Workshop in Electronic Commerce

1. Workshop in Electronic Commerce Presented by: Dr. Kelly Burke – UH Hilo School of Business Dr. Eric Jeschke – UH Hilo Computer Science Department Funded by: Department of Business, Economic Development, and Tourism University of Hawaii Hilo School of Business

2. Workshop in Electronic Commerce Objectives The WWW Payment Business Problem Planning Marketing EC Models Getting Started Infrastructure EC Levels Site Design Site Performance Security Wrap Up Facts and Forces

3. Workshop Objectives • You are planning to establish an eBusiness in the future • Whether you intend to: • Plan and develop the site yourself • Have an employee plan and develop the site • Plan the site and have an ISP/Host develop it • Have an ISP/Host plan and develop the site • You need to understand • what Electronic Commerce is, • how it works, • how to plan and manage it.

4. Workshop Objectives • What is EC? • What forms can EC take? • How can EC help? • How do I get started? • How do I build a simple web page? • What is involved in building a full web site?

5. Workshop Objectives • What are my options for doing E-Commerce? • What software and hardware do I need? • What makes a good web site? • How do I market my site? • What concerns should I have for security? • How can I settle transaction payment? • What future issues should I be aware of?

6. Defining Electronic Commerce Use of electronic communications facilities to conduct any part of a business (internal or external) transaction.

7. Business Problem • The world is attracted to the possibility of doing EC • Media frenzy (business publications) • Appears easy (seems like every one has a computer) • Appears glamorous (look at the tech IPOs) • Everyone is doing it / we can’t afford to miss out!! • Opportunity is SEDUCTIVE

8. Business Problem • Gartner group advises online companies to beware • Within 2 years, 95 % of online dot.coms will fail • e.g., boo.com • e-Toys layoffs • Misuse or misreading of opportunity can be costly • e.g., Nor-Cal EMS experience – long term “ill will” • Lesson: opportunity without understanding and prioritization of objectives = problem • Implementation and Integration with business processes ARE King • e.g., Northwest and United Airlines fare wars

9. Models and Applications for E-Commerce

10. Models of Electronic Commerce • Inter-organizational (B2B) • EDI, supply-chain interaction, etc. • Intra-organizational (B2E or BinB) • E-portals, Lotus notes, etc. • Business-to-consumer (B2C) • Direct marketing, e-malls, etc.

11. Models of Electronic Commerce • Consumer-to-consumer, peer-to-peer (C2C, P2P) • Auctions, electronic flea markets, etc. • E-marketplaces • Exchanges • Non-business • On-line communities (Geocities), news groups

12. Taxonomy of Applied Business Models • Brokerage (http://globalsources.com/) • Advertising (http://www.altavista.com/) • Infomediary (http://www.job-search-engine.com/) • Merchant (http://www.etoys.com/) • Manufacturer (http://www.hp.com/) • Affiliate (http://s1.amazon.com/) • Community (http://geocities.yahoo.com/) • Subscription (http://prodigy.com/) • Utility (http://prodigy.com/)

13. E-Business Initiatives • E-Commerce— selling more goods via the Web • E-care for customers— providing all kinds of customer support on-line • E-care for business partners— dedicated services providing faster, better information for these important groups • E-care for employees— improving their effectiveness by making the right information and services available to them

14. E-Business Initiatives • E-procurement— working closely with customers and suppliers to improve the tendering process and to better administer the huge number of transactions involved • E-marketing communications— using the Internet to better communicate marketing stance

15. Electronic Commerce:Planning Framework • Management • Strategy, planning, resources, monitoring • Infrastructure • Business services, information transfer, content, networks, interfaces • Environmental constituents • People, policies, technical standards, stakeholder organizations • Business applications • Catalogs, banking, procurement, auctions

16. Planning Your EC Path:Levels* of E-Commerce Development • Minimal online presence • On-line catalog • On-line transactions • Automated value chain • Market site • Super market site *Adapted from www.dotcomadvisor.com – 2000

17. Level I E-Commerce Development: Minimal • Motivation • General pressure to “get on the net” • Promote business entity • Information • Financial • HR • Technology issues • Simple, • In-sourced *Adapted from www.dotcomadvisor.com – 2000

18. Human Resources Purchasing - Production - Sales Finance Level I E-Commerce Development: Minimal *Adapted from www.dotcomadvisor.com – 2000

19. Level II E-Commerce Development: On-line Catalog • Motivation • Pressure from customers and competitors • Information • Product • Service • Technology issues • Searching, maintenance (e.g., changing product information) • Customer personalization • On-line activity tracking *Adapted from www.dotcomadvisor.com – 2000

20. Human Resources Purchasing - Production - Sales Marketing Finance Level II E-Commerce Development: On-line Catalog *Adapted from www.dotcomadvisor.com – 2000

21. Level III E-Commerce Development: On-line Transactions • Motivation • Exploit Internet as new channel of distribution • Information • Catalog / order • Technology issues • Interactivity • Integration of core businesses functions (e.g., sales and accounting) • Business issues • Order fulfillment capacity • Building site traffic *Adapted from www.dotcomadvisor.com – 2000

22. Human Resources Purchasing Production Sales Marketing Finance Level III E-Commerce Development: On-line Transactions *Adapted from www.dotcomadvisor.com – 2000

23. Level IV E-Commerce Development: Automated Value Chain • Motivation • Customers and suppliers “want” more info • Reduce cycle times and costs • Information • Manufacturing, purchasing, shipping • Technology issues • Systems integration • Outsourcing • Business issues • Sharing operational information with external entities *Adapted from www.dotcomadvisor.com – 2000

