Slide 1.

SUNWAY UNIVERSITY
E-Business Strategy
Lecture

Introduction to e-business

Lecturer: David Chong

Adapted from Chaffey D, 2007 E-Business and E-Commerce

Management.

David Chong
Slide 1.2

Learning outcomes
1. Define the meaning and scope of e-business and e-
commerce and their different elements
2. Discuss how the Internet has changed the nature of
business.
3. Summarize the main reasons for adoption of e-
commerce and e-business and barriers that may
restrict adoption
4. Use resources to define the extent of adoption of
the Internet as a communications medium for
consumers and businesses
5. Outline the business challenges of introducing e-
business and e-commerce to an organization.

David Chong
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Management issues
1. How do we explain the scope and
implications of e-business and e-commerce
to staff?
2. What is the full range of benefits of
introducing e-business and what are the
risks?
3. How great will the impact of the Internet be
on our business? What are the current and
predicted adoption levels?

David Chong
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E-business opportunities
1. Reach:
– Over 1 billion users globally
– Connect to millions of products
2. Richness
– Detailed product information on 20 billion +
pages indexed by Google. Blogs, videos,
feeds…
– Personalised messages for users
3. Affiliation
– Partnerships are key in the networked economy

David Chong
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The impact of the Internet on business

• Andy Grove, Chairman of Intel, one of the

early adopters of e-commerce, has made
a meteorological analogy with the Internet.
He says:
• The Internet a typhoon force, a ten times
force, or is it a bit of wind? Or is it a force
that fundamentally alters our business?
(Grove, 1996)

David Chong
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E-Business Growth and Projections

• How big is the Internet: 500 million users

worldwide - 2005 expected 1 billion.
• How much will consumers spend online:
1.8 billion - 2005: 16 billion.
• How much will businesses spent online:
1.3 trillion - 2005: 4.3-8 trillion.

David Chong
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Dubit C2C site for a youth audience (www.dubit.co.uk)

David Chong
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Business Is Changing

1. Global activity
2. Environmental concerns
3. New technology
4. Increased knowledge and skill
requirements of employees

David Chong
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Impact of the Internet

• E-commerce—a company’s use of the

Internet to support or complete business
transactions
• Increased competition
• Increased the speed of business

David Chong
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Definitions E-business & E-commerce

• E-business is a system that uses a

number of information-technology
based business practices to enhance
relationships between a business and
its customers/stakeholders.
• E-commerce is the process of allowing
Web based technologies to facilitate
commerce or trade.

David Chong
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Figure 1.4 Three definitions of the relationship between e-commerce and e-business

David Chong
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David Chong
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What’s eCommerce?

Strategic deployment of computer-

mediated business tools and
information technologies to satisfy
business objectives (or might it be to
help re-shape them?).

*Hoffman & Novak, 1996

David Chong
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‘e-commerce’

• E-commerce
First coined by IBM it can now be
considered to include all digitally enabled
commercial transactions between and
among organisations and individuals.
(Laudon & Traver, 2001, p. 6)

David Chong
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E-commerce basics
• List the different combinations of
buyers and sellers engaged in e-
commerce.
• Explain why many online-only e-
commerce companies failed and why
traditional businesses have added e-
commerce.

David Chong
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E-Commerce Categories

• E-commerce—the process of using the

Internet to allow buyers and sellers to engage
in trade
• Business-to-consumer e-commerce
• Consumer-to-consumer e-commerce
• Business-to-business e-commerce

David Chong
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E-commerce

• Business-to-business e-commerce is very

common, while business-to-consumer e-
commerce is still a small percentage of overall
retail sales. Nevertheless, e-commerce is an
important part of a multi-channel retail approach.
• Pure-play e-commerce companies use the
Internet to meet market needs, and traditional
brick-and-mortar retailers use the Internet as a
tool to reach and maintain relationships with
their customers.

