Unit IV

E-Business Applications & Strategies

Business Models
• Online direct marketing- The most obvious EC model is that of selling products or services online.
Sales may be from a manufacturer to a customer, eliminating intermediaries or physical stores (e.g.,
Dell), or from retailers to consumers, making distribution more efficient (e.g., Net-a-Porter, Walmart
online). This model is especially efficient for digitizable products and services (those that can be
delivered electronically).

• Electronic tendering systems- Large organizational buyers usually make large-volume or large-value
purchases through a tendering (bidding) system, also known as a reverse auction. Such tendering can
be done online, saving time and money. Pioneered by General Electric Corp., e-tendering systems are
gaining popularity. Indeed, many government agencies mandate that most of their procurement
must be done through e-tendering.
Business Models over Internet (Contd.)
• Electronic marketplaces and exchanges- Electronic marketplaces existed in isolated applications for decades
(e.g., stock and commodities exchanges). But as of 1996, hundreds of e-marketplaces (old and new) have
introduced new methods and efficiencies to the trading process. If they are well organized and managed, e-
marketplaces can provide significant benefits to both buyers and sellers. Of special interest are vertical
marketplaces that concentrate on one industry.

• Viral marketing- According to the viral marketing model, people use e-mail and social networks to spread
word-of-mouth advertising. It is basically Web-based word-of- mouth advertising, and is popular in social
networks.

• Group purchasing- Group purchasing is a well-known offline method, both in B2C and B2B. It is based on the
concept of quantity discounts (“cheaper by the dozen”). The Internet model allows individuals to get
together, so they can gain the large-quantity advantage.
Revenue Models over Internet
• A revenue model specifies how the organization, or the EC project, will generate revenue.
• The major revenue models are:
• Sales- Companies generate revenue from selling products or services on their websites. E.g.- Starbucks,
Amazon.com etc.
• Transaction fees- Commissions are based on the volume of transactions made. E.g.-when a home owner
sells a house, he or she typically pays a transaction fee to the broker.
• Subscription fees- Customers pay a fixed amount, usually monthly, to get some type of service. E.g.-
Netflix.
• Advertising fees- Companies charge others for allowing them to place a banner on their sites.
• Affiliate fees-Companies receive commissions for referring customers to certain website.
• Licensing fees- Licensing fees can be assessed as an annual fee or a per usage fee. E.g.- Microsoft receives
fees from each workstation that uses Windows NT.
• Other revenue sources-Some companies allow people to play games for a fee or to watch a sports
competition in real time for a fee.
Digital Commerce
• Digital commerce is the
successor to eCommerce (buying
and selling online, usually on a
website).

• Digital commerce is the process

of buying things online without
human intervention.
Digital Commerce in Business
• Services are also delivered in the digital commerce model, and SaaS (software-as-a-service) applications are

just one example of digital commerce’s utilization in business.

• Broadly, digital commerce in the business environment works across four categories of business models:

• Business to business (B2B model)

• Business to consumer (B2C model)

• Consumer to consumer (C2C model)

• Consumer to business (C2B model)

Diff Btw Digital Commerce & E-Commerce
S.No. Digital Commerce E-commerce

1. Digital commerce is more like a culture. E-Commerce is a function.

2. Digital Commerce is not just about selling, E-commerce refers to the functional aspects of selling
rather more than that. products online such as managing supply chains,
getting a storefront set up on a website, or processing
transactions and collecting payments

3. Digital commerce represents people, E-commerce represents the nuts and bolts of online
technology, & data driven processes that selling.
elevate retail to a whole new level.
Mobile Commerce
• Mobile commerce (m-commerce), also known as m-business , refers to conducting e-commerce
by using mobile devices and wireless networks.

• Activities include B2C, B2B, m-government, and m-learning transactions, as well as the transfer of
information and money.

• For example, paying for an item in a vending machine or a tax with an iPhone is considered m-
commerce.

• M-commerce provides an opportunity to deliver new services to existing customers and to attract
new customers to EC anytime, anywhere.
Attributes of M-Commerce

• Ubiquity- Ubiquity means being everywhere, especially at the same time. It is facilitated by wireless
computing. Given that Wi-Fi access is available in more and more places, and that about half of all mobile
phones are smartphones.

• Convenience and capabilities- Having a mobile device increases the convenience of communication. The
functionality and usability of mobile devices is increasing while their physical size remains small and the
cost is affordable. Unlike traditional computers, mobile devices connect to the Internet almost instantly.

