Chapter 7 E-Business: Doing Business Online Learning Goals Define e-business and discuss how it can help achieve business success. Distinguish between a corporate and a marketing Web site. List the major forms of B2B e-business. Explain B2C e-business and identify the products most often sold online. Describe some of the challenges associated with e-business. Discuss how organizations use Internet communications to advance their objectives. Discuss Web sites and identify methods for measuring Web site effectiveness. Explain the global scope of e-business

WHAT IS E-BUSINESS? Electronic business (e-business) Conducting business via the Internet. E-tailing, or virtual storefronts on Web sites. Online business-to-business transactions. Electronic data interchange (EDI), the business-to-business exchange of data using compatible software. , instant messaging, and other Web-enabled communication tools and their use as media for reaching prospective and existing customers. The gathering and use of demographic, product, and other information through Web contacts.

Capabilities and Benefits of E-Business Global reach. The Net allows goods and services to be sold to customers regardless of geographic location. Personalization. Companies can begin the production process when an order is received to better satisfy customer needs and sharply reduce inventory. Interactivity. Customers and suppliers negotiate prices online, resulting in an ideal product at the right price that satisfies both parties. Right-time and integrated marketing. Online retailers provide products when and where customers want them and can coordinate promotional activities and communication to create a unified, customer-oriented message. Cost savings. E-business can markedly reduce the costs associated with operating and starting a business.

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Business Web Sites Corporate Web site Web site designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties. Attempt to build customer goodwill and assist retailers and other resellers in their marketing efforts. Use for a variety of other purposes Disseminating financial information to investors Enabling prospective employees to apply online for jobs Providing communication. Marketing Web site Web site whose main purpose is to increase purchases by visitors.

BUSINESS-TO-BUSINESS (B2B) E- BUSINESS Business-to-business e-business (B2B) Electronic business transactions between businesses using the Internet. B2B transactions account total $2.5 trillion. By some estimates, account for 80 percent of all e-commerce activities. Can reduce cost of B2B transactions by almost 25 percent.

Electronic Data Interchanges, Extranets, and Private Exchanges Electronic Data Exchange Computer-to-computer exchanges of invoices, purchase orders, price quotations, and other sales information between buyers and sellers. Allows retailers like Walmart to use a system of quick response, is the retailing equivalent of just-in-time inventory. Extranet Secure networks used for e-business and accessible through the firm’s Web site by external customers, suppliers, or other authorized users. Provide selected outsiders with internal information.

Private Exchanges A secure Web site at which a company and its suppliers share all types of data related to e-business. Participants collaborate on product ideas, production scheduling, distribution, order tracking, and any other functions a business wants to include. Sometimes called c-business.

Electronic Exchanges and E-Procurement Electronic exchanges are online marketplaces that bring buyers and sellers together and cater to a specific industry’s needs. Initially 15,000 were launched but only 20 percent remain. E-procurement is Web- based systems that enable all types of organizations to improve the efficiency of their procurement processes.

ONLINE SHOPPING COMES OF AGE Business-to-consumer e-business (B2C) Selling directly to consumers over the Internet. E-tailing accounts for eight percent of all U.S. sales. Thirty percent of the U.S. population shops online. Services also are important participants in e-business. E-Tailing and Electronic Store Fronts Electronic storefronts Company Web site that sells products to consumers. Growth of broadband is aiding e-tailing. Fifty-five percent of American Internet users have broadband. Expected to rise to 70 percent.

Who Are the Online Buyers and Sellers?

Typical user is young, highly educated, urban or suburban, and affluent. Demographics are shifting; there is decreasing difference in Internet purchasing habits among groups.

Who Are the Online Buyers and Sellers? Online market is changing as customers become more familiar with online shopping.

Benefits of B2C e-Business Lower Prices Many products cost less online. Internet allows customers to easily compare prices from multiple sellers. Convenience Can order products from around the world anytime day or night. Can register customer information to streamline transactions. Personalization Emphasis on personalized, one-on-one marketing to increase repeat purchases.

