The Internet in Business- Corporations, Businesses, and Entrepreneurs

1. Chapter 9 The Internet in Business- Corporations, Businesses, and Entrepreneurs

2. E-Commerce • Electronic Commerce • Buying and selling over the Internet

3. E-CommerceRetail Sites • Retail becomes etail

4. Clothes Out-of-print biography Used car Bargain airline tickets Music CDs Videos Baby equipment Jewelry Sporting goods Office supplies Cosmetics Flowers Gifts Groceries E-CommerceRetail Sites What’s for Sale? EVERYTHING!

5. EtailAdvantage to Consumer • Any time • No need to dress and travel • Saves time • Provides simple means to comparison-shop • Anyplace • Contributes to competition

6. EtailSavings to retail business • No physical store building • People time

7. The Commerce Site • Lists and views of products and prices • Content • Product related • Updated regularly • Written to interest visitors in returning to site to purchase in the future

8. Commerce vs. Content Sites • Commerce adding content • Content adding products and sales information • Division is no longer clear

9. E-Commerce Acceptance • Opposition to e-Commerce by in-person sales representatives • Strategy to merge Etail and Retail • Web site prices may be higher • Commission to sales representative on each Internet transaction regardless of their involvement with its origin • Web site marketing followed by local store purchase

10. E-Commerce Acceptance • Successful web site may alienate others

11. Promoting a Web Site • Users must find their way to the site • Advertising needed • Traditional ads on web pages • Portals

12. Portals • Definition – entry point to the rest of the Internet • Presents content and links to variety of topics • Customize the content • User provides personal data • Portal provides related information and links • Can become your home page

13. PortalsEarning Money • Flat fee to be listed on portal based upon number of visitors to the site • Percentage of sale generated by a visitor who traveled to the affiliate via the portal

14. Yahoo! MSN Snap! Excite Netscape Go Network America Online PortalsWho Are They? Search engines that expanded their content and retail connections

15. Advertising • Pay a fee to the host site • Disadvantage of online Ads • Contain graphics and applets that load slowly • Ads load first

16. AdvertisingTypes of Online Ads • Banner ads • Clickable • Users reluctant to click through • Live banner • Displays sales pitch • User does not need to leave current site • Work slowly • Expensive to develop • Context-sensitive • Ad is related to subject matter on web page • Greater click through and conversion

17. Web-based Business • Simple to start-up of new businesses • Provides access to people and global markets • Minimum investment • Server link • Home page • Competition • Not a level playing field • Large advertising budgets of large companies “get the word out”

18. Web-based Business • Make business look large • Many products can be offered since no inventory • No physical space to reflect size

19. Payments • Finalize order by • Phone • Fax • Call with credit card number • Enter credit card number • Security • Communication between buyer and retailer is encrypted • Use SSL (Secure Sockets Layer) protocol and generate the message “our secure server”

20. Taxes • American Federal Law • Taxes due only on mail-orders within your state • Presence of etail is debatable

21. Taxes • Internet Tax Freedom Act – 1998 • Provisions • No tax on Internet access charges • No new tax on out-of-state businesses (insures that presence is not redefined) • Creates temporary commission to study Internet taxes • Demand that foreign governments keep Internet free of taxes and tariffs • Free of taxes for three years • Can impose same tax regulations as phone or mail order • Provisions extended through 2005

22. Content What you have to say and offer Cannot be static News about product, scores, contest, searches Uniqueness Not offered elsewhere Difficult to obtain Self-help Search for product Order product Check the status of an order Track a delivery Community Provide sense of community Sharing between visitors Prizes Success FactorsMaking a Profit Repeat business needed

23. B2CBusiness-to-Consumer • Activity between business and individual • User makes purchase based upon personal decisions • Growing • $38 billion in 1998 • Over $800 billion by 2005 • Global trend – more than ½ online sales will be outside US by 2004

