e-commerce basics…. Compiled by : S. Agarwal. Introduction : Commerce is, quite simply, the exchange of goods and services, usually for money. We see commerce all around us in in millions of different forms. When you buy something at a grocery store you are participating in commerce. In the same way, if you cart half of your possessions onto your front lawn for a yard sale, you are participating in commerce from a different angle. If you go to work each day for a company that produces a product, that is yet another link in the chain of commerce. Compiled by : S. Agarwal. When you think about commerce in these different ways, you instinctively recognize several different roles: •Buyers - these are people with money who want to purchase a good or service. •Sellers - these are the people who offer goods and services to buyers. Sellers are generally recognized in two different forms: retailers who sell directly to consumers and wholesalers or distributors who sell to retailers and other businesses. •Producers - these are the people who create the products and services that sellers offer to buyers. A producer is always, by necessity, a seller as well. The producer sells the products produced to wholesalers, retailers or directly to the consumer. Compiled by : S. Agarwal. In an e-commerce sales channel you find all of the elements of commerce as well, but they change slightly. You must have the following elements to conduct ecommerce: •A product •A place to sell the product - in the ecommerce case a web site displays the products in some way and acts as the place •A way to get people to come to your web site •A way to accept orders - normally an on-line form of some sort. Compiled by : S. Agarwal. •A way to accept money - normally a merchant account handling credit card payments. This piece requires a secure ordering page and a connection to a bank. Or you may use more traditional billing techniques either on-line or through the mail. •A fulfillment facility to ship products to customers (often outsource-able). In the case of software and information, however, fulfillment can occur over the Web through a file download mechanism. Compiled by : S. Agarwal. •A way to accept returns •A way to handle warrantee claims •A way to provide customer service (often through email, on-line forms, online knowledge bases and FAQs, etc.) In addition, there is often a strong desire to integrate other business functions or practices into the ecommerce offering. An extremely simple example -- you might want to be able to show the customer the exact status of an order. Compiled by : S. Agarwal. The biggest product categories include: •Computer products (hardware, software, accessories) •Books •Music •Financial Services •Entertainment •Home Electronics •Apparel •Gifts and flowers •Travel services •Toys •Tickets •Information Compiled by : S. Agarwal. EDI Compiled by : S. Agarwal. Short for Electronic Data Interchange, the transfer of data between different companies using networks, such as the Internet. As more and more companies get connected to the Internet, EDI is becoming increasingly important as an easy mechanism for companies to buy, sell, and trade information. Compiled by : S. Agarwal. EDI refers to the electronic exchange of business information between two companies using a specific and structured format. The concept has been around since the 1970s and has traditionally been used to automate buyer-seller transactions such as invoices and purchase orders. But as more processes within a company become automated, EDI has expanded to areas such as inventory management and product distribution. Compiled by : S. Agarwal. How does EDI work? EDI relies on standards, or common methods of defining classes of business data, which allow computers to recognize what data belongs to what department in a company. In the early days of EDI, many companies built inhouse EDI standards, but as interest grew, industries started to agree on common standards, administered by standards organizations. These standards, which allow computers in different organizations to share information over privately built, closed networks known as value-added networks, led to the use of EDI for corporate purchasing. Compiled by : S. Agarwal. E-Commerce Compiled by : S. Agarwal. eCommerce is a subset of business, where products and services are advertised, bought and sold over the Internet. Many businesses have become extremely profitable through online sales. Dell Computers is a prime example. Small companies and even individuals can also market their products or services on a worldwide basis through eCommerce. Large companies can reduce sales and stocking costs by selling online. Compiled by : S. Agarwal. Comparison with traditional commerce Online commerce provides an additional method for buying or selling. Compiled by : S. Agarwal. Traditional sales In traditional sales, the buyer and/or the salesman is the active party. In one case, the buyer initiates the purchase by either going to the store to buy or calling on the phone and making an order. In another situation, the salesman goes to the home or place of business to make the sale, or he calls on the phone to make the sale. A third method combines action from both parties. The business' sales department mails a catalog or other material, and the customer then makes a purchase from the catalog. These methods all apply to business-to-person as well as business-to-business sales. Compiled by : S. Agarwal. Online commerce Online commerce adds a new method, similar to a mail order catalog. The business' sales department posts a Web site with an online catalog. The buyer then selects items from the online catalog and makes the purchase, either online or by phoning or mail order. Although the buyer is really using an online catalog, the metaphor of browsing a store with a shopping cart is most often used in eCommerce. This allows the customer to put items in the shopping cart to hold until checkout or when the purchase is finally made. Compiled by : S. Agarwal. Advantages and disadvantages of eCommerce There are advantages and disadvantages for both the seller and buyer in online commerce. Compiled by : S. Agarwal. Seller Advantages for the seller include: = Access to worldwide markets = Minimal sales costs = Can compete with larger companies = Can track purchases and use data to recommend other items to the customer Disadvantages to the seller include: = No personal contact = Expense of getting popular-servers, etc. = Must get people to know about and visit the site Compiled by : S. Agarwal. Buyer Advantages for the buyer include: = Can find hard-to-get items from his or her chair = Reduced cost = Automated cost-comparison available Disadvantages for the buyer include: = Must pay for shipping and wait for delivery = Cannot see or feel the product before making a decision = Cannot easily return item or get support Compiled by : S. Agarwal. Elements of eCommerce Just as in tradition commerce, especially that done by mail order, there are certain elements required to perform online business. You must: = Promote your Web site presence = Have an online catalog or store = Have the capability to receive payments = Be able to deliver the item = Provide after-the-sale support Compiled by : S. Agarwal. Web site promotion You need to advertise and promote your business, so that the customers will either come to your store, read your catalog or view your Web site. Compiled by : S. Agarwal. Online catalog or store You need to have a store or catalog where customers can view and select goods or services. Customers need to be able to easily get around your catalog to find things. The customer should be able to easily browse the selection and mark products for later purchase. They also need to be able to get detail information or see pictures of the items. Compiled by : S. Agarwal. Finding items The Web site should be easy for customers to find what they want. The customer must know what is in the store, and the products must be organized in a logical manner. The customer must be able to easily search for what he or she wants without the help of a sales clerk. Selecting what to buy Once the customer finds what he is looking for, he can put the selection in a "shopping cart" and search for other items. This make it easier for the customer to purchase multiple items, as well as to buy things he may not have been looking for. Just as in a physical store, people often buy things they just happen to see. For example, stores place some "impulse items" at the checkout stand. Compiled by : S. Agarwal. Purchase It should be easy for customers to purchase the items they want. You must have a way to receive online payments, either using credit cards or other means of payment. For example, businessto-business sales may simply involve a purchase order. The purchase of the item can be complex, but it should be made as simple as possible for the customer. 1. The customer must give certain information about himself. Usually this is name, address and e-mail 2. A mutually acceptable payment method must be chosen. Credit card or billing information must be gathered. 3. The merchant must process the customer's payment information. 4. Finally, the customer must receive confirmation of the sale. Security is a concern in credit card purchases and the ability to encrypt transfer of data is equally important. Compiled by : S. Agarwal. Delivery You must have a good means of fulfilling the order and delivering the material to customers. Different means of delivery depends on the type of item purchased. The product may be access to special information on the Web site, it may be downloadable software, or it may be items that must be physically delivered to the customer. Support The customer needs a way to voice problems. You also need a customer service system, consisting of support to handle complaints or returns in the event of problems. Compiled by : S. Agarwal. Setting up an online store You can purchase one of the various ready-made software applications that set up your online business. The problem there is the lack of ability to customize the application. You can also have a Web programmer develop such a store. You may not get as sophisticated site, and it may cost more in the long run if you start to re-invent the wheel. The best bet is to look at both possibilities and pick a solution that is in-between. Compiled by : S. Agarwal. e-commerce MODELS Compiled by : S. Agarwal. B2B On the Internet, B2B (business-to-business), also known as e-biz, is the exchange of products, services, or information between businesses rather than between businesses and consumers. It's companies buying from and selling to each other online. But there's more to it than purchasing. It's evolved to encompass supply chain management as more companies outsource parts of their supply chain to their trading partners. Compiled by : S. Agarwal. B2B Web sites can be sorted into: Company Web sites, since the target audience for many company Web sites is other companies and their employees. Company sites can be thought of as round-the-clock minitrade exhibits. Sometimes a company Web site serves as the entrance to an exclusive extranet available only to customers or registered site users. Some company Web sites sell directly from the site, effectively e-tailing to other businesses. Product supply and procurement exchanges, where a company purchasing agent can shop for supplies from vendors, request proposals, and, in some cases, bid to make a purchase at a desired price. Sometimes referred to as eprocurement sites, some serve a range of industries and others focus on a niche market. continued……. Compiled by : S. Agarwal. Specialized or vertical industry portals which provide a "subWeb" of information, product listings, discussion groups, and other features. These vertical portal sites have a broader purpose than the procurement sites (although they may also support buying and selling). Brokering sites that act as an intermediary between someone wanting a product or service and potential providers. Equipment leasing is an example. Information sites (sometimes known as infomediary), which provide information about a particular industry for its companies and their employees. These include specialized search sites and trade and industry standards organization sites. Many B2B sites may seem to fall into more than one of these groups. Models for B2B sites are still evolving. Compiled by : S. Agarwal. Benefits of B2B : B2B e-commerce can save or make your company money. Some ways companies have benefited from B2B ecommerce include: •Managing inventory more efficiently •Adjusting more quickly to customer demand •Getting products to market faster •Cutting the cost of paperwork •Reigning in rogue purchases •Obtaining lower prices on some supplies Compiled by : S. Agarwal. B2B exchange : At its most basic, a B2B exchange (also called a marketplace or hub) is a website where many companies can buy from and sell to each other using a common technology platform. Many exchanges also offer additional services, such as payment or