Chapter 1 Introduction to EBusiness ECommerce Reference Book

Chapter 1 Introduction to E-Business & ECommerce Reference Book By: Dave Chaffey

Impact of electronic communications on traditional businesses Innovation in e-business is relentless, with the continuous introduction of new technologies, new business models and new communication approaches. What is a business model? § A business model is the way in which a company generates revenue and makes a profit from company operations. Managers use the metric gross profit as a way to compare the efficiency and effectiveness of a firm's business model. § As an example, assume a company rents movies. Prior to the internet, the company made $5 million in revenues and the total cost of inventory sold was $4 million. Gross profit is calculated as $5 million minus $4 million, or $1 million.

Impact of electronic communications on traditional businesses • After the advent of the internet, the company decides to offer movies online instead of renting or selling a physical copy. This change disrupts the business model in a positive way. The licensing fees do not change, but the cost of holding inventory is down considerably. In fact, the change reduces storage and distribution costs by $2 million. The new gross profit for the company is $5 million minus $2 million, or $3 million. • The company isn't making more in sales, but it figured out a way to revolutionize its business model, which greatly reduces costs. v All organization must review new electronic and internet-based communications for their potentials to make business more competitive and also managing risks such as security and performance.

Impact of electronic communications on traditional businesses What are the communications? • latest electronic and internet-based Social networks, blogs, virtual worlds (virtual tours on Ashland University), rich media (https: //www. youtube. com/watch? v=_4 BWGwy. JRLw), mobile commerce (cell phone and laptops), location-based tracking of goods and inventory as they are manufactured and transported. The pace of change and opportunities for new communication approaches make e-business an exciting area of business to be involved in. For example: E-commerce using Facebook e. g. Walton. BD. A large proportion of internet users are spending time on social network. It compels the firms to think on the approach to determine the ways to engage users of social networks and communities with brands and monitor and respond to their comments. Please go to the link to get the list on top social networks: http: //www. ebizmba. com/articles/social-networkingwebsites

E-commerce & E-business: The difference E-commerce involves much more than electronically mediated financial transactions between organizations and customers. • E-commerce should be considered as all electronically mediated transactions between an organization and any third party it deals with. The transactions include financial and non-financial transactions. • The definition implies that the e-commerce does not only include buying and selling products, but also includes pre-sale and post-sale activities. Buy-side and sell-side e-commerce • When an organization wants to implement e-commerce, it must go through designing “Buy-side and sell-side e-commerce”.

E-commerce & E-business: The difference

E-commerce & E-business: The difference Buy-side e-commerce: • Buy side e- commerce refers to transactions to procure resources needed by an organization from its suppliers. • They basically indicate using communications technology to support the upstream supply chain from procurement to inbound logistics. • They are e-commerce transactions between a purchasing organization and its suppliers, possibly through intermediaries.

E-commerce & E-business: The difference • Example: E-business application developed by Shell Chemicals is an excellent example for buy side e-commerce. Prior to the development of this application, there was a danger (an opportunity!!) that Shell’s customers might run out of an essential chemical and eventually revenues would be lost. Hence, this application helped them to manage their customer’s inventory based on data shared by its customers about their usage and forecast demand for chemicals. Advantages of using this application include: • Quick availability of product when required • Reduces the need for excess inventory storage. • Transaction costs like invoices and data entry is reduced. • Order processing overhead is reduced.

E-commerce & E-business: The difference Sell-side e-commerce: • Sell side e-commerce refers to transactions involved with selling products to an organizations customer. • They do not only involve selling products such as books and CD’s online, but also involves using internet technologies to market products/services using a range of techniques. • It is useful to consider the four main types of online presence for sell side e-commerce which are as follows: üTransactional e-commerce sites: These enable purchase of product online. The main business contribution of the site is through sale of these products. üServices-oriented relationship-building websites: Provide information to stimulate and build relationship. Products are not available for purchase online. Information is provided through website and e-newsletters to inform purchase decisions. The main business contribution is through encouraging offline sales and generating enquiries or leads from potential customers.

