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Ch2

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									    University of Palestine



            E-Business
            ITBS 3202

     Miss Rasha R. Atallah

      2nd Semester 2009-2010
1
       Chapter 2 – part1
    E-commerce fundamentals




2
    Learning objectives
     Evaluate changes in business relationships between
      organizations and their customers enabled by e-commerce
     Identify the main business and marketplace models for
      electronic trading
     Describe different revenue models and transaction
      mechanisms available through hosting an e-commerce site.




3
    Issues for managers
     What are the implications of changes in marketplace
      structures for how we trade with customers and other
      partners?
     Which business models and revenue models should we
      consider to exploit the Internet?
     What will be the importance of online marketplace hubs or
      exchanges to our business?




4
    The e-business environment




Figure 2.1 The environment in which e-business services are provided
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    Environment constraints and opportunities

 Micro-environment
 Customers – which services are they offering via their web site that your organization could
  support them in?
 Competitors – need to be benchmarked in order to review the online services they are offering
  – do they have a competitive advantage?
 Intermediaries – are new or existing intermediaries offering products or services from your
  competitors while you are not represented?
 Suppliers – are suppliers offering different methods of procurement to competitors that give
  them a competitive advantage?

 Macro-environment (SLIPT)
 Society – what is the ethical and moral consensus on holding personal information?
 Country specific, international legal – what are the local and global legal constraints for
  example on holding personal information, or taxation rules on sale of goods?
 Country specific, international economic – what are the economic constraints of operating
  within a country or global constraints?
 Technology – what new technologies are emerging by which to deliver online services such as
  interactive digital TV and mobile phone-based access?


6
 B2B and B2C models




Figure 2.2 B2B and B2C interactions between an organization, its suppliers and
its
7 customers
                Transaction alternatives between
                   businesses and consumers




 8
Figure 2.3 Summary of transaction alternatives between businesses and consumers
    B2B and B2C characteristics

    Characteristic                   B2C                                  B2B
    Proportion of adopters with      Low to medium                        High to very high
    access

    Complexity of buying decisions   Relatively simple – individual       More complex – buying process
                                     and influencers                      involves users, specifiers, buyers,
                                                                          etc.

    Channel                          Relatively simple – direct or from   More complex, direct or via
                                     retailer                             wholesaler, agent or distributor


    Purchasing characteristics       Low value, high volume or high       Similar volume/value. May be
                                     value, low volume. May be high       high involvement. Repeat orders
                                     involvement                          (rebuys) more common



    Product characteristic           Often standardized items             Standardized items or bespoke
                                                                          for sale

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     Disintermediation




Figure 2.4 Disintermediation of a consumer distribution channel showing
(a) the original situation, (b) disintermediation omitting the wholesaler, and
(c) disintermediation omitting both wholesaler and retailer
10
 Reintermediation




 Figure 2.7 Reintermediation process: (a) original situation, (b) reintermediation
 contacts
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     Countermediation
       Creation of a new intermediary
       Example:
          B&Q www.diy.com
          Opodo www.opodo.com
          Boots www.wellbeing.com www.handbag.com
          Ford, DaimlerChrysler (www.covisint.com)
       Partnering with existing intermediary – Mortgage broker
        Charcol and Freeserve




12
                       Meta services

                      Search engines
     Portal
                        Directories
     ‘A gateway to
     information     News aggregators
     resources and
                     MR aggregators
     services’
                        Comparers

                        Exchanges
13
 Types of portal
     Type of portal                         Characteristics                      Example

     Access portal                          Associated with ISP                  Freeserve (www.freeserve.net)


     Horizontal or functional portal        Range of services: search engines,   Yahoo! (www.yahoo.com) Excite
                                            directories, news recruitment,       (www.excite.com) Lycos
                                            personal information management,     (www.lycos.com)
                                            shopping, etc.