logistics services that help members complete a transaction. Exchanges may also support community activities, like distributing industry news, sponsoring online discussions and providing research on customer demand or industry forecasts for components and raw materials. Compiled by : S. Agarwal. Which business units should be involved in a B2B project? Definitely the units that do purchasing. B2B e-commerce can drastically change how buyers do their jobs, especially if your company is one that still places orders the old fashioned way. Sales and customer service departments will need to be involved with projects that affect how you receive and process orders from customers. And don't forget inventory. You may need to get other departments involved, too, depending on the functionality you're building. Also involve your suppliers, distributors and customers, and make sure there's something in the project for them. B2B ecommerce doesn't only change how you do business internally, your partners have to change too. And unless you're the 900pound gorilla in your industry-and sometimes even if you areyou can't force everyone to do things your way. Compiled by : S. Agarwal. B2C What is B2C e-commerce? While the term e-commerce refers to all online transactions, B2C stands for "business-to-consumer" and applies to any business or organization that sells its products or services to consumers over the Internet for their own use. Business-to-consumer, meaning that the primary focus is toward consumers not other businesses, even though a B2C company may sell to resellers or other business as a small portion of their revenue. Retailers are typically B2C companies while manufacturers and wholesalers are typically B2B companies. When most people think of B2C e-commerce, they think of Amazon.com, the online bookseller that launched its site in 1995 and quickly took on the nation's major retailers. However, in addition to online retailers, B2C has grown to include services such as online banking, travel services, online auctions, health information and real estate sites. Compiled by : S. Agarwal. What is the difference between B2C and B2B e-commerce? For one thing, the customers are different — B2B (business-to-business) customers are other companies while B2C customers are individuals. Overall, B2B transactions are more complex and have higher security needs. Beyond that, there are two big distinctions: Negotiation Selling to another business involves haggling over prices, delivery and product specifications. Not so with most consumer sales. That makes it easier for retailers to put a catalog online, and it's why the first B2B applications were for buying finished goods or commodities that are simple to describe and price. Integration Retailers don't have to integrate with their customers' systems. Companies selling to other businesses, however, need to make sure they can communicate without human intervention. Compiled by : S. Agarwal. Major challenges of B2C e-commerce? Getting browsers to buy things — Your e-commerce site cannot live on traffic alone. Getting visitors to the site is only half the battle. Whether they buy something is what determines if you win. The so-called conversion rate for B2C e-commerce sites is still fairly low. Some ways to boost your conversion rate include improving navigation, simplifying checkout process (such as one-step checkout and easily replaced passwords), and sending out e-mails with special offers. continued… Compiled by : S. Agarwal. Building customer loyalty : With so many sites out there, how can you build a strong relationship with customers? Here are some tips: • Focus on personalization: A wide array of software packages are available to help e-commerce sites create unique boutiques that target specific customers. For example, American Airlines has personalized its website so that business fliers view it as a business airline and leisure travelers see it as a vacation site. • Create an easy-to-use customer service application. Providing just an e-mail address can be frustrating to customers with questions. Live chat or, at the very least, a phone number will help. • Focus on making your site easy to use. Compiled by : S. Agarwal. Fulfillment — E-commerce has increased the focus on customer satisfaction and delivery fulfillment. One cautionary tale is Toys "R" Us' holiday debacle in 1999, when fulfillment problems caused some Christmas orders to de delivered late. Since then, companies have spent billions to improve their logistical systems in order to guarantee ontime delivery. Providing instant gratification for customers still isn't easy, but successful B2C e-commerce operations are finding that fulfillment headaches can be eased with increased focus and investment in supply chain and logistical technologies. Compiled by : S. Agarwal. C2C (customer-to-customer) Person-to-person transactions are the oldest form of ebusiness. They’ve been there from the beginning, long before there was any widespread use of the internet. They continue to be all over the place, quite invisible to anyone thinking that all business is on a website. They can (in part) be supported on large and visible websites. As in the case of the so called "auctions" that have been growing fast all over the place – but they are only one of many ways of helping people to deal directly with each other or to buy more conveniently from companies. Compiled by : S. Agarwal. C2C (Consumer to Consumer) E-Commerce allows unknown, un-trusted parties to sell goods and services to one-another. An excellent example of this is found at EBay, where consumers sell their goods and services to other consumers. To accommodate this activity, several technologies have emerged. Firstly, Ebay allows all sellers and buyers to rate one another. In this manner, future prospective purchasers may see that a particular seller has sold to more than 2,000 customers - all of whom rate the seller as excellent. In another example, a prospective purchaser may see a seller who has previously sold only 4 times and all 4 rate the seller poorly. This type of information is helpful. Another technology that has emerged to support C2C activities is that of the payment intermediary. Pay Pal is a good example of this. Instead of purchasing items directly from an unknown, un-trusted seller, the buyer can instead send the money to Pay Pal. From there, Pay Pal notifies the seller that they will hold the money for them until the goods have been shipped and accepted by the buyer. Compiled by : S. Agarwal. C2B (customer-to-business) The