Internet Service
Learning Objectives




Describe different Internet business
models.
Contrast an electronic and traditional
service.
Understand the importance of scalability
to E-commerce success.
Distinguish among the E-business
models.
Technology Convergence
Enabling E-Business



Internet
Global telephone system
Communications standard TCP/IP
(Transfer Control Protocol/Internet Protocol)





Addressing system of URLs
Personal computers and cable TV
Customer databases
Sound and graphics
User-friendly free browser
Purpose of Web-site








A retail channel (Amazon.com)
Supplemental channel (Barnes & Nobel)
Technical support (Dell Computer)
Embellish existing service (HBS Press)
Order processing (Delta Airline)
Convey information (Dr. Koop)
Organization membership (POMS.org)
Games (Treeloot.com)
E-Business Models
(Weill & Vitale, Place to Space, HBS Press, 2001)








Content Provider: Reuters
Direct to Customer: Dell
Full-Service Provider: GE Supply Co.
Intermediary: eBay
Shared Infrastructure: SABRE
Value Net Integrator: Seven-Eleven Japan
Virtual Community: Monster.com
Whole-of-Enterprise: Government
Service Package and E-Service
Selling
(providing)
information
Selling valueadded service
Selling
services with
goods
Selling goods
Used car
prices
Online travel
agent
Computer
support
Online retailer
Kelly Blue
Book
Biztravel.com
Everdream
Amazon.com
Information
dominates
service
package
Goods
dominates
service
package
Electronic and Traditional Services
Features
Electronic
Traditional
Interaction
Screen-to-face
Face-to-face
Availability
Anytime
Working hours
Access
From anywhere
Travel to location
Market Area
Worldwide
Local
Ambiance
Payment
Electronic
interface
Credit card
Physical
environment
Cash or check
Speed
Immediate
Physical waiting
Privacy
Anonymity
Social interaction
Grocery Shopping Comparison
On-line
Shopping
Advantages
Convenience
Saves time
Less impulse
buying
Disadvantages Forget items
Less control
Need computer
Delivery fee
Traditional
Shopping
See new items
Memory trigger
Product sampling
Social interaction
Time consuming
Waiting lines
Carry groceries
Impulse buying
E-Business Supply Chain
(Network) Elements




Major entities including firm of interest and its
customers, suppliers, and allies
Major flows of product, information, and
money
Revenues and other benefits each participant
receives
Critical aspects: participants, relationships,
and flows
Example: 7-Eleven Japan
Economics of E-Business


Sources of Revenue:
- Transaction fees
- Information and advice
- Fees for services and commissions
- Advertising and listing fees
Ownership
- Customer relationship
- Customer data
- Customer transaction
Economics of Scalability






Information vs goods content of service
package
Degree of customer contact
Standardization vs customization
Shipping and handling costs
Cost of after sales service
Why did living.com fail?
Economics of Scalability
Dimensions
High
Scalability
Selling valueadded service
Low
E-commerce
continuum
Selling
information
(E-service)
Selling
services with
goods
Selling goods
(E-commerce)
Information vs.
Goods Content
Information
dominates
Goods dominate
Degree of
Customer Content
None
Need for call
center
Standardization vs.
Customization
Mass
distribution
Fill individual
orders
Shipping and
Handling Costs
None
Yes - costs depend
on item ordered
Cost of Aftersales service
None
Returns possible
Example Service
Used car prices
Online travel
agent
Computer support
Online retailer
Example Firm
Kelly Blue
Book
Biztravel.com
Everdream
Amazon.com
Topics for Discussion




Can an Internet service encounter be a
memorable experience?
What is the “front-office” of an Internet
service?
What is the contribution to gross national
product (GNP) of “self-service” activities?
Position the following websites on the
electronic services product-process matrix:
cookingpost.com, chocoholic.com,
peapod.com, raisinrack.com, and win.com.
Amazon.com


How would you contrast Amazon’s
business design with that of Barnes &
Noble before Barnes & Noble went
online?
From a customer’s perspective, what
are the advantages and disadvantages
of each design?
Amazon.com (cont.)



Why has Amazon.com not turned a profit yet
and what needs to be done to achieve
profitability?
Will amazon continue to be successful
against “click and mortar” competitors, such
as Barnes & Nobel, which go online?
Is Amazon.com a model for the future of
retailing?