Electronic Commerce
Lecture 4
Consumers
Businesses
Governments
e-Commerce
e-Publisher
Global Digital Community
WebMD
OfficeMax
Internet
Internet Technology
Traditional Businesses
Microprocessor Technology
Consumers
Should We?

Entrepreneurs & Small Businesses

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Attractive channels in reaching customers
Easy Delivery of innovative products
Cost Effective channels for marketing
Big Corporations

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A threat, an opportunity -> a must
Further explore procurement & supply
chain management
Whoever You are…
Could only be better
 Cutting costs, increase productivity, …
 Models from information providers,
products and services providers (etailers), e-business, e-enterprise, eindustry,…

Pessimism Out There?
Business is business; can’t afford to
be…
 Lack of social interactions; generation
to generation
 One language:  :> +,)
?

Internet Business Strategy

Commerce & Technology Revolutions
calendar years vs internet years
 local/regional vs global
 competition: across/down the street vs unseen
and everywhere; playing field is getting invisibly
large

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Internet Value


transform customer relationships
traditional sources of business value disappear
The Commerce Value Chain
o
o
o
Introduce the idea of Value Chain
A value chain from the raw material supplier to the
final product, or from the product on the market to
the buying customer
Using a generic value chain, four stages are identified
o
o
o
o
Attract
Interact
Act
React
Stages in a Value Chain

Attract

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Advertising
Marketing
Interact


Catalog
Sales
Act
Order capture
Payment
Fulfillment
React
Customer service
Order tracking
This should be compared to the traditional business practice.
What Strategy?

Channel Master : Cisco
Sold more than $1.0 billion online out of a total $6.4 billion worth of
routers, switches, and other network interconnect devices (1997)

Customer Magnet : Tripod
Target certain consumer group with a selected range of products to
meet their needs

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Value Chain Pirate : ONSALE
Digital Distributor : Classifieds2000
Others…
e-Business Models
Consumer retail (c-to-b, c2b)
 Business-to-business (b-to-b, b2b)
 Information Commerce
 Services Commerce??

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Bank?
Social?
B2C Electronic Commerce

b2c e-commerce or retailing in the Internet
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company retailing sites, such as B&N, Gateway,
Wellcome
domain portal sites, such as WebMD, Expedia,
Amazon.com (not sure…)
general portal sites, such as Yahoo!
Business contacts/buyers-sellers/market place,
such as Go.com, JobDB.com, www.hkjobs.com
newspapers
Will it work b2c ec

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one in five persons have made some
purchases over the net
50% used e-tickets
60% of Charles Schwab trading via Web
distance learning
US$8 billion 1998 to estimated US$20 billions
in 1999 Internet retailing revenue:
implications?? No more traditional shopping
malls?
Analysis of B2C EC
threshold of users implies success
 transaction costs reduced?
 supply and demand
 presentation
 WOULD YOU USE IT?

B2C e-tailers
(Tresse, chapter4)
Benefits
 Ability to reach a global market
(marketspace: critical mass maybe reached
quickly)
 Reduced marketing and selling expenses
(update is easy; no re-printing)
 Increased efficiency of operation (specialized
personnel)
 Ability to target consumers more precisely
 Ability to convey more accurate product and
availability information
B2C e-tailers

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Attracts: advertising, e-coupons, sales,
promotions, frequent buyer programs, oneto-one marketing (individualized product
announments)
Interact: content development and
interactivity
Act:

Order processing (one-click ordering) – shopping
cart, order validation and modifications, discounts,
cross-selling (this with that), taxes (not
applicable), shipping & handling charges, records
and receipts
Continued

Act (cont’d)
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Payment: Cash, credit/debit cards, check,
e-wallets?, currencies?
Fulfillment: how? Logistics?
React: customer service – self help,
discussion group, track and trace,
multiple-language support.
B2B EC

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actual business transactions and connection
of organizations
types: selling/buying between business company sites target other business partners
types: portal sites but for businesses;
cybercash, security system integration,…
B2BEC - US$43 billion in 1998; expect to hit
US$1.3 trillion by the end of 2003
B2B Models
(Turban, et al)
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Supplier-oriented Marketplace
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Buyer-oriented Marketplace
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www.cisco.com
Tpn.geis.com
Intermediary-oriented Marketplace

Www.industry.net
e-Procurement Supply Chain Management
Elements of ERP
(p 169)
Sales, Distribution (Order Entry)
 Human Resources
 Accounting and Financials
 Integrated Logistics
 Production Planning
 Customer/Employee

Enterprise Resource Planning
(ERP)