most important activity in e-commerce isn’t selling. It’s buying. Quite often that doesn’t mean buying online but checking, comparing, analyzing quality and price before baying in traditional stores or services. Customer empowerment isn’t a legend or a theory, It’s hard fact and it will grow as more people become more aware of the tools they have to pick and choose – and negotiate. This could be the single most important development in the new economy. Maybe scaring for some companies, but an opportunity for all who know how to find the right clues. With or without the internet, in many businesses the concept of marketing (even of market) will have to change radically. We are only at the beginning of a development that can have vast and deep consequences. Compiled by : S. Agarwal. BUSINESS MODELS EXAMPLES Compiled by : S. Agarwal. B2C BUSINESS MODELS Business Model: Variation Portal: Horizontal/General Description Offers an integrated package of services and content such as search, news, e-mail, chat, music downloads, video streaming, and calendars. Seeks to be a user's home base. Offers services and products to specialised marketspace. Revenue Model Examples Advertising, Yahoo.com, subscription AOL.com, fees, MSN.com transaction fees Portal: Vertical/Specialised (Vortal) E-tailer: Virtual Merchant Advertising, iboats.com subscription fees, transaction fees Sales of goods Amazon.com Online version of retail store, where customers can shop at any hour of the day or night. E-tailer: Clicks and Mortar E-tailer: Catalog Merchant Online distribution channel for company that also has physical stores Online version of direct mail catalog Sales of goods Walmart.com Sales of goods LandsEnd.com Compiled by : S. Agarwal. B2C BUSINESS MODELS continued… Business Model: Variation E-tailer: Catalog Merchant E-tailer: Online Mall E-tailer: Manufacturerdirect Content Provider Description Revenue Model Sales of goods Examples Online version of direct mail catalog Online version of shopping mall Online sales made directly by manufacturer Information and entertainment providers such as newspapers, sports sites, and other online sources that offer customers up-to-date news and special interest, how to guidance, and tips and/or information sales. LandsEnd.com Sales of goods, Fashionmall.com transaction fees Sales of goods Dell.com Advertising, subscription fees, affiliate referral fees WSJ.com, Sportsline.com, CNN.com Compiled by : S. Agarwal. B2C BUSINESS MODELS continued… Business Model: Variation Transaction Broker Description Processors of online sales transactions, such as stockbrokers and travel agents, that increase customers' productivity by helping them get things done faster and more cheaply. Web-based businesses that use Internet technology to create markets that bring buyers and sellers together. Companies that make money by selling a service, rather than a product. Revenue Model Transaction fees Examples E-Trade.com, Expedia.com, Monster.com Market Creator: Auctions and other forms of dynamic pricing Service Provider Transaction fees eBay.com, Priceline.com Sales of services xDrive.com, whatsitworthtoyou. com, myCFO.com Community Provider Sites where individuals with particular interests, hobbies and common experiences can come together and compare notes. Advertising, About.com, subscription iVillage.com, , affiliate BlackPlanet.com referral fees Compiled by : S. Agarwal. B2B BUSINESS MODELS Business Model: Variation Description Revenue Model Transaction fees Examples DirectAg.com, eSteel.com Marketplace/Exc Helps bring buyers and hange: Vertical sellers together to reduce procurement costs for a specific industry. Marketplace/Exc Same as vertical except hange: focused on specific types of Horizontal products and services. E-Distributor Transaction fees TradeOut.com Connecting businesses Sales of directly with other businesses, goods reducing sales cycles and mark-up. Supports companies through online business services. Sales of services Grainger.com B2B Service Provider: Traditional Employeematter s.com Compiled by : S. Agarwal. B2B BUSINESS MODELS continued… Business Model: Variation B2B Service Provider: Application Service Provider Matchmaker Description Rents Internet-based software applications to businesses. Helps businesses find what they want and need on the Web. Gathers information about consumers and uses it to help advertisers find the most appropriate audience. Revenue Model Rental fees Examples Salesforce.com, Corio.com Transaction fees Sales of information IShip.com Infomediary: Audience Broker Doubleclick.com Infomediary: Lead Generator Gathers customer data, and uses it to direct vendors to customers Referral fee AutoByTel.com Compiled by : S. Agarwal. "I'm telling you, 'Bee-to-Bee' is going to be the next big thing." Compiled by : S. Agarwal. Payment Gateway One of the most important things that you must have in order to accept credit cards for your business is a payment gateway. A payment gateway is basically the same thing as a physical point of sale terminal in a retail store. Payment gateways link the virtual terminal ("buy" page) to the merchant account and the credit card organization securely. This protects the credit card data and any other personal information from being exposed to computer hackers. One good thing about most payment gateways is that they offer a virtual terminal (input information screen). This is the software that allows the customer to input their credit card information. Compiled by : S. Agarwal. Payment gateways offer many different services, some of which include: •Authenticate credit card or electronic check transactions over the Internet •Send/receive transactions over the wire using the secure socket layer (usually128-bit encryption behind a firewall) •Offers administrative support •Promises complete privacy for all messages Compiled by : S. Agarwal. E-Commerce Revenue Streams What is a revenue stream? • The method a business uses to generate income • A single Web site may use more than one method of generating revenue Compiled by : S. Agarwal. Revenue generated with direct sales : •You purchase a product or service •The business arranges delivery •Sales are made to both consumers and businesses What is electronic software distribution (ESD)? Sale of digital products such as software, music, movies, books, and photographs. A purchase entitles you to download one copy of an item. How is revenue generated with software rental? Application service providers (ASPs) charge a rental fee before you can access and use Web application