ELECTRONIC COMMERCE CLASSIFICATION Introduction to E-Commerce COMM1Q

E-COMMERCE CLASSIFICATION Previous session: Development of E-Business and E-Commerce, and the growth E-Commerce has experienced over the last few years. This week systems of classification are examined: Phases of online presence Classification by transaction

E-COMMERCE CLASSIFICATION By phase of online presence Reflects the level development of on line presence and use of Internet technology By transaction Reflects the parties between which online transactions can occur

CLASSIFICATION BY PHASE OF ONLINE PRESENCE Phase 1: “Hello, I’m online too” Phase 2: “Structured web site” Phase 3: “Trying E-Commerce” Phase 4: “Doing E-Business” Phase 5: “Pervasive E-Business” Phase 6: “One World - one computer”

CLASSIFICATION BY TRANSACTION B2B - business to business B2C - business to consumer C2C - consumer to consumer C2B - consumer to business Non-business EC Intrabusiness EC

B2B Uses Extranets and the Internet. Extranet = two or more Intranets connected via Internet, Only enough information made available to allow business, Often security attained using virtual private n/works (VPNs). Cost of deploying networks has dramatically fallen - by-product of Internet. Transaction costs have been cut dramatically - a driving force behind B2B adoption. Business-to-business (B2B) is carried out over Extranets and the Internet. Extranets consist of two or more Intranets which are connected via the Internet, whereby two organisations are allowed to see confidential data belonging to the other. Normally just enough information is made available to the partner, to facilitate the efficient execution of business. In order to keep the business transactions secure virtual private networks (VPN) are often used. The Internet has reduced the cost of deploying network technology. An added advantage is that transaction costs have been cut dramatically and this is one of the driving forces behind B2B adoption.

Supply Chain Management (SCM) Key to B2B is SCM Supply Chain Management (SCM) ‘Supply Chain’ means the network of alliances that a company forms with suppliers and distributors to source manufacture and deliver goods and services. Alliances can be just as effective as a single company. SCM = ‘the co-ordination of materials, information and financial flows between all the partners in the alliance’. Supply Chain Management (SCM) The term supply chain refers to the network of alliances that a company forms with suppliers and distributors to source manufacture and deliver goods and services (including information based products). In an e-business environment it is possible for multiple and complex alliances, which form supply chains to function as effectively as a single company. Supply chain management (SCM) is the co-ordination of materials, information and financial flows between all the partners in the alliance.

Supply Chain Management SCM Supply Chain Management Companies that exploit their supply chain properly gain the competitive advantage. Competition evolves into competing supply chains - pressure on prices, quality, responsiveness, ever increasing customer expectations. Supply Chain Management (SCM) Competitive advantage will be achieved by those companies which can leverage their supply chain to reduce time to market, reduce distribution costs and fulfil the e-commerce value proposition. Competition will cease to be a matter between companies. It will become an issue between competing supply chains driving them to optimise pricing, quality and responsiveness in order to satisfy the expectations of increasingly sophisticated customers.

Examples of B2B Supplier Orientated Marketplace www.cisco.com Buyer Orientated Marketplace Intermediary Orientated Marketplace http://www.procurenet.com

B2C E-tailing: Manufacturer Wholesaler Distributor Retailer Customer Direct Marketing – Dis-intermediation Manufacturer Customer Marketing with e-intermediaries – Re-intermediation Manufacturer Electronic Intermediary Customer

Key to B2C is CRM (Customer Relationship Management) 1.  Only a minority of companies can support e-commerce! 2.  Sell to existing customers rather than new customers 3.  Dissatisfied customers = BAD NEWS. 4.  Minimal increases in customer retention = maximal company profits 5.  The odds of selling a product or service to an existing customer are three times as high as to a new customer 6.  Customers will do business with you again if you deal with complaints swiftly (Sybase Customer Asset Management Solutions: http://www.sybase.com) 1.       90% of companies do not have the necessary sales and service integration to support e-commerce. 2.       It is six times more costly to sell to a new customer than to an existing one. 3.       Dissatisfied customers will tell 8 or 9 people of their experience. 4.       Company profits can be increased by 85% by increasing customer retention by 5% per annum. 5.       The odds of selling a product or service to an existing customer are 50%; to a new customer, it is 15%. 6.       If a company deals with a complaint swiftly then 70% of those customers will do business with them again. (Sybase Customer Asset Management Solutions: http://www.sybase.com)

Examples of B2C Electronic stores Electronic Malls www.amazon.com www.dell.com Electronic Malls http://www.evvmall.com/ http://www.emall.com/

C2C Auctions and classified advertising Examples - http://www.trader.com

C2B This is buying and selling where the consumer takes the initiative to contact the business establishment Example - http://www.priceline.com

Non-business EC Government, educational, not for profit organisations Examples www.e-global.es/libros.html www.europa.eu.int www.dti.gov.uk

Intra-business EC Includes all internal organisational activities (via intranets). A range of case studies is available from: www.dacs.dtic.mil/databases/url/key.hts?keycode=178:193&islowerlevel=1

Limitations of Classification The flexibility of the WWW makes it a powerful strategic weapon for business and commerce. Classification is an attempt to provide structure and to identify major agents in the WWW and E- Commerce, however the WWW evolves rapidly and classifications can quickly become dated.