Introduction to eManagementMGMT 230

WEEK 3: JANUARY 22Assessing the value of e-Commerce, information management systems

Internet marketing basics for emerging managers

Today’s Class● Understanding and assessing the value of eCommerce

○ Revenue Models of the eCommerce world

●● Overview of the channels available in an eCommerce world

○ Basics for Internet based marketing & communications

●● Bridging the gap between eCommerce and Information Systems for the

organization○ Establish discussion for future lectures

Let’s recap a few concepts from last week

Aspects of the eCommerce Model• Value proposition: How a company's product or service fulfills the needs of

customers. •• Revenue Model: Define how the company will generate profit. •• Market Opportunity: The revenue potential within a company's intended market

space.•• eCommerce sector (B2C, B2B, C2C)

Tech does not replace Good Marketing Practices

• Technology is no substitute for a good understanding of the basic principles of marketing.

• Basic marketing questions:– Who is the customer?– What does the customer need?– What does the customer want?– What message do you want the customer to remember?– How can information be presented to the customer effectively?

What We Need to Remember

● There are two key technology issues:○ Which technology to use?○ How to deal with the fast pace of technological change?

● Remember, we cannot devise an eCommerce strategy until we consider:●

○ What do you hope to achieve by utilizing eCommerce capabilities?○ What marketspace do you intend to serve and what is its size?○ Who is your target consumer and what characteristics define them?○ What type of content do they best engage with and how can you incorporate this into

your strategy? ■ Where do they get it (websites, social sites, blogs, etc.?)

What We Need to Remember

● eCommerce changes industry structure by changing: ○ Rapidly shifting competition ….. Disruption happens fast○ Barriers to entry ○ Threat of new substitute products ○ Strength of suppliers ○ Bargaining power of buyers○ Consumer feedback (and trust) is real time, visible and needs to be managed

Revenue Models of eCommerce

Revenue Models: 5 CommonHow will the firm earn revenue, generate profits, and produce a superior return on invested capital?

1. Advertising revenue model

a. Web site that offers content, services and/or products also provides a forum for

advertisements and receives fees from advertisers

i. Example: Google AdWords2. Subscription revenue model

a. Web site that offers users content or services charges a subscription fee for access to

some or all of its offerings

i. Example: Constant Contact Email Marketing

Revenue Models: 5 CommonHow will the firm earn revenue, generate profits, and produce a superior return on invested capital?

3. Transaction fee revenue model

a. Company that receives a fee for enabling or executing a transaction

i. Example: Many C2C companies… Uber, AirBnB, eBay, etc….4. Sales revenue model

a. Company derives revenue by selling goods, information, or services to customers

i. Example: Nike.com, etc…5. Affiliate revenue model

a. Sites that steer business to an “affiliate” receive a referral fee or percentage of the revenue

from any resulting sales

i. Example: Mypoints.com , ReferralCandy.com

eCommerceChannels

eCommerce Tools

How Do We Establish Our Channels/Tools?● Consideration 1: Scalability

○ Will the site perform efficiently through traffic peaks and valleys?

●

● Consideration 2: The Product Catalog

○ Will today’s catalog schema meet tomorrow’s demands?

●

● Consideration 3: User Control ○ Will my application directly empower my consumers, system users, etc?

●● Consideration 4: Search

○ How easily can customers find what they want, and how easily can I promote the products I want

to push based on customer searches?

How Do We Establish Our Channels/Tools?● Consideration 5: Agility

○ How easily can I implement business requests to monitor and respond to an individual Web

visitor behavior?

●● Consideration 8: Integration

○ How easily can the application integrate with my other systems?

●● Consideration 9: Interoperability

○ Does the application function within a service-oriented architecture?

●● Consideration 10: Synergy

○ Will the application support business models beyond the space I operate in?

eCommerce Funnel

Social Commerce● The use of social networks and social interaction (e.g. Facebook,

Twitter, Pinterest, etc) to encourage consumers to buy products and services online.

●● If a friend or someone you know is recommending you to buy a

product or service, you are more likely to buy it. Online reviews, consumer forums, etc. provide immediate feedback on quality, reliability for the consumer…. Part of many eCommerce strategies.

●● traditional approach: the brand controls the reviews not really

social, no trust vs. word-of-mouth, consumer feedback, instant and accessible

○ trust + social proof = $$$■ More to follow in week 3

Traditional goes Digital● Grocery Aisles and E-Commerce Collide With Whole

Foods-Amazon Deal○ Amazon leveraging one of their core strengths, shipping and

logistics○ $14B○ Amazon needs food and urban real estate for its grocery

ventures, similar to their acquisition or bookstores■ ironically working itself back into the brick-and-mortar

business that it’s also disrupting

● Not all just about end consumer sales,○ Wal-Mart Marketplace

■ Access entrepreneurs easily and efficiently to stay innovative with new products

eCommerce&

e Management

eCommerce to eManagement

eCommerce to eManagement

Recall from the Readings… ● The Cafe Grind

○ Busy NYC coffee shop, uses its POS system to track customer visits, how long it takes to serve each customer,

and which items are selling, saving the store five to 10 hours per week in managing logistics.

● Tin Pot Creamery

○ Used demographic analytics to prove that opening a store in the neighboring town of Los Altos would not

cannibalize sales in its current location

● Scooters Coffee

○ Loyalty program for online transactions similar to Starbucks

● LaFleur’s Seafood Restaurant

○ 1,800 rewards members in less than a year

■ “If your server doesn’t tell you about our rewards program, we’ll give you $10 off your meal.”

Next ClassWednesday Class

Wednesday’s lab will be used to commence the web planning project, you will be working individually to

start your assignments

Outcomes for Wednesday:

● Selection of your website organization

● Clarity, commencement of PART 1 of your project

Some terms to recall from our first 2 weeks on the next slides….

Important Concepts/ Terminology● Google Analytics – the industry standard for analytics, Google Analytics is a free tool you can link up with your

website, enabling you to track traffic through your site and their interactions with you funnels and goals. Google

Analytics provides invaluable insights about your website, which can be used as a basis for identify growth hacks.

● Multi-Channel Ecommerce – multi-channel ecommerce is the process of selling goods and services across multiple

different channels and devices, including online and on mobile.

● SEO – Search engine optimisation, the process of setting out your website and building links in a Google-friendly

way, to ensure your website is given the best possible ranking within relevant SERPs.

● Pay Per Click – a type of online advertising where you bid per click on highly targeted traffic, paying online for each

click through to your website, rather than paying for impressions or some other metric. Google Adwords is the most

well-known example of a PPC network.

● Usability/ UX – the ease and efficiency with which your customers can use and interact with your website, central to

the quality of their experience and your conversion rate. Usability now also extends to mobile and tablet devices, and

the experience your ecommerce store offers across these channels.

eCommerce Guide

Important Concepts/ Terminology● Conversion Rate Optimization (CRO): The process of improving the user experience of a website

with the goal of increasing the percentage of visitors that convert into customers.● Customer Segmentation: Targeting your most profitable customer and those with the highest

profit potential. These can include frequent shoppers, high average order values, few returns, customers that provide reviews, responsive customers (ie. respond to special offers and promotions).

● Cross Selling: Selling a related or complementary product to a customer to entice a larger order value.

● CTA – Call To Action, the heading or phrase on your page encouraging the visitor to take action and click your buy button. CTAs have a proven impact on conversion rates.

eCommerce Guide

Important Concepts/ Terminology

Some other great sites for terminology:

Demacmedia.com

Conversio.com

Please take a look and familiarize yourself, we will integrate these terms throughout the semester.