E-Commerce

Chapter: 01 Overview of e-Commerce Framework

Overview of E-Commerce Framework Todays Objective

Develop an understanding of the framework of e-commerce

Chapter 1 Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

Definition of E-Commerce

E-commerce is characterized by several specific attributes: It is about the exchange of digitalized information between parties

It is technology-enabled
It is technology-mediated It includes intra- and inter-organizational activities that support the exchange

E-commerce can be defined as technology-mediated exchange between parties (individuals, organizations or both) as well as the electronically based intra- and interorganizational activities that facilitate such exchange

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

Table 1 1: Four Categories of E-Commerce

Four distinct categories of e-commerce can be defined, based on the business origination and the customer type

Business originating from...

Business Consumers

Business

B2B
e.g., Freemarket, Covisint

C2B
e.g., Mercata.com

And selling to...

Consumers

B2C
e.g., Amazon, Staples.com

C2C
e.g., Groupsgoogle.com, Monster.com

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

How Is E-Commerce Different From Traditional Commerce?

1. 2. Core Strategic Decisions Are Technology-Based
Digital businesses cannot separate technology choices from the strategic decision-making process

Real-Time Competitive Responsiveness

Speed is becoming increasingly important as a means to increase differentiation as well as to compete with competitors

3.

24/7 Access
Consumers expect to be able to constantly access a businesss online storefront, forcing businesses to adjust their level of responsiveness (both strategic and tactical)

4.

Technology-Based Consumer Interface

Screen-to-face customer interaction has increased the importance of capturing and delivering a positive customer experience

5.

Customer in Control of the Interaction

Technology-based interfaces limit the companys influence on the buying process and give the customer more control of the interaction

6.

Increased Knowledge of Customer Behavior

A technology-based interface, however, gives the company the opportunity to more accurately track consumer behavior

7.

Networked Economics and Positive Feedback

Networked economics and positive feedback can allow increasing returns

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

Exhibit 1 2: Importance (Estimated Savings From E-Commerce)

E-commerce is important for the cost savings. it can generate as well as for its impact on industry boundaries and on many aspects of the social life

Cost savings from ecommerce are expected to exceed $1 trillion by the end of year 2002

Importance
An article on e-Commerce and e-Business has been attached to get to know the importance of e-Commerce.

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

E-Commerce Decision-Making Process

What unique benefits should I provide? Which customers should I target?

How do I communicate with customers?

How can I provide a compelling online experience? How should I structure the organization?

New E-Commerce Business

How will the business create shareholder value?

Who should be my partners?

What metrics should be used to track performance?

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

Exhibit 1 3: Framework for E-Commerce

The E-commerce framework helps managers develop a sound E-commerce strategy

Frame the Market Opportunity

Select the Business Model What is the value proposition? What products/services should be offered? What resources are necessary? What financial model should be used?

Design Customer Interface What should the online interface look like? Look and feel Content Transaction capabilities Community building

Develop Marketing Communicati on Strategies How do I attract and retain customers? Includes all offline and online methods to reach customers

Where will I play? The emphasis is more on potential business partnerships

Implem ent the Strateg y How do we go to market?

Defin e Metric s

Estim ate Market Value

How are we doing? What value are we What metrics should be creating for used to track the shareholders? business performance?

Exhibit 1 4: Where to Play Online and Offline

Many companies are combining both online and offline capabilities to serve customers. There are different positions a company can hold when deciding where to play.
Online Offline

Yahoo only plays online; it only communicates with its customers online
Egghead also plays online only, but the Internet is used for both customer interface and back-office systems Amazon employs both online and offline back-office resources, but interacts with customers only online McDonalds interacts with customers offline (mainly) and online, but only uses offline backoffice systems BN.com plays in all four quadrants

Customer Interface

Yahoo! McDonalds

BN.com

Fulfillment Systems Amazon.com

Exhibit 1 5: Market Infrastructure

Underlying each e-commerce decision is the industry environment or market infrastructure, which is generally outside the companys control and presents both opportunities and constraints. This environment can be divided into two broad categories:

Network Infrastructure
Basic, underlying group of electronic devices and connecting circuitry designed as a system to share information Devices: telephone, radio, cable TV, computer, satellite, etc. Companies: ISPs, hardware providers, software companies etc.

Media Infrastructure
All the various communication companies and their channel of communication Media infrastructure refers to the content of communication

Exhibit 1 6: Media Convergence to a Digital Platform

Network and media infrastructure are independently converging due to the digitalization of information, causing competition in the market to increase
The network to deliver digitized content has converged, leading to cross-industry competition The major content players are now competing to deliver content to the same target segments

Network Infrastructure

Media Infrastructure

Telephone/DSL Cable

Print (Newspapers and Magazines) Television

Broadcast Radio & TV Satellite Wireless

Digital Convergence

Radio Music Motion Pictures

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

Exhibit 1 7: A Framework for E-Commerce

There are six interrelated, sequential decisions to make to implement an e-commerce strategy. These decisions are made in the context of a changing market-level infrastructure
Vertical boxes are analyses and decisions that are controllable by the firm Horizontal boxes represent forces that are non-controllable by the firm

Framing the Market Opportunity

Business Model

Customer Interface

Market Communications and Branding

Implementation

Evaluation: Metrics and Valuation

E-Commerce Strategy

Network Infrastructure

Media Infrastructure
Publics and Politics

Market Infrastructure

Chapter 1: Overview of E-Commerce Framework

Definition of e-commerce Distinct categories of e-commerce E-commerce vs. traditional commerce The importance of e-commerce Decision-making in e-commerce A framework for e-commerce What is to come? Conclusion

E-Commerce Framework Overview Conclusion

After todays lesson, you should be able to answer the following questions:

1.
2. 3.

What is the definition of e-commerce?

What are the distinct categories of e-commerce? What are the key characteristics of e-commerce that make it different from traditional commerce? Why is understanding e-commerce so critical? What is the e-commerce framework? What are its main components? Which of them are controllable and which are non-controllable?

4. 5.