Chapter IV.

Information Systems in Tourism: Applications and Strategy

Lesson 1: E-Business and E-Commerce Systems

INTRODUCTION

Some people use the terms "e-business" and "e-commerce" interchangeably, but they aren't
synonymous. To put it simply, e-commerce refers to buying and selling online, while e-business
encompasses all business conducted online. E-commerce can be viewed as a subset of e-business. If you
plan on starting or working closely with an internet-based company, you should strive to understand all
the ways these two concepts are unique.

However, to clearly bring out the differences between the two as both of them are completely different
phenomenon are as follows:
1. E-Commerce is the subset of E-Business.
2. Those activities which essentially involve monetary transactions are termed as "e-commerce".
However, e-business is a much broader term. There are many other things besides selling including
but not limited to marketing, procurement of raw materials or goods, customer education, looking
for suppliers etc.
3. To sell online is e-commerce but to bring and retain customers and educate them online about the
product or service is e-business. Having a website to do it is not sufficient. But, having a
professionally built website loaded with latest technologies to capture the attention of the visitor
and win his/her appreciation is required. When money is involved then the first thing which user
looks for is safety and security of his/her money. Having a website laden with such qualities is
important.
4. When Dell sell computers, laptops, monitors, printers, accessories etc online then it is not engaged in
e-commerce but e-business. Let me tell you how. When a visitor comes on the website, the first
thing he see is website design and navigation as well as those things which are going to help him
find what he is looking for and if he directly lands on the page he was looking for, he looks for the
information related to it. The information provided should be appealing and clear maximum doubts
of the visitor so as to convert him in a client. Till now no money has been exchanged nor been talked
about. So, was this e-commerce? No, it is e-business which guides the visitor.
5. E-commerce has also been defined as a process covering outward processes that touch customers,
suppliers and external partners while e-business covers internal processes such as production,
inventory management, product development, risk management, finance etc.

E-Business Basics

In a tech-driven world, it might be tough to tell which businesses are truly e-businesses. Perhaps the
best way to understand e-businesses is with the help of examples: Email marketing to existing and/or
prospective customers is an e-business activity. It electronically conducts a business process—in this
case, marketing. A company that builds and sells an online system that tracks inventory and triggers
alerts at specific levels is an e-business. Inventory management is a business process, and when
facilitated electronically, it becomes part of e-business.

A content management system that manages the workflow between a content developer, editor,
manager, and publisher is another example of an e-business. In the absence of an electronic workflow,
the physical movement of paper files would conduct this process. By electronically enabling it, it
becomes an e-business. Online tools for human resources can be produced by an e-business. These tools
include online job boards, application processers, and systems that collect and maintain
data about employees.
E-Commerce Basics

Compared to e-business, the definition of e-commerce is clearer. In its basic form, it involves placing
orders and making payments online. E-commerce comes in multiple forms. In business-to-consumer
(B2C) e-commerce, a business sells goods and services to consumers through its website. Many brick-
and-mortar retailers have adapted to the popularity of e-commerce, and they now conduct sales
through their websites as well as in their stores.

E-commerce sales can include every element of a sale: ordering a product, paying for a product, and
having it delivered. It might also involve only part of the process. For example, a customer might order a
product online to be picked up at the store. Payment might be conducted online or at the store when
the item is picked up. Either way, the transaction still involved an element of e-commerce.

E-Commerce is the concept of buying and selling on the Internet. However, the infrastructure of any
business is more than just buying and selling and this is where e-Business begins. A strong e-Business
platform enables a company to provide quality customer service, prompt delivery, a strong marketing
presence, maintain flexibility, have reliable inventory control mechanisms and access to real-time
information. Let’s take an example of a fictitious company that sells widgets to distributors as well as the
general public worldwide. Widgets, Inc. has been very successful selling their widgets for many years in
which they contribute their success to a combination of a solid product, prompt delivery, efficient
management, and excellent customer service. These variables add up to a satisfied customer base and a
profit margin to be proud of.

