Chapter 5
Electronic Commerce
Strategies for the New Economy
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Sales
-Cost of goods sold
-= Gross margin
Income
Statement
--expenses
-Wages
-Rent
-Insurance
-Phone
-Advertising
-Postage
-Electric
-=Net income
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Introduction
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The new economy introduced by the www has been
interesting.
Fortunes have been made and lost.
Dot-com millionaires have been created.
Others have seen their company turn into a dot-bomb.
The revolution of ebusiness promised by the internet has
just began.
We are still learning what works and what does not
work.
There is still a lot of uncharted territory ahead.
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The Growth of E-Commerce
Figure 5.1
Four Categories
of E-Commerce
page 178
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The Growth of E-Commerce
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E-commerce
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Enables customers, consumers and companies to
form powerful new relationships that would not be
possible without the enabling technologies
The internet facilitates commerce by its ability
to move ________ information at low cost.
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The Growth of E-Commerce
The Digital Divide
Digital divide
Expresses the fact that different peoples,
cultures, and areas of the world or within
a nation do not have the same access to
___________ and telecommunications
technologies.
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The Advantages of Business To Consumer E-Commerce
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just another channel by which to reach
their customers??
a channel with some unique and powerful
advantages over traditional channels
Know
When to use it
 How to use it effectively and
 When to use it in ___________ with other channels
Is key.
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The Advantages of Business To Consumer E-Commerce
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advantages over ‘_________’ stores:
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Shopping can be faster and more convenient
Offerings and prices can change
instantaneously
Call centers can be integrated with the web
site
Broadband telecommunications will enhance
the buying experience
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The Advantages of Business To Consumer E-Commerce
Shopping Can Be Faster and More Convenient
Figure 5.3
Alternative
Channels for
Selling to
Customers
page 182
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The Advantages of Business To Consumer E-Commerce
Offerings and Prices Can Change
Instantaneously
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E-tailers can change product offerings
and prices instantaneously in response
to changes in customer demand.
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Keys To Success In Business To Consumer E-Commerce
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Important lessons of e-commerce:
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Commodity like items work best.
Digital products are the best of all.
Attracting and retaining customers.
Remember the importance of
merchandising.
You must execute well.
Watch the competition.
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Keys To Success In Business To Consumer E-Commerce
Remember the Importance of Merchandising
Figure 5.3
Dos and Don’ts of Web
Site Design
page 188
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Business to Business E-Commerce
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B2B e-commerce is e-commerce that takes place
between organization.
Companies do business with other companies all
over the world.
Example: an airline needs to buy
Aircraft fuel
 Spare parts
 Food
 Other
From other companies
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Business to Business E-Commerce
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Relationships in B2B take different
forms in the e-commerce
environment:
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Value networks
Corporate purchasing segments
Next-generation solutions
B2B marketplaces
Intranets and extranets
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Business to Business E-Commerce
Value Networks
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More and more in e-commerce
involves a complex network of
relationships to operate between
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the enterprise,
its customers,
intermediaries,
complemetors and
suppliers
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Business to Business E-Commerce
Value Networks
Figure 5.6
The Value
Network
page 194
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Business to Business E-Commerce
Corporate Purchasing Segments
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In B2B, most attention has been given
to the ways that e-commerce could
streamline the purchasing of materials
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Business to Business E-Commerce
Corporate Purchasing Segments
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Purchasing applications are usually
divided into three segments:
1. Purchasing of direct materials
2. Purchasing of indirect materials (MRO)
3. Purchasing of services
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Business to Business E-Commerce
Corporate Purchasing Segments
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The most important form of B2B ecommerce today is electronic data
interchange or EDI
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Business to Business E-Commerce
Corporate Purchasing Segments
Figure 5.7
An EDI Huband-Spoke
Arrangement
page 196
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Business to Business E-Commerce
Corporate Purchasing Segments
Figure 5.8
How Value-Added Networks
(VANs) Facilitate EDI
page 197
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Business to Business E-Commerce
Next Generation Solutions
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Efforts are underway to create a
new generation of EDI for the B2B
transactions that would be
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Easier to setup and use
More attractive to small businesses
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Business to Business E-Commerce
B2B Marketplaces
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B2B marketplaces - Internet-based
services that bring together buyers and
sellers.
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They give the potential to bring together large
numbers of buyers and sellers
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giving buyers more choices and
aggregating demand for the sellers
Transaction costs can be reduced
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Business to Business E-Commerce
Intranets and Extranets
Figure 5.10
Intranet Structure
page 201
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Business to Business E-Commerce
Intranets and Extranets
Figure 5.11
Extranet Structure
page 202
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The Role OF E-Government
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E-Government - describes the
application of e-commerce technologies
in governmental agencies.
In many countries the government is
the largest hub to use EDI for
ecommerce activities.
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E-Commerce Payment Systems
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EDI transactions are for purchase
orders and other standard business
documents
Financial EDI (FEDI) - the use of EDI
for payments.
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E-Commerce Payment Systems
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E-payments would solve traditional
timing problems such that:
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Epayments would clear faster and
The payer would lose the use of that
money for those extra few day it would
have taken for the check to clear.
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E-Commerce Payment Systems
Credit Cards and Smart Cards
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Smart cards - plastic cards the size of a
credit card that contain an embedded chip
on which digital information can be
stored.
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E-Commerce Payment Systems
Financial Cybermediaries
Figure 5.12
The PayPal Web
Site
page 204
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