E-commerce & E-business: The difference Sell-side e-commerce: ü Brand-building sites: Provide an experience to support the brand. Products are not typically available for online purchase. Their main focus is to support the brand by developing an online experience of the brand. They are typical for low-value, high-volume FMCG brands for customers. ü Portal or Media sites: Provide information or news about a range of topics. Portal refers to gateway of information. This is information both on the site and through links to other sites. For example: Social networks. • Example: Example of sell side e-commerce include Retail sites (like Amazon), online banking services (like HSBC), Portals (like Yahoo) etc.

E-commerce & E-business: The difference E-business involves the use of internet technologies to operate the key business processes. As implied by the definition, activities of e-commerce are the part of e-business.

E-commerce & E-business: Internet technologies & services Many e-business applications that access sensitive company information require access to be limited to qualified individuals or partners. Intranet: If information is only accessible to employees inside an organization, this is an intranet. It is a private network within a company using internet standards to enable employees to access and share information. Benefits of intranet: Workforce productivity: Intranets can help users to locate and view information faster and use applications relevant to their roles and responsibilities. With the help of a web browser interface, users can access data held in any database the organization wants to make available, anytime, from anywhere within the company workstations, increasing the employees ability to perform their jobs faster, more accurately, and with confidence that they have the right information. It also helps to improve the services provided to the users. Increased accuracy of information Reduced cost of printing information

E-commerce & E-business: Internet technologies & services Extranet: A service provided through internet and web technology delivered by extending an intranet beyond a company to customers, suppliers, and collaborators. Advantages: Exchange large volumes of data using Electronic Data Interchange (EDI) Share product catalogs exclusively with trade partners Collaborate with other companies on joint development efforts Provide or access services provided by one company to a group of other companies, such as an online banking application managed by one company on behalf of affiliated banks

E-commerce & E-business: Internet technologies & services Digital marketing: Also called e-marketing or internet marketing, and it is a related field to e-commerce. It refers to the marketing using electronic media such as the web, email, SMS etc. Access platforms that are used by e-marketers include PCs, cell phones, radio, tablets, interactive TV (t-commerce) Advertising content delivery through access platforms are enabled by different online communication tools or media channels. Some of them are: websites, e-mail, SMS, search engine etc.

E-commerce & E-business: Internet technologies & services The latest communication tools are as follow: RSS feed: In today’s online world of rapidly growing ecommerce websites, many business owners have implemented RSS, short for Really Simple Syndication, formats to publish frequently updated content. It is generally used to promote blog entries, audio, articles, press releases, and video. RSS feeds include full or summarized descriptions about the contents the users are interested. The RSS feeder checks the user's subscribed feeds on a regular basis by downloading any updates it finds. This relays the new information to the user, which may prompt them to visit the target website. Podcast: Individuals or organizations post online media (audio and video) which can be viewed in the appropriate players. The latest podcast updated can be delivered by the RSS feeder Social network

E-commerce & E-business: Internet technologies & services Types of digital media channels Search engine marketing: Placing messages on a search engine to encourage clickthrough to a website when the user types a specific keyword phrase. Online PR: Maximizing interactions with a company’s products or websites using third-party site such as social networks or blogs that are likely to be visited by your targeted audience. Interactive advertising: Use of rich media ads to achieve brand awareness and encourage clickthrough to a target site. Opt-in e-mail marketing Social media marketing: It is the use of social media platforms and websites to promote a product or service. Most of these social media platforms have their own built-in data analytics tools, which enable companies to track the progress, success, and engagement of ad campaigns. Companies address a range stakeholders through social media marketing including current and potential customers, current and potential employees

E-commerce transactions: Business or consumer models Business-to-consumer (B 2 C): Amazon. com Business-to-business (B 2 B): Alibaba. com Consumer-to-consumer (C 2 C): Bikroy. com Consumer-to-business (C 2 B): Consumer-to-business (C 2 B) is a business model in which consumers (individuals) create value and businesses consume that value. For example, when a consumer writes reviews or when a consumer gives a useful idea for new product development then that consumer is creating value for the business if the business adopts the input.

Drivers of internet adoption by business The two main ways in which the benefits of e-business can be achieved are: Potential for increased revenue by reaching more customer base Opportunities to reduce operational costs in forms of reduced staff cost, inventory cost etc. These are supported by two drivers as follow: Cost/efficiency drivers: Increasing speed with which supplies can be obtained and goods can be shipped Reduced purchasing and sales costs Reduced operating costs Competitiveness drivers Customer demands Improving the range of products and services Avoiding loosing market share to the competitors