E-Commerce -PPT by LisaB1982

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Jason C.H. Chen, Ph.D. School of Business Administration Gonzaga University, Washington, U.S.A. Senior Consultant, Taskco.com
chen@gonzaga.edu Nov. 20, 2000

• E-Commerce: From B2C to B2B and Beyond • e-Bid Process • Features of a B2B application. • Business plan for an e-Marketplace (next year) • e-CRM and 1-1 Marketing (next year)

E-Commerce: From B2C to B2B and Beyond
Jason C.H. Chen, Ph.D. School of Business Administration Gonzaga University, Washington, U.S.A. Senior Consultant, Taskco.com
chen@gonzaga.edu Nov. 22, 2000

Outline of Topics
• • • • • • • EC, B2C and B2B and their models. How big is B2B? Where is the Evidence? What are the revenue models in B2B? What is driving adoption of B2B? Why now? TASKCo.com

eBusiness Key Concepts
• eBusiness
– The strategy of how to automate old business models with the aid of technology to maximize customer value

• eCommerce
– The process of buying and selling over digital media

• eCRM (eCustomer Relationship Management)
– The process of building, sustaining, and improving eBusiness relationships with existing and potential customers through digital media

What is E-Commerce ?
• Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information via computer networks, including the Internet.

Figure: E-commerce on the rise. Source: 1999 SG Cowen/Datamation Networked Computing Survey

26% 24% 21%

22% 15% 8% 9% 6% 6%

In pilot stage

Starting to implement 1998 1999

In use


Figure: E-commerce apps are a big driver for storage. Average installed online storage in gigabytes. Source: 1999 SG Cowen/Datamation Networked Computing Survey

E-commerce status at sites
775 623 434


No plans

Start in 99/00

Expand in 99/00 Largely done

Table: E-commerce’s most promising potential benefits


% of Respondents

New channel for existing business 25%

Improved customer service 23%

Enabled entire new line of business 18%

Reduced operating costs 7%

Improved cycle time


Benefit % of Respondents

Keep pace with technology 5%

Reduced cost Other of sales 4% 6%

Not available 4%



eBusiness Processes
WHY Customer Relationship


Redesign Business Processes (Outside-In)


Applying Technology

eBusiness Processes
WHY Customer Relationship


Redesign Business Processes (Outside-In)


Applying Technology

Traditional versus E-Business Models?



C: Individual Consumer B: Business


What is B2C?
• B2C (or Extranets) is just web-enabled relationships between existing partners; they tend to be run by a single company seeking to lower the cost of doing business with its current suppliers or individual customers. • Examples?
– Amazon.com – Egghead.com

Figure: A B2C e-business Model

Enterprise User Profiles Workflow Business rules Payment Analytics



B2C Applications
• • • • Electronic storefront Electronic malls Advertising online Service online
– – – – selling books, toys, computers e-banking (cyberbanking) online stock trading online job market, travel, real estate

Figure : B2C and B2B Internet Commerce in the U.S. (Source: Forrester Research)

$1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 1998







What is B2B?
• “B2B” is businessto- business commerce conducted over the Internet (called B2B ecommerce space, or e-marketplaces)


B2B e-Markepplaces: A CEO’s Perspective
“The next chapter in the e-business revolution involves the transformation of entire markets and the redefinition of industries. We will see the rise of a new class of entities -- e-Marketplaces -- that will help online buyers and sellers find each other, attack the inefficiencies of traditional markets, and carve out for themselves important roles in the ebusiness economy.”
Louis V. Gerstner Jr. Chairman of the Board and CEO IBM Corporation

E-Market is … Web-based marketplace
• e-market is Web sites Sellers where buyers and sellers come together to communicate, exchange ideas, advertise, bid in MarketSite auctions, conduct transactions, and coordinate inventory Buyers and fulfillment

Figure : A B2B Model
(Source: Goldman Sachs Investment Research Report)

Banks, Financial Institutions eCredit.com




Production materials Operating goods, services

Logistics Celarix, NTE

Focus on e-Business Applications
Knowledge Management/Business Intelligence

E-Customer Relationship

Businesses & Consumers


Procurement Network M:1

Trading Network M:N

E-Channel Management 1:N

E-Portal Management E-Services

SCM/ERP/Legacy Appls

B2B Applications
• • • • • Advertising Auctioning Procurement Channel management E-commerce

