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Chapter 8: The Web-Enabled Enterprise

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1 Chapter 8: The Web-Enabled Enterprise
Oz (5th edition)

2 Uniqueness of Web-Enabled Commerce
The Web provides a universal standard Enables seamless integration of information exchanges Within the business Between business and customers/suppliers Unbundling of products and product info Reductions in search costs for both buyer and seller Information asymmetry for buyers Richness and reach New business models (discussed later)

3 Web Technologies (all but the last are available for free)
HTTP HTML and XML File transfer protocol (FTP) RSS Blogs Podcasting Instant messaging Cookies Proprietary technologies

4 HTTP, HTML, and XML Hypertext Transfer Protocol (HTTP) is the protocol used to transfer and download Web information. HTTPS is HTTP with encryption. Uniform Resource Locator (URL) is a literal address given to a Web server that corresponds to the IP address Hypertext Markup Language (HTML) is the language for creating Web pages viewable with a Web browser. HTML determines the look and structure of Web pages. Extensible Markup Language (XML) is used to convey meaning or content to data. HTML <font size =“2”>Oz enterprises, Ltd.</font> <b> </b> XML <company name>Oz Enterprises, Ltd</company name> <telephone> </telephone>

5 FTP, RSS, and Blogs FTP (file transfer protocol) is a common way of transmitting files from one computer to another. You use this when you download files are attach files to an . RSS (rich site summary) is a family of XML file formats. An RSS service is installed on a site to enable users to check updates to the site. Users can also instruct a Web site with RSS to automatically send new information (often used on news Websites). A blog (contraction of “Web log”) is a Web page that invites visitors to post opinions and images on a particular topic. Blogs usually have links to sites of interest. Trackback feature Commercial implications of blogs Advertising Market research Sample blog sites

6 Podcasting and Instant Messaging
Podcasting is like blogging but enables users to post sound on a Web site so that people can download it. Users can subscribe to a podcast site that uses RSS and be notified of new audio files Files are usually in an MP3 format. Business uses Time shifted broadcast of tv/radio programs (www.abc.com) Deliver lessons to remote students New musicians (garageband.com); has RSS Instant messaging (IM) is a service that offers users the ability to determine whether other persons using the service are online. Users can do this in groups (chat rooms) or with one person. Some applications permit video conferencing and FTP. AOL Instant Messenger, MSN Messenger Used in business for customers to chat with sales rep

7 Cookies Cookies Small files a Web site places on a visitor's hard drive so the site can retrieve information later Cookie contains a unique identifier and data collected from prior visits Use of cookies Convenience for users Some cookies are used by third parties contracted by a business Web site (e.g., DoubleClick) Clickstream tracking Spyware includes cookies and other techniques that are installed on your computer unbeknownst to you that transmit information about you while you are online.

8 Proprietary Technologies
Many of the technologies mentioned earlier are widely used and available for no charge. Proprietary technologies are intellectual property and not free of charge. Local search engines (e.g., Google for the WU Web site) Shopping cart applications Wish list creation Tools to analyze Web site visitor behavior

9 Intranets An intranet is a computer network within an organization that uses Internet technologies for r members of the organization only If a company has an existing network, than establishing an intranet is very inexpensive. All that is required is the server software and browsers for clients. Most of the technologies mentioned earlier are all available at no charge

10 Information Most Frequently Found in Corporate Intranets
Customer databases Corporate policies and procedures (Winthrop) Corporate phone directories Human resource forms (Winthrop) Training programs Product catalogs and manuals (Winthrop) Data warehouse and decision support access Internal purchase orders (Winthrop) Travel reservations Knowledge management databases

11 Functional Applications of the Intranet Idea

12 Extranets An extranet is similar to an intranet but it enables the firm’s business partners (e.g., suppliers or customers) to access the firm’s intranet Once an organization links its network to the Internet theoretically anyone can access the firm’s network. With respect to an extranet, firms want to restrict access to business partners. A virtual private network provides the security mechanism for accomplishing this. A VPN uses a combination of public and private lines to build a secure extranet. The link between the firm’s network and the Internet is often called a “tunnel.” A VPN provides a secure tunnel. VPNs are also required for firms with extensive intranets (multi-site firms)

13 Extranet Applications
Managing the supply chain Collaborating with other organizations in the development of new products/services Sharing product catalogs exclusively with wholesalers Sharing news and other information of shared interest exclusively with business partners (e.g., production schedules, forecasts)

14 Types of E-Commerce B2B (seller and buyer are business entities)
B2C (seller is business; buyer is consumer) Other types C2C (seller and buyer are consumers; not covered in our outline; eBay) G2C, G2B, G2G

15 Main Ideas in B2B E-Commerce
Buying and selling in B2B Auctions support dynamic pricing (bidding) Exchanges support dynamic and negotiated prices Supporting technologies for buying/selling VAN EDI and Web enabled EDI Electronic funds transfer Digital signature and digital certificates Activities other than buying and selling Alliances Sharing of supply chain information Sharing of product designs, logistics, forecasts

16 Size of the B2B Market By 2004 market may reach $10 trillion; much larger than B2C market In the US 40 percent of all B2B transactions are done on-line B2B commerce is about 10 times as great as B2C commerce