     Vertical                               May cover a single function e.g.:    Moreover (www.moreover.com)
                                            –news                                SciQuest (www.sciquest.com)
                                            – and industry sector



     Geographical (region, country, local   May be:                              Yahoo! country versions Countyweb
     area)                                  – horizontal                         (www.countyweb.com)
                                            – vertical

     Marketplace                            May be:                              CommerceOne
                                            – horizontal                         (www.commerceone.net)
                                            – vertical                           PlasticsNet (www.plastics.net)
                                            – geographical

     Media type                             Voice portal                         Verizon VoiceGear
                                                                                 (www.voicegear.net)
                                            Wireless portal                      Vodafone Vizzavi
                                                                                 (www.vizzavi.com)
                                            Streaming media portal               Silicon
                                                                                 (www.silicon.com)




14
                                     Methods for finding web pages
     All the web - 5 billion pages                           Invisible web
                                         Unregistered        Not indexed by search
                                             sites,          engines
                                       inaccessible sites    Search Engine
                                         and databases       Search against   Google
                                                             every word on
                   1




                                                              every page
                                           Search               indexed
                                           engine               Directory    Yahoo!
                                                            Searches against
                                         registered
                                                             company name
                                            sites             and 25 word
                                         Directories           description
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     Trading arrangements
     Commercial (trading) mechanism                        Online transaction mechanism of Nunes et al. (2000)

     1. Negotiated deal                                    Negotiation – bargaining between single seller and buyer.
     Example: Can use similar mechanism to auction as on   Continuous replenishment – ongoing fulfilment of orders
     Commerce One(www.commerceone.net)                     under pre-set terms

     2. Brokered deal                                      Achieved through online intermediaries offering auction
     Example: Intermediaries such as Screentrade           and pure markets online
     (www.screentrade.co.uk)
     3. Auction                                            Seller auction – buyers’ bids determine final price of sellers’
     Examples: C2C: E-bay (www.ebay.com)                   offerings. Buyer auction – buyers request prices from
     B2B: Industry to Industry                             multiple sellers. Reverse – buyers post desired price for seller
     (www.assetauctions.freemarkets.com)                   acceptance
     4. Fixed price sale                                   Static call – online catalogue with fixed prices Dynamic call
     Example: All e-tailers                                – online catalogue with continuously updated prices and
                                                           features
     5. Pure markets                                       Spot – buyers’ and sellers’ bids clear instantly
     Example: Electronic share dealing

     6. Barter                                             Barter – buyers and sellers exchange goods. According to the
     Example: www.intagio.com and www.bartercard.co.uk     International Reciprocal Trade Association (www.irta.com)
                                                           barter trade was over $9 billion in 2002.




16
        Chapter 2 – part2
     E-commerce fundamentals




17
     Business model
      Timmers (1999) defines a ‘business model’ as:

        An architecture for product, service and information flows, including
        a description of the various business actors and their roles; and a
        description of the potential benefits for the various business actors;
        and a description of the sources of revenue.




18
     Business models




Figure 2.11 Alternative perspectives on business models
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      Business Models (cont.)

      Revenue model: description of how the company or an EC project
       will earn revenue
          Sales
          Transaction fees
          Subscription fees
          Advertising
          Affiliate fees
          Other revenue sources




20
     Typical Business Models in EC

     1.   Online direct marketing
     2.   Electronic tendering systems
          tendering (reverse auction): model in which a buyer requests would-be
          sellers to submit bids, and the lowest bidder wins
     3.   Name your own price: a model in which a buyer sets the price he or
          she is willing to pay and invites sellers to supply the good or service at
          that price
     4.   Affiliate marketing: an arrangement whereby a marketing partner (a
          business, an organization, or even an individual) refers consumers to
          the selling company’s Web site
     5.   Viral marketing: ‫ فيروسي‬word-of-mouth (WOM) marketing in which
          customers promote a product or service to friends or other people


