Presentation on theme: "MIS E-COMMERCE Working 24//7 Net Flix ADWORDS ECOMM ADS E-bake"— Presentation transcript:
1 MIS E-COMMERCE Working 24//7 Net Flix ADWORDS ECOMM ADS E-bake CHAPTER 8E-COMMERCEThis chapter provides an overview of e- commerce and value chain analysis, then compares e- commerce with traditional commerce. It explains e- commerce business models and the major categories of e- commerce. Along the way, it shows what the major activities are in the business- to- consumer e- commerce cycle and the major models of business- to-business e- commerce as well as mobile- and voice- based e- commerce. Finally, it provides an overview of electronic payment systems and Web marketing, two supporting technologies for e- commerce operations.LO1 Define e-commerce and describe its advantages, disadvantages, and business models.LO2 Explain the major categories of e-commerce.LO3 Describe the business-to-consumer e-commerce cycle.LO4 Summarize the major models of business-to- business e-commerce.LO5 Describe mobile- and voice-based e-commerce.LO6 Explain two supporting technologies for e- commerce.Net FlixADWORDSWorking 24//7Hossein BIDGOLIE-bakeECOMM ADSGoogle – m-commerce
2 Defining E-Commerce E-business E-commerce Business applications that use the Internet:Buying and selling products and servicesCollaborating & Communicating with other companies & partnersGathering business intelligence on customers and competitorsProviding customer serviceMaking software updates and patches availableOffering vendor supportPublishing and disseminating informationE-businessActivities a company performs for selling and buying products and services, using computers and communication technologiesE-commerceBuying and selling goods and services over the InternetBuilds on traditional commerce by adding the flexibility that networks offer and the availability of the InternetE- business encompasses all the activities a company performs in selling and buying products and services using computers and communication technologies.E- commerce is buying and selling goods and services over the Internet.
3 Value Chain AnalysisIs a process of analyzing an organization’s activities to determine where value is added to products and/or services and what costs are incurred in doing so.Primary activities are … .For businesses that you interact with, what are some examples of each of the primary activities?Support Activities – are value chain activities that an organization conducts to support the creation of business value.An organization’s value chain is the sum of its primary and support activities working together to create business value.The value chain is another way to view the organization as a system (inputs processes outputs).The value chain is also a useful tool for defining an organization’s core competencies and the activities it can pursue to gain a sustained competitive advantage.Value chainMichael Porter 1985Series of activities designed to meet business needs by adding value (or cost) in each phase of the process
4 Net FlixNet FlixDescribe Net Flix’s competitive advantage and what are the sources of that competitive advantage ?Discuss where you feel Net Flix uses of information systems helps them add value in the Value chain.Primary activities:Inbound logisticsOperationsOutbound logisticsMarketing and salesServiceThe InternetIncreases the speed and accuracy of communication between suppliers, distributors, and customersLow cost means companies of any size can participate in value chain integration
5 E-bakeRevenue ParadigmsSales- Cost of goods soldGross margin- ExpensesNet incomeHow do we make a buck?Margin * Volume(SP – cost) * VolumeA value chain is a series of activities designed to meet business needs by adding value ( or cost) in each phase of the e- commerce process.
6 Dell Computer: E-Commerce in Action Sells computers, hardware, and software directly to customersLower manufacturing costs, faster delivery, and more customized products and servicesJust-in-time (JIT) inventory systemKeep inventory around for no more than 8 to 11 days
7 Advantages of E-commerce Better relationships with suppliers, customers, business partnersPrice transparencyRound the clock and global operationsMore information on potential customersIncreasing customer involvementImproving customer serviceIncreasing flexibility and ease of shoppingSales- Cost of goods soldGross margin- ExpensesNet income
8 Advantages of E-Commerce Increasing the number of customersIncreasing opportunities for collaboration with business partnersIncreasing return on investment because inventory needs are reducedOffering personalized services and product customizationReducing administrative and transaction costsSales- Cost of goods soldGross margin- ExpensesNet income
9 Disadvantages of E-Commerce Bandwidth capacity problemsSecurity issuesAccessibilityAcceptanceE- commerce also has the following disadvantages, although many of these should be eliminated or reduced in the near future:• Bandwidth capacity problems ( in certain parts of the world)• Security issues • Accessibility ( not everybody is connected to the Web yet)• Acceptance ( not everybody accepts this technology)
10 E-bakeRevenue ParadigmsSales- Cost of goods soldGross margin- ExpensesNet incomeHow do we make a buck?Margin * Volume(SP – cost) * VolumeA value chain is a series of activities designed to meet business needs by adding value ( or cost) in each phase of the e- commerce process.
11 E-Commerce Business Models ECOMM ADSWhy did so many dot.com companies go out of business in 2000 and 2001?E-commerce companies focus their operations in different parts of the value chainTypesMerchantBrokerageAdvertisingMixedInformediarySubscriptionADWORDSThe merchant model transfers the old retail model to the e- commerce world by using the medium of the Internet.Using the brokerage model brings sellers and buyers together on the Web and collects commissions on transactions between these parties.The advertising model is an extension of traditional advertising media, such as radio and television. Directories such as Yahoo! provide content ( similar to radio and TV) to users for free. By creating more traffic with this free content, they can charge companies for placing banner ads or leasing spots on their sites.The mixed model refers to generating revenue from more than one source.
