CS453: The Business ofE-Commerce
CS453: The Business ofE-Commerce
Readings: HandoutReadings: Handout
Why E-Commerce?Why E-Commerce?
Using the Internet is a given nowLet’s reflect (back perhaps) on
what it offers companiesBetter access to customersCost reductions for services providedOpportunity to deliver new products
or services that would be impossible without the network
Using the Internet is a given nowLet’s reflect (back perhaps) on
what it offers companiesBetter access to customersCost reductions for services providedOpportunity to deliver new products
or services that would be impossible without the network
Better Access to Customers
Better Access to Customers
Reasons?Quantity, frequency, qualityExplain! Examples!
Quantity, FrequencyMore people can visit a site than a storeGlobal presenceAnytime access
Reasons?Quantity, frequency, qualityExplain! Examples!
Quantity, FrequencyMore people can visit a site than a storeGlobal presenceAnytime access
Better Access to Customers (2)
Better Access to Customers (2)
QualityLearn preferences, target advertisingEmail news and informationOffer discounts, etc.Customer serviceTwo-way communication
QualityLearn preferences, target advertisingEmail news and informationOffer discounts, etc.Customer serviceTwo-way communication
Benefits for a Traditional Business View
Benefits for a Traditional Business View
Global presence not as hardMass distribution now easier,
cheaperMaybe: costs shifted? Scalability?Others pay part of costs (NWs,
access)Up to date info and productsSearchable
Global presence not as hardMass distribution now easier,
cheaperMaybe: costs shifted? Scalability?Others pay part of costs (NWs,
access)Up to date info and productsSearchable
Another List: 8 Unique FeaturesAnother List: 8 Unique Features
UbiquityGlobal ReachUniversal StandardsRichnessInteractivityInformation DensityPersonalization / CustomizationSocial Technology
UbiquityGlobal ReachUniversal StandardsRichnessInteractivityInformation DensityPersonalization / CustomizationSocial Technology
DiscussionDiscussion
Has the Net Changed the Business World?
Has the Net Changed the Business World?
Of course, in many waysConsider concentration vs. empowerment
Think of Walmart vs. the local small-town general store
What are some issues here?
Of course, in many waysConsider concentration vs. empowerment
Think of Walmart vs. the local small-town general store
What are some issues here?
Concentration vs. EmpowermentConcentration vs. Empowerment
Big storeMany customer benefitsTakes over
How can a small store survive?Meet some need Walmart can’tNiche market, specialization
Discuss: examples in E-commerce?
Big storeMany customer benefitsTakes over
How can a small store survive?Meet some need Walmart can’tNiche market, specialization
Discuss: examples in E-commerce?
Your ExamplesYour Examples
Concentration vs. EmpowermentConcentration vs. Empowerment
Business on the Internet supports bothBusinesses supporting niche markets
can succeed better than without the net
Of course large companies are successful too
Business on the Internet supports bothBusinesses supporting niche markets
can succeed better than without the net
Of course large companies are successful too
Changes in Competition between Businesses
Changes in Competition between Businesses
Traditional roles and distributions are short-circuited
Consider what banks did 20 years agoNo other options
New combinations of loans, investing, money management, getting financial infoBanks, investment houses, insurance
companies, new startups,…
Traditional roles and distributions are short-circuited
Consider what banks did 20 years agoNo other options
New combinations of loans, investing, money management, getting financial infoBanks, investment houses, insurance
companies, new startups,…
Creeping CostsCreeping Costs
SW Engineering has taught us things about system life-cycles and costs over time
How do you think these might apply to companies that begin to provide services on the Web?Discuss!
SW Engineering has taught us things about system life-cycles and costs over time
How do you think these might apply to companies that begin to provide services on the Web?Discuss!
SW Engin. Lessons?SW Engin. Lessons?
SW Engin. Lessons?SW Engin. Lessons?