software. Rental fee arrangements vary by vendor and application. What is advertisement revenue? Some Web sites contain advertisements and earn commissions from the advertising sponsors when visitors make purchases as a result of clicking the advertisement Compiled by : S. Agarwal. How is revenue generated with an informational Web site? • Visitors are required to subscribe to a service. • Usually provide some information at no cost, but require a subscription to access the content of the entire site. What is a Web hosting service? • Assists people and companies in hosting their Web site. • Provides the hardware, software, and communications required for a Web server • Some provide services that include managing payments and tracking inventory What is an online storage service? • Provides data storage to computer users • Often used to store backup copies of data and information How is revenue generated with Internet access? • Some sites provide Internet access • Many have become portals offering many other services Compiled by : S. Agarwal. E-Retailing E-retail occurs when retailers use the Web to sell their products and services Also called e-tail. Compiled by : S. Agarwal. The E-Retailing Market Sector What is an electronic storefront? • The Web site where an e-retailer displays its products • Also called an online catalog • Contains descriptions, graphics, and sometimes product reviews What is a shopping cart? • A software component on the Web that allows the customer to collect purchases • Items can be added, deleted, or saved for a future visit What is a secure checkout? • Web site where the customer enters personal and financial data • The transaction and financial data automatically are verified at a banking Web site Compiled by : S. Agarwal. Other E-Commerce Market Sectors on the Web Online Banking: • Allows you to pay bills from your computer • Transfer money electronically from your account to a payee’s account • Download monthly banking transactions Online Trading : • You can invest in stocks, options, bonds, treasuries, CDs, money markets, annuities, and mutual funds without using a broker • Transaction fee usually less than when trading through a broker Entertainment and media : • Music, videos, news, sporting events, and 3-D multiplayer games • News and live radio broadcasting • Streaming audio Compiled by : S. Agarwal. Other E-Commerce Market Sectors on the Web - continued… Travel Services : • Driving directions and maps • Airline, hotel, and car reservations Shopping Bot : • A Web site that searches the Internet for the best price on a product or service in which you are interested • Also called a shopbot Health Services : • Provide up-to-date medical, fitness, nutrition, or exercise information • Some maintain databases of doctors and dentists • Pharmacies allow customers to refill prescriptions and ask questions Compiled by : S. Agarwal. Building an E-commerce Site The things you need to keep in mind when thinking about building an e-commerce site include: •Suppliers - this is no different from the concern that any normal store or mail order company has. Without good suppliers you cannot offer products. •Your price point - a big part of e-commerce is the fact that price comparisons are extremely easy for the consumer. Your price point is important in a transparent market. Compiled by : S. Agarwal. •Customer relations - E-commerce offers a variety of different ways to relate to your customer. E-mail, FAQs, knowledge bases, forums, chat rooms... Integrating these features into your e-commerce offering helps you differentiate yourself from the competition. •The back end: fulfillment, returns, customer service These processes make or break any retail establishment. They define, in a big way, your relationship with your customer. Compiled by : S. Agarwal. When you think about e-commerce, you may also want to consider these other desirable capabilities: •Gift-sending •Affiliate programs •Special Discounts •Repeat buyer programs •Seasonal or periodic sales The reason why you want to keep these things in mind is because they are all difficult unless your e-commerce software supports them. If the software does support them, they are trivial. Compiled by : S. Agarwal. Implementing an E-commerce Site Let's say that you would like to create an ecommerce site. There are three general ways to implement the site with all sorts of variations in between. The three general ways are: •Enterprise computing •Virtual hosting services •Simplified e-commerce These are in order of decreasing flexibility and increasing simplicity. Compiled by : S. Agarwal. Enterprise computing means that you purchase hardware and software and hire a staff of developers to create your ecommerce web site. Amazon, Dell and all of the other big players participate in e-commerce at the enterprise level. You might need to consider enterprise computing solutions if: •You have immensely high traffic - millions of visitors per month •You have a large database that holds your catalog of products (especially if the catalog is changing constantly) •You have a complicated sales cycle that requires lots of customized forms, pricing tables, etc. •You have other business processes already in place and you want your e-commerce offering to integrate into them. Compiled by : S. Agarwal. Virtual hosting services give you some of the flexibility of enterprise computing, but what you get depends on the vendor. In general the vendor maintains the equipment and software and sells them in standardized packages. Part of the package includes security, and almost always a merchant account is also an option. Database access is sometimes a part of the package. You provide the web designers and developers to create and maintain your site. Compiled by : S. Agarwal. Simplified e-commerce is what most small businesses and individuals are using to get into e-commerce. In this option the vendor provides a simplified system for creating your store. The system usually involves a set of forms that you fill out online. The vendor's software then generates all of the web pages for the store for you. Two good examples of this sort of offering include Yahoo Stores and Verio Stores. Compiled by : S. Agarwal. Creating an Online Store Compiled by : S. Agarwal. What decisions should be made to create an online store? • Building a storefront • Managing payment • Managing product delivery • Designing a site that attracts customers and keeps them returning • Managing the site • Promoting the site Compiled by : S. Agarwal. Options available for