Professional Documents
Culture Documents
H. Joseph Wen
New Jersey Institute of Technology, Newark, New Jersey, USA
Houn-Gee Chen
National Chung-Cheng University, Chia-Yi, Taiwan
Hsin-Ginn Hwang
National Chung-Cheng University, Chia-Yi, Taiwan
[5]
H. Joseph Wen, Table I
Houn-Gee Chen and The benefits of electronic commerce
Hsin-Ginn Hwang
E-commerce Web site design: Benefit Description
strategies and models
Information Management & Product promotion Through a direct, information-rich and interactive contact with customers, EC
Computer Security enhances the promotion of products. Electronic medium also allows interactivity and
9/1 [2001] 5±12 customization for advertising content, based on the customer profile or input. EC
thus offers an opportunity for new promotion strategies, enhancing the branding of
products
Cost saving By using a public shared infrastructure such as the Internet and digitally
transmitting and reusing information, EC systems lower the cost of delivering
information to customers, including personnel, phone, postage, and printing costs
Timely information Due to their instantaneous nature, EC systems allow a reduction of the cycle time
required to produce and deliver information and services.
Shortened remittance time With electronic funds transfer (EFT), customers send their remittances electronically
to the company’s bank. This arrangement eliminates the time delay associated with
the remittance in the mail system
Information consistency EC ensures the consistency and accuracy of information through sharing of
information and use of electronic forms for doing business
Better customer service The ability to provide on-line answers to problems through resolution guides,
archives of commonly encountered problems and electronic mail interaction 24
hours a day, 365 days a year, builds customer confidence and retention
Better customer EC enables the learning about customers due to its ability to record every event in
relationship which a customer asks for information about a product, buys one, requests customer
service, etc. Through these interactions, the needs of the customer are identified
and will feed future marketing efforts
Customization of products The information-based nature of the EC processes allows for new products to be
created or existing products to be customized based on customers’ exact needs.
Competitive advantages EC enables a company to achieve competitive advantages of: cost saving based on
reduced advertising/promotion costs; product differentiation by customizing
products and timely response to market; customer focus through better customer
relationships and better customer services
Convenience of doing There is no limit on time and location to conduct a business with related parties.
business The information delivered to manufacturers, suppliers and warehouses is almost real
time
Table II
Web site design strategy
Web site design Definition/characteristic Promotion measures/ways Merits
Informational/ This approach is for companies to 1. Putting companies’ catalog on-line 1. Providing large quantities of
communicational use the Web as a supplement to 2. Building broad awareness and image information to customers
design traditional marketing, delivering 3. Using the Web as a cost-effective way to 2. Giving a company an instant global
additional benefits to customers and augment their core products with related presence and attracting people to
building relationships with them information and service function one’s ad, some of them are not the
4. Obtaining cost savings from automating company’s target market, but
routine customer services potentially will be
3. Opening a new communication
channel allowing a company to
develop further relationships with
customers
4. All at a reasonable cost
On-line/transactional This approach is for companies to 1. Creating a retail presence larger than 1. Providing a larger or more specialized
design use the Web to construct ``virtual any physical store could selection of products than
business’’ ± independent, profitable 2. Creating a virtual business providing competitors can offer
ventures that exist only on the extra information in a form competitors 2. Providing higher quality and higher
Internet cannot imitate quantity information, more economic
3. Creating a virtual business that takes a benefits, and more convenience than
specialty product or collectible and sells competitors can offer
it worldwide 3. Providing a sense of community for
4. Creating a virtual business that uses the customers
Internet to produce superior economic
benefits to customers that competitors
can not imitate
5. Creating a virtual business providing
convenience to customers that
competitors cannot match
[8]
H. Joseph Wen,
. Reebok (www.reebok.com) lets visitors Promotion model
Houn-Gee Chen and read about sports and fitness, hear from The promotion model represents a unique
Hsin-Ginn Hwang
E-commerce Web site design: Reebok-sponsored athletes, and learn form of advertising that attracts a potential
strategies and models about Reebok’s human-rights activities, customer to a site. The objective is to attract
Information Management & among other things. the user to the commercial site behind it. In
Computer Security many cases, Web sites provide free gifts to get
9/1 [2001] 5±12
Cost saving model users’ attention. The gifts typically include
Saving from commercial activity on the Web digitized material such as software,
includes cost-effective savings and photographs, music, and consumer reports.
