly

April 18, 2023 QUME 185 9

Portals

• Portals eg. Yahoo

• Rely on advertising for main revenue stream

April 18, 2023 QUME 185 10

Technology Affects the Business

• Internet technology allows organizations to communicate directly with their constituents

• Removes layers between the organization and its partners (e.g. suppliers)

• Reduces transaction costs in many ways

April 18, 2023 QUME 185 11

New Strategies

• Viral Videos on YouTube– Ikea– i-Tunes: Affects the entire music distribution

industry; a disruptive innovation– Second Life: Many organizations have a

presence there

April 18, 2023 QUME 185 12

end

April 18, 2023 QUME 185 13

More Business Models

• Virtual Storefront

• Marketplace Concentrator

• Online Exchange

• Information Broker

• Transaction Broker

• Auction

• Reverse Auction

• Aggregator• Digital Product Delivery• Content provider• On-line service

provider• Virtual Community• Portal• Syndicator

Some additional examples:

April 18, 2023 QUME 185 14

Internet Business Models: Selling

• Virtual Storefront– Sells goods and /or

services online– www.chaptersindigo.

ca• Marketplace

Concentrator– Concentrates

information and/or products from several providers

– www.canadashop.com

• Online Exchange– Bid-ask system, multiple

buyers and sellers– www.U-Swap.com

• Aggregator– groups come together to

gain volume discounts– www.accompany.com

April 18, 2023 QUME 185 15

Internet Business Models: Auctions

• Auction– Dynamic pricing– www.eBay.com

• Reverse Auction– Consumers submit a bid to

multiple sellers– www.priceline.com

April 18, 2023 QUME 185 16

Business Models: Online Delivery, Products & Services

• Digital Product Delivery– Sell and deliver

software, multimedia, etc.

– www.Compusmart.com

• Content provider– creates revenue

through providing content for a fee, and through advertising

– www.yahoo.com

• On-line service provider – provides service

& support for hardware, software products

– www.PCSupport.com

April 18, 2023 QUME 185 17

Internet Business Models: Brokers & Syndicators

• Information Broker– Provides information

about products– www.travelocity.com

• Transaction Broker– Buyers view rates and

terms & completes transaction

– www.TDWaterhouse.com

• Syndicator– Aggregate

information or applications from several sources, sell to other companies

– www.Sportsline.com

April 18, 2023 QUME 185 18

Internet Business Models: Web Entries & Communities

• Virtual community– Provides an online meeting place for

people with common interests– www.kidshelp.sympatico.ca

• Portal– Initial point of entry to Web,

specialized content, services– www.yahoo.com

April 18, 2023 QUME 185 19

Electronic Commerce

Business to Business

B2B

C2C

Consumer to consumer

Business to consumer

B2C

April 18, 2023 QUME 185 20

Intranets

• Using Internet technology to support internal organizational needs– E-mail– Document sharing– Online repositories of information– Remote access to resources– Group collaboration

April 18, 2023 QUME 185 21

Intranets: Organizational Benefits

• Cross platform availability• Can be tied to internal & transaction

processing systems• Interactive applications with text,

audio, video• Scalable as required• Easy to use Web interface• Low start-up costs• Improved information sharing• Reduced cost of distributing

information

April 18, 2023 QUME 185 22

Challenges & Opportunities

• Unproven business models

• Business processes require change– channel conflicts

• Legal Issues

• Security and Privacy

April 18, 2023 QUME 185 23

E-commerce in Canada

• There is a higher percentage of Canadians than Americans using the Internet

• But . . . Canadian businesses are underrepresented on the Internet– Only 6 percent of Canadian businesses

selling online in 2000, down from 10% in 1999

– In 2000, e-commerce sales accounted for 0.4 % of revenues, up from 0.2% in 1999

– Canadians purchase from US companies

April 18, 2023 QUME 185 24

Internet Technology affects Relationships

Information flows seamlessly • Throughout the organization• With trading partners, suppliers &

distributors• To and from customers

April 18, 2023 QUME 185 25

Barriers to e-commerce in Canada

• High percentage of SMEs in Canada– May not have adequate resources to

develop e-commerce strategy & solution• Shortage of skilled IT workers• Lack of sense of urgency• Traditional investment decisions based on

ROI, which may not be appropriate • Conservative investor culture• Tax structure