building a storefront : • E-retailers must select software and hardware to build a storefront • Can develop and maintain the site in house • Can outsource all or part of the system • Often e-retailers hire an expert in Web design and development to assist in implementing a site e-commerce software : • Allows a merchant to set up a storefront with a product database, combined with a shopping cart • Should provide a secure environment to process order transactions • Some include statistical tracking features and capability of integrating with a business' other systems Compiled by : S. Agarwal. Web host : • An outside company that provides the hardware, software, and communications required for a Web server • Charges a monthly fee or a percentage of the sales income • Web server also called an e-commerce server or commerce server Secure server : • Prevents access to the system by unauthorized users • Often used for transaction services where credit card information is entered Web site development service : • Assists in the process of creating a storefront • Allows small businesses and individuals to participate in the e-commerce arena with a minimum investment Compiled by : S. Agarwal. Steps in accepting customer payments using a credit card Obtain a merchant account • Establishes a relationship between the e-retailer and a bank • Allows the e-retailer to accept credit card payments Provide a secure order form • Used to collect orders and credit card information from the customer Use a payment-processing service • Provides software to manage the transaction between the e-retailer and the bank Compiled by : S. Agarwal. Compiled by : S. Agarwal. Fulfillment : • Managing and storing inventory • Packaging and shipping products • Maintaining records of all transactions As a result of e-retail for delivery services traditional delivery services such as Federal Express and UPS will have increased business due to e-retail sales Compiled by : S. Agarwal. Fulfillment companies • outsourcing services that provide warehousing and inventory management, product assembly, order processing, packing, shipping, return processing,and online reporting • also called logistics companies Compiled by : S. Agarwal. Compiled by : S. Agarwal. What factors lead to customer loyalty? • Successful sites attract customers and keep them returning to the site • Te best storefronts plan for convenience, are efficient, and easy to use • Customers who must wait more than eight to ten seconds for a page to download usually will click to another site electronic Customer Relationship Management(eCRM)? • Used to provide service after a sale • Combines a personalized touch and customized service to customers • Uses automatic e-mail to confirm orders, display a list of frequently asked questions (FAQ), and send surveys for feedback Compiled by : S. Agarwal. e-mail publishing : • The process of sending newsletters via e-mail messages to a large group of people with similar interests • Can be used as follow up after a sale to generate return business and recommendations Site management : • Monitoring Web site use • Collecting data and using it to improve the Web site Compiled by : S. Agarwal. Submission service : • A Web-based business in which you typically pay a fee to register with hundreds of search engines Online advertising : • Often called banner ads • Advertisements are linked to the advertiser's Web site • Advertiser usually pays based on the number of clickthroughs • Occurs when a visitor clicks an advertisement to move to the advertiser’s Web page Spam : • Unsolicited e-mail messages or newsgroup postings • Internet junk mail • Usually generates antagonism instead of sales Compiled by : S. Agarwal. e-governance Compiled by : S. Agarwal. Governance refers to the exercise of political, economic and administrative authority in the management of a country’s affairs, including citizens’ articulation of their interests and exercise of their legal rights and obligations. A Definition of eGovernance eGovernance advocates often mean electronic delivery of government services; paying fees and fines, ordering services, finding information, submitting tenders, applications, permits and licenses. Compiled by : S. Agarwal. E-Governance may include very broad range of services for almost all segments of society. The most common areas of E-Governance applications are: •Electronic commerce and business regulations •Taxation and revenue •Law enforcement and courts •Digital democracy •Agriculture •Education •Health •Transport Compiled by : S. Agarwal. Government transactions G2C: Government to Citizen Interface. This involves Governance processes involving significant citizen interface. For example, Utility bill payment, Issue of driving license, Birth/Death registration, Property Tax etc G2B: Government to Business Transactions. This involves interactions between Government & Business. For example, E-Procurement, E-payments, Company Registrations, Trade Licenses/Permits etc. G2G: Government to Government. This involves Internal Government processes (intra and inter-departmental). For example, Workflow Automations of internal Administrative functions (Employee Information System, accounting, payroll etc), Project Monitoring, Repository of Parliament Questions & Answers etc. Compiled by : S. Agarwal. Significant benefits from E-Governance •The citizen benefits because there is transparency, efficiency and integrity in his dealings with the government; furthermore, there is easy information access. •The government benefits because it reduces redundancy and duplication. The processes of data collection, analysis and audit are made much easier. Decision making gets expedited. And there can be tremendous improvements in specialized areas such as criminal justice, transport etc. •The business community benefits because E-Governance can become a catalyst and a channel for e-business, and in fact it has been so in places like the US, UK, Canada, Australia and Singapore. Furthermore a web-based government will enable tax paying online and reduce corruption and bending of laws. Compiled by : S. Agarwal. Benefits of Electronic Governance e-Governance sees the people in government, business and citizens working together for the benefit of all. Some of its obvious benefits are: Integrated Information: e-Governance targets to use a government-wide electronic information infrastructure to simplify service delivery, reduce duplication, and improve the level and speed of service to clients at a lower cost. It recommends creating, managing, and