Some Interesting Types of e-Commerce Applications Outline 2.1 ®@ 22 Introduction to Different Types of e-Commerce Applications 35 Considering the Varicty of e-Commerce Applications 36 2.2.1 ¢-Businesses 38 2.2.2 e-Brokerages 40 2.2.3 Information Utilities 42 2.24 Customized Marketing 43 2.2.5 Custom Manufacturing 45 2.2.6 On-line Procurement 46 2.2.7 Supplier-Customer Systems Integration 47 2.2.8 Logistical Management of Commodity Suppliers 48 2.2.9 Human Resource Planning and Management 49 2.2.10 Advanced Compensation Systems 51 2.2.11 Matrix Management Support 52 2.2.12 Support for Distributed Workers 53 2.2.13 Business Modeling 54 2.2.14 Auditing Support Systems 58 2.215 Support for Non-Profit Organizations 58 Applying Knowledge of Different Types of e-Commerce Applications 60 2.3.1 Migrating Legacy Electronic Data Interchange (EDI) Systems to the Internet 60 2.3.2 New e-Commerce Applications for Existing Organizations 61 2.3.3 e-Commerce Applications for Start-up Organizations 61 2.3.4 Student Assignment—Identifying an Interesting e-Commerce Application 63 Some Examples of e-Commerce Applications ° 65 24.1 e-Groceries 65 2.4.2 c-Clothing 66 24.3 e-Builders 66 2.4.4 Services for Individuals 672.1 | INTRODUCTION TO DIFFERENT TYPES OF E-COMMERCE APPLICATIONS 35 2.4.5 Services for Businesses or Professionals 67 2.4.6 Niche Market Sales and Services 67 ¥® 25 Cyber Supplements for Chapter 2 68 e-Commerce applications are continually developing and evolving as people identify new uses for increasingly complex and flexible networks of computerized organiza- tional systems. In general, e-Commerce applications tend to have the following char- acteristics: * They involve multiple distinct groups of users (each with their own distinct sets of needs) * They cross organizational boundaries (both within an organization and even with other organizations) * They include information from external sources (which may be freely obtain- able, may be rewarded, may be bought, or may require special efforts to obtain) * They adapt to changes (both within the competitive marketplace and in tech- nology in general) * They recognize information as a commodity (to which value can be added and from which value can be extracted) e-Commerce often involves enterprise-wide systems integration. Enterprise-wide systems integration involves developing or redeveloping of an organization’s infor- mation infrastructure in a manner that optimizes the benefits to the whole organiza- tion rather than to individual parts of the organization. It is a strategy rather than a type of application. Applications analyze/control the operations of an organization. This may include redefining the applications that interact with this information in- frastructure. It often includes some extent of organizational restructuring. e-Commerce makes a variety of just-in-time activities possible within an organ- ization. Just-in-time is a business strategy involving deferring acquisitions or devel- ‘opment of resources (material, product, and people resources) until they are needed. Organizations use a variety of just-in-time strategies to delay investing in resources until the resources are assured of producing a profit for the organization. ‘The types of interesting e-Commerce applications, discussed in this chapter, have evolved from the results of interviews with a number of business experts and the ongoing evolution of e-Commerce systems in industry, especially those featured in various trade press articles, They are still evolving today. Visit the companion Web site for information on the latest evolutions. The names used in this chapter for e-Commerce application types are not nec- essarily the only or even the best names used for them. Different people may use these names to refer to other types of applications. However, they provide a useful start to understanding the range of different e-Commerce applications. ‘The information in this chapter provides a general idea of some of the possibil- ities of these applications. The selected information also includes notes that can help36 CHAPTER 2 / SOME INTERESTING TYPES OF E-COMMERCE APPLICATIONS: developers avoid making limiting or incorrect assumptions about various possibili ties of each of the applications. The rest of the text provides a method for gaining a deeper understanding of any chosen application and for developing a system to serve it. The most typical types of e-Commerce applications interface an organization with external individuals and/or organizations. These applications generally involve the buying, selling, trading, and/or promoting of products and/or services. They include: . e-Businesses e-Brokerages Information utilities Customized marketing Custom manufacturing On-line procurement Supplier-customer systems integration Logistical management of commodity suppliers Human resource planning and management Support for non-profit organizations ‘Additional applications, involving enterprise-wide systems integration, are closely related to the above types of e-Commerce applications. While these types of appli- cations are primarily internal to an organization, they: © Generally require information external to the organization * Cross organizational boundaries within the organization * Contain the other attributes of a typical e-Commerce application The internal nature of these applications leads organizations with successes in these areas to be relatively secretive about them. Thus, it may be difficult to find suf- ficient information about the state of the art to fully understand what other organi- zations are doing about them. These types of applications include: Advanced compensation systems. Matrix Management Support Support fér distributed workers Business modeling * Auditing support systems These different types of applications, which are briefly described below, are not to- tally distinct from one another. Rather, there is considerable overlap between them, as is illustrated in Figure 2-1, Support for non-profit organizations is not illustrated in the figure because it may involve some or all of the other application types. ‘The focus of each of the following descriptions is to identify the range of tasks that an application may involve for its various users. Tasks are specific (usually2.2 | CONSIDERING THE VARIETY OF E-COMMERCE APPLICATIONS 37 ‘Supplier. euwtomer Logistical Information, systems management utilities integration of commodity suppliers Businesses Brokerage On-line procurement ‘Customized manufacturing Customized marketing Human resource planning and management eS | Matrix ‘Advanced