21
 Typical Business Models in EC (cont.)
     6.    Group purchasing: quantity purchasing that enables groups of
           purchasers to obtain a discount price on the products purchased
     7.    SMEs: small to medium enterprises
     8.    Online auctions
     9.    Product and service customization
           customization: creation of a product or service according to the
           buyer’s specifications
     10.   Electronic marketplaces and exchanges
     11.   Value-chain integrators
     12.   Value-chain service providers



22
Typical Business Models in EC (cont.)
     12.   Information brokers ‫سمسار‬
     13. Bartering ‫مقايضة‬
     14. Deep discounting
     15. Membership
     16. Supply chain improvers
      Note :Business models can be independent or they can be combined
           amongst themselves or with traditional business models




23
     Classification of EC by Transactions or
     Interactions
        business-to-consumer (B2C) : online transactions are made between
           businesses and individual consumers
          business-to-business (B2B): businesses make online transactions with other
           businesses
          e-tailing: online retailing, usually B2C
          business-to-business-to-consumer (B2B2C): e-commerce model in
           which a business provides some product or service to a client business
           that maintains its own customers
          consumer-to-business (C2B):
           e-commerce model in which individuals use the Internet to sell products
           or services to organizations or individuals seek sellers to bid on products
           or services they need


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     Classification of EC by Transactions or
     Interactions (cont.)
      consumer-to-consumer (C2C):
       e-commerce model in which consumers sell directly to other consumers
      peer-to-peer (P2P): technology that enables networked peer computers to
       share data and processing with each other directly; can be used in C2C, B2B,
       and B2C e-commerce
      mobile commerce ((m-commerce):
       e-commerce transactions and activities conducted in a wireless environment
      location-based commerce (l-commerce): m-commerce transactions
       targeted to individuals in specific locations, at specific times




25
     Classification of EC by Transactions or
     Interactions (cont.)
      intrabusiness EC: e-commerce category that includes all internal
         organizational activities that involve the exchange of goods, services, or
         information among various units and individuals in an organization
        business-to-employees (B2E): e-commerce model in which an organization
         delivers services, information, or products to its individual employees
        collaborative commerce (c-commerce):
         e-commerce model in which individuals or groups communicate or
         collaborate online
        e-learning: the online delivery of information for purposes of training or
         education
        exchange (electronic): a public electronic market with many buyers and sellers




26
 Classification of EC by Transactions or
 Interactions (cont.) e-commerce model in which electronic
     exchange-to-exchange (E2E):
       exchanges formally connect to one another the purpose of exchanging
       information
      e-government: e-commerce model in which a government entity buys
       or provides goods, services, or information to businesses or individual
       citizens




27
Ecommerce can be divided into five distinct categories:
Business                   business
     Network-based ordering from suppliers, invoicing,
     making payments
Business                   consumer
     Web based electronic retailing
Business                   government
     Transactions such bidding for government contracts
Consumer                   government
     Epayment of taxes, receiving govt. services
Consumer                   consumer
     Peer-to-peer, bartering, auctions
28
     From Indiana Slides
     Electronic Commerce: Definitions and Concepts
                       (cont.)
  Pure vs. Partial EC depends upon the degree of
   digitization (the transformation from physical to digital) of:
    the product (service) sold;
    the process; and for
    the delivery agent (or digital intermediary)
  Brick-and-Mortar organizations are old-economy
   organizations (corporations) that perform most of their
   business off-line, selling physical products by means of
   physical agents

29
        Electronic Commerce: Definitions and Concepts
                          (cont.)
      Virtual (pure-play) organizations conduct their
      business activities solely online

      Click-and-mortar organizations conduct some EC
      activities, but do their primary business in the physical world

      Electronic market (e-marketplace) online marketplace
      where buyers and sellers meet to exchange goods, services,
      money, or information

30
        Electronic Commerce: Definitions and
                   Concepts (cont.)
      Interorganizational information systems (IOSs):
      allow routine transaction processing and information
      flow between two or more organizations

      Intraorganizational information systems enable
      EC activities to go on within individual organizations




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