Maintenance costs over timeSuccess hurtsNew features neededEnvironment changes
Systems degrade over timeUsability mattersScalability
Maintenance costs over timeSuccess hurtsNew features neededEnvironment changes
Systems degrade over timeUsability mattersScalability
Topics in this SlidesetTopics in this Slideset
A “commerce value chain” From Chap. 2 Treese and Stewart
textbook Identifying customers Marketing to customers International issues Legal issues
A “commerce value chain” From Chap. 2 Treese and Stewart
textbook Identifying customers Marketing to customers International issues Legal issues
1. What’s the Commerce Value Chain?
1. What’s the Commerce Value Chain?
Generally:Value added during the process of
creating and delivering a product or service
Commonly used to describe manufacturing of thingsConsider Value-Added Tax (VAT)
based systems
Generally:Value added during the process of
creating and delivering a product or service
Commonly used to describe manufacturing of thingsConsider Value-Added Tax (VAT)
based systems
Treese and Stewart’s ViewTreese and Stewart’s View
Certainly a commerce-value chain (CVC here) for underlying business’ products
Also one directly tied to e-commerceFocused on customers
Certainly a commerce-value chain (CVC here) for underlying business’ products
Also one directly tied to e-commerceFocused on customers
Value Chains (in general)Value Chains (in general)
Way of organizing activities a business unit does to design, …, support products or services(See p. 26ff in handout)
At each stage, how can things be improved?And can the internet help?
Way of organizing activities a business unit does to design, …, support products or services(See p. 26ff in handout)
At each stage, how can things be improved?And can the internet help?
Chain for Internet SystemsChain for Internet Systems
Four parts: Attract; Interact; Act; ReactAttract
Get and keep customer interestActivities: advertising, marketing
InteractTurn interest into ordersContent/product driven: web pages, info,
query results, etc.Activities:
Four parts: Attract; Interact; Act; ReactAttract
Get and keep customer interestActivities: advertising, marketing
InteractTurn interest into ordersContent/product driven: web pages, info,
query results, etc.Activities:
Chain for Internet Systems (2)
Chain for Internet Systems (2)
ActProcess and manage ordersActivities:
Order processing -- shopping carts, taxation, shipping charges)
Payment processing -- account, credit cards, third-party financial companies, etc.
Fulfillment -- deliver hard goods, packing, shipping; carry out e-service; deliver digital goods (file, software, license)
ActProcess and manage ordersActivities:
Order processing -- shopping carts, taxation, shipping charges)
Payment processing -- account, credit cards, third-party financial companies, etc.
Fulfillment -- deliver hard goods, packing, shipping; carry out e-service; deliver digital goods (file, software, license)
Chain for Internet Systems (3)
Chain for Internet Systems (3)
ReactService customers, order tracking,
returns, warranties, rebates, help services
ReactService customers, order tracking,
returns, warranties, rebates, help services
Another ViewAnother ViewOf course it’s not linear
Not necessarily even sequential now
Of course it’s not linearNot necessarily even sequential now
Attract
React Act
Interact
Comments on ThisComments on This
Relatively simple ideas hereReasonable as a framework for
partitioning the domain of e-commerce topics, components
At different points in this chainBusinesses can fail or succeedBusinesses can focus
DifferentiationCan you think of an example?
Relatively simple ideas hereReasonable as a framework for
partitioning the domain of e-commerce topics, components
At different points in this chainBusinesses can fail or succeedBusinesses can focus
DifferentiationCan you think of an example?
2. Defining the Customer2. Defining the Customer
With the web, anyone can beThat’s good news and bad news
General public vs. specialized companies or employees within companiesE.g. a Motorola engineer looking for ICs for
a new cell-phone design
How that person’s need different than you or me buying a book or song?
With the web, anyone can beThat’s good news and bad news
General public vs. specialized companies or employees within companiesE.g. a Motorola engineer looking for ICs for
a new cell-phone design
How that person’s need different than you or me buying a book or song?
Is it Important to Design for Customer Types?
Is it Important to Design for Customer Types?
Many e-commerce sites assume one kind of customerExamples where a mismatch is a problem?Examples of sites that don’t?
Things to considerHome consumer vs. corporateNovice vs. expertAge
Many e-commerce sites assume one kind of customerExamples where a mismatch is a problem?Examples of sites that don’t?