productivity savings. By directly meeting Examples of the promotion model include:
information needs, a Web site can be highly
. Auto-By-Tel (www.autobytel.com) offers a
cost-effective. Many companies now use their comprehensive consumer report for all
Web site to support the ownership phase of major manufacturers. It attracts
the customer service life cycle. Productivity consumers to visit the site to read the
report and compare the price. The Web
savings arise from reduction in order and
site produces significant sales for local car
processing costs and more efficient inventory
dealers.
management. Cost savings result through . Kodak (www.kodak.com) provides
reduced brochure printing and distribution
technical help and tutorials for its digital
costs and reductions in order-taking as
cameras and offers a library of colorful,
customers use fill-out forms to prepare their high-quality digital images that are
own orders. As control is effectively downloadable.
transferred to the customer, customer
satisfaction might actually be increased. Info-mediary model
Examples of the cost saving model include: An info-mediary may offer users free Internet
. Microsoft (www.microsoft.com) provides access or free hardware in exchange for
voluminous support material, live audio detailed information about their surfing and
broadcasts of Microsoft conferences, purchasing habits. This is more likely to
product user groups, and free download of succeed than the pure promotion model. Data
the patch and supplemental programs. about consumers and their buying habits are
. FedEx (www.fedex.com) has a Web-based extremely valuable. Especially when that
parcel tracking service. The Web site information is carefully analyzed and used to
saves at least 100,000 shipment tracking target marketing campaigns. Some firms are
requests a day. The savings from reducing able to function as info-mediaries by
the number of employees in answering collecting and selling information to other
standard customer inquiries are businesses. The model can also work in the
tremendous. other direction: providing consumers with
useful information about the Web sites in a
Figure 1 market segment that compete for their dollar.
Emerging models of e-commerce Web site design Examples of the info-mediary model include:
. Audio Review (www.AudioReview.com) is
a site that allows users to exchange
information with each other about the
quality of products and services ± or the
sellers with whom they have had a good/
bad purchase experience. Other sites take
the concept a step further by integrating
an intelligent agent into a Web browser.
Such agents monitor a user’s habits,
thereby increasing the relevance of its
recommendations to the user’s needs ±
and the value of the data to the collector.
. New York Times (www.NYTimes.com), a
content-based site, is free to view but
requires users simply to register (other
information may or may not be collected).
Registration allows inter-session tracking
of users’ site usage patterns and thereby
generates data of greater potential value
in targeted advertising campaigns. This is
the most basic form of info-mediary
model.
[9]
H. Joseph Wen, The following eight models that are based on Mall model
Houn-Gee Chen and the on-line/transactional design strategy An e-mall hosts many on-line merchants. The
Hsin-Ginn Hwang include:
E-commerce Web site design: mall typically charges setup, monthly listing,
strategies and models 1 brokerage model; and/or per transaction fees. The virtual mall
Information Management & 2 retail model; model may be most effectively realized when
Computer Security 3 mall model; combined with a generalized portal. Also,
9/1 [2001] 5±12 4 advertising model; more sophisticated malls will provide
5 subscription model; automated transaction services and
6 community model; relationship marketing opportunities.
7 manufacturer model; and Examples of the mall model include:
8 customization model. . Yahoo! Shopping (Shopping.Yahoo.com) is
a cyber shopping mall. It allows customers
These are popular models that provide
to visit just one site for all their shopping
on-line transaction services for companies to
needs. Since it is an attractive and well-
make profits on the Web.
promoted site, it attracts many more
visitors than any individual store could.
Brokerage model . zShops (zShops.com) is a virtual mall, but
Brokers are match-makers. They bring
one that will process the transaction,
buyers and sellers together and facilitate
track orders, and provide billing and
transactions. Those can be business-to-
collection services. It brings buyers and
business (B2B), business-to-consumer (B2C),
on-line merchants to the mall and
or consumer-to-consumer (C2C) markets. A
provides transaction services such as
broker makes its money by charging a fee for
financial settlement and quality
each transaction it enables. Examples of the
assurance. zShops protects consumers by
brokerage model include:
assuring satisfaction with merchants.