David Chong
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Business-to-Consumer E-Commerce
• Brick-and-mortar stores—traditional retail
businesses operating out of buildings where
customers come and shop
• Multichannel strategy—businesses that
traditionally used stores or catalogs for sales that
have added e-commerce
• Brick-and-click businesses—businesses that
offer both traditional and Internet sales
Business-to-Business E-Commerce
• Many of the same features as B-to-C sites
• Reverse auctions—businesses bid against each
other for customer orders

David Chong
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Business-to-Business E-Commerce

Considered from three perspectives:

1. there is the supply chain system and
process. This system links suppliers,
distributors, and other channel members
into an integrated process.
2. businesses are engaging in marketplaces
where goods are bought and sold
3. e-retail has had an impact on the business-
to-business market

David Chong
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Roles and Relationships

• The business
• Customers
• Supply chain
• Information
• Technology
• Communication

David Chong
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Online-Only to Brick-and-Click
• Most early online-only businesses did not
survive due to high start-up costs and few
customers.
• Traditional businesses saw a growing
market acceptance of e-commerce and
added Internet-based marketing functions
to serve their markets.
• Smaller businesses often use e-commerce
service providers.
David Chong
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Consumer-to-Consumer
E-Commerce

• Online auctions
• Online exchanges

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Figure 1.1 The distinction between buy-side and sell-side e-commerce

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Summary and examples of transaction alternatives between businesses,

Figure 1.2
consumers and governmental organizations
David Chong
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Figure 1.5 UK rate of adoption of different digital media

Source: MORI Technology Tracker, January 2006. See www.mori.com/technology/techtracker.shtml for latest details

David Chong
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Cost/efficiency and competitiveness drivers

• Cost/efficiency drivers
– Increasing speed with which supplies can be obtained
– Increasing speed with which goods can be dispatched
– Reduced sales and purchasing costs
– Reduced operating costs.
• Competitiveness drivers
– Customer demand
– Improving the range and quality of services offered
– Avoid losing market share to businesses already using
e-commerce.

David Chong
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Tangible and intangible benefits
Tangible benefits
• Increased sales from new sales leads
giving rise to increased revenue from:
– new customers, new markets
– existing customers (repeat-selling)
– existing customers (cross-selling).
 Marketing cost reductions from:
– reduced time in customer service
– online sales
– reduced printing and distribution costs of
marketing communications.
 Supply-chain cost reductions from:
– reduced levels of inventory
– increased competition from suppliers
– shorter cycle time in ordering.
 Administrative cost reductions from more
efficient routine business processes such
as recruitment, invoice payment and
holiday authorization.
Intangible benefits
• Corporate image communication
 Enhancement of brand
 More rapid, more responsive
marketing communications
including PR
 Faster product development lifecycle
enabling faster response to market
needs
 Improved customer service
 Learning for the future
 Meeting customer expectations to
have a web site
 Identifying new partners, supporting
existing partners better
 Better management of marketing
information and customer information
 Feedback from customers on
products
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Attitudes to business benefits of online technologies

Source: DTI (2002)

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Adoption of Internet and e-business services across Europe

Source: Eurostat, Community Survey on ICT usage in enterprises, eEurope (2005) Information Society Benchmarking Report, © European Communities 2005,
http://europa.eu.int/information_society

David Chong
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Barriers to development of online technologies

Source: DTI (2002)

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Intro to B2B Company

• Employs 600 people worldwide
• Turnover £100m
• Products – composites and speciality polymers
– See www.globalcomposites.com
• Distribution – 90 companies worldwide via joint
ventures and agents
• Competitors:
– Derakan (www.dow.com/derakane)
– Scott Bader (www.scottbader.com)
– Owens Corning (www.owenscorning.com)

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North West Supplies Ltd site (www.northwestsupplies.co.uk)

Source: Opportunity Wales

David Chong
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Intro to B2C Company

• Established 1984, 80 staff

• Products – Kitchenware
• Distribution
– Through retailers and transactional web sites
• Competitors
– Cooking.com (www.cooking.com)
– Lakeland (www.lakelandlimited.com)
– Tupperware (www.tupperware.com).

David Chong
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End of Session

Next Session

E-Bus Strategy

David Chong