Things to considerHome consumer vs. corporateNovice vs. expertAge
3. Marketing on the Internet
3. Marketing on the Internet
Why does this matter more now than, say, in 2000?
Your ideas:
Why does this matter more now than, say, in 2000?
Your ideas:
Why is Marketing Different on the Internet?
Why is Marketing Different on the Internet?
Can reach many more people anywhereMore competitionIdentity more easy to conceal
Who are you? Big company or not? Scam artist or market leader?
New media and multi-media the normHarder or not clear how to get placement,
presence or attentionNo longer just ads in print, TV or radioSearch, ad auctions, email, blogs, YouTube,…
Can reach many more people anywhereMore competitionIdentity more easy to conceal
Who are you? Big company or not? Scam artist or market leader?
New media and multi-media the normHarder or not clear how to get placement,
presence or attentionNo longer just ads in print, TV or radioSearch, ad auctions, email, blogs, YouTube,…
What’s the Same?What’s the Same?
Customer identity, needs, wantsClear messagesEffective presentation
Tracking and measuring success
Customer identity, needs, wantsClear messagesEffective presentation
Tracking and measuring success
Internet Customer Demographics
Internet Customer Demographics
Remember when mom and dad didn’t surf the web? :-)Students, university types, technologists,…
One interface, many demographicsE.g. kids and adults use search enginesShould they really be finding the same
thingsNote how in the non-internet world there
are different marketing channels
Remember when mom and dad didn’t surf the web? :-)Students, university types, technologists,…
One interface, many demographicsE.g. kids and adults use search enginesShould they really be finding the same
thingsNote how in the non-internet world there
are different marketing channels
StrategiesStrategies
One-to-one marketingEmailProfiles on sites like Google (“customers like
you were also interested in…”Mass marketing (dead or not?)Convergence
With other media sourcesTargeted ads
On sites, in applications, with query results
One-to-one marketingEmailProfiles on sites like Google (“customers like
you were also interested in…”Mass marketing (dead or not?)Convergence
With other media sourcesTargeted ads
On sites, in applications, with query results
Search and MarketingSearch and Marketing
Originally, search didn’t include marketing“Gaming the system” became the normSearch sites tied ads in with user searches
Ad auctionsSpecialized search
Sites by priceSites like PricelineSites like Travelocity (car or hotel with that
flight?)
Originally, search didn’t include marketing“Gaming the system” became the normSearch sites tied ads in with user searches
Ad auctionsSpecialized search
Sites by priceSites like PricelineSites like Travelocity (car or hotel with that
flight?)
4. International Issues4. International Issues
Global customers, contentMaking sites work for international customers
Language; monetary conversions; taxes; shipping; customs and other laws
Customs, norms, conventionsProducts for international customers
Software: internationalizationServices: sites, games, …
PrivacyLaws governing info privacy etc.E.g. Google and Yahoo in China
Global customers, contentMaking sites work for international customers
Language; monetary conversions; taxes; shipping; customs and other laws
Customs, norms, conventionsProducts for international customers
Software: internationalizationServices: sites, games, …
PrivacyLaws governing info privacy etc.E.g. Google and Yahoo in China
5. Legal Issues5. Legal Issues
PrivacyPoliciesPractical security for customer info and
company info
Authorization, digital signatures, etc.Government regulation
PrivacyExport rules (e.g. cryptography)
PrivacyPoliciesPractical security for customer info and
company info
Authorization, digital signatures, etc.Government regulation
PrivacyExport rules (e.g. cryptography)
SummarySummary
Internet Commerce: a brave new world?Some things aren’t so different?Quickly face global and legal issues that in
the past only large companies dealt withCommerce Value Chain
A guide to organizing a business plan or a system?
A framework for talking about business’ efforts
Next: Business strategies
Internet Commerce: a brave new world?Some things aren’t so different?Quickly face global and legal issues that in
the past only large companies dealt withCommerce Value Chain
A guide to organizing a business plan or a system?
A framework for talking about business’ efforts
Next: Business strategies