. eTrade (www.eTrade.com) is an on-line
financial brokerage, where customers
Advertising model
place buy and sell orders for transacting
The Web-advertising model is an extension of
financial instruments. Also, travel agents the traditional media-broadcasting model.
fit into this category. In this model, the The broadcaster, in this case, a Web site,
broker charges the buyer and/or seller a provides content (usually, but not
transaction fee. Some models work on necessarily, for free) and services (like e-
volume and low overhead to deliver the mail, chat, or forums) mixed with advertising
best-negotiated prices. messages in the form of banner ads. The
. World Chemical Exchange banner ads may be the major or sole source of
(www.ChemConnect.com) is an revenue for the broadcaster. The broadcaster
increasingly common model in B2B may be a content creator or a distributor of
markets. In this model, the broker content created elsewhere. The advertising
typically charges the seller a transaction model only works when the volume of viewer
fee based on the value of the sale. The traffic is large or highly specialized.
pricing mechanism can be a simple Examples of the advertising model include:
offer/buy, offer/negotiated buy, or an . Yahoo! (Yahoo.com) is a high-volume
auction offer/bid approach. traffic ± typically tens of millions of visits
per month ± driven by generic or
Retail model diversified content or services. The high
E-tailers are an Internet version of classic volume makes advertising profitable and
wholesalers and retailers of goods and services. permits further diversification of site
Sales may be made based on list prices or services. Competition for volume has led
through auction. In some cases, the goods and to the packaging of free content and
services may be unique to the Web and not have services, such as e-mail, stock portfolio,
a traditional ``brick-and-mortar’’ storefront. message boards, chat, news, and local
Examples of the retail model include: information.
. eToys (eToys.com) is a toy business that . Free Merchant (FreeMerchant.com) gives
operates only over the Web. The method of users free Web services, site hosting, and
selling may be list price or auction. Internet access. Freebies create a high
. Lands’ End (www.Landsend.com), a volume site for advertising opportunities.
traditional catalog company, has now
migrated from mail order to a Web-based Subscription model
order business. There is the potential for Users pay for access to the site. High value-
channel conflict. Catalog marketing can added content is essential. Generic news
prove to be an asset if cleverly integrated content, viable on the newsstand, has proven
into Web operations. less successful as a subscription model on the
[ 10 ]
H. Joseph Wen, Web. A 1999 survey by Jupiter savings that may or may not be passed on to
Houn-Gee Chen and Communications found that 46 per cent of consumers), improved customer service, and
Hsin-Ginn Hwang Internet users would not pay to view content a better understanding of customer
E-commerce Web site design:
strategies and models on the Web. Some businesses have combined preferences. The model has the potential for
Information Management & free content (to drive volume and ad revenue) channel conflict with a manufacturer’s
Computer Security with premium content or services for established supply chain. Examples of the
9/1 [2001] 5±12 subscribers only. Examples of the manufacturer model include:
subscription model include: . Micron (www.micron.com), a computer
. Quote.com (www.Quote.com) is an manufacturer, sells its computer directly
example of a site profitably selling to customers on the Web. Since there is no
investment information. It creates a intermediary the distribution costs or
unique and ``must have’’ content that cost-of-sales shrink to zero.
draws investors to pay a subscription fee . Flowerbud (www.Flowerbud.com) sells
for the information. fresh flowers directly to customers on the
. ESPN SportsZone (espnnet.sportszone.com) Web. Perishable products that benefit
attracts more than 250,000 visitors a day from fast distribution, like fresh flowers,
with free, frequently updated sports may prove advantageous by eliminating
information, while 50,000 subscribers pay $5 middlemen.
per month to access detailed background
information, columns, reports, and more. Customization model
This model provides customers with content
Community model that is customized to meet their preferences.
