E-Business for Small
Enterprises
Associate Professor Mohini Singh PhD
Director, Community and Industry Liaison
School of Business Information Technology
RMIT University
This Presentation
Definitions
Technologies for e-business
An understanding of the e-business framework and
environment
E-business models
E-business trends
E-business issues – payment methods, security
Benefits and limitations
E-business set up issues
Critical success factors for e-SMEs
E-Commerce
electronic commerce (EC)
The process of buying, selling, or exchanging
products, services, or information via computer
networks
The use of the Internet and the Web to transact
business
Digitally enabled commercial transactions between
and among organisations and individuals.
E-Business
e-business
A broader definition of EC that includes not just the
buying and selling of goods and services, but also
servicing customers, collaborating with business
partners, and conducting electronic transactions
within an organization
All electronically mediated information exchanges,
both within the organisation and with external
stakeholders supporting the whole range of business
processes.
Technologies for E-Business
Internet - a global network of networked computers
World Wide Web - a body of software and a set of protocols that link sites,
files and e-mail addresses
Intranet
an intra-organisational network based on the Internet technology. An
internal corporate or government network that uses Internet tools, such
as Web browsers, and Internet protocols
enables communication within the organisation
Extranet
an extension of an organisation‟s intranet to trusted partners to share
information and conduct business in a secured environment
a network that uses the Internet to link multiple intranets
The E-Business Framework
Networked computing is the infrastructure for EC, and
it is rapidly emerging as the standard computing
environment for business, home, and government
applications
Networked computing connects multiple computers and other
electronic devices located in several different locations by
telecommunications networks, including wireless ones
Allows users to access information stored in several different
physical locations and to communicate and collaborate with
people separated by great geographic distances
A Framework for Electronic Commerce
E-Business Organizations
brick-and-mortar organizations
Old-economy organizations (corporations) that perform most
of their business off-line, selling physical products by means
of physical agents
virtual (pure-play) organizations
Organizations that conduct their business activities solely
online
click-and-mortar (click-and-brick) organizations
Organizations that conduct some e-commerce activities, but
do their primary business in the physical world
E- Business Models
business-to-business (B2B)
E-business model in which all of the participants are
businesses or other organizations
business-to-consumer (B2C)
E-business model in which businesses sell to
individual shoppers
business to employee (B2E)
E-business model delivering services, information or
products to its employees
Business Models cont…
Electronic distributor
Electronic intermediary responsible for order fulfillment (eg Amazon,
eToy, etc)
Electronic brokers
Introduce suppliers who deal with items that customers are looking for
(eg www.choicemall.com, BestBook-Buys.com)
E- Store
An electronic distributor whose dealing items are handled by a single
store
E-Mall
An electronic distributor or broker whose dealing items are handled by
more than a single electronic store
Generalised E-Malls/Stores - deal with various categories of items where
supply items are very wide
Specialised E-Malls/Stores - focus on only special types of items (eg
pharmaceutical or computer products)
How E-Business is conducted
electronic market (e-marketplace)
An online marketplace where buyers and sellers meet to
exchange goods, services, money, or information
interorganisational information systems (IOSs)
Communications system that allows routine transaction
processing and information flow between two or more
organizations
intraorganisational information systems
Communication systems that enable e-business activities to
go on within individual organizations
The Future of EC
Overall, the growth of the field will continue to
be strong into the foreseeable future
Despite the failures of individual companies and
initiatives, the total volume of EC is growing by
15 to 25% every year
E-Business Trends
One-Tenth of the World‟s Population is Shopping Online
627 million people have done it
Europe and North America display the highest incidence of
online shoppers
The world‟s biggest online shoppers are in Germany, Austria and
the UK with at least 95 percent of Internet users having
purchased online
B2C clearly show an upward trend
While there is growth in nearly all global markets, lesser
developed markets are maturing faster than many of their more
developed counterparts
Source: Global consumer attitudes towards online shopping (www.acnielsen.com)
What sells well in B2C?
ACNielsen surveyed a total of 21,261 consumers over the
Internet in 38 markets covering 17 products between April 11 –
May 10, 2005.
Across the globe, the most popular items purchased on the
Internet are
Books (34%),
Videos / DVDs / Games (22%),
Airline Tickets / Reservations (21%) and
Clothing / Accessories / Shoes (20%).
Source: Global consumer attitudes towards online shopping (www.acnielsen.com)
What sells well: Regional variation
Books top the list of items purchased by the Chinese
(56%) and South Koreans (50%)
Over half of South Korea‟s online shoppers have
purchased Clothing / Accessories / Shoes online.
Airline Tickets/Reservations are purchased by Malaysia
(55%), New Zealand (40%), Singapore (36%) and
Australia (35%) Ireland (58%), Norway (45%), Finland
(31%), and Spain (26%).
In the UK, Videos /DVDs/ Games generate the
biggest online market (34%), followed by Books (30%)
Source: Global consumer attitudes towards online shopping (www.acnielsen.com)
What sells well: Regional variation
Tours/Hotel Reservations are commonly purchased
online in Finland (30%) and Spain (27%).
In Japan, Groceries (26%) are the second most popular
item purchased online after Books
In Latin America, Electronic Equipment (30%) such as
cameras, etc. are a favourite online purchase item
similar to Books
For most of these online purchases, credit card (59%)
or bank transfer (23%) was used to make the payment.