• Interactivity- Mobile systems allow for fast and easy interactions (e.g., via Twitter, tablets, or
smartphones).
• Personalization- Mobile devices are personal devices. While several people may share the same
PC, a specific mobile device is usually used by one person.

• Localization- Knowing where a user is physically located in real time provides an opportunity to
offer him or her relevant mobile advertisements, coupons, or other services. Such services are
known as location-based m-commerce. Localization may be for the entire public (e.g., an
announcement about an emergency) or it can be personalized for an individual.
 Landscape of mobile
computing and m-commerce
M-commerce applications
and their classifications
Basics of Internet Enabled SCM-e Supply
Chain
• SCM is the backbone of e-Commerce.

• SCM means coordinating, scheduling, controlling, production, inventories and deliveries of products and

services to customers.

• A supply chain is the connected network of individuals, organizations, resources, activities and technologies

involved in the manufacture & sale of a product or service.

• A supply chain starts with the delivery of raw material from a supplier to a manufacturer and ends with the

delivery of the finished product or service to end consumer.

• SCM is the active streamlining a business’ supply-side activities to maximize customer value and gain a

competitive advantage in the marketplace.

Strategies for E-
Commerce
The major objective of a strategy is to
improve organizational performance.
Therefore, strategy development and
performance are interrelated and described
here as a five phase cyclical process.
Strategy Initiation

• In the strategy initiation phase, an organization is setting its vision, goals, and objectives. Looking at its environment,
strategy initiation includes an assessment of a company’s strengths and weaknesses, and examines the external factors
that may affect the business. Additionally, a company may undertake a competitive and competitor analysis to determine
its strategy. All these activities need to be related to the Internet and e-commerce.

• Example: Amazon.com Amazon.com recognizes that besides selling books, there is also value in providing customers with
information about books, personalized services, and outstanding customer care. Amazon is continuously expanding its
product line (e.g., adding the grocery same day delivery service; increasing its App store to include 200 countries).

• Typical goals and objectives of EC include:

• Improved performance

• Gain of competitive advantage

• Increased sales and revenue

• Improved customer and partner service and relationships

• Generation of new business models and facilitating innovation

Strategy Formulation

•Strategy formulation refers to the development of specific strategies and tactics to exploit opportunities and manage

threats in the business environment in light of corporate strengths and weaknesses. In an EC strategy, the result is

likely to be a list of EC applications or projects to be implemented (e.g., e-procurement, e-auctions). Specific activities

and outcomes from this phase include:

• Business opportunities- The strategy initiation may point to future opportunities.

• Cost–benefit analysis- Each proposed opportunity must be assessed and justified. More information about

conducting a cost– benefit analysis is included.

• Risk analysis, assessment, and management- The risks of each proposed EC initiative (project) must be analyzed and

assessed. If a significant risk is suspected, then a risk management plan is required. Of particular importance in an EC

strategy are business risk factors such as a transition risk.

• Business plan- Many of the outcomes from these first two phases – goals, competitor analysis, strategic

opportunities, risk analysis, and more are components of a business plan.

• The strategy implementation phase includes tactics, plans, schedules, deployment strategies, resource allocation, and

project management. The major specific activities and outcomes from this phase include:

• Project planning- Project planning includes setting project objectives, metrics, a project schedule, and EC initiatives.

• Resource allocation- All internal and external resources need to be properly planned and allocated.

• Project management- Each project needs to be managed during the implementation phases. Activities here range

from purchasing parts to developing an Internet security system.

Strategy Assessment

• Strategy Assessment-Strategy assessment refers to the continuous performance monitoring, the comparison of actual to
desired performance, and the evaluation of the progress toward the organization’s goals, resulting in corrective action and,
if necessary, in strategy reformulation. In strategy assessment, EC metrics are used as a standard against which the
performance level of the strategy is compared using analytics. For large EC projects, business performance management
tools can be employed.
Legal Impacts of E-Commerce

• Incorporation problem

• Trademark security problem

• Copyright protection issue

• Transaction issues

• Privacy issues
Ethical Impacts of E-Commerce

• Client privacy

• Advertising online

• Copyright infringements

• Net neutrality
Societal impacts of E-commerce

• Security & Privacy

• Transfer of money

• Real price & marketing

• Transport issue
• Delivery charges

• Complexity of process

• Uneducated customers
Thank You

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