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This handout explores the impact of e-commerce on businesses, focusing on better access to customers, cost reductions, and delivering new products. It delves into the benefits for traditional businesses, unique features, changing competition, creeping costs, and the commerce value chain.
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CS453: The Business ofE-Commerce Readings: Handout
Why E-Commerce? • Using the Internet is a given now • Let’s reflect (back perhaps) on what it offers companies • Better access to customers • Cost reductions for services provided • Opportunity to deliver new products or services that would be impossible without the network
Better Access to Customers • Reasons? • Quantity, frequency, quality • Explain! Examples! • Quantity, Frequency • More people can visit a site than a store • Global presence • Anytime access
Better Access to Customers (2) • Quality • Learn preferences, target advertising • Email news and information • Offer discounts, etc. • Customer service • Two-way communication
Benefits for a Traditional Business View • Global presence not as hard • Mass distribution now easier, cheaper • Maybe: costs shifted? Scalability? • Others pay part of costs (NWs, access) • Up to date info and products • Searchable
Another List: 8 Unique Features • Ubiquity • Global Reach • Universal Standards • Richness • Interactivity • Information Density • Personalization / Customization • Social Technology
Has the Net Changed the Business World? • Of course, in many ways • Consider concentration vs. empowerment • Think of Walmart vs. the local small-town general store • What are some issues here?
Concentration vs. Empowerment • Big store • Many customer benefits • Takes over • How can a small store survive? • Meet some need Walmart can’t • Niche market, specialization • Discuss: examples in E-commerce?
Concentration vs. Empowerment • Business on the Internet supports both • Businesses supporting niche markets can succeed better than without the net • Of course large companies are successful too
Changes in Competition between Businesses • Traditional roles and distributions are short-circuited • Consider what banks did 20 years ago • No other options • New combinations of loans, investing, money management, getting financial info • Banks, investment houses, insurance companies, new startups,…
Creeping Costs • SW Engineering has taught us things about system life-cycles and costs over time • How do you think these might apply to companies that begin to provide services on the Web? • Discuss!
SW Engin. Lessons? • Maintenance costs over time • Success hurts • New features needed • Environment changes • Systems degrade over time • Usability matters • Scalability
Topics in this Slideset • A “commerce value chain” • From Chap. 2 Treese and Stewart textbook • Identifying customers • Marketing to customers • International issues • Legal issues
1. What’s the Commerce Value Chain? • Generally: • Value added during the process of creating and delivering a product or service • Commonly used to describe manufacturing of things • Consider Value-Added Tax (VAT) based systems
Treese and Stewart’s View • Certainly a commerce-value chain (CVC here) for underlying business’ products • Also one directly tied to e-commerce • Focused on customers
Value Chains (in general) • Way of organizing activities a business unit does to design, …, support products or services • (See p. 26ff in handout) • At each stage, how can things be improved? • And can the internet help?
Chain for Internet Systems • Four parts: Attract; Interact; Act; React • Attract • Get and keep customer interest • Activities: advertising, marketing • Interact • Turn interest into orders • Content/product driven: web pages, info, query results, etc. • Activities:
Chain for Internet Systems (2) • Act • Process and manage orders • Activities: • Order processing -- shopping carts, taxation, shipping charges) • Payment processing -- account, credit cards, third-party financial companies, etc. • Fulfillment -- deliver hard goods, packing, shipping; carry out e-service; deliver digital goods (file, software, license)
Chain for Internet Systems (3) • React • Service customers, order tracking, returns, warranties, rebates, help services
Another View • Of course it’s not linear • Not necessarily even sequential now Attract Interact React Act
Comments on This • Relatively simple ideas here • Reasonable as a framework for partitioning the domain of e-commerce topics, components • At different points in this chain • Businesses can fail or succeed • Businesses can focus • Differentiation • Can you think of an example?
2. Defining the Customer • With the web, anyone can be • That’s good news and bad news • General public vs. specialized companies or employees within companies • E.g. a Motorola engineer looking for ICs for a new cell-phone design • How that person’s need different than you or me buying a book or song?
Is it Important to Design for Customer Types? • Many e-commerce sites assume one kind of customer • Examples where a mismatch is a problem? • Examples of sites that don’t? • Things to consider • Home consumer vs. corporate • Novice vs. expert • Age
3. Marketing on the Internet • Why does this matter more now than, say, in 2000? • Your ideas:
Why is Marketing Different on the Internet? • Can reach many more people anywhere • More competition • Identity more easy to conceal • Who are you? Big company or not? Scam artist or market leader? • New media and multi-media the norm • Harder or not clear how to get placement, presence or attention • No longer just ads in print, TV or radio • Search, ad auctions, email, blogs, YouTube,…
What’s the Same? • Customer identity, needs, wants • Clear messages • Effective presentation • Tracking and measuring success
Internet Customer Demographics • Remember when mom and dad didn’t surf the web? :-) • Students, university types, technologists,… • One interface, many demographics • E.g. kids and adults use search engines • Should they really be finding the same things • Note how in the non-internet world there are different marketing channels
Strategies • One-to-one marketing • Email • Profiles on sites like Google (“customers like you were also interested in…” • Mass marketing (dead or not?) • Convergence • With other media sources • Targeted ads • On sites, in applications, with query results
Search and Marketing • Originally, search didn’t include marketing • “Gaming the system” became the norm • Search sites tied ads in with user searches • Ad auctions • Specialized search • Sites by price • Sites like Priceline • Sites like Travelocity (car or hotel with that flight?)
4. International Issues • Global customers, content • Making sites work for international customers • Language; monetary conversions; taxes; shipping; customs and other laws • Customs, norms, conventions • Products for international customers • Software: internationalization • Services: sites, games, … • Privacy • Laws governing info privacy etc. • E.g. Google and Yahoo in China
5. Legal Issues • Privacy • Policies • Practical security for customer info and company info • Authorization, digital signatures, etc. • Government regulation • Privacy • Export rules (e.g. cryptography)
Summary • Internet Commerce: a brave new world? • Some things aren’t so different? • Quickly face global and legal issues that in the past only large companies dealt with • Commerce Value Chain • A guide to organizing a business plan or a system? • A framework for talking about business’ efforts • Next: Business strategies