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Electronic Commerce School of Library and Information Science Ecommerce channels: portals, auctions, communities I. The shape of the “new” economy Internet.

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Presentation on theme: "Electronic Commerce School of Library and Information Science Ecommerce channels: portals, auctions, communities I. The shape of the “new” economy Internet."— Presentation transcript:

1 Electronic Commerce School of Library and Information Science Ecommerce channels: portals, auctions, communities I. The shape of the “new” economy Internet indicators II. Strategies: B2C Portals, auctions Marketmakers, syndicators III. The etailing challenge Marketing to the e-consumer

2 Electronic Commerce School of Library and Information Science http://www.ucomics.com/tomtoles/viewtt.htm

3 Electronic Commerce School of Library and Information Science Center for Research in Electronic Commerce. (2001). The Internet Economy Indicators http://www.internetindicators.com/ I. The shape of the “ new ” economy Infrastructure layer Applications infrastructure layer Intermediary layer Commerce layer

4 Electronic Commerce School of Library and Information Science Infrastructure layer This layer includes companies that produce the wires, boxes, and code that make up the physical structure of the net Telecom companies: AT&T, SBC, MCI ISPs: AOL, MSN, Earthlink, United Online Internet backbone carriers: Qwest, Alcatel, WorldCom “ Last mile ” access companies: Time-Warner, AT&T, SBC, Verizon, Insight Communications, Smithville Telephone Manufacturers of networking equipment: Cisco, Corning Servers and client hardware: Dell, IBM, Apple

5 Electronic Commerce School of Library and Information Science Applications infrastructure layer The work occurring at this layer is a fundamental basis for e- commerce and other functionality on the Internet Most of the activity on this and the previous layer is b-2-b Web development software: Adobe, Macromedia, Vignette Companies enabling web transactions: Yahoo Store, Oracle, SAP, Microsoft, Google Transaction intermediaries: Paypal, Microsoft Consultants, Ibuilders: Scient, Viant, Razorfish, IXL Online training: Sylvan Prometric, SmartPlanet

6 Electronic Commerce School of Library and Information Science The businesses are predominantly Internet pure-play They do not generate revenues directly from transactions Revenues through advertising, subscription fees, and commissions Many companies are Content providers/aggregators: ClickZ, Commercenet Market makers: VerticalNet, Ebay Market intermediaries: eSteel, Orbitz These businesses are likely to have a significant impact over time on the efficiency and performance of e-markets Travel agency sites, brokerages, portals, malls Intermediary layer

7 Electronic Commerce School of Library and Information Science Companies in this layer conduct web-based commerce transactions Some are pure play: Amazon, Egghead, InformIT It also includes bricks and clicks etailers: Barnes and Noble, Gateway Some are OEMs: Dell, Dell Companies may be engaged in B2B as well as B2C online sales Many sell both to consumers and to businesses of all sizes Commerce layer

8 Electronic Commerce School of Library and Information Science Infrastructure layer: $142.8 billion in revenues in the first half of 2000, (11.2% growth between Q1 and Q2) Over 932,000 work in this layer Applications layer: $ 72.8 billion in revenues (14.7% between between Q1 and Q2) Over 740,000 work in this layer Intermediary layer: $64 billion in revenues (34.5% between Q1 and Q2) Over 468,700 work in this layer Commerce layer: $127 billion in revenues (11% between between Q1 and Q2) Over 1,000,000 work in this layer

9 Electronic Commerce School of Library and Information Science What this means: key findings from the 2000 Internet Indicators study The internet economy as a whole added 612,375 jobs in the first half of 2000 and directly supports 3 million workers It is projected to produce $830 billion in revenues in 2000, a 58% increase over 1999 Dot.coms are a small part of the internet economy Only 9.6% of the firms studied are dot.coms with 95% or more of their revenue from the net Employment in internet economy companies was growing much faster (10%) than the jobs in the overall economy (6.9%) in 2000 http://www.internetindicators.com/keyfindings.html

10 Electronic Commerce School of Library and Information Science Internet Economy Indicators "Dot Com" Summary Q1‘00 % of Total Q2‘00 % of Total Growth Inet Economy Inet Economy Q1 - Q2 “DotCom” $16,114 9.3% $19,125 9.6% 18.7% Revenue ($ Millions) “Dot Com” 362,487 12.1% 360,718 11.7% -.5% Employees From: http://www.internetindicators.com/keyfindings.html

11 Electronic Commerce School of Library and Information Science Most internet economy jobs are not IT http://www.internetindicators.com/keyfindings.html

