Chapter 1

Introduction to e-business and e-commerce

What is E-commerce and E-business

Electronic commerce describes the buying and selling of products, services, and information via Internet e-Business describes the broadest definition of EC. It includes buying and selling of products and services, servicing customers, collaborating with business partners, and conducting other intrabusiness tasks.

The main difference between them is that e-commerce defines interaction between organizations and their customers, clients, or constituents. On the other hand, e-business is broader term that also encompasses an organizations internal operations.

E-business and e-commerce

Three alternative de nitions of the relationship between e-business and e-commerce

E-business opportunities
Reach:
Potential no. of customers ,a business can interact with. No. of different categories and products a consumer interface can cover.

Richness:
Detailed product information More interactivity and customization

Affiliation:
Refers to effectiveness of links with partners

E-Business Risks
Strategic Risk of making wrong decision about e-business investments. Practical risks that can lead to bad customer experiences.     A company emails without permissions, problems with fulfilment of goods ordered online, service enquiries dont reach the appropriate person . Hackers stealing the credit card details

E-Commerce
All electronically mediated transactions between an organization and any third party it deals with.

Different Perspectives of E-commerce

1. A Communication Perspective: 2. A Business Process Perspective 3. A Service Perspective: 4. An Online Perspective:  Buy-side e-commerce  Sell-side e-commerce

Figure 1.1

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

Different Types of the Sell-side e-commerce

1. Transactional e-commerce sites:  Enable purchase online.  Business contribution: 1) sale of products. 2)Provide info to customers that prefer to purchase the products offline. 2. Service oriented Relationship building sites:  Provide information to stimulate the products and build relationships( through web sites and e-newsletters).  Business contribution : encouraging offline sales and generating enquiries from potential customers.

3. Brand Building sites:  Provide an experience to support the brand.  Typical for low value high volume fast moving customer goods. 4. Portal or media sites:  Provide information or news about a range of topics  Business contribution: Advertising, commission based sales, sale of the customer data.

Major Types of E-commerce 1. 2. 3. 4. 5. 6. 7. 8. amazon.com eBay.com Grainger.com Priceline.com gswan.gov.in incometaxindia.gov.in CAL-Buy portal Small contractors maintaining government buildings, schools etc. 9. P2P: Gnutella s/w application 10. M-Commerce : Wireless mobile devices such as PDAs or cell phones. 11. G2G: non-commercial interactions between 2 or more nations governments e.g. providing foreign aid. B2C: C2C: B2B: C2B: G2C: G2B: B2G: C2G:

E-government
E-government describes the use of technologies to facilitate the operation of government and the disbursement of government information and services. G2C,G2B,G2E,G2G Cover services for:
 Citizens: Facilities for dissemination of information and use of online services at local and national levels. Suppliers: Internal communications: includes information collection and dissemination and email and workflow systems for improving efficiency within government departments.

 

Drivers of consumer Internet adoption

Content: More detailed, in-depth information to support buying process. Customization: Web pages or email alerts Community: forums, chat-rooms and Blog comments. Convenience: 24 x 7 x 365 availability of the service. Choice: Wider choice of products and suppliers. Cost reduction: Internet is a relatively low cost place of purchase. Test and trial online:

Barriers of consumer Internet adoption

No perceived benefit Quality evaluation Lack of trust in virtual sellers Security problems Lack of enjoyment in shopping. Time-consuming nature. Cost of entry. Cost of use. Limited Internet/ computer experience. Poor connection speed.

Drivers of business adoption

Potential for increased revenue Cost reduction

Figure 1.6

Attitudes to business benefits of online technologies

Source: DTI (2002)

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.

Tangible and intangible benefits

Tangible benefits

Intangible 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.

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

Figure 1.8

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

Barriers to adoption
Business are not using Internet for particular e-business applications

Figure 1.9

Barriers to development of online technologies

Source: DTI (2002)

Figure 1.10

The McKinsey 7S framework

Source: Adapted from Waterman et al. (1980)

Exercise
Please identify one company for each the types of e-commerce below:
Transactional e-commerce sites Services-oriented relationship-building web sites Brand-building sites Portal or media sites

Refer to Figure 1.2 and identify a company for each the category provided.