17 Classifying Auctions/Exchanges Overview
Public or private Auctions tend to be public; exchanges tend to be private Number of participants Sell side one seller Buy side one buyer (GE or ChoiceBuy) Many sellers and many buyers (ChemConnect) Ownership Industry giant Neutral third party Consortium

18 Sell-Side with One Seller
Sellers may be click-and-mortar manufacturer or intermediaries Use the Internet to sell through electronic catalogs Cisco, Dell, Staples Separate pages and catalogs for major buyers Boeing sponsors a website for which airlines can find maintenance and parts

19 Buy-Side with One Buyer
This model arises from the procurement needs of firms where procurement involves the purchase of goods and services needed to accomplish the mission of the business In this model a buyer opens an electronic market on its own server and invites potential suppliers to bid on the items the buyer needs. The invitation is called a request for quote (RFQ). This process is called the reverse auction of bidding mode. GE was one of the first to do this Online directories exist for suppliers that list open RFQs

20 Exchanges with Many Buyers and Sellers
In these exchanges buyers and sellers may be interested in both long term contracts or one-time transactions at prevailing prices. Examples ChemConnect Alibaba.com Converge.com (spot market for electric, networking and computer components)

21 Classifying Exchanges/Auctions (cont) Ownership of Exchanges
Industry giant IBM established an exchange for selling patents (delphion.com) Neutral entrepreneur ChemConnect.com The consortia or co-op Covisint (automobile) Orbitz (airlines)

22 Services Provided by Intermediaries in an Auction/Exchange
Services for buyers Automate buying, contract management, purchase orders, requisitions, business rules enforcement, and payment Services for sellers Catalog creation and content management, order management, invoicing, and settlement

23 Other B2B E-commerce Practices: Alliances and Sharing Information
Online business alliances of airlines such as Orbitz (www.orbitz.com) and Star Alliance Covisint is an alliance of major automobile makers In real estate (MLS) Sharing of information (collaborative commerce) Extranet idea Sharing of supply chain information Joint design

24 Technologies that Support B2B
VAN and Web-enabled EDI Electronic funds transfer (EFT) Digital signatures and certificates Ways to authenticate online messages similar to physical signatures on paper.

25 Major Benefits of B2B to Business
Reduction of paper and administrative costs Reduces cycle time (time compression) Reduces search costs and time for buyers and sellers Reduces inventory levels and costs Reduction in errors and/or improved quality of service Enables JIT and production flexibility Expands the marketplace

26 An Overview of B2C E-commerce Practices
Growth of B2C (see graph in textbook); over 50% of US is online E-tail revenues doubled from 2002 to 2005 Types of e-retailers (e-tailers) Pure-play versus bricks-and-mortar Clicks-and-bricks Catalogue retailers

27 E-tailing Fulfillment concept (picking, packing, and shipping
Advantages to the seller Lower inventory by routing orders directly to manufacturer Lower labor costs (no registers) Lower building costs Advantages to the buyer Convenience and time savings Search mechanisms and comparison shopping Selection and product reviews

28 E-tailing Practices Consumer profiling and one-to-one marketing; both concepts relate to knowing the consumer better so that the business can serve consumers more effectively at lower cost to the business Cookies, clickstream tracking Buying and selling information from third parties Affiliate programs Location of the link versus target of link Compensation schemes Cooperation among competitors Amazon example Conversion rates Pure-play beats clicks and bricks companies Mass-customization Reverse auctions (Priceline.com)

29 Digital Products and Services
Digital products include products like software, photographs, music, movies, or text that can be delivered over the Internet regards.com (greeting cards) and photodisc.com (photographs) Why are these products special? Digital services Application service providers (renting software) Renting storage space (rackspace.com) Online banking (direct.com)

30 Pure-play Business Models
Virtual storefront: Sells goods or services online (Amazon.com) Information broker: Provides information on products or services (Edmunds.com) Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com) Online marketplace: Provides a trading platform for individuals and firms (eBay.com, alibaba.com)

31 More Pure-play Business Models
Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com, mp3.com) Online service provider: Provides online services, including search service. (Google.com, Xdrive.com) Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com) Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)

32 M-Commerce M-commerce concerns the ability of mobile devices to reach the Internet and the ability of merchants to locate a mobile device. Mobile devices must have GPS capability Competitive position of US relative to Japan/Korea Consumer services Information based services – instant messaging, , search for information Transaction based services – purchase stocks, concert tickets, music, or search for price Location based services –anticipate what you want based on your location or data profile (beam coupons for nearby restaurants) Business services

33 Practices (rules) that Attract and Retain Customers (both B2B and B2C)
Use of affiliate programs to target the right customer (links with related sites) Use cookies and CRM software to analyze customer behavior Use CRM software to develop customer profiles and personalize shopping Shorten the business cycle; fill orders quickly Empower customers to help themselves; see text for examples Be proactive; capture the customer’s address and use it to bring the customer back; de-commoditize E-commerce is every commerce

34 Ethical and Societal Issues
Online annoyances Spamming Advertisers viewpoint Consumers viewpoint Pop-up windows Adware and spyware Phishing


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