Introduction to e-business and e-commerce Professor: Nabil Elmjati Chapter 1 Introduction to e-business and e-commerce Professor: Nabil Elmjati 1

Learning outcomes Define the meaning and scope of e-business and e-commerce and their different elements Summarize the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption Outline the ongoing business challenges of managing e-business and e-commerce in an organization. 2

Management issues How do we explain the scope and implications of e-business and e-commerce to staff? What is the full range of benefits of introducing e-business and what are the risks? How do we evaluate our current e-business capabilities? 3

E-business innovation Discussion Which company / website impacted on Internet or the web? How do we measure their success? What made them successful? 4

Figure 1.1 Google circa 1998 Source: Wayback machine archive: http://web.archive.org/web/19981111183552/google.stanford.edu 5

The impact of the Internet on business Andy Grove, Chairman of Intel, one of the early adopters of e-commerce, has made a meteorological analogy with the Internet. He says: Is the Internet a typhoon force, a ten times force, or is it a bit of wind? Or is it a force that fundamentally alters our business? (Grove, 1996) 6

E-business opportunities Reach Over 1 billion users globally Connect to millions of products Richness Detailed product information on 20 billion + pages indexed by Google. Blogs, videos, feeds… Personalized messages for users Affiliation Partnerships are key in the networked economy 7

Internet risks – what can go wrong with a transactional site? This slide left deliberately blank for student Q&A interaction. Potential answers:   Site downtime affecting whole site or some processes Security attack, e.g. denial of service, content hijacked Wrong content presented for site visitor 8

Internet risks – what can go wrong with a transactional site? Web sites that fail because of spike in visitor traffic Hacker penetrating the security of the system A company emails customer without receiving their permission Problems with fulfilment E-mail customer-service enquiries from the web site don’t reach the right person This slide left deliberately blank for student Q&A interaction. Potential answers:   Site downtime affecting whole site or some processes Security attack, e.g. denial of service, content hijacked Wrong content presented for site visitor 9

What is e-commerce and e-business? Write down a definition for each E-commerce: E-business: 10

What is e-commerce and e-business? All electronically mediated information exchange between an organization and its external stakeholders (Chaffey) Digitally enabled commercial transactions between and among organizations and individuals 11

What is e-commerce and e-business? All electronically mediated information exchanges, both within an organization and with external stakeholders supporting the range of business process (Chaffey) Digital enablement of transactions and processes within a firm, involving information systems under firm’s control. Does not include commercial transactions involving an exchange of value across organizational boundaries (Laudon) 12

What is e-commerce and e-business? Activity 1.2 Use Google Syntax for: 'E-business' 'E-commerce' 'Internet ‘ ‘Marketing’. 'E-marketing' 'Digital marketing' 13

Figure 1.2 The distinction between buy-side and sell-side e-commerce 14

Figure 1.3 Three definitions of the relationship between e-commerce and e-business 15

What is e-commerce and e-business? Activity 1.3, P. 11 Discussion—Question 1 Intranet vs. Extranet 16

Intranet vs. Extranet P. 11, Activity 1.3 Discussion—Question 1 17

Figure 1.4 The relationship between intranets, extranets and the Internet 18

Why Study E-commerce? E-commerce technology is different, more powerful than previous technologies E-commerce bringing fundamental changes to commerce Traditional commerce: Passive consumer Sales-force driven Fixed prices Information asymmetry

Unique Features of E-commerce Technology Global reach Universal standards Information richness Interactivity Information density Personalization/customization Social technology

Origins & Growth of E-commerce Precursors: Electronic Data Interchange (EDI) 1995: Beginning of e-commerce First sales of banner advertisements Since then, e-commerce fastest growing form of commerce in the United States

The Growth of B2C E-commerce SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b;

The Growth of B2B E-commerce SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.

