E-Commerce
Jason C.H. Chen, Ph.D.
School of Business Administration
Gonzaga University, Washington, U.S.A.
Senior Consultant, Taskco.com
chen@gonzaga.edu
Nov. 20, 2000
Topics
• E-Commerce:
From B2C to B2B and Beyond
• e-Bid Process
• Features of a B2B application.
• Business plan for an e-Marketplace (next
year)
• e-CRM and 1-1 Marketing (next year)
E-Commerce:
From B2C to B2B and Beyond
Jason C.H. Chen, Ph.D.
School of Business Administration
Gonzaga University, Washington, U.S.A.
Senior Consultant, Taskco.com
chen@gonzaga.edu
Nov. 22, 2000
Outline of Topics
•
•
•
•
•
•
•
EC, B2C and B2B and their models.
How big is B2B?
Where is the Evidence?
What are the revenue models in B2B?
What is driving adoption of B2B?
Why now?
TASKCo.com
eBusiness Key Concepts
• eBusiness
– The strategy of how to automate old business models
with the aid of technology to maximize customer value
• eCommerce
– The process of buying and selling over digital media
• eCRM (eCustomer Relationship Management)
– The process of building, sustaining, and improving
eBusiness relationships with existing and potential
customers through digital media
What is E-Commerce ?
• Electronic commerce
(EC) is an emerging
concept that describes
the buying and selling
of products, services
and information via
computer networks,
including the Internet.
Figure:
E-commerce on the
rise.
Source: 1999 SG
Cowen/Datamation
Networked
Computing Survey
26%
24%
21%
22%
15%
In pilot stage
6% 6%
Starting to
implement
1997
Figure:
E-commerce apps are
a big driver for
storage. Average
installed online
storage in gigabytes.
Source: 1999 SG
Cowen/Datamation
Networked
Computing Survey
9%
8%
1998
In use
1999
E-commerce status at sites
775
623
364
No plans
434
Start in 99/00
Expand in 99/00 Largely done
Table: E-commerce’s most promising potential benefits
Benefit
% of
Respondents
Benefit
% of
Respondents
New
channel for
existing
business
25%
Improved
customer
service
Keep pace
with
technology
5%
Reduced cost Other
of sales
23%
4%
Enabled
entire new
line of
business
18%
6%
Reduced
operating
costs
Improved
cycle time
7%
5%
Not
available
None
4%
3%
eBusiness Processes
WHY
Customer Relationship
WHAT
Redesign Business
Processes (Outside-In)
HOW
Applying Technology
eBusiness Processes
WHY
Customer Relationship
WHAT
Redesign Business
Processes (Outside-In)
HOW
Applying Technology
Traditional versus E-Business
Models?
C
C
B
B
C: Individual Consumer
B: Business
What is B2C?
• B2C (or Extranets) is just web-enabled
relationships between existing partners;
they tend to be run by a single company
seeking to lower the cost of doing business
with its current suppliers or individual
customers.
• Examples?
– Amazon.com
– Egghead.com
Figure: A B2C e-business Model
Enterprise
Internet
User Profiles
Workflow
Business rules
Payment
Analytics
Intranet
B2C Applications
•
•
•
•
Electronic storefront
Electronic malls
Advertising online
Service online
–
–
–
–
selling books, toys, computers
e-banking (cyberbanking)
online stock trading
online job market, travel, real estate
Figure : B2C and B2B Internet Commerce in the
U.S. (Source: Forrester Research)
Billion
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
1998
B2C
B2B
1999
2000
2001
2002
2003
What is B2B?
• “B2B” is businessto- business commerce
conducted over the
Internet (called B2B ecommerce space, or
e-marketplaces)
N
B2B e-Markepplaces:
A CEO’s Perspective
“The next chapter in the e-business revolution
involves the transformation of entire markets and
the redefinition of industries. We will see the rise
of a new class of entities -- e-Marketplaces -- that
will help online buyers and sellers find each other,
attack the inefficiencies of traditional markets, and
carve out for themselves important roles in the ebusiness economy.”