prudently sharing information electronically among the various government departments and the different services offered by them. That is, information will be captured once, as close to the source as possible, then shared and re-used by all authorized users. This will avoid manual transcription and re-entering of the same information repeatedly whenever a citizen goes to a new government department for some Compiled by : S. Agarwal. services. Benefits of Electronic Governance Integrated Services: The integrated information approach automatically lends itself to offering integrated services. Different types of services offered by different government departments like collecting taxes, granting licenses, administering regulations, paying grants and benefits, can be availed at one place. This greatly facilitates the citizens by allowing them to perceive the government as a single body to interact with instead of a number of unrelated entities, operating at different locations in different government buildings. Compiled by : S. Agarwal. Benefits of Electronic Governance Anywhere Services: Provision of fully interactive on-line services by eGovernance gives public access to government services with quicker responses at convenient times. This on-line accessibility of stored information from remote locations allows government officials to serve any citizen from a government office located in any part of the state or country. Compiled by : S. Agarwal. Benefits of Electronic Governance Anywhere, Anytime Information: Delivery of services may require interaction between government officials and citizens, but delivery of publicdomain information to citizens can be done without any such interaction. Citizens can obtain information related to government processes and procedures through an on-line system without interacting with any government official. In fact, e-Governance can give the average citizen quick, interactive access to a vast array of information, through computers at home or work or through kiosks in convenient public locations, because this access to information can be available at many different locations and at all hours, there is no pressure on individuals to physically visit a Government Office. Compiled by : S. Agarwal. Benefits of Electronic Governance Improved Overall Productivity: e-Governance will significantly contribute to improved overall productivity of both the government officials and the citizens, as it ensures faster interaction among them by electronic mail instead of moving paper files and letters, and in streamlining the workflow of internal government administrative processes such as procurement, recruitment, evaluation, budgeting, planning. On the other hand, improved productivity of citizens results because of the facility of anytime, anywhere services and information. Compiled by : S. Agarwal. Benefits of Electronic Governance Better Decision Making and Planning: The integrated information base of e-Governance helps planners and decision makers to perform extensive analysis of stored data to provide answers to the queries of the administrative cadre. This facilitates taking well informed policy decisions for citizen facilitation and accessing their impact over the intended section of the population. This in turn helps them to formulate more effective strategies and policies for citizen facilitation. Compiled by : S. Agarwal. Benefits of Electronic Governance Better Security and Protection of Information: e-Governance uses the integrated information approach for keeping all information at one place in electronic form. Thus, keeping the information secure against theft or leakage. Proper backup mechanisms also help in protecting the valuable information from getting lost due to natural calamities such as fires, earthquakes, and floods. Compiled by : S. Agarwal. E-Governance - Issues and Challenges Achieving the benefits of e-Governance may not be easy and goes far beyond mere computerization of government processes. Its successful implementation not only poses technical challenges but also requires a fundamental change in the manner in which the government operates today. In fact, the challenges the Governments are likely to face would be, how to cope with re-engineering the government processes and functions and related issues of new responsibilities for civil servants, businesses and citizens. Compiled by : S. Agarwal. Compiled by : S. Agarwal. E-Governance - Issues and Challenges….. Creating the Integrated Information Base: Gathering and integrating information is the first basic requirement of e-Governance. This requires building of various types of data entry systems that can operate as close as possible to the source of data and can capture the different types of data to be kept in the integrated information base. Considerable effort needs to be made to the task of deciding what data to keep, how to capture the identified data, and how to integrate information from multiple sources to create the integrated information base. Even universal, easy-to-use access is of little use if the information is fragmented, contradictory, out-of-date, poorly indexed, or simply not of interest or use. Compiled by : S. Agarwal. E-Governance - Issues and Challenges….. Accessing of Information: To make the best use of data stored in the integrated information base, they should be universally and easily accessible by the end users. This requires design and installation of easy to operate access devices such as kiosks, push-button telephones and access terminals at all locations from where access is desired. This also requires wide-area networking of all these equipment and the integrated information base. Moreover, essential software that will allow different categories of users to visualize the data in a form useful and understandable to them will also be required. Compiled by : S. Agarwal. E-Governance - Issues and Challenges….. Finding the Right Information: The integrated information base contains all types of data that is of interest to many different types of users. Hence, quickly finding and accessing a desired piece of information from this large ocean of information may not be easy for a user. To enable this, the system must have the necessary tools to properly structure the data and quickly search for the desired information. Compiled by : S. Agarwal. E-Governance - Issues and Challenges….. Security and Privacy of Information: While e-Governance allows information to be gathered, stored, and shared more readily than ever before, it also raises important issues