12 Electronic Commerce School of Library and Information Science http://www.census.gov/mrts/www/current.html Estimated Quarterly U.S. Retail E-commerce Sales: Q4 1999 - Q3 2003 Billions of $$$

13 Electronic Commerce School of Library and Information Science TimeAll retailE-retailE-retail/TotalAnnual growth 1999 4th Quarter 787,362 5,393 0.7% 2000 1st Quarter 715,102 5,772 0.8 % 2nd Quarter 775,364 6,250 0.8 % 3rd Quarter 768,559 7,079 0.9 % 4th Quarter 812,667 9,248 1.1% 2001 1st Quarter 723,710 8,009 1.1%40.0% 2nd Quarter 801,115 7,904 1.0% 3rd Quarter 777,882 7,894 1.0% 4th Quarter 850,608 10,788 1.3% 2002 1st Quarter 740,020 9,470 1.3%18.2% 2nd Quarter 818,609 9,761 1.2% 3rd Quarter 822,125 10,465 1.3% 4th Quarter 864,653 13,770 1.6% 2003 1st Quarter 772,185 11,928 1.5%26.0% 2nd Quarter 858,793 12,464 1.5% 3rd Quarter 872,506 13,29 1.5% Estimated quarterly total and e-commerce retail sales

14 Electronic Commerce School of Library and Information Science Ecommerce channels: portals, auctions, communities I. The shape of the “new” economy Internet indicators II. Strategies: B2C Portals, auctions Marketmakers, syndicators III. The etailing challenge Marketing to the e-consumer

15 Electronic Commerce School of Library and Information Science Portals A “ portal ” is a gateway It is a web site that is (or wants to be) a major starting site for users when they go online It is focused on the user It intends to be an anchor site As a single access point to all resources, the portal will: Provide reliable, fast, secure access and guidance Take people to the right information or service Deliver the information in the correct context Be available from anywhere at anytime

16 Electronic Commerce School of Library and Information Science Types of portals Vertical portals ( “ vortals ” ) A vertical industry, market, or specific group portal Linking customers and vendors within a single site Oriented towards a demographic, product or topical category These cater to specific ethnic groups, specific age groups, alternative lifestyles, religions, and other groups that form a community or market Also called “ affinity ” or “ community ” portals because of the demographic focus Ivillage.com http://www.ivillage.com WebMD http://www.webmd.com

17 Electronic Commerce School of Library and Information Science Horizontal portals These were the first, general interest (mega)portals Yahoo and AOL, AltaVista, Yahoo, and NetCenter They offer net access with a wide range of information and services These were early adopters of personalization Users select components and define their content or other properties MyYahoo, My AltaVista, and My Netscape allow the user to choose which components they want to see (weather, news, stocks, etc.) These portals were targets for early VC investment and then M&A

18 Electronic Commerce School of Library and Information Science Business to consumer portals This is corporate extranet with community building services added on Their primary goal is to market goods and services from a specific company directly to consumers However, they offer services beyond their products that encompass a wider range of activities Amazon, Dell, eBay allow people do do much more than purchase products NBCi.com. offers TV schedules and news It also includes such things as web search, e-mail, free home-page space, and shopping

19 Electronic Commerce School of Library and Information Science Enterprise portals Similar to consumer portals, but built for the internal use of corporations or among organizations Simplify access to and use of information Allow integration of major business functions and resources Users can organize and use a wide range of corporate information quickly and easily This can change work flows and support individual and group decision making Some see these as tools for knowledge management

20 Electronic Commerce School of Library and Information Science Enterprise portals can help employees find information and perform their jobs better A consistent look and feel reduces cognitive load The key issues in building a good intranet portal were political and organizational and not technical Buying software won't get you a good portal unless you also manage internal company politics Technology accounts for roughly one-third of the work in launching a good portal Internal processes account for the rest Nielsen, J. (2003). Intranet Portals: A Tool Metaphor for Corporate Information http://www.useit.com/alertbox/20030331.html

21 Electronic Commerce School of Library and Information Science Companies that build enterprise portals provide content and commerce aggregation and syndication technology Typically requires an enterprise server, a hosted service, or a combination of the two, depending on customer needs and requirements Can involve personalization and customization Allows people to access and work with information across the enterprise using centralized interface Allows integration of diverse sources of enterprise data and control of heterogeneous IT environments Vignette: http://www.vignette.com SAP: http://www.sap.com/solutions/enterpriseportal/