1.1 Terms and concepts of e-business

E-Business Concept

A simple definition, e-Business is the use of electronic, computing, and Internet-based technologies to
change traditional revenue models and business designs to the mutual benefit of customers and
vendors.

A wordy answer : e-Business is the replacement of ineffective existing methods of information flow in
the supply and value chains of an organization, and creating new ones with Internet-based, computing,
and communications technologies. E-Business liberates resources like manpower, materials, money and
time, which can then be redistributed for more value-added tasks, to bring incremental revenue and
profits to customers and suppliers.

E-Business, by definition, implies the usage of Internet-based technologies, but to what end? Initially, e-
Business was used to replace current methods of information (bits and bytes) flow within and outside
organizations. Current methods of information flow to and from customers can be slow and expensive,
and contribute costs that are unsustainable in environments of extreme competitiveness. (Anand- 1998)

For example, a typical manufacturer may receive about 20% of the ultimate selling price to the end-user.
Eighty-percent of the margin is spent in the distribution pipeline from the manufacturer to the end-user.
Elimination of the non-value add intermediaries in the value chain (or disintermediation) can deliver
substantial benefit to both the producer and the consumer. Pundits predict that e-Business’s
disintermediation contribution will be as significant as Henry Ford’s Model T was to the manufacturing
and production paradigm. Forecasters predict that distribution costs will collapse substantially in the
next decade, significantly altering all methods of consumer and business buying behavior!
Basic Benefits of e-Business
 increase sales - this is the first thing that people consider  when dealing with e-commerce
 decreasing costs
 increase profits
 understanding that profits is not the same as sales
 Expands the size of the market from regional to national or national to international
 Contract the market
 reach a narrow market
 target market segmentation allows you to focus on a more  select group of customers
 and therefore have a competitive advantages in satisfying them

1. Decreasing costs
 costs of creating the product
 marketing of promotional material
 costs of distribution
o eg. Netscape allowing you to download instead of waiting to get the CD by mail
 costs of processing (orders from the customers)
o repeat activities and information processing
o of handling customer phone calls
o of handling sales inquiries
o determine product availability (inventory management)
 costs of storing information
 lowers telecommunication costs

2. Other Benefits....
 Pull-type processing
 enables customization of products
 allows for innovative business models
 allows for a high degree of specialization
 reduces the time exposure
 supports BPR - Business Process Reengineering 
 increases productivity
 improves customer service (in some cases)

Main Types of E-business

 Business to Consumer (B2C)

The most widely recognized form of e-business, B2C is the exchange of information, products or
services taking place between a business and a consumer over the internet. As the internet
develops, B2C is continually changing the way consumers acquire information, the way products are
compared against one another and the way in which they are purchased.
An example of a B2C only site is amazon.com. Ae.com is an example of a B2C site housing a
physical location as well.

 Business to Business (B2B)

The largest form of e-business in terms of money spent is B2B. Business-to-business allows trading
to take place between businesses, using a low-cost sales channel for the sale of goods and services
and is responsible for constantly changing corporate buying habits.
An example of a B2B site would be a car part company selling parts to a car dealership, another
company, rather than directly to consumers.
 Business to Government (B2G)
B2G is the online exchange of information and transactions between businesses and government
agencies, also known as e-government. B2G allows government agencies and businesses to use
electronic means to conduct business and interact with each other over the internet.
An example of a B2G site would be one that offers electronic tax filing.

1.2 Strategic and tactical tools for e-business

1.3 Customer Focus and Management

The orientation of an organization toward serving its clients' needs. Having a customer focus is usually a
strong contributor to the overall success of a business and involves ensuring that all aspects of the
company put its customers' satisfaction first. Also, having a customer focus usually includes maintaining
an effective customer relations and service program.

Companies are dependent upon customers to realize their financial objectives. Still, they do not duly
recognize the role of customers in driving business growth. Companies consider them as mere numbers.
This spoils the business-customer relationship. Gainsight, the leading customer success management
company, focuses on building a profitable relationship with customers.