24. Human Resources Purchasing Production Sales Marketing Finance Level IV E-Commerce Development: Automated Value Chain *Adapted from www.dotcomadvisor.com – 2000

25. Level V E-Commerce Development: Market Site • Motivation • Product comparisons, e.g., http://www.amazon.com • Information • Competitor’s products/services • Third-party product/service comparisons • Technology issues • Handling traffic loads • Monitoring/mining traffic • Business issues • Corporate identity • Objectivity of product comparisons *Adapted from www.dotcomadvisor.com – 2000

26. Human Resources Purchasing Production Sales Reverse Marketing Marketing Finance Level V E-Commerce Development: Market Site Competitors

27. Level VI E-Commerce Development: Super Market Site • Motivation • Become the “preferred” one-stop shop (i.e., marketplace), e.g., http://www.sabre.com/ • Information • Complimentary products/services • Technology issues • Integrating associates systems/information • Business issues • Managing customer AND supplier suggestions and requirements *Adapted from www.dotcomadvisor.com – 2000

28. Complimentors Human Resources Purchasing Production Sales Reverse Marketing Marketing Finance Competitors Level VI E-Commerce Development: Super Market Site

29. Facts and Forcesin E-Commerce

30. Benefits of E-Commerce • Increase sales • Distributed market exposure • Target narrow segments • Create virtual communities which become targets • Reduce costs • Sales inquiries • Price quotes • Product availability • Enhance product value • Benefits work both ways – selling or buying

31. Disadvantages of E-Commerce • High ticket and perishables don’t work • Costs / benefits can be hard to quantify • Difficult to integrate with existing databases • Fast pace of technology change • Potential legal issues

32. Big Business Survey Results • Have a systematic, strategic approach to internet-based initiatives with top-level executive involvement (69% ) • Have full time units dedicated to e-business development (47%) • Extent of e-business functionality isn’t beyond basic “brochure ware” (25%)

33. Big Business Survey Results • E-business accounts for less than 5% of revenues (79%) • Able to process payments online (25%) • Creation of a convenient buying experience for customers on the Web is “extremely important” (80%)

34. On-line Transaction Completion

35. Reasons for Abandoning On-line Purchases

36. Other Common Site Problems • Navigation problem • Finding information • cdw.com • Site too slow

37. Forces Driving Online C2C Shopping • Convenience (75%) • Cost (38%) • Context – opportunity to buy at right time and right place (e.g., from work when I am thinking about that book)

38. The Typical Online Customer • Age: 30-49 • Gender: Male • Family status: Married with children • Household annual income: $60,000 • Amount spent online per year: $460 Source: Harris Interactive, Nielson Netratings

39. The Typical Online Customer • Completed online transactions:10 • Online sessions per week: 6 • Unique sites visited per week: 6 • Average surfing session: 31 minutes • Time per site per week: 32 minutes • Time online per week: 3 hours, 8 minutes Source: Harris Interactive, Nielson Netratings

40. The WWW and How it Works for E-Commerce

41. The “Big Picture” In EC • WWW architecture • How the web works • Internet protocol • URLs / domain names • Internet communication

42. Client (Browser) Web Server Static Pages Pages Commerce Server Pages Pages Dynamic Product Database Shopping Cart Secure Transaction Server

43. How the Web Works: Uniform Resource Locators • Browsers differ in the way they are programmed • But if WWW is to be useful to many – we need standard way to identify a resource • Example: • http://www.hawaii.edu:2074/~kburke/494/ch_3.ppt • URLs specify: • protocol (e.g. http) • host name (e.g., www.hawaii.edu) • connection port on host (e.g. 2074) • path on host to resource (494/ch_3.ppt)

44. How the Web Works: The Internet Protocol • TCP / IP protocol for communicating • IP addressing • Network Information Center allocates blocks • Class Address Network part Host part A 18.155.32.5 18 155.32.5 B 128.171.12.237 128.171 12.237 C 192.66.12.56 192.66.12 56

45. How the Web Works:Domain Names • IP addresses are unfriendly • Assign a human readable name to IP addresses • Placed in a distributed, hierarchical, lookup system (DNS) • Domains and Hosts - pahuleka.uhh.hawaii.edu Host || Domain || • Host_name Org_name_1 Org_name_2 Org_type pahuleka uhh hawaii edu

46. HTTP TCP IP HTTP TCP IP Message (example: Page) Packet 3 Packet 2 Packet 1 Packet Packet Packet How the Web Works:Protocols and Infrastructure • Messages versus Packets • i.e., connection vs. connectionless

47. Client (Browser) Web Server Static Pages Pages Commerce Server (Storefront) Pages Pages Dynamic Product Database Shopping Cart Secure Transaction Server Back to Hosting

48. Planning forE-Commerce

49. Planning Your EC Path • Identify your organizational objectives • Want to increase effectiveness of salesperson’s time • Identify ways EC can help achieve the objectives • Permit customers to order online / salesperson can spend time showing new products • Determine what resources are required • Need: website, database, computer to process orders, trained user to process orders • Sample planning checklist

50. Planning Your EC Path • Plan the implementation • Select implementation strategies - e.g., http://strategis.ic.gc.ca/SSG/ir01580e.html#implementation • Outsource web site creation / maintenance, plan content, train users • Determine how you will monitor EC results / performance • Require periodic site reports from ISP, measure increase in new product sales