22 Electronic Commerce School of Library and Information Science Portal sites have attracted investor interest because their main goal is to draw and hold traffic This means large numbers of numbers of advertising viewers and higher rates Typical services offered by portal sites include: Services: shopping, chat, free email, webhosting Resources: directories of web sites, news, weather information, stock quotes, phone and map information, a facility to search for other sites Portals are moving towards personalization to make themselves sticky Excite is among the first portals to offer users the ability to create a site that is personalized for them

23 Electronic Commerce School of Library and Information Science Some portals are large, all-purpose ecommunities with high ecommerce potential, including advertising revenue 84% of US online households rely on major portals for critical net services (AOL, MSN, Yahoo) IDC Research (2002). Portals Hold the Key to Online Households http://www.idc.com/getdoc.jhtml?containerId=pr2002_07_15_104311 Portals do have some disadvantages They dictate the content that you are able to find They're a good aid for new users, but they only serve up a slice of the Internet They often point to sites that live under the same corporate umbrella as they do, rather than to the most relevant or informative site on a given topic

24 Electronic Commerce School of Library and Information Science The term “ portal space ” means the total number of major sites competing to be one of the portals Leading portals include Yahoo, Alta-Vista, MSN, Lycos, AOL, AskJeeves With its own private array of sites when you dial in, AOL is also a portal to its own Web A number of large ISPs also offer portals to the Web for their own users Now, M&A AOL --> NetscapeABC --> Go.com Disney --> Infoseek NBC --> Snap.com Terra Networks --> Lycos

25 Electronic Commerce School of Library and Information Science What is the future of portals? One possibility is that they become the new desktop: the “ webtop ” Sites offer web-based services that replace those provided by desktop software Email, schedule and calendaring address databases, productivity applications Then word processing, spreadsheets This personalized desktop can be accessed from anywhere on the net with any device The network is the computer (assuming big bandwidth) Yourwebtop.com http://www.yourwebtop.com/

26 Electronic Commerce School of Library and Information Science This would create a shift in the business model of portals They were doorways, now they are “ data guardians ” and “ full service providers ” They take on the responsibility for maintaining and upgrading shared software They have to guarantee privacy, security, universal access, and reliability They compete with software companies who would rather sell individual packages to users than one server version

27 Electronic Commerce School of Library and Information Science http://ars.userfriendly.org/cartoons/?id=20030125&mode=classic

28 Electronic Commerce School of Library and Information Science http://ars.userfriendly.org/cartoons/?id=20030125&mode=classic

29 Electronic Commerce School of Library and Information Science http://www.unt.edu/.../2002/january02/ cartoon.htm

30 Electronic Commerce School of Library and Information Science Auctions Web auctions are based on the ability to negotiate in near real-time They allow best price bargaining, guaranteed sales, minimal collusion It is a one to many negotiation based solely around price Some auction forms allow rounds of negotiation, others do not The rules of the negotiation are clearly spelled out for all participants

31 Electronic Commerce School of Library and Information Science An auction is an economic mechanism for determining the price of an item It requires a pre-announced methodology, one or more bidders who want the item, and an item for sale The item is sold publicly to the highest bidder It requires a web page displaying information about a good or service A picture A list of features A suggested comparison price Instructions on how to bid Description of payment and fulfillment

32 Electronic Commerce School of Library and Information Science What makes auctions work? A successful auction must have repeat business This requires building a loyal community The community is based on the development and maintenance of mutual trust Social practices create and maintain trust Posting comments about buyers and sellers and link these comments to specific auctions Target the advertising for auctions (appropriate newsgroups and lists) Have clear statements about privacy and security

33 Electronic Commerce School of Library and Information Science A standard online auction of an item will often contain a: Registration procedure Picture of the item List of features Suggested comparison price Instructions on how to bid for the item Forms to fill out to place your bid Description of the rules of the auction

34 Electronic Commerce School of Library and Information Science Requirements Support for a variety of auction formats Integration of auctions with business ’ back-end applications to allow automated trading processes Security, based on cryptography and audit trails Preventing hackers from sabotaging and buyers and sellers from cheating or disrupting the auction Efficient notification to inform bidders of the latest bids

35 Electronic Commerce School of Library and Information Science Single and multiple round sealed bid auctions Buyers must submit bids by a specified deadline The bid information secret is until the deadline Then bids are evaluated and the winners are declared Single round auctions lack the bidding frenzy of open cry auctions where bidders try outbid their rivals In a multiround sealed bid auction there is a deadline for each round of bids At the deadline the auction is closed or the bids from the current round are publicized and a new round of bidding begins

36 Electronic Commerce School of Library and Information Science Dutch auctions Starts with a very high asking price Price decreases until buyers bid and specify the number of items they will purchase at the current price The bid is lowered to sell more while inventory lasts The auctioneer controls how fast the inventory sells by controlling the lowering of the bid It closes at a pre-specified time, when the items are sold, or the price has fallen to a pre-specified level These are good for perishable items Shoreline Acoustic Music http://www.samusic.com/specials/dutchauction.shtml Homeschool Auctions.com http://www.homeschoolauctions.com/cgi-bin/auction1/auction.pl?action =dispalldutch

37 Electronic Commerce School of Library and Information Science The reverse auction The buyer sets a price she is willing to pay The auction house bids the price out to sellers Sellers compete to meet the bid If the bid is matched, the buyer must purchase the item The auction house takes a cut of the transaction Priceline http://www.priceline.com

38 Electronic Commerce School of Library and Information Science The Vickery auction Each submits one sealed bid Bids are opened simultaneously and the winner is the one with the highest bid But: the winner pays the price of the second highest bid It is supposed to encourage bidders to bid the largest amount they are willing to pay This has been used to set prices of IPO stock It has also been used in contract bidding

39 Electronic Commerce School of Library and Information Science The auction process Initial buyer and seller registration Authentication of parties, exchange of public keys Creation of a profile for each trader reflecting interests in products and spending limits Setting up a particular auction event: Describing the items being sold or acquired and setting up the rules of the auction The auction rules explain the: Type and procedures (open cry, sealed bid, Dutch) Parameters (price, delivery dates, terms of payment) Starting and closing dates and times

40 Electronic Commerce School of Library and Information Science Scheduling and advertising Items to be auctioned in upcoming auctions are advertised, and potential buyers are notified Popular auctions can be mixed with less popular ones to force people to be present in the less popular auctions Bidding This involves the collection of bids from buyers and implements the bid control rules of the auction Minimum bid, bid increment, deposits required with bids... For open cry auctions there is notification of the participants when new high bids are submitted

41 Electronic Commerce School of Library and Information Science Evaluation of bids and closing the auction The auction closing rules are applied and the winners and losers of the auction are notified Trade settlement, involving Payment to the seller Transfer of goods to the buyer If the seller is not the auctioneer, payment of fees to the auctioneer and other agents (appraisers, consignment agents, etc.)

42 Electronic Commerce School of Library and Information Science Auction security Auction house policy and seller instructions dictate whether the auction is accessible to the: Public at large Buyers/sellers registered with the auction services Buyers registered to participate in the current auction Access control mechanisms enforce these rules Security mechanisms ensure that the site is not sabotaged by an outsider This means preventing unauthorized bids and alterations and denial of service attacks

43 Electronic Commerce School of Library and Information Science Auction houses One-to-many auction The house provides access to goods and services auctions them to many buyers Consumer-to-consumer auction The house brings together many buyers and sellers at the same time and they negotiate with each other Reverse auction The house allows the buyer to set the price that sellers compete to match Business to business auction One company auctions off projects to contractors who submit bids (procurement) or unwanted inventory

44 Electronic Commerce School of Library and Information Science Marketmakers and syndicators Marketmakers bringing buyers and sellers together The marketmaker provides industry-specific news and related product and service information Buyers find the information they need to quickly locate, source and purchase products and services online Suppliers generate sales leads by showcasing their products and services across multiple markets to reach qualified buyers Revenue is generated from listings and % of transactions Verticalnet http://www.verticalnet.com/

45 Electronic Commerce School of Library and Information Science Syndication is business to business ecommerce “ [It] is...the next-generation business architecture of the Internet ” Neil Weintraub http://www.herring.com/mag/issue46/neil.html Syndicators are horizontally specialized web sites that provide content and services to client sites They are “ syndicated ” into collective business systems that lower costs for business and provide benefits to customers Each participant of a syndicated business specializes in physical production, virtual experiences, or infrastructure

46 Electronic Commerce School of Library and Information Science Syndication divides the web-labor It doesn ’ t matter to producers where customers see the product so long as many of them see it Those who operate channels want to attract as many customers as possible Who produces the message is of less concern As producers and web administrators focus on their core businesses, they outsource work done by clerks, clearinghouses, and call centers to syndicators This leads to aggregation and the pooling of resources The difference between a showroom and a showroom of showrooms NewsEdge http://www.newsedge.com/

