The Internet in Business:

Corporations, Businesses, and Entrepreneurs

Lesson 9

Objectives
Discuss the pervasiveness and inevitability of business on the Internet Explain how money factors, especially advertising, affect the Web Describe the likely success factors for Web entrepreneurs Differentiate between business-to-Consumer and Business-to-Business sites Explain the importance of Internet transmission speed for business sites Differentiate between intranets, extranets and virtual private networks

Contents
E-Commerce Promoting a Web Site Web-based Business Internet Speed Streaming Sharing Files Push Technology / Webcasting Intranets VPN Consolidation of the Web

E-Commerce
Electronic Commerce
Buying and selling over the Internet

E-Commerce Retail Sites

Retail becomes etail

E-Commerce Retail Sites

Clothes Out-of-print biography Used car Bargain airline tickets Music CDs Videos Baby equipment Jewelry Sporting goods Office supplies Cosmetics Flowers Gifts Groceries

Whats for Sale? EVERYTHING!

Etail Advantage to Consumer

Any time No need to dress and travel Saves time Provides simple means to comparison-shop Anyplace Contributes to competition

Etail Savings to retail business

No physical store building People time

The Commerce Site

Lists and views of products and prices

Content
Product related Updated regularly Written to interest visitors in returning to site to purchase in the future

Commerce vs. Content Sites

Commerce adding content

Content adding products and sales information

Division is no longer clear

E-Commerce Acceptance
Opposition to e-Commerce by in-person sales representatives Strategy to merge Etail and Retail
Web site prices may be higher Commission to sales representative on each Internet transaction regardless of their involvement with its origin Web site marketing followed by local store purchase

E-Commerce Acceptance
Successful web site may alienate others

Promoting a Web Site

Users must find their way to the site
Advertising needed
Traditional ads on web pages Portals

Portals
Definition entry point to the rest of the Internet
Presents content and links to variety of topics Customize the content
User provides personal data Portal provides related information and links

Can become your home page

Portals Earning Money

Flat fee to be listed on portal based upon number of visitors to the site Percentage of sale generated by a visitor who traveled to the affiliate via the portal

Portals Who Are They?

Yahoo! MSN Netscape Go Network

Snap!
Excite

America Online

Search engines that expanded their content and retail connections

Advertising
Pay a fee to the host site Disadvantage of online Ads
Contain graphics and applets that load slowly Ads load first

Advertising Types of Online Ads

Banner ads
Clickable Users reluctant to click through

Live banner
Displays sales pitch User does not need to leave current site Work slowly Expensive to develop

Context-sensitive
Ad is related to subject matter on web page Greater click through and conversion

Web-based Business
Simple to start-up of new businesses
Provides access to people and global markets Minimum investment
Server link Home page

Competition
Not a level playing field Large advertising budgets of large companies get the word out

Web-based Business
Make business look large
Many products can be offered since no inventory No physical space to reflect size

Payments
Finalize order by
Phone Fax Call with credit card number

Enter credit card number

Security
Communication between buyer and retailer is encrypted Use SSL (Secure Sockets Layer) protocol and generate the message our secure server

Taxes
American Federal Law
Taxes due only on mail-orders within your state
Presence of etail is debatable

Taxes
Internet Tax Freedom Act 1998
Provisions
No tax on Internet access charges No new tax on out-of-state businesses (insures that presence is not redefined) Creates temporary commission to study Internet taxes Demand that foreign governments keep Internet free of taxes and tariffs

Free of taxes for three years Can impose same tax regulations as phone or mail order Provisions extended through 2005

Success Factors Making a Profit

Content
What you have to say and offer Cannot be static News about product, scores, contest, searches

Self-help

Search for product Order product Check the status of an order Track a delivery Provide sense of community Sharing between visitors Prizes

Uniqueness
Not offered elsewhere Difficult to obtain

Community

Repeat business needed

B2C Business-to-Consumer
Activity between business and individual User makes purchase based upon personal decisions Growing
$38 billion in 1998 Over $800 billion by 2005

Global trend more than online sales will be outside US by 2004

B2B Business-to-Business
Activity of one business providing another with materials and supplies Advantages to buyers
Reduced costs of procurement Consider a larger number of suppliers Security Antitrust concerns $92 billion in 1998 $2 trillion in 2004

Problems

Growing

Internet Speed Traffic

Not planned for current use Victim of its own success Original Internet
Low-speed Text-based Limited sites

Todays Internet
Million of users Downloading high-volume multimedia data Causes slow transmission speed

Internet Speed Impacts Business

Large companies use T1 and T3 lines and have servers capable of thousands of concurrent visitors Smaller business connect via ISP or pay a company with high-speed connections to host their site

Internet Speed Solutions

Increase bandwidth
Satellite ISDN DSL Cable modem

Increase backbone capacity

Backbone communication lines across geographical areas Advances in technology Investment in new facilities

Change Internet access fees

Streaming
Hear and see digitized content as it is downloaded
Audio Video Animation

Uses substantial bandwidth

Quality of content Speed of connection Internet traffic Performance will improve as bandwidth improves

Content is displayed using Plug-ins

Streaming RealPlayer
Free download from RealNetworks

Broadcast.com
Live radio Canned television shows

Sharing Files
Unicasting
Send multiple computers copies of files individually Wastes bandwidth as you are sending the same file over and over

Sharing Files
Broadcast
Send one copy of the file to every computer on the network Wasteful some users do not need the file Compromises security

Multicasting
Send one copy of the file and it is directed only to the appropriate recipients

Push Technology Webcasting

Software that send (pushes) information from the Internet to a users PC

Makes business active participants in providing information to users

Push Technology How it Works

User provides consent by downloading and installing free push software User selects channels to receive User sets update schedule Push software goes to the Internet on schedule and downloads updated information for the channels

Push Technology Good or Bad?

Time-saver for user; no browsing required Uses precious bandwidth to send graphics and advertising

Intranets
Internal network Private to a certain company

Easy and fast to setup

Inexpensive

Intranet Setting it Up
Same components as needed for Internet

Computers for access

Server TCP/IP Software including a browser

Intranet Web Pages for Employee Use

Personnel data Internal job posting

Corporate policy information

Available training courses Cafeteria menu Notices from management

Intranet, Internet, Extranet

Internet
Public

Intranet
Private Can be linked to Internet

Extranet
Provide access to Intranet to selected customer and suppliers Replacing EDI

VPN Virtual Private Networks

Use public Internet as a channel for private data communication

Use the Internet to access the company network rather than private lines
Sharing public lines Lower cost

VPN Benefits
Lower operating costs Simplifies communications

No 800 lines and long distance charges

Reduces in-house management responsibilities Communication needs handled by ISP

VPN Technology
Tunneling / encapsulation
Transfer of data between two similar networks over an intermediate network Point-to-Point Tunneling Protocol (PPTP) proposed protocol for tunneling Encloses packet of one protocol (PPTP) inside packet using different protocol (TCP/IP)

Encryption
Packets are encrypted before encapsulation Authentication software used

Consolidation of the Web

Consolidation brings efficiency and uniformity
Occurring quickly Large scale

1999 AOL purchased Netscape

Conglomerates moving in will control the majority of what we see