Customer-focused management is a concept that goes far beyond just smiling, answering queries, and
communicating with buyers. It transcends customer service training. Companies must change their focus
from products and processes to the values they share with customers.
Customer-focused management goes beyond just the dynamics of service and quality. Everyone with
whom you conduct business is a customer or referral source of someone else. The service we get from
some people, we pass along to others. Customer service is a continuum of human behaviors...shared
with those we meet.

Customers are the lifeblood of every business. Employees depend upon customers for their paychecks.
Yet, you wouldn’t know the correlation when poor customer service is rendered. Employees often
behave as though customers are a bother, do not heed their concerns, and do not take suggestions for
improvement.

Here are a few quotes on courtesy, customer service, and corporate manners to keep top of mind:

“The customer is always right.”—H. Gordon Selfridge

“The greater man, the greater courtesy.”—Alfred Lord Tennyson (1809-1892)

“There are two little words that can open any door with ease. One little word is thanks, and the other is
please. Good manners are never out of style.”—Pinky Lee, 1950”s

“We are born charming, fresh, and spontaneous and must be civilized before we are fit to participate in
society. It is far more impressive when others discover your good qualities without your help. Let us
make a special effort to stop communicating with each other, so we can have some conversation.”—
Judith Martin, (Miss Manners)

“Good manners will open doors that the best education cannot.”—Supreme Court Justice Clarence
Thomas

“Do thou restrain the haughty spirit in thy breast, for better far is gentle courtesy.”— Homer

“Don’t forget to say please and thank you.”—Captain Kangaroo, children”s TV star

“Don’t flatter yourself that friendship authorizes you to say disagreeable things to your intimates. The
nearer you come into relation with a person, the more necessary do tact and courtesy become. Except
in cases of necessity, which are rare, leave your friend to learn unpleasant things from his enemies; they
are ready enough to tell them.”—Supreme Court Justice Oliver Wendell Holmes (1809-1894)

“Gratitude is the most exquisite form of courtesy.”—Jacques Maritain (1882-1973)

“Discourtesy does not spring merely from one bad quality, but from several—from foolish vanity, from
ignorance of what is due to others, from indolence, from stupidity, from distraction of thought, from
contempt of others, from jealousy.”—Jean de la Bruyere (1645-1696)

1.4 Risks and Risk Management

2. Systematic risk
Systematic risk is the risk a company faces from the entire market or market segment in which it
operates. A classic example of systematic risk in the e-business market is the dotcom crash of 2000 and
2001. Several e-businesses started and went public, then were purchased by other e-businesses.
Most of the e-businesses had little cash flow and were unable to make profits; these companies valued
growth over financial stability, creating an unsustainable economic bubble that burst, destroying many
dotcom companies. While this type of systematic risk may not occur again, most market segments may
tend to operate in business cycles, growing, reaching a plateau and contracting. Owners and
entrepreneurs of e-businesses must be able to assess their market segment and plan for each stage in
the business cycle.

3. Security Risk
E-businesses face many different types of risks related to the security of their business information and
customer information. Computer viruses and hackers are constantly trying to tap into online companies
and steal customer identities and financial information. These security risks force e-businesses to use
software and encryption codes that limit an outsider’s ability to hack into their secure systems. Online
security risks can also lead to legal issues for e-businesses, as they are obligated to protect consumer
information by federal and state law. Breaches in an e-business’ system will also increase the company’s
insurance risk, as insurers require higher premiums for companies with legal issues, if they decide to
take on the e-business as a client

1.4 Technological advances and advantages

A. Technological advancements have had a huge impact on the ecommerce world, transforming
the way consumers connect with brands and empowering them to shop
more cost effectively. Driven by the convenience of getting products
delivered to your doorstep, ecommerce has now become an integral part
of everyday life. Strategic plans, competitive marketing, and a skilled
 workforce aside, ecommerce organizations are expected to remain up to date with the latest
technologies. These technological advancements have enabled people to meet their purchasing
needs with ease, and as a result, the ecommerce sector continues to go from strength to
strength.

In this article we will discuss some of these ecommerce technology trends and their implications for
driving forward ecommerce success.

