E-commerce: B-2-C Jenny Stoehr, Eduardo Yamuni, & Matthew Doughty

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  • e-commerce: B-2-C Jenny Stoehr, Eduardo Yamuni, & Matthew Doughty
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  • Online Consolidation 2000 crash led to widespread dot-com destruction, although the strongest survived and continue to grow.
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  • Demographics Of Internet and E-commerce Users
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  • Global Internet Languages 1 Total World Online Population: 529 million
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  • US internet user statistics US internet users: 104.8 million US Women: 55.0 million US Men: 49.8 million 2 50.4% female, 49.6% male in 2000 3
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  • However... Average time spent online: roughly 11:20 for US men, 9:06 for US women (in Dec 2001) 4 Men seem more interested in purchasing items online: 58% of men, only 42% of women. 5 53% of all US online buyers are male 6
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  • Young Users Still mostly surfing or browsing... 54% of connected 12-24 year olds (in 16 countries) used the internet to gather information about products, but only half of them are actually buying online. Biggest-volume categories: music (19%), clothing (16%), books (14%) Popular e-commerce sites for the young included Amazon, eBay, Gap, JCrew, and FootLocker 7
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  • Recent Study: Holiday Shopping By Pew Internet and American Life Project, January 1, 2002 8 64 million total e-shoppers in 2001, up from 53 million in 2000 26% of all US internet users made holiday purchases (29 million people). Average spent per person: $392 (up from $330 last year).
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  • Holiday Shopping 58% of online holiday gift-buyers were women. Sharpest increase came from minorities and the young (18-29). 32% shopped from work, up from 26% last year.
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  • Household Income
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  • Holiday Shopping Satisfaction
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  • General E-Shopping Concerns
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  • Dissatisfaction w/ E-Shopping Approximately 33% of those who bought gifts online last year did not repeat this year. Reasons: Better ways to shop than online Merchandise sent was incorrect last year Merchandise did not arrive on time last year Worried about credit card security
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  • Ethical Issues and Taxation
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  • Privacy 9 Major concerns (youve heard of them): spam, selling of personal information to other companies, corporate or government surveillance Clinton Administration policy advocated self- regulation: businesses must develop and post prominent, clearly written policies that inform consumers about the identity of the collector of their personal information, along with intended uses of that information.
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  • Questions Question for audience: What do you know about the user information policies of the websites you regularly visit?
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  • Privacy issues Surveillance: web bugs and Carnivore Web bugs are Software code embedded in Internet banner ads, and invisible image file 1 pixel by 1 pixel that watches and records browsing activity on a users machine. Carnivore: FBI program that plugs into an ISP server and gathers data as a user logs into their ISP. Designed to combat cyber-terrorists, ACLU has strong concerns about potential abuse of its power.
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  • Security Trends: Improving?
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  • Two Taxation Issues E-commerce Taxation can be divided into two concerns: 1. State Sales Tax Issues 10 2. International Taxation 11
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  • State Sales Taxes 10 Currently, there are no state sales taxes which apply to e-commerce, because of Congressional legislation: the [renewed] Internet Tax Freedom Act of 2001, which expires in 2003. The legislation augments a 1992 Supreme Court ruling banning states from collecting taxes on transactions unless the retailer has a physical presence there.
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  • State Sales Taxes Opponents of the ban tried to introduce a new provision which would require e-tailers without a physical presence to collect online sales tax. Measure failed 43-57 in the US Senate. Major opponents of tax ban: US states that collect sales tax. Potential online 2001 tax revenue: $13.3 B
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  • International E-Taxes 11 Controversial Issues: Permanent Establishments (aka physical presence): do stand-alone computer servers constitute a PE? Customs duties: currently a moratorium on taxation of electronic transmissions by WTO European Union value-added taxes (VATs) Consumption of services taxed at place of supply. Imported Digital goods are treated as services, and therefore not taxed, but exports are taxed! This hurts native (EU) exporters.
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  • Taxation: Key Points Currently little to no taxation of e-commerce. Many possibilities now discussed by state or national governments Organization for Economic Cooperation and Development (OECD) Created framework for taxation of e-commerce Most discussions now in committee who knows how long until decisions reached?
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  • Business Models What is a Business Model? A business model is the method of doing business used by a company to sustain itself. Any given firm may combine various models as part of its web business strategy. Business models in the web evolve rapidly and new models can be expected in the future. Business models have taken another meaning now that they can be defined within the context of patent law.
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  • Business Models Brokerage Model They are market makers; they bring buyers and sellers together and facilitate transactions. Market Exchange Virtual Mall Auction Broker Reverse Auction Search Agent
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  • Business Models Auction Broker: A site that conducts auctions for sellers, individuals or merchants. Ex: E-bay, AuctoinNet Reverse Auction: Price is set by consumers own demand. Name your own price. Ex: Priceline, Respond.com Market Exchange: Increasingly common in the B2B markets. Virtual Mall: A site hosting many online merchants. Ex: Yahoo! Stores Search Agent: Intelligent software used to search out the best price for a good or service.
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  • Business Models Advertising Model Provides content and services mixed with advertising messages (banner ads). Generalized Portal: driven by generic or diversified content or service. Ex: Excite, Yahoo!, AOL. Personalized Portal: portal with customization of the interface and content. Vortal: portal with less volume and well defined user base. Design to attract advertisers willing to pay premium to reach a particular audience Bargain Discounter: Sells goods typically at low or below cost and seeks to make profit thorough advertising.
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  • Business Models Infomediary Model based on collecting and selling data about customers and consumer habits to other businesses. Merchant Model E-tailers Virtual Merchant: Pure e-tailers. Ex: Amazon Catalog Merchant: The migration of mail order to a web-based order business. Ex: Levenger Click and Mortar: traditional Brick and Mortar establishment with web store front. Ex: The Gap, Borders.
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  • Business Models Other models include: Manufacturer Model Affiliate Model Community Model Subscription Model Utility Model
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  • Surviving in E-commerce
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  • Why do companies perish in the Web? From a group of 117 dot-com failures over a period of 12 months showed 1 34% lacked sufficient benefits for the intended customers. 55% had no competitive advantage 59% of these ventures had a poor revenue and poor cost-and-profit model Only 15% had organizational and execution problems. Just 8% had significant supply chain management problems
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  • Different strategies for different ventures Small Businesses Local Stores Pure E-tailers Lands