12 Major Categories of E-Commerce Exhibit 8.3Major E-Commerce CategoriesMajor Categories of E-CommerceUnder the informediary model, e- commerce sites collect information on consumers and businesses and then sell this information to other companies for marketing purposes.Under the subscription model, e- commerce sites sell digital products or services to customers. Business- to- consumer ( B2C) companies sell directly to consumers.
13 B2B E-Commerce B2Bs use these additional technologies extensively: IntranetsExtranetsVirtual private networksElectronic data interchange (EDI)Electronic funds transfer (EFT)Lowers production costs and improves accuracyBy eliminating many labor-intensive tasks• Fulfillment— Delivering products or services to customers is multifaceted, depending on whether physical products ( books, videos, CDs) or digital products ( software, music, electronic documents) are being delivered. For example, delivery of physical products can take place via air, sea, or ground at varying costs and with different options. Delivering digital products is more straightforward, usually involving just downloading, although products are typically verifi ed with digital certifi cates. Fulfillment also varies depending on whether the company handles its own fulfi llment operations or outsources them to third parties. Fulfi llment often includes delivery address verifi ca-tion and digital warehousing, which maintains digital products on storage media until they’re delivered. Several third- party companies are available to handle fulfi llment functions for e- commerce sites.• Service and support— Service and support are even more important in e- commerce than in traditional commerce, given that e- commerce companies don’t
14 Major Models of B2B E-Commerce Three major types of B2B e-commerce models, based on who controls the marketplace:SellerBuyerIntermediary (third-party)SELLER Most popular B2B modelSellers who cater to specialized markets come together to create a common marketplace for buyersE-procurementEnables employees in an organization to order and receive supplies and services directly from suppliersCan also automate some buying and selling activitiesBUYERBuyer, or a group of buyers, opens an electronic marketplaceInvites sellers to bid on announced products or requests for quotation (RFQs)Buyers can:Manage the procurement process more efficiently Lower administrative costsImplement uniform pricingLarge corporations, such as General Electric or BoeingIntermediary (third-party) Controlled by a third partyMarketplace generates revenue from the fees charged for matching buyers and sellersUsually active in vertical or horizontal marketOffers suppliers a direct channel of communication to buyers through online storefronts
15 Seller-Side Marketplace Most popular B2B modelSellers who cater to specialized markets come together to create a common marketplace for buyersE-procurementEnables employees in an organization to order and receive supplies and services directly from suppliersCan also automate some buying and selling activitiesMajor vendors of e-commerce and B2B solutions include I2 Technologies, IBM, Oracle, and SAPThe seller- side marketplace model is the most popular B2B model. In this model, sellers who cater to specialized markets, such as chemicals, electronics, and auto components, come together to create a common marketplace for buyers— sort of a one- stop shopping model.E- procurement enables employees in an organization to order and receive supplies and services directly from suppliers.
16 Buyer-Side Marketplace Buyer, or a group of buyers, opens an electronic marketplaceInvites sellers to bid on announced products or requests for quotation (RFQs)Buyers can:Manage the procurement process more efficientlyLower administrative costsImplement uniform pricingLarge corporations, such as General Electric or BoeingIn a buyer- side marketplace model, a buyer, or a group of buyers, opens an electronic marketplace and invites sellers to bid on announced products or requests for quotation ( RFQs). Using this model, buyers can manage the procurement process more efficiently, lower administrative costs, and implement uniform pricing.
17 Third-Party Exchange Marketplace Controlled by a third partyMarketplace generates revenue from the fees charged for matching buyers and sellersUsually active in vertical or horizontal marketOffers suppliers a direct channel of communication to buyers through online storefrontsThe third- party exchange marketplace model isn’t con-trolled by sellers or buyers. Instead, it’s controlled by a third party, and the marketplace generates revenue from the fees charged for matching buyers and sellers. These marketplaces are usually active in vertical or horizontal markets.A vertical market concentrates on a specific industry or market. Utility companies, the beef and dairy industries, and medical prod-ucts are a few examples of vertical markets.
18 E-bakeRevenue ParadigmsSales- Cost of goods soldGross margin- ExpensesNet incomeHow do we make a buck?Margin * Volume(SP – cost) * VolumeA value chain is a series of activities designed to meet business needs by adding value ( or cost) in each phase of the e- commerce process.