1. Omni-channel presence/support
Modern shopping habits involve a process of cross-channel research, consideration, and purchase.
Indeed the statistics show that 90% of customers expect smooth interactions across multiple channels
and devices, highlighting the importance of omnichannel readiness for today’s businesses. Making use
of the right technology means providing customers with not only what they want when they want it, but
where they want it too.
 Video Chat: Allows your business to interact face-to-face with customers creating a
personalized, cross-channel, visually demonstrative and consultative experience.
 Cobrowsing: A visual engagement system bringing your agents and customers together on the
same page, at the same time, allowing agents to seamlessly guide your customers through
complex procedures.
 Screen Sharing: A method of interacting where your customers share their screen with your
agents to effortlessly resolve difficulties filling forms, completing transactions, etc.
 Document Interaction: Provides a platform for your agents to interact with your customers’
documents safely and includes e-signature technologies for enhanced security.
These methods all help to ensure an interconnected customer journey all the way through to purchase.

2. Extensive personalization

“The customer journey is changing. Consumers want everything, and they want it immediately.
Experience matters than anything else – and the technology at our fingertips enable such amazing
experiences, only desired in today’s fast-paced world.” – Sam Hurley

Artificial Intelligence (AI) and machine learning analytics drive customer behavior patterns, whilst
simultaneously interpreting this data, meaning businesses are provided with a cycle of desires and
expectations, creating endless possibilities.

3. The shift to mobile

Mobile platforms have increased in importance, so much so that m-commerce has emerged as a
concept in its own right. Failing to provide a mobile-oriented shopping experience will lose your brand
potential customers. Equipping yourself with mobile-friendly technology is therefore crucial in
maximizing your chances of future success.
 Ecommerce mobile apps – Apps offer customers continuous engagement with your brand and
the
chance for your customers to familiarize themselves with new and relevant purchasing
opportunities.
 Location-based marketing – Use your customers’ geographical whereabouts to market products
relevant to their specific location.
 VR/AR guidance – Integrating VR and AR technologies provides an immersive mobile shopping
experience for your customers, connecting them with your brand in a deeper and more
meaningful way.
 Internet of Things (IoT) – The IoT stems from the desire to better understand consumer trends
across a range of connected devices. The scope it provides for delivering personalized mobile
shopping experiences to your customers is almost limitless.
4. Conversational Marketing
Traditional marketing channels flow in only one direction. The new concept of conversational marketing
has opened up two-way communication, creating numerous opportunities for ecommerce success.
Getting information directly from customers makes more sense than attempting to predict it. You can
establish a personalized, real-time, one-on-one conversation on the back of this, safe in the knowledge
you truly understand your customers’ needs.

Below are some of the most efficient technologies for nurturing customer conversations:

 Chatbots - Chatbots are excellent conversational marketing tools, capable of handling multiple
conversations at any one time. They provide your customers with answers, drawing on
knowledge pooled from multiple channels, whilst maintaining a consistent tone for your brand.
 Live chat - Live chat allows your support teams to communicate with customers through live
messaging. You can initiate a preemptive chat invitation to particular customers based on their
behavior.
 Mobile messaging Smartphones are another way for your business to reach out to customers.
With potential fatigue from the onslaught of promotional emails, talk with them through mobile
messaging apps instead.

5. AI and chatbots for customer communications

“It’s the first inning. It might even be the first guys up at bat. We’re on the edge of golden age [of AI].” –
Jeff Bezos CEO at Amazon

Chatbots and virtual assistants represent the future for businesses. Some are already integrating
chatbots in their systems to improve their customers’ experience and boost brand image. With the help
of Chatbots you can order food, check in luggage at the airport, book a hotel room, schedule your flight,
and get recommendations for almost anything you can think of. The Starbucks chatbot for example gives
customers details regarding their order status, payment details etc.

6. Image search
Ecommerce businesses are integrating image search technology on their websites so customers can
easily photograph products they are interested in and find similar examples on other sites that may be
offering better deals. Imagine someone sees a beautiful couch, but it costs too much for them. If your
business offers similar products at a more reasonable price, integrating image search into your website
will allow you to potentially pick up on this sale, creating an extra revenue stream.