24. B2BBusiness-to-Business • Activity of one business providing another with materials and supplies • Advantages to buyers • Reduced costs of procurement • Consider a larger number of suppliers • Problems • Security • Antitrust concerns • Growing • $92 billion in 1998 • $2 trillion in 2004

25. Internet SpeedTraffic • Not planned for current use • Victim of its own success • Original Internet • Low-speed • Text-based • Limited sites • Today’s Internet • Million of users • Downloading high-volume multimedia data • Causes slow transmission speed

26. Internet SpeedImpacts Business • Large companies use T1 and T3 lines and have servers capable of thousands of concurrent visitors • Smaller business connect via ISP or pay a company with high-speed connections to host their site

27. Internet SpeedSolutions • Increase bandwidth • Satellite • ISDN • DSL • Cable modem • Increase backbone capacity • Backbone – communication lines across geographical areas • Advances in technology • Investment in new facilities • Change Internet access fees

28. Streaming • Hear and see digitized content as it is downloaded • Audio • Video • Animation • Uses substantial bandwidth • Quality of content • Speed of connection • Internet traffic • Performance will improve as bandwidth improves • Content is displayed using Plug-ins

29. StreamingRealPlayer • Free download from RealNetworks • Broadcast.com • Live radio • Canned television shows

30. Sharing Files • Unicasting • Send multiple computers copies of files individually • Wastes bandwidth as you are sending the same file over and over

31. Sharing Files • Broadcast • Send one copy of the file to every computer on the network • Wasteful – some users do not need the file • Compromises security • Multicasting • Send one copy of the file and it is directed only to the appropriate recipients

32. Push TechnologyWebcasting • Software that send (pushes) information from the Internet to a user’s PC • Makes business active participants in providing information to users

33. Push TechnologyHow it Works • User provides consent by downloading and installing free push software • User selects channels to receive • User sets update schedule • Push software goes to the Internet on schedule and downloads updated information for the channels

34. Push TechnologyGood or Bad? • Time-saver for user; no browsing required • Uses precious bandwidth to send graphics and advertising

35. Intranets • Internal network • Private to a certain company • Easy and fast to setup • Inexpensive

36. IntranetSetting it Up • Same components as needed for Internet • Computers for access • Server • TCP/IP • Software including a browser

37. IntranetWeb Pages for Employee Use • Personnel data • Internal job posting • Corporate policy information • Available training courses • Cafeteria menu • Notices from management

38. Intranet, Internet, Extranet • Internet • Public • Intranet • Private • Can be linked to Internet • Extranet • Provide access to Intranet to selected customer and suppliers • Replacing EDI

39. VPNVirtual Private Networks • Use public Internet as a channel for private data communication • Use the Internet to access the company network rather than private lines • Sharing public lines • Lower cost

40. VPNBenefits • Lower operating costs • Simplifies communications • No 800 lines and long distance charges • Reduces in-house management responsibilities • Communication needs handled by ISP

41. VPNTechnology • Tunneling / encapsulation • Transfer of data between two similar networks over an intermediate network • Point-to-Point Tunneling Protocol (PPTP) – proposed protocol for tunneling • Encloses packet of one protocol (PPTP) inside packet using different protocol (TCP/IP) • Encryption • Packets are encrypted before encapsulation • Authentication software used

42. Consolidation of the Web • Consolidation brings efficiency and uniformity • Occurring quickly • Large scale • 1999 AOL purchased Netscape • Conglomerates “moving in” will control the majority of what we see

44. Objectives • Discuss the pervasiveness and inevitability of business on the Internet • Explain how money factors, especially advertising, affect the Web • Describe the likely success factors for Web entrepreneurs • Differentiate between business-to-Consumer and Business-to-Business sites • Explain the importance of Internet transmission speed for business sites • Differentiate between intranets, extranets and virtual private networks

45. Contents • E-Commerce • Promoting a Web Site • Web-based Business • Internet Speed • Streaming • Sharing Files • Push Technology / Webcasting • Intranets • VPN • Consolidation of the Web