of protecting information from unauthorized changes and safeguarding personal privacy. Proper user authentication and access control mechanisms need to be implemented to ensure that only authorized users can access a particular piece of information. Additionally, encryption techniques will be required to safeguard tampering of information by unauthorized users when critical information flows on communication channels or networks. Compiled by : S. Agarwal. Customer service and service quality evaluation (SERVQUAL) Compiled by : S. Agarwal. The SERVQUAL method from Valarie A Zeithami, A.Parasuraman and Leonard L Berry is a technique that can be used for performing a gap analysis of an organization’s service quality performance against customer service quality needs. Compiled by : S. Agarwal. SERVQUAL… • Empirically derived method that may be used by a services organization to improve service quality. • The method involves the development of an understanding of the perceived service needs of target customers. • These measured perceptions of service quality for the organization in question, are then compared against an organization that is “excellent”. • The resulting gap analysis may then be used as a driver for service quality improvement. Compiled by : S. Agarwal. SERVQUAL… • Takes into account the perceptions of customers of the relative importance of service attributes. • This allows an organization to prioritize. And to use its resources to improve the most critical service attributes. • The data are collected via surveys of a sample of customers. • In these surveys, these customers respond to a series of questions based around a number of key service dimensions. Compiled by : S. Agarwal. The methodology was originally based around 5 key dimensions : 1. Tangibles. Appearance of physical facilities, equipment, personnel and communication materials. 2. Reliability. Ability to perform the promised service dependably and accurately. 3. Responsiveness. Willingness to help customers and provide prompt service. 4. Assurance. Knowledge and courtesy of employees and their ability to convey trust and confidence. 5. Empathy. The firm provides care and individualized attention to its customers. Compiled by : S. Agarwal. This has been adapted later by some to cover 10 dimensions: 1. Tangibles. Appearance of physical facilities, equipment, personnel and communication materials. 2. Reliability. Ability to perform the promised service dependably and accurately. 3. Responsiveness. Willingness to help customers and provide prompt service. 4. Competence. Possession of required skill and knowledge to perform service. 5. Courtesy. Politeness, respect, consideration and friendliness of contact personnel. Compiled by : S. Agarwal. 10 dimensions continued….. 6. Credibility. Trustworthiness, believability, honesty of the service provider. 7. Feel secure. Freedom from danger, risk or doubt. 8. Access. Approachable and easy of contact. 9. Communication. Listens to its customers and acknowledges their comments. Keeps customers informed. In a language which they can understand. 10.Understanding the customer. Making the effort to know customers and their needs. Compiled by : S. Agarwal. ORIGIN OF SERVQUAL HISTORY The authors conducted a qualitative study, from which they concluded that customers ranked the i m p o r t a n c e o f t w o S E RV Q U A L d i m e n s i o n s consistently. Regardless of service industry. • Reliability is the most important contributing factor to service quality • Tangibles is the least important. Compiled by : S. Agarwal. USAGE OF SERVQUAL APPLICATIONS • SERVQUAL is widely used within service industries to understand the perceptions of target customers regarding their service needs. And to provide a measurement of the service quality of the organization. • SERVQUAL may also be applied internally to understand employees’ perceptions of service quality. With the objective of achieving service improvement. Compiled by : S. Agarwal. STEPS IN SERVQUAL PROCESS The method essentially involves conducting a sample survey of customers so that their perceived service needs are understood. And for measuring their perceptions of service quality for the organization in question. Compiled by : S. Agarwal. Customers are asked to answer numerous questions within each dimension that determines : • The relative importance of each attribute. • A measurement of performance expectations that would relate to an ―excellent‖ company. • A measurement of performance for the company in question. This provides an assessment of the gap between desired and actual performance, together with a ranking of the importance of service criteria. This allows an organization to focus its resources. To maximize service quality whilst costs are controlled. Compiled by : S. Agarwal. STRENGTHS OF SERVQUAL BENEFITS. Most users would agree that a comprehensive and thorough examination of service needs and service quality provides an invaluable approach to improving service quality. SERVQUAL provides detailed information about : • Customer perceptions of service (a benchmark established by your own customers) • Performance levels as perceived by customers • Customer comments and suggestions • Impressions from employees with respect to customers expectations and satisfaction Compiled by : S. Agarwal. LIMITATIONS OF SERVQUAL DISADVANTAGES There have been a number of studies that doubt the validity of the 5 dimensions. And of the uniform applicability of the method for all service sectors. According to an analysis by Thomas P Van Dyke, Victor R Prybutok and Leon A Kappelman, it appears that the use of difference scores in calculating SERVQUAL contributes to problems with the reliability, discriminant validity, convergent validity and predictive validity of the measurement. These findings suggest that caution should be exercised in the use of SERVQUAL scores and that further work is needed in the development of measures for assessing the quality of information services. Compiled by : S. Agarwal. ASSUMPTIONS OF SERVQUAL CONDITIONS • The results of market surveys are accurate. The validity of the model is based around the results of empirical studies. A number of academics have since performed further empirical studies that appear to contradict some of the original findings. • Customer needs can be documented and captured, and they remain stable during the whole process. Compiled by : S. Agarwal. Compiled by : S. Agarwal. Compiled by : S. Agarwal. Compiled by : S. Agarwal. 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