management support ‘compensation systems Figure 2-1 Overlapping types of e-Commerce applications work-related) accomplishments of a person (or group of persons). Tasks accomplish work and/or personal objectives. Applications are typically composed of a number of related tasks that work toward accomplishing major organizational goals. Tasks define what has to be accomplished without dealing with how it will be accom- plished, Most tasks can be accomplished in a wide number of ways, using various tools and/or procedures. e-Commerce often involves a variety of external and internal users. External users are those users who are not employed by or responsible to (as with members of a non-profit group) the organization that controls the e-Commerce system, re- gardless of whether or not they use the system externally to the organization's facil- ities. Internal users are those users who are not employed by or responsible to (as with members of a non-profit group) the organization, that controls the e-Commerce system, regardless of whether or not they use the system externally to the organiza- tion’s facilities.38 CHAPTER 2 / SOME INTERESTING TYPES OF E-COMMERCE APPLICATIONS, 2.2.1 e-Businesses e-Businesses (also known as electronic storefronts) involve setting up Web sites that provide the main interface between an organization and its clients. e-Businesses go far beyond the average corporate home pages, which are little more than an acknowl- edgment that the corporation exists. Likewise, they should provide more than an on- line version of traditional catalog shopping. Successful e-Business sites generally: * Provide a full range of services both to customers and to employces of the e-Business. * Serve the whole business, including all traditional aspects of: marketing, sales, and support. * Identify what type of products and/or services they provide and what types of clients they intend to serve. Special types of e-Businesses include: * e-Brokerages * Information utilities * Customized marketing * Customized manufacturing * Supplier-customer systems integration ILis important that an e-Business provide some unique competitive advantages that will entice potential customers to give it a try. Chapter 3 contains a discussion of var- ious e-Commerce competitive advantages. Start-up e-Business organizations are most successful if they focus on a specific type of business in a particular industry. Some examples of specific e-Business op- portunities include: * A special interest gift store * An outfitter specializing in a particular sport * A conference-organizing company specializing in a particular locale * Music by a particular artist or group. * Crafts of a unique style and/or theme * Health products focused on a particular set of diseases Often these businesses can only exist in cyberspace because their potential cus- tomers are too spread out geographically for any physical location to achieve a high enough amount of sales. Existing businesses need to provide a reason for their cus- tomers to shop on-line rather than just go to the local shopping center and look for what they want. A possible feature could help customers get products that they want as quickly and easily as possible by identifying the closest physical location that has a desired item in stock, NOTE: If c-Businesses are not directly involved in adding value to the products and/or services that they sell, then they may be particularly vulnerable to other e-Businesses with any type of competitive advantage. Some of the earliest successful e-Businesses were based on offering a wider variety of books or music than might be found at individual physical stores. They were able to provide this variety without ex- cessive inventory costs by using taking orders for items that they would then acquire2.2 / CONSIDERING THE VARIETY OF E-COMMERCE APPLICATIONS 39 from various suppliers. However, this strategy is easy to copy, and ¢-Businesses who just resell the products and/or services of other organizations can easily lose out to direct sales by the organizations that produce the products and/or services, Cur- rently, e-Businesses provide value by a number of techniques, including: Producing or modifying the product or services to suit the customer Lower prices than are available through local stores Larger selection than is typically available locally Fast delivery compared with ordering through a local store After-sales service ‘The main users of c-Businesses include: External users + External product sources—those who create products outside the organization * Customers—those who want or need the produets/services * Current customers of the organization * Potential customers of the products/services Internal users * Product procurers—those who obtain any products that come from outside the organization * Internal product sources—those who create products inside the organization * Consultants—those who provide services for hire to those outside the or- ganization * Product line managers—those who decide what products/services to offer to the customers * Marketers—those who identify needs and clients for products/services and decide how to market them * Support personnel—those who provide produet/sales support * Accountants—those who provide accounting services for the e-Business The main tasks of e-Businesses include: Managing product lines Acquiring products Providing service Marketing Support customers Purchasing Obtaining required support Providing accounting support for these tasks Special considerations for ¢-Businesses include: e-Businesses need to create a steady stream of sales, They can only expand, if sales also expand. While products/services may be sold via the Web, some organizations will also maintain traditional sales methods, such as real stores. Delivery of products/services may be done in many ways, with Web delivery only suitable for information-based products.40 CHAPTER 2 / SOME INTERESTING TYPES OF E-COMMERCE APPLICATIONS Find reviews of and links to examples of e-Businesses in the Chapter 2 Cyber Supple- ment. 2.2.2 e-Brokerages e-Brokerages are a specialized type of e-Business where the main business function of the organization is to bring buyers and sellers together. e-Brokerages often also include features of on-line procurement. Some traditional businesses that are based on brokering include: « Travel agencies © Stock brokers * Real estate agencies * Insurance agencies « Employment services * Auction services NOTE: These traditional business areas are already heavily served by various e- Brokerages. ‘The ease of using the Web has greatly