19 Mobile and Voice- Based E-Commerce Mobile commerce (m-commerce)Based on Wireless Application Protocol (WAP)Using handheld devices, such as smart phones or PDAs, to conduct business transactionsSupporting technologies:Wireless wide-area networks and 3G networksShort-range wireless communication technologiesExamples:iPhone appsInternet Explorer MobileGoogle mobileA horizontal market concentrates on a specifi c function or busi-ness process and automates this function or process for diff erent industries.Trading partner agreements automate negotiating pro-cesses and enforce contracts between participating businesses.Mobile commerce ( m- commerce) is using handheld devices, such as smartphones or PDAs, to conduct business transactions.Google – m-commerce
20 Mobile Commerce Issues confronting m-commerce Working 24//7Mobile CommerceIssues confronting m-commerceUser-friendliness of the wireless deviceNetwork speedSecurityQuality of lifeMobile CommerceMobile commerce, or m-commerce, relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business.The wireless application protocol (WAP) is a standard set of specifications for Internet applications that run on handheld, wireless devices. WAP is a key technology underlying m-commerce.Global E-Commerce and M-CommerceThe use of the Internet is growing rapidly in markets throughout Europe, Asia, and Latin America. As a result, many e-commerce sites are broadening their focus from primarily North American consumers to global consumers.The market for m-commerce in North America is expected to mature much later than in Western Europe and Japan, due to a number of reasons. In North America, responsibility for network infrastructure is fragmented among many providers; consumer payments are usually done by credit card; and most Americans are unfamiliar with mobile data services. In most Western European countries, communicating via wireless devices is common, and consumers are much more willing to use m-commerce. Japanese consumers are generally enthusiastic about new technology and are much more likely to use mobile technologies for making purchases.
21 E-Commerce Supporting Technologies Electronic payment systemsWeb marketingSearch engine optimizationVoice- based e- commerce relies on voice recognition and text- to- speech technologies.Electronic payment refers to money or scrip that is exchanged electronically. It usually involves use of the Internet, other computer networks, and digitally stored value systems. It includes credit cards, debit cards, charge cards, and smart cards.A smart card is about the size of a credit card and contains an embedded microprocessor chip for storing important fi nancial and personal information. The chip can be loaded with informa-tion and updated periodically.
22 Electronic Payment Systems Money or scrip that is exchanged only electronicallyPayment cards:Credit, debit, charge, and smart cardsSmart cardsCredit card sizedContains an embedded microprocessor chip storing important financial and personal informationOther types of payments:E-cashE-checkE-walletsPayPalMicropayments
24 Web MarketingUses the Web and its supporting technologies to promote goods and servicesTerms:Ad impressionBanner adsClickCost per thousand (CPM)HitCost per click (CPC)Click-through rate (CTR)CookieMeta tagPage view (PV)Pop-up adsPop-under adsSplash screenSpot leasing• Ad impression— One user viewing one ad.• Banner ads— Usually placed on frequently visited Web sites, these ads are around 468 x 60 pixels and have simple animation. Clicking a banner ad displays a short marketing message or transfers the user to another Web site.• Click— The opportunity for a user to click a URL or a banner ad and be transferred to another Web• Cost per thousand ( CPM)— Most Web and e- mail advertising is priced based on the cost per thousand ( M stands for mille, which means thousand) ad impressions.• Cost per click ( CPC)— The cost of every click on an ad. For example, $ 1.25 CPC means that for every click an advertiser gets, the advertiser pays $ 1.25 to the sponsoring Web site.• Click- through rate ( CTR)— This rate is computed by dividing the number of clicks an ad gets by the total impressions bought.• Cookie— Information a Web site stores on the user’s hard drive so that it can be remembered for a later visit, such as greeting a visitor by name. This infor-mation is also used to record user preferences and browsing habits.• Hit— Every element of a Web page ( including text, graphics, and interactive items) is counted as a hit to a server. Hits aren’t the preferred unit of measure-ment for site traffi c, because the number of hits per page can vary widely, depending on the number of graphics, type of browser uses, and page size.• Meta tag— This HTML tag doesn’t affect how a Web page is displayed; it simply provides information about a Web page, such as keywords that represent the page content, the Web designer, and frequency of page updates. Search engines use this information, particularly keywords, to create indexes.
25 Search Engine Optimization Method for improving the volume or quality of traffic to a Web siteSome companies offer SEO serviceEditing a site’s contents and HTML code to increase its relevance to specific keywordsRecommendations for optimizing a Web site:KeywordsPage titleInbound linksSearch engine optimization ( SEO) is a method for improving the volume or quality of traffi c to a Web site. A higher ranking in search results should generate more revenue for a Web site.
26 SummaryMichael Porter’s value chain, compared e- commerce with traditional commerceMajor e-commerce business modelsMain categories of e-commerceB2C e-commerce business cycleB2B e-commerce business modelsMobile and voice e-commerceSupporting technologiesIn this chapter, you’ve learned about the role of e- commerce in Michael Porter’s value chain, you’ve compared e- commerce with traditional commerce, and you’ve seen the advantages and disadvantages of e- commerce. You’ve also learned about the major e- commerce business models as well as the main categories of e- commerce. In addition, you’ve reviewed important activities in the B2C e- commerce cycle, various B2B e- commerce business models, and applications of m- commerce and voice- based e- commerce. Finally, you’ve learned about electronic payment systems and Web marketing as sup-porting technologies for e- commerce operations.Groupon