Developing Safe Online Payment Systems Response to customer concerns about security of sending credit card information over the Internet. Through encryption, data is encoded for security purposes. Many companies use Secure Sockets Layer (SSL) technology to increase to encrypt information and verify senders and receivers. Others use electronic method payment method, a computer data file at an e- business site’s checkout counter that contains not only electronic cash but credit card information, owner identification, and address.

E-BUSINESS CHALLENGES Privacy Issues Privacy is among the top concerns of Internet users. E-business sites often require passwords and use electronic signatures, an electronic form of identity verification. Companies can track customers’ shopping and viewing habits through cookies. Customers usually prefer that companies do not share their personal information. Merchants have responded by joining privacy organizations. Privacy protections may soon become legally required. Employees also have concerns that employers are monitoring their Internet behavior. Companies worry about data theft.

Internet Fraud Internet Crime Complaint Center logged more than 207,000 complaints in a recent year, an increase of 67 percent over the prior year.Internet Crime Complaint Center Seventy percent of the complaints referred to law enforcement agencies dealt with online auctions. Phishing Growing form of Internet fraud that uses or pop-up messages claiming to be from familiar businesses or organizations to get unsuspecting victims to disclose personal information. Payment fraud is also growing. Cardholder fraudulently claims ordered merchandise was never delivered and asks credit issuer for a chargeback.

Poor Web Site Design and Service Two-thirds of Internet shopping carts are abandoned before any purchase is made. Problems with system overloads during holiday and other busy shopping seasons. Problems with delivery and returns. Companies that have brick-and-mortar experience often have better success satisfying customers than Internet-only retailers. Channel Conflicts Direct sales to customers can compete with business partners such as retailers and distributors, disputes called channel conflicts. Example: Mattel sells only specialty products online.Mattel

USING THE WEB’S COMMUNICATION FUNCTION Web has four main functions: e-business, entertainment, information, and communication. Communication is Web’s most popular function. Firms use to communicate with customers, suppliers, and other partners. Spam Popular name for junk . Online Communities Internet forums, newsgroups, electronic bulletin boards, and Web communities that appeal to people who share common interests.

Blogs Blog Short for Web log, an online journal written by a blogger. Some incorporate wikis, a Web page that anyone can edit. Some incorporate podcasts, video & audio recordings that are posted online. According to iPodder.org, more than 3,000 podcasts operate worldwide.iPodder.org Corporate blogs can help build brand trust. Example: Apple’s iLoungeiLounge Builds iPod brand. Gives Apple ideas for product improvement. Employee blogs present ethical issues. Negative comments can harm company. Form of free speech that humanizes a company.

Web-Based Promotions Companies buy banner ads and pop-up ads on Web sites customers are likely to visit. Search marketing Paying search engines a fee to make sure the company’s listing appears toward the top of search results. Companies use online coupons to promote their products. Some companies, such as ValPak Marketing Systems, offer virtual, searchable coupons.ValPak Marketing Systems Nike’s Joga Bonita marketing campaign and world’s longest soccer clip, to which Nike invites fans to contribute.world’s longest soccer clip

MANAGING A WEB SITE Developing Successful Web Sites

Planning and Preparation What is the company’s goal for its Web site? Determines content and design. Determines scope. Will the site be maintained in-house or by a contractor? What will the site be named? Content and Connections Content an important factor for whether visitors return to a site. Available resources should be relevant to viewers, easy to access and understand, updated regularly, and written or displayed in a compelling, entertaining way. Small businesses are better off outsourcing to meet their hosting and maintenance needs.

Costs and Maintenance Variety of costs: Development Placing the site on a Web server. Maintaining and updating the site. Promoting the site.

Measuring Web Site Effectiveness Click-through rates Percentage of people presented with a Web banner ad who click on it. Conversion rates Percentage of visitors to a Web site who make a purchase.

GLOBAL ENVIRONMENT OF E-BUSINESS Future growth of many companies is linked to a global strategy that incorporate e-business. U.S. leads world in Internet users but ranks only fifth in Internet penetration. International competition is growing. U.S. firms run eight of the 10 most popular e-business sites in Europe, but French-owned Fnac.com is now more popular than Amazon.com in both France and Spain.Fnac.comAmazon.com Three of four Web pages are written in English. Can heighten competition in the global marketplace.