Characteristics of high-volume
products
high brand recognition
recognized guarantees
digitized formats
relatively inexpensive items
frequently purchased items
standard and well known commodities
unopenable packaged items.
How do Online Customers Pay for their
Purchases?
PayPal: The Money’s in the E-mail
One of e-commerce‟s major success stories:
Went public in 2002; acquired by eBay October 2002 for $1.5
billion
An example of a “peer-to-peer” payment system
Fills a niche that credit card companies avoided –
individuals and small merchants
Piggybacks on existing credit card and checking
payment systems
Weakness: suffers from relatively high levels of fraud
Competitors include Western Union (MoneyZap), AOL
(AOLQuickcash) and Citibank (C2it)
Data is from the April 2006 comScore report titled "The State of Online
Banking." The analysis is based on comScore's panel of over two million
online consumers and a survey of 2, 214 US consumers conducted
March 22-27, 2005.
Online Frauds
Phishing
A high tech scam that uses email, pop-up messages, or Web pages to trick a user into
disclosing sensitive information such as credit card numbers, bank account numbers and
passwords
Denial of service
An attack on a web site in which an attacker uses specialised software to send a flood of data
packets to the target computer with the aim of overloading its resources
Melware (Malicious software)
Viruses
A software code that inserts itself into a host computer
worms
A software program that runs independently consuming the resources of the host in order to maintain itself
trojan horses
A program that appears to have a useful function but contains a hidden function that presents a security risk
Social Engineering
A type of nontechnical attack that uses social pressures to trick computer users into
compromising computer networks to which individuals have access
…
Fraud Prevention
Client side
Access control
username-password model
pre-defined secret cognitive questions
Biometrics
Scramble pads
System side
Digital Certificates
SSL
Session timeouts
Fraud detection systems
….
Organisational Benefits of E-Business
Global Reach Lower Communication
Cost Reduction Costs
Supply Chain Efficient Procurement
Improvements Improved Customer
Extended Hours Relations
Customization Up-to-Date Company
Material
New Business Models
No City Business
Rapid Time-to-Market
Permits and Fees
Other Benefits
Benefits of EC
Benefits to Consumers
Ubiquity Information Availability
More Products and Participation in Auctions
Services Electronic Communities
Customised Products No Sales Tax
and Services
Cheaper Products and
Services
Benefits of EC
Benefits to Society
Telecommuting
Higher Standard of Living
Hope for the Poor
Information or technocentric society
Availability of Public Services
E-Business Setup
business model
A method of doing business by which a company
can generate revenue to sustain itself
Business models are a subset of a business plan or a
business case
Structure of Business Models
A description of the customers to be served and the
company‟s relationships with these customers (customers’
value proposition)
A description of all products and services the business will
offer
A description of the business process required to make and
deliver the products and services
A list of the resources required and the identification of
which ones are available, which will be developed in-
house, and which will need to be acquired
Structure of Business Models cont…
A description of the organization supply chain,
including suppliers and other business partners
A description of the revenues expected (revenue
model), anticipated costs, sources of financing,
and estimated profitability (financial viability)
E-Business Structure Issues
Revenue Models Major revenue models
revenue model Sales
Description of how the Transaction fees
company or an EC Subscription fees
project will earn revenue Advertising fees
Affiliate fees
Other revenue sources
Business Models
Value proposition
The benefits a company can derive from using E-
Business
How do e-marketplaces create value?
Search and transaction cost efficiency
Complementarities
Lock-in
Novelty
Limitations of EC
Other E-Business Challenges
Infrastructure
Integration of front-end and back-end systems,
business process re-engineering
Incorporation of secure transaction systems, e-
payments, automated responses – eCRM, web page
design issues
E-supply chain management/cyber chain
management
Organisational
Senior management buy-in
Sociotechnical - employee acceptance, new skills,
new job designs
Raising the awareness of e-business
E-Business Applications
The digital revolution continues to accelerate, provides
competitive advantage to organizations and enables
innovations
Electronic business applications have been extended to:
E-government services to citizens
Government to government dealings
E-learning
E-management
E-research
Mobile and pervasive applications
…
Critical Success Factors for fast
growth of e-SME’s
All SME‟s
Content – attention grabbing and compelling
Internet presentation of a product/s
Convenience – usability of a web
Control – defined processes for the control of
deliveries, responding to customer queries and web
site updating
Interaction – relationship building with customers
CFCs relevant to particular industries
Community
Relationship building with like minded individuals
and organisations by enabling information exchange
and tailored services
Price sensitivity
Sensitive to Internet price competition
CFCs relevant to individual
companies
Brand image – use of online and offline branding
techniques
Commitment – motivation to use the Internet and to
innovate
Partnership – use of partnerships to leverage Internet
presence and expand business
Process improvement – change and automate business
processes
Integration – link IT systems to support partnership
and process improvement
References
Taylor M. and Murphy, A., 2004, „SMEs and e-
business‟, Journal of Small Business and Enterprise
Development, Vol 11 No 3pp 280 – 289
Turban, E, King, D., Viehland, D. and Lee, J.,
2006, Electronic Commerce A Managerial
Perspective 2006, Pearson Prentice Hall, USA
Singh, M., Lecture notes
Singh, M., conference presentations