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To improve sutomer order processing
To consolidate and unify business functions
such as manufacturing, finance,
distribution/logistics, and human resources
To integrate disparate technologies, along
with the processes they support, into a
common denominator of overall functionality
To create a new foundation on which nextgeneration applications can be developed
E-Commerce
Example: e-Procurement
(chapter nine of A)
A typical procurement process:
 Identify sellers/vendors
 Make a request
 Receive approval
 Fill up a Purchase Order
 Wait for Business/Procurement Office to
interface with supplier
 Wait for the delivery of products
 Receiving report to Business/Procurement
Office
e-Procurement Solutions
http://www.buyingchain.com/buying_ch
ain/default.asp
 http://www.walker.com/products_servic
es/eprocurement/
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Benefits of e-Procurement
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Efficiency: “lower procurement costs, faster
cycle times, reduced maverick or
unauthorized buying, more highly organized
information, and tighter integration of the
procurement function with key back-office
systems” (p234)
Effective: “increased control over the supply
chain, proactive management of key
procurement data, and higher-quality
purchasing decisions within organizations”
Other e-Procurement
Solutions

Buy-side: linking the buying party with
suppliers and back-office systems
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Fire up browser and login
Browser products catalog
Select Products and obtain quotes
Create On-line PO
Get On-line Approval
Send PO to Supplier for fulfillment
Start order tracking and ready for receipt
CU Business Office
Quote1
Quote2
k
j
Quote3
l
Approve and Generate P.O.
Browser
Quote1
Quote2
Quote3
k
j
l
Other e-Procurement
Solutions
Sell-side: Vertical product trading
community
 www.chemdex.com
 www.sciquest.com
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Supply Chain Management
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Too much to read…


For a company
For inter-enterprises
Other ‘possibilities’ of EC

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Industrial E-Commerce: logistic centers, a
case in point; third-party or company-owned?
Governmental agencies involvement?
Person-centered e-commerce: improves one’s
own life and better quality of life overall?
Empowered an individual? Networking...
Two Views of Where EC is Going
acquisition of information
vs
conduct of actual business transactions
 connection of persons
vs
connection of organizations

“The Future of E-Commerce: Integrate & Customize”
Choi & Whinston, Computer, Jan, 1999.
e-Procurement Supply Chain Management
Personal Integrator
Get Started: Planning
Questions to Ask:
 How is EC going to change our business or
create new channel for new business?
 How do we uncover new types of business
opportunities?
 How can we take advantage of new electronic
linkages with customers and trading
partners? (Extended Enterprise)
 Do we become intermediaries ourselves?
(Shrink and Specialize; Expand and Capture)
Planning
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How do we bring more buyers together
electronically (and keep them there)?
How do we change the nature of our
products and services or create new ones?
Why is the Internet affecting other companies
more than ours?
How do we manage and measure the
evolution of our strategy?
How to assess the success of EC?
What to do?
Mougayar (1998, Opening Digital Markets)
1.
2.
3.
4.
5.
Conduct Necessary Education and Training
Review Current/New Distribution and
Supply Chain Models
Understand What Your Customers and
Partners Expect from the Web
Re-evaluate the Nature of Your Products
and Services
Give a New Role to Your Human Resources
Department
What to do?
6.
7.
8.
9.
10.
Extend Your Current Systems to the
Outside
Track New competitors and Market
Shares
Develop a Web-Centric Marketing
Strategy
Participate in the Creation and
Development of Virtual Marketplaces
Instill EC Management Style
Four System Architechure
(Hsu)

Document Connectivity
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Applications Connectivity
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CGI, Javascript, …
Database Connectivity

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HTML, …
ODBC/JDBC, databases
Enterprise Connectivity

Java, CORBA
Five Elements of an EC System
(Hsu)
 Web
Server
 Applications Server
 Database Server
 Internal Networking
 Internet Connection
To Implement the Site
E-business Plan and Design
Web-based Enterprise Computing
(article 20)
Web
Browser
WebServer
-received request
-Invoked applications
Web-based
API
Applications
ODBC/JDBC compliant
DB
db engine
Web-based Enterprise Computing
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Client-server computing
ODBC- & JDBC- compliant
DBMS
Static vs Dynamic HTML
pages
Java
COM
CORBA
Drumbeaat 2000
X/Open
Informix, Sybase, Oracle

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CGI programs (Unix shell
scripts, C and/or Perl
programs)
HTTP
Applets vs Servlets
API
ASP vs JSP
Lotus Domino, Netscape
Enterprise, IIS, …
SQL
ColdFusion/CFML
XML