E-commerce: A Brief History 1995–2000: Innovation Key concepts developed Dot-coms; heavy venture capital investment 2001–2006: Consolidation Emphasis on business-driven approach 2006–Present: Reinvention Extension of technologies New models based on user-generated content, social networking, services

Types of E-commerce Selling Side Transaction e-commerce sites Service-oriented relationship-building site Brand-building sites Portal, publisher or media sites

Types of E-commerce Digital Marketing The management and execution of marketing using e-media in conjunction with digital data about customer Involves using digital technology ………… To achieve these objectives ………….. Through using these marketing tactics ………..

Figure 1.5 First Direct Interactive (www.firstdirect.com) 27

Figure 1.6 Blendtec viral campaign micro-site (www.willitblend.com) 28

Web 2.0 and Beyond Web 2.0 Web 3.0 Features-pp. 24-25 Box 1.1 Web 2 examples Web 3.0 Features-pp. 24-25 Box 1.1 Research the web to discover what Web 3.0 technology and features have been used by which company

Figure 1.7 Evolution of web technologies Source: Adapted from Spivack (2007) 30

e-Commerce and SCM What’s Supply Chain Management (SCM) Value Chain The coordination of all supply activities of an organization from its supplier and partners to its customers (Both the buy Side and Sell side) Value Chain The value chain is a related concept that describes the different value-adding activities that connect a company’s supply side. We can identify an internal value chain within the boundaries of an organization and an external value chain where these activities are performed by partners. Note that in the era of e-business a company will manage many interrelated value chains, so in chapter 6 we also consider the concept of a value network.

Business-Consumer Model of e-Commerce Classified by market relationship Business-to-Consumer (B2C) Business-to-Business (B2B) Consumer-to-Consumer (C2C) Classified by technology used Peer-to-Peer (P2P), e.g., BitTorrent and Napster Mobile commerce (M-commerce)

Figure 1.8 Summary and examples of transaction alternatives between businesses, consumers and governmental organizations 33

Mini Case Study How does Betfair gains profit What’s the challenges they may face

Figure 1.9 Betfair peer-to-peer gambling exchange 35

E-government What is it? E-government refers to the application of e-commerce technologies to government and public service. What are the benefits? Citizens-facilities for dissemination of information and use of online services at local and national levels. For example, at a local level you can find out when refuse is collected and at national level it is possible to fill tax returns. Suppliers-government departments have a vast network of suppliers. The potential benefits (and pitfalls) of electronic supply chain management and e-procurement described in chapters 6 and 7 are equally valid for government. Internal communications _ this includes information collection and dissemination and e-mail and workflow systems for improving efficiency within government departments.

E-Business Opportunities what goals does a business can achieve through e- business?

Business Adoption of E-Commerce/Business Activity: You are in a team of advisers at a local business link List Drivers to adoption of sell-side e-commerce by business and how you can reinforce these by marketing benefits Barriers to adoption of sell-side e-commerce by business and how you can reinforce these by stressing benefits 38

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 39

E-business Risks and Barriers for Adoption Strategy level issues Practical risks

Figure 1.12 Barriers to development of online technologies Source: DTI (2002) 41

Potential Limitations on B2C E-commerce* Expensive technology Sophisticated skill set Persistent cultural attraction of physical markets and traditional shopping experiences Persistent global inequality limiting access to telephones and computers Saturation and ceiling effects

Evaluating an Organization’s E-business Capability Is any company ready for e-commerce?

Figure 1.13 A simple stage model for buy-side and sell-side e-commerce 44

Figure 1.14 Variation in different online activities by gender Source: UK National Statistics (2006) Individuals accessing the Internet – Report from the UK National Statistics Omnibus Survey. Published online at www.statistics.gov.uk 45

Internet risks – what can go wrong with a transactional site? Web sites that fail because of spike in visitor traffic Hacker penetrating the security of the system A company emails customer without receiving their permission Problems with fulfilment E-mail customer-service enquiries from the web site don’t reach the right person This slide left deliberately blank for student Q&A interaction. Potential answers:   Site downtime affecting whole site or some processes Security attack, e.g. denial of service, content hijacked Wrong content presented for site visitor 46

Case Study: E-Bay