How Big is B2B?
1800 1500
($ Billions )

$1,500 $1,113 $782 $522 $294 $39 1998 $114 1999 2000 2001 2002 2003 2004 B2B

1200 900 600 300 0

Figure: The Goldman Sachs B2B Sizing in USA

Where is the Evidence
• Three highlights from the Goldman Sachs B2B survey 1.0:
– E-Commerce spending on proprietary Web site, e-market, and procurement (75% say, in 2000) – Business are increasingly likely to develop B2B e-markets and to favor online auctions (74% say, in 2000) – Outsourcing e-commerce spending is commonplace among businesses (25% say, up to 75% of e-C spending)

B2B Revenue Model
• B2B companies exhibit varying business models, depending on the key products and services they offer. The models include:
– – – – – transaction fees, auction-driving commissions, advertising, content subscriptions, software licensing

B2C vs. B2B
B2C Switching Costs Low with multiple suppliers B2B High when integrated with e-frastructure; few qualified suppliers Long term, mission critical

Transactional Relationship Type Transaction Type Smaller average selling price Larger average selling price Traffic volume is critical; Don’t need every customer, only need the Revenue Model Large customer base is key right customers

Source: Goldman Sachs Investmenet Research

The Magnificent Seven B2B Drivers
• • • • • • • Increasing competition and globalization Growing interactivity Financial opportunity Efficiencies and cost savings Enhanced market and customer reach Real-time needs Regulatory and taxation issues

Small Business Likely to Fuel B2B
• Small businesses will fuel the B2B market
– the use of and dependence on the Internet by small businesses as a medium for marketing, distribution, and commerce will likely fuel the B2B market. – as more small business access the Internet and set up corporate Web pages, the more they will employ the Internet to execute their business strategy.

Benefits of B2B
• B2B solutions create competitive dynamics through:
– cost savings
• the composition of cost (product versus process costs) • the number of intermediaries in the supply chain.

– new financial (revenue) opportunities
• the rate of industry-wide B2B adoption • business model

Why Now?
• B2B catalysts are now arising to stimulate adoption (mentioned earlier). • Interactive networks have recently become ubiquitous and inexpensive, accelerating the use of B2B applications. • A viral effect will spur copycat behavior throughout the market as more companies continue to implement B2B applications.

Which Industries are Likely to Embrace B2B Solutions
• Industries that are B2B inclined exhibit certain key characteristics:
– the supply chain is highly diffuse, – techno-innovators dominate the culture, – process represents more than 20% of total costs, – products exhibit complex configurations, – expense pressure is intense.

• Research show that leading industries migrating online and adopting B2B solutions include the following:
– – – – – Aerospace/Defense: 35% Electronics: 25% Chemicals: 20% Motor vehicles and parts: 18% Medical equipment and transport: 17%

What Makes a B2B e-market Company Succeed?
• Five Critical Success Factors for e-markets:
– – – – – Business model, market size, industry expertise, branding and distribution, management execution hustle (not just the formulation of strategy)

Solutions for e-Enterprise Organizations

• Streamlines buying and selling between trading partners • Maximizes trade efficiency across the entire supply chain • Strategic e-commerce capabilities in Internet time • Delivers compelling ROI



Solutions for Internet Market Makers
• Turn your supply chain into a revenue generation opportunity • Leverage your industry domain expertise into strategic e-commerce solutions • Brings e-commerce to businesses of any size, across all industries

Your Portal

Global Solution for Businesses: The Global Trading Web

Global Trading Web

Connect once to trade with anyone,anytime, anywhere in the world.

European e-markets
• B2C e-commerce in Europe is likely to remain approximately two to three years behind the U.S. . • B2B in Europe currently lags the U.S. by two years. • How about in Asia?

TASKCo Mission
Leveraging Internet to Help Customers to:

Expand Markets

Fundamental Business Drivers Have Not Changed
Retain Customers Improve Efficiencies

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