47 Electronic Commerce School of Library and Information Science Ecommerce channels: portals, auctions, communities I. The shape of the “new” economy Internet indicators II. Strategies: B2C Portals, auctions Marketmakers, syndicators III. The etailing challenge Marketing to the e-consumer

48 Electronic Commerce School of Library and Information Science An e-commerce site that ’ s going to make money must be inviting, well-organized, secure and intuitive. Vaughan-Nichols,. S.J. (1998). E-Commerce Step-by-Step ZDNet http://www.zdnet.co.il/devhead/stories/articles/0,4413,2185923,00.html

49 Electronic Commerce School of Library and Information Science Major challenges for ecommerce retailers Brand development and promotion Generating online sales Attracting new customers Boosting customer loyalty and retention Improving after-sale customer service Cutting costs in after-sales customer service Boosting customer traffic to offline stores Cutting costs of sales transactions Accelerating inventory turns Cutting general advertising and promotion costs

50 Electronic Commerce School of Library and Information Science Major obstacles Understanding the technical requirements for an ecommerce site Lack of a clear business model to guide development Insufficient corporate resources Consumer fears about security and privacy The difficulty of integrating ecommerce web sites into the company ’ s other business processes

51 Electronic Commerce School of Library and Information Science What matters: Having a well-designed, easy-to-use site is the most important factor in for online success Having a strong company brand and well-known branded products Using an effective site promotion strategy Linking with the right search engines Having a presence on the right portals or web communities Offline promotion Successfully marketing the web business

52 Electronic Commerce School of Library and Information Science What matters in a web site Information organization and architecture: is it easy to navigate? Search? Currency: how frequently is content updated? Knowledge: do the pages educate visitors about products and their uses? Interactivity: does it offer the ability to provide feedback, ask questions, etc? Customization: does it allow visitors to tailor content and information presentation? Community: Does it allow visitors to share information with other visitors? Speed: how quickly do pages download

53 Electronic Commerce School of Library and Information Science What else? Having contact information on every page Having a site that works under minimal conditions (text-` only...) Making it easy for people to inquire about your services, while they are still online (mailto: links, short forms) Having a way to ask your web site visitors for their e- mail addresses This is an opportunity to resell them later, by sending them quality, informative helpful e-mail as a follow-up

54 Electronic Commerce School of Library and Information Science The important question to ask is, "Can I deliver what I make or do anywhere in the world?" 1.Decide if the product or service you sell is deliverable to a Net audience Can it be sent via the Net or delivered by physical means (FedEx, UPS)? 2.Determine the added costs of delivery If the cost of delivering is too high, stop here 3.Find an e-commerce host and get a bid Check carefully to make sure that the services and protections you want are offered

55 Electronic Commerce School of Library and Information Science Then: 4.Determine whether the extra revenue produces an adequate return Minus the added cost of delivery and the hosting costs 5.If it does, it ’ s time to go into business You may find that these steps do not produce a clear case for starting your e-commerce project right now If they don ’ t, repeat the calculation quarterly until you find it ’ s time to start

56 Electronic Commerce School of Library and Information Science What must be managed? Ecommerce sites need a reliable technical and social infrastructure to support the: Practice of sales skills via the Internet Orchestration and management of customer relationships and support Creation of new relationships with customers, suppliers, partners, and even competitors

57 Electronic Commerce School of Library and Information Science Strategy for marketing to consumers Awareness Attraction Visit-engagement Purchase Repurchase

58 Electronic Commerce School of Library and Information Science Awareness Announcements: through letterheads, business cards, brochures, packages, newspapers, magazines and TV Carefully chosen address: it should be similar to the company name and easy to remember Attraction Links from other sites Search engines and indexes leading to the site Site can be easily and quickly accessed

59 Electronic Commerce School of Library and Information Science Visit/engagement Information about products and company Facilities: careful use of scripting, search engines, sound, video and animation Purchase Multiple methods: ordering form, mail, fax, phone ordering and e-mail Payment facilities: cash, check, credit card and direct account Delivery/booking facilities: mail, fax, call phone and e- mail, package tracking Interactivity: offers, interaction with others

60 Electronic Commerce School of Library and Information Science Revisit and re-purchase (stickiness) Freshness: “ What ’ s New ” Changing content and features Extended interactivity: communities/clubs/user-to-user communication Extensive help: “ FAQs ” Link to other sites Customization: collecting user information, meeting customer needs Personalization:, optional menu and content requiring user input Customer loyalty and service programs


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