Website Marketing and Design Websites and Advanced Business Issues- Partnerships, Distribution 1

Part 1 - Introduction to Ecommerce I Perry & W Robson 2 B2B eCommerce The Profit Pool Concept Increasing the total amount of business done with a particular customer means that firms need to take advantage of opportunities to add products and services that fit well with current customer purchases and add profit to the firm Alliance partners can help to make this happen The profit pool is a useful tool to identify and evaluate potential online online partners A profit pool identifies the different products in an industry and calculates their industry share of revenue and their profitability

Part 1 - Introduction to Ecommerce I Perry & W Robson 3 B2B eCommerce 3 Categories of profit pools 1.Anchor Services – Service providers that form the basis of an e-commerce Web site 2.Extension Services – Alliance partners with an anchor service 3.Neutral Services – Profit pool components without high profits or customer contact frequency Desirable Features of Online E-Commerce Allies Anchor Service Extension Service High customer acquisition cost Profitable pool component Frequent customer content High profit/revenueratio Strong positioning Consistent position to anchor Trusted Effective, reliable

Part 1 - Introduction to Ecommerce I Perry & W Robson 4 Distribution Strategies Figure Alternative Channel Responses Channel Structure Options Shift sales entirely to manufacturer direct (Dell, Cisco) Use existing retailers and their web sites (autos, perfume)

Part 1 - Introduction to Ecommerce I Perry & W Robson 5 Distribution Strategies Three sources of channel conflict 1.Goal divergence – objectives of manufacturer or service provider differ 2.Responsibility disputes – pertain to customer handling, territorial assignments, functions to be served and technology to be used 3.Differing perceptions of reality – actions may be misconstrued and lead to conflict Channel Conflict Traditional distribution channels are threatened by online commerce

Part 1 - Introduction to Ecommerce I Perry & W Robson 6 Distribution Strategies Figure Likelihood of Channel Conflict

Part 1 - Introduction to Ecommerce I Perry & W Robson 7 Distribution Strategies E-Commerce and the Proper Distribution System Build-to-Order –Direct selling enables mass customization –Allows companies to manufacture unique products quickly and cost effectively –Lowers the cost of holding inventory

Part 1 - Introduction to Ecommerce I Perry & W Robson 8 Distribution Strategies Real-Time Marketing Personally customized goods or services continuously update themselves –Continuously track changing customer needs –Without intervention by corporate personnel –Often without conscious or overt input from the customer Requires direct sales and direct distribution

Part 1 - Introduction to Ecommerce I Perry & W Robson 9 Distribution Strategies However, intermediaries reduce the total number of contacts a firm has Channel Contacts and Learning Advantages of using intermediaries –They know more about customers –They have greater knowledge of local markets –They carry a broader product line within a category –They carry multiple product categories

Part 1 - Introduction to Ecommerce I Perry & W Robson 10 Distribution Strategies Data-Driven Intermediaries Advantages of using intermediaries –They can build a profile of customer choices based on a much wider array of business than a direct seller would acquire Incentives for using intermediaries –Customer coalitions – customers join intermediaries that protect their privacy while sharing appropriate knowledge to vendors –Seller scope – a multi-product vendor can learn much more about customers and use this info across product categories

Part 1 - Introduction to Ecommerce I Perry & W Robson 11 Distribution Strategies eCommerce and the Proper Distribution System Disintermediation occurs when layers of a distribution channel are dropped Example – online brokerages substituting for stock brokers Reintermediation occurs when layers of a distribution channel are added Example – services such as auto-locating that combine multi-vendor information and comparison shopping

Part 1 - Introduction to Ecommerce I Perry & W Robson 12 Disintermediation & Re- intermediation Disintermediation —removal of orgs or business process layers responsible for certain intermediary steps in given value chain eliminating traditional intermediaries, such as wholesalers, distributors, & retailers, to reduce cost Re-intermediation —shifting or transfer of intermediary functions, not elimination intermediation such as electronic shopping malls, directory & search engine service, & comparison aids using agents creates role of re-intermediation

Part 1 - Introduction to Ecommerce I Perry & W Robson 13 Disintermediation Internet bypasses classical intermediate stages; it offers supplier a direct channel to their customers Danger: Cannibalising of the prior sales channels (intermediate trade) Customer Enterprises SuppliersWholesaleRetail Trade

Part 1 - Introduction to Ecommerce I Perry & W Robson 14 Disintermediation ‘collapses’ the distribution chain Grower Jobber $8.00 Wholesaler $12.00 Florist $24.00 Customer $60.00 Customer $54.00

Part 1 - Introduction to Ecommerce I Perry & W Robson 15 New Forms of Intermediaries ISPs Guarantor / Certificate Authorities / Trusted Third Parties Directories, search services e-Malls Web site Evaluation / recommendation service Financial intermediary Market organiser (auctions, stock exchanges...) etc..

Part 1 - Introduction to Ecommerce I Perry & W Robson 16 Trade Vertical Supply Chains efficiently move spare parts from Manufacturer to End User. Manufacturer Supplier Industrial End Users Manuf’s & Supp’s maximise profit by fast stock turn & small inventory. Stock must be visible & accessible to sell. Eventually, uneconomic support older equip as demand, & hence stock turnover, slows. Then trade Vertical Supply Chain fails - may mean expensive plant closure. Insurance spares held by End Users have low stock turn. May hold for many years (is where in Supply Chain majority spare parts). Inter- company visibility poor though what for disposal for 1 firm heavily sought by another. sparesFinder.com opens up the Horizontal Supply Chain for internal and inter-company trade of surplus engineering parts Re-intermediation creates Horizontal Supply Chains

Website Marketing and Design Session 16: The Future of the Web, Final Discussion and Assessment 1 Poitiers, September 23-27

Part 1 - Introduction to Ecommerce I Perry & W Robson 18 The Future … ? Web evolve to a 3-D medium –Virtual communities –Gaming Interactivity –True Global ‘web’ in real-time Ubiquitous Devices –Mobile, 3G, Continuous Access –‘Wearable’ computing

Part 1 - Introduction to Ecommerce I Perry & W Robson 19 The Future … ? Interfaces –HCI – voice, digital, Medical Data Aggregation and Analysis –Analytics Impact on Healthcare –Bio-informatics The ‘Digital Divide’ –Impact on socio-economic status –eCommerce influence via IP, Portable transactions, Service Economy, etc.

Website Marketing and Design Final Assessment and Project Review 1 Poitiers, September 23-27

Part 1 - Introduction to Ecommerce I Perry & W Robson 21 Final Grade First Half: –Group project –See Link Here for Grading Criteria: ppt Second Half: –Exam Course presentations 1 or 2 documents provided to Peter Short essay answer

Website Marketing and Design End of Course: Thank You! 1 Poitiers, September 23-27