The viability of the community model is By completely customizing information
based on user loyalty (as opposed to high needs, a Web site can be highly attractive to
traffic volume). Users have a high investment visitors. While this model represents a novel
in both time and emotion in the site. In some use of e-commerce technology, it is unclear
cases, users are regular contributors of how large a paying market exists for this
content and/or money. Having users who kind of information. Examples of the
visit continually offers advertising, customization model include:
info-mediary or specialized portal . My.Netscape (My.Netscape.com) is a
opportunities. The community model may personalized portal. The generic nature of
also run on a subscription fee for premium a generalized portal undermines user
services. Examples of the community model loyalty. The personalized portals allow
include: customization of the interface and
. Family Radio (FamilyRadio.com) is a content. This increases loyalty through
Christian radio station site. It is the user’s own time investment in
predicated on the creation of a community personalizing the site. The profitability of
of users who support the site through this portal in based on volume and
voluntary donations. Not-for-profit possibly the value of information derived
organizations may also seek funding from from user choices.
charitable foundations to support the . Intelligent Agents (BargainFinder.com)
organization’s mission. are programs that answer to user
. Guru (Guru.com) provides a source of problems with navigation in the chaos of
information based on professional the Internet. BargainFinder not only helps
expertise and the experience of other users find a good price but also learns
users. It is typically run like a forum from past user behavior to help optimize
where persons seeking information can searches.
pose questions and receive answers from
(presumably) someone knowledgeable
about the subject. The experts may be
Summary
employed staff, a regular cadre of
volunteers, or in some cases, simply This paper studies the emerging models of
anyone on the Web who wishes to e-commerce Web site design. The models are
respond. categorized based on different Web design
site strategies. We identify two major Web
Manufacturer model site design strategies: ``informational/
This model is predicated on the power of the communicational design strategy’’ and
Web to allow manufacturers to reach buyers ``on-line/transactional design strategy.’’ The
directly and thereby compress the models for informational/communicational
distribution channel (i.e. eliminate design strategy include brand awareness and
wholesalers and retailers). The manufacturer image building, cost saving, promotion, and
model can be based on efficiency (cost info-mediary. The models for on-line/
[ 11 ]
H. Joseph Wen, transactional design strategy include Griffith, D.A. and Krampf, R.F. (1998), ``An
Houn-Gee Chen and brokerage, retail, mall, advertising, examination of the Web-based strategies of
Hsin-Ginn Hwang subscription, community, manufacturer, and the top 100 US retailers’’, Journal of
E-commerce Web site design:
strategies and models customization. Marketing: Theory and Practice, Summer,
Information Management & Although a large number of companies use pp. 12-22.
Computer Security the Web as an advertising tool to build Hoffman, D.L., Novak, T.P. and Chatterjee, P.
9/1 [2001] 5±12 awareness or provide information rather (1995), ``Commercial scenarios for the Web:
than relying on the Web to do online opportunities and challenges’’, Journal of
transactions, we present eight e-commerce Computer-Mediated Communication, Vol. 1
models that companies are using to make No. 3, pp. 1-20.
profits on the Internet. In fact, companies Ju-Pak, K.H. (1999), ``Content dimension of Web
usually use more than one model to advertising: a cross-national comparison’’,
accomplish their e-commerce objectives. International Journal of Advertising, Vol. 18,
Although new models are beginning and are pp. 207-31.
continuing to appear on the Web, no one Kalakota, R. and Whinston, A.B. (1996), Frontiers
knows which, if any, of these models will of Electronic Commerce, Addison-Wesley,
finally succeed. Reading, MA.
Liu, C., Arnett, K., Capella, L. and Beatty, R.
(1997), ``Web sites of the Fortune 500
References and further reading
Angehrn, A. (1997), ``Designing mature Internet companies: facing customers through home
business strategies: the ICDT model’’, pages’’, Information & Management, Vol. 31,
European Management Journal, Vol. 15 No. 4, pp. 335-45.
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Cappel, J.J. and Myerscough, M.A. (1996), ``World emerging model of Web site design for
Wide Web uses for electronic commerce: marketing’’, Communications of the ACM,
toward a classification scheme’’, http:// Vol. 41 No. 3, pp. 44-51.
hsb.baylor.edu/ramsower/ais.ac.96/papers/ Slywotzky, A.J. (2000), ``The future of commerce’’,
aisor1-3.htm. Harvard Business Review, January-February,
Clark, B. (1997), ``Welcome to my parlor . . .’’, p. 39.
Marketing Management, Chicago, Vol. 5 No. 4, Watson, R.T., Akselsen, S. and Pitt, L.F. (1998),
pp. 10-25. ``Attractors: building mountains in the flat
Duffy, J. (2000), ``Point of no return’’, CMA landscape of the World Wide Web’’, California
Management, March, pp. 32-7. Management Review, Vol. 40 No. 2, pp. 36-56.
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