expanded the concept of brokerage to all types of products and services. There are a number of techniques that are currently being used, including: « Gateways to selected groups of ¢-Businesses that have chosen to affifiate them- selves, often based on their scrving a similar group of customers * Elcetronic shopping malis, which promise greater exposure and sometimes de- sign consulting to the e-Businesses that pay to join them » Electronic shopping services/agents, which will try to find desired products/services for clionts at the “best” possible price * Electronic auctions « Reverse auctions, where customers post their wants and the prices they are will- ing to pay Barter exchanges, where members barter their products/services rather than buying/seliing them New techniques keep evolving and appearing, Like other types of e-Businesscs, it is important that an e-Brokerage have unique competitive advantages in order to gain customers (in this case, both buy- ers and sellers). Some of the earliest successful e-Brokerages were based on of- fering discount-priced airfares or insurance. They were able to provide this advantage by dealing with a number of different competing suppliers. However, the airlines and insurance companies are large organizations that can undercut prices offered by such brokers whenever, they wish. Whercas most e-Businesses are actively creating or adding value to the products or services that they scll, e-Brokcrages generally concentrate their servicing to arranging the sale and leave product servicing to be arranged between buyer and seller. e-Brokerages may also broker product/servicing-related insurance (such as trip cancellation insurance oree 22 | CONSIDERING THE VARIETY OF E-COMMERCE APPLICATIONS 41 extended warranties on equipment) to protect buyers and/or sellers from problems with their sale. An e-Business with some products and/or services of its own may choose to also e-broker-related products and/or services in order to provide a larger selection to its customers without increasing its inventory or staff costs, NOTE: Since ¢-Brokerages are not directly involved in adding value to the products and/or services that they broker, they are particularly vulnerable to changes in the way people choose do business and to other e-Brokerages with any type of compet- itive advantage. Traditional brokerages sell their services based on the expertise they can provide buyers and sellers in making good deals, When buyers and sellers do not feel the need for this expert advice, they will often find it cheaper to deal directly with one another. Where this advice is found valuable, it may lead the organization to market the advice directly either in the form of an information utility or a consulting e-Business, The main users of e-Brokerages include: « External users * Sellers, who create products and/or services outside the organization * Customers, who want or need the products/services * Current customers * Potential customers + Internal users * Product line managers, who decide what products and/or services to handle and who manage and assist individual brokers * Brokers, who match customers with sellers and who may assist in the negoti- ations between them * Marketers, who decide how to market brokerage services * Support personnel, who provide product support * Accountants, who provide accounting services for the e-Brokerage ‘The main tasks of e-Brokerages include: * Standardizing product identifications and descriptions * Matching customers and sellers * Providing advice * Assisting negotiations * Marketing brokerage services © Providing accounting support for these tasks Special considerations for e-Brokerages include: * c-Brokerages need to create a steady stream of sales because their income is based on the commissions from these sales. * e-Brokering can occur at considerable distances from both buyers and sellers. Find reviews of and links to examples of e-Brokerages in the Chapter 2 Cyber Supplement.42 CHAPTER 2 / SOME INTERESTING TYPES OF E-COMMERCE APPLICATIONS 2.2.3 Information Utilities Information utilities are a specialized type of e-Business whose main activities in- clude the obtaining, trading, selling, and giving away of information (including ad- vertising). This may include: * Entertainment—such as on-line radio and television * Expert opinions—such as technical or financial advice * Facts—such as sports scores, weather reports, historical or scientific data * Games—whether played on the Web, on the client’s computer, or otherwise * Graphics—such as clip art, photos * News and news analysis—whether the same as provided via another medium or uniquely via the Web Any other forms of information that may be provided for the use of individuals and/or organizations Many existing (print and broadcast) media have adopted the use of information util- ities as an additional format for disseminating their information. In many cascs their main costs of producing the information have already been covered in their original medium, and the information can be converted for reuse on the Web at very little cost. This provides these media with a new source of both advertising revenue and exposure, ‘The Web has made possible the relatively low-cost publishing of all kinds of in- formation. It also makes it easier to find people interested in this information. How- ¢ver, just because someone wishes to publish some information and other people are interested in the information does not guarantee that there is the potential for a vi- able information utility. Information utilities need to make money from their efforts. It is very possible that advertisers may not be available and that people interested in the information may not be willing to pay for it. NOTE: Despite copyright laws and other forms of intellectual Property “protec- tions.” many individuals and organization may readily pirate information that is posted on the Web or that is provided to them via other media. Thus, as information gets older, the likelihood that it may be used without compensation increases. Infor. mation utilities need to be continually creating new information in order to maintain their viability. ‘The main users of information utilities include: * External users * External information providers, who generate the information outside the organization * Information sponsors, who add their own advertising information * Information consumers, who want or need the information * Current consumers * Potential consumers * Internal users * Internal information providers, who generate the information inside the organization