7. Quick and easy checkout processes

Cart abandonment is the most frustrating reason for losing a sale because it means a user was
considering buying your product, only to change their mind at the last minute. The latest data shows a
79.17% global rate of cart abandonment, highlighting how big a problem it is. One of the main reasons
customers abandon their carts is the checkout procedure itself. No matter how well the lead has been
nurtured, inefficient checkout processes raise the chances your users will abandon their cart.

Therefore, if you want your ecommerce company to be successful, embrace technology that provides
quick and efficient checkout solutions, such as: Speedy mobile payment solutions, including Apple Pay
and Android Pay. Enabling your customers to save card details, streamlining repeat purchases. Providing
one-page, hassle-free checkouts. Offering a range of payment options. Equipped with this technology,
your business can alleviate any potential difficulties customers
may encounter at checkout.

B. Advantages of Technologies enabled business

Today, business organizations are using electronic medium to identify, attract, and retain customers.
Technology has helped business houses greatly to offer extended customer support.

Interactive Computer and Communicators Technologies have helped business organizations to collect
detailed information about the customer’s behavior, preferences, tastes, needs and buying patterns;
and use the information to take right decisions on product, price, place and promotion. Various
advantages of enabling technology in business are briefly explained below.

Advantages of Technologies enabled business

The advantages that are obtained in using technology for providing customer support are many:

1. Reduction of Cost per Contact

In personal contacts, any sales Representative should pay full attention in one-to-one interaction. Lot of
time, money and labor resources should be allocated for such one-on-one interaction. A web based chat
or e-mail involves a relatively low cost per contact. E-mail are generally handled in batches. The
customer support executive while communicating with potential customers on the web can handle
other functions between sessions during a live chat. It reduces cost incurred on labor which reduces the
cost incurred on each contract. Using technology to acquire customers decreases the customer
acquisition cost.

2. Creation of Intimate Relationship

Computer mediated chats create and support intimate relationship between the sales Representative of
an organization and the customer. The conversation and refined method of’ answering queries help to
develop emotional bondage between the representative and the customer. An integrated database to
deliver consistent and improved customer responses improves the service level agreements and
enhances the relationship between the customers and the business.

3. Reduction of Human Errors

“To err is Human”. Errors may creep in when the customer support executive lacks training or influenced
by moods. Computer-enabled communication results in fewer errors in relation to tracking orders,
identifying the customer base and verifying the charges. If the data of the customers are accurately fed
into the computer, then the reports generated on customers will be very accurate and meaningful to
business organizations.

4. Quality of Work
The interaction between the customers and the representatives are generally monitored in business
with computer mediated communications. Various business organizations also provide incentives to
customer support executives based on their performances. This motivates and influences them to
provide better and consistent service as they are subject to quality control and performance appraisal.

5. Good return on investment

Low cost per contact, outsourcing of customer support functions and filling up the customer
representative post with temporary and seasonal workforce generate good return to any organization.
An E-Commerce transaction reduces the cost on middlemen, advertisement and labor and generates
good return on investment.

6. Generates revenue
Using interactive service tools to sell various product helps to decrease cost of product which in turn
increases revenue and retail customers. Technology enabled business helps to shorten the sales cycle of
the firm and increase sales performance such as revenue per sales representative and per Customer,
average order size etc.
7. Quick response
The customer support executives respond to customer queries quickly. The services of the organization
are available 24/7 x 365. Likewise, the supporting staff are well trained to handle queries. Such quick
response brings satisfaction to customers and help business organization to retain customers.

8. Reduction of Development time

It is very expensive to train, motivate, influence and retain customer support executives. The image and
the performance of the customer support executive has an impact on the image of the business
organization. So, it is vital to recruit a pleasant looking customer support executive in traditional
business. In E-business, where the transaction and communication take place on web, there is a need for
customer support executive with good communication skills. The organization need not worry about the
physical appearance of the individual as there is no face to face communication.