Louis V. Gerstner Jr.
Chairman of the Board and CEO
IBM Corporation
E-Market is …
Web-based marketplace
• e-market is Web sites
Sellers
where buyers and sellers
come together to
communicate, exchange
ideas, advertise, bid in
MarketSite
auctions, conduct
transactions, and
coordinate inventory
Buyers
and fulfillment
Figure : A B2B Model
(Source: Goldman Sachs Investment Research Report)
Banks,
Financial Institutions
eCredit.com
Suppliers
Production materials
Operating goods, services
Enterprise
Logistics
Celarix, NTE
Customers
Focus on e-Business Applications
Knowledge Management/Business Intelligence
E-Commerce
Procurement
Network
M:1
Trading
Network
M:N
E-Channel
Management
1:N
E-Portal Management
E-Services
SCM/ERP/Legacy Appls
Businesses &
Consumers
Businesses
E-Customer Relationship
B2B Applications
•
•
•
•
•
Advertising
Auctioning
Procurement
Channel management
E-commerce
How Big is B2B?
1800
$1,500
($ Billions )
1500
$1,113
1200
$782
900
$522
600
300
B2B
$294
$39
$114
1998
1999
0
2000
2001
2002
2003
Figure: The Goldman Sachs B2B Sizing in USA
2004
Where is the Evidence
• Three highlights from the Goldman Sachs
B2B survey 1.0:
– E-Commerce spending on proprietary Web site,
e-market, and procurement (75% say, in 2000)
– Business are increasingly likely to develop B2B
e-markets and to favor online auctions (74%
say, in 2000)
– Outsourcing e-commerce spending is
commonplace among businesses (25% say, up
to 75% of e-C spending)
B2B Revenue Model
• B2B companies exhibit varying business
models, depending on the key products and
services they offer. The models include:
–
–
–
–
–
transaction fees,
auction-driving commissions,
advertising,
content subscriptions,
software licensing
B2C vs. B2B
B2C
Switching Costs
Low with multiple suppliers
B2B
High when integrated with e-frastructure;
few qualified suppliers
Long term, mission critical
Transactional
Relationship
Type
Transaction Type Smaller average selling price Larger average selling price
Traffic volume is critical;
Don’t need every customer, only need the
Revenue Model
Large customer base is key
right customers
Source: Goldman Sachs Investmenet Research
The Magnificent Seven B2B Drivers
•
•
•
•
•
•
•
Increasing competition and globalization
Growing interactivity
Financial opportunity
Efficiencies and cost savings
Enhanced market and customer reach
Real-time needs
Regulatory and taxation issues
N
Small Business Likely to Fuel
B2B
• Small businesses will fuel the B2B market
– the use of and dependence on the Internet by
small businesses as a medium for marketing,
distribution, and commerce will likely fuel the
B2B market.
– as more small business access the Internet and
set up corporate Web pages, the more they will
employ the Internet to execute their business
strategy.
Benefits of B2B
• B2B solutions create competitive dynamics
through:
– cost savings
• the composition of cost (product versus process
costs)
• the number of intermediaries in the supply chain.
– new financial (revenue) opportunities
• the rate of industry-wide B2B adoption
• business model
N
Why Now?
• B2B catalysts are now arising to stimulate
adoption (mentioned earlier).
• Interactive networks have recently become
ubiquitous and inexpensive, accelerating the
use of B2B applications.
• A viral effect will spur copycat behavior
throughout the market as more companies
continue to implement B2B applications.
Which Industries are Likely to
Embrace B2B Solutions
• Industries that are B2B inclined exhibit
certain key characteristics:
– the supply chain is highly diffuse,
– techno-innovators dominate the culture,
– process represents more than 20% of total
costs,
– products exhibit complex configurations,
– expense pressure is intense.
• Research show that leading industries
migrating online and adopting B2B
solutions include the following:
–
–
–
–
–
Aerospace/Defense: 35%
Electronics: 25%
Chemicals: 20%
Motor vehicles and parts: 18%
Medical equipment and transport: 17%
What Makes a B2B e-market
Company Succeed?
• Five Critical Success Factors for e-markets:
–
–
–
–
–
Business model,
market size,
industry expertise,
branding and distribution,
management execution hustle (not just the
formulation of strategy)
N
Solutions for e-Enterprise
Organizations
Sellers
MarketSite
Buyers
• Streamlines buying and
selling between trading
partners
• Maximizes trade efficiency
across the entire supply chain
• Strategic e-commerce
capabilities in Internet time
• Delivers compelling ROI
Solutions for Internet Market
Makers
Your
Portal
• Turn your supply chain into
a revenue generation
opportunity
• Leverage your industry
domain expertise into
strategic e-commerce
solutions
• Brings e-commerce to
businesses of any size,
across all industries
Global Solution for Businesses:
The Global Trading Web
Global
Trading
Web
Connect once to trade with anyone,anytime,
anywhere in the world.
European e-markets
• B2C e-commerce in Europe is likely to
remain approximately two to three years
behind the U.S. .
• B2B in Europe currently lags the U.S. by
two years.
• How about in Asia?
TASKCo Mission
Leveraging Internet to Help Customers to:
Expand
Markets
Fundamental
Business
Drivers Have
Not Changed
Retain
Customers
Improve
Efficiencies
Focus on e-Business Applications
Knowledge Management/Business Intelligence
E-Commerce
Procurement
Network
M:1
Trading
Network
M:N
E-Channel
Management
1:N
E-Portal Management
E-Services
SCM/ERP/Legacy Appls
Businesses &
Consumers
Businesses
E-Customer Relationship
Objectives
This Market Place offers an integrated suite of capabilities that enables all modes of
access, reduce buyer’s total cost of ownership and seller’s marketing costs, eventually
increase revenue for both parties.
ePayment
— Suppliers —
eSuppliers
B2B
Marketplace
• Financing • Billing and Payment Processing
and Credit • Payment Settlement (A/P and AR)
• Risk Mgmt. • Financial Control Management
eProcure
— Buyers —
eBuyer
• 3rd Party
• On-Line ordering and
Logistics
tracking
• Needs evaluation
• Catalog Production • Order Mgmt. • eCustomer Service and
• Fact-based Negotiation
• Order Acceptance • Catalog
Transaction Processing
• Procurement Policies &
• Logistics
Maintenance • Order Acknowledgement
Procedures Mgmt.
• Financing
eService
• Maintenance,
Disposal, &
• Reporting of
Renewal
Item Level
Detail
• Trend Analysis
• Budget
• Usage/Demand Analysis
Tracking
and Forecasting
• Asset Recognition and
Tracking
• Payment Info.
(e.g., P-Card)
TASKCo.com Business
Logistics.com
Finance.com
Customs.com
TASKCo Trading Network
Infrastructure and Operation
MediNet.com
Transportation.com
Home Hardware.com
Travel.com
IPBank.com
PC Industry
Component
Electronics
Textile.com
Knowledge Management Services
企業間電子採購作業
賣方/供應商
企業電子商務市場
供應
商
供應商作業平台
經銷商作業平
台
買方/經銷商
經銷商
企業採購電子商務作業系統
供應鏈
Supply
Chain
•訂單管理
•電子型錄
•財務管理
•詢價管理
•交貨管理
•快速下單
•顧客管理
•帳戶管理
電子採購作業系統
物流
資訊流
金流
需求鏈
Demand
Chain
B2B e-Procurement Processes
Seller/Supplier
e-Marketplaces
Supplier
Trading Platform
Supplier
Buyer/Wholesale
Buye/r
Wholesale
Buyer/Wholesale
Trading Platform
B2B e-Procurement Process System
•Order mgt.
•Finance mgt.
•Shipping mgt.
•Customer mgt.
供應鏈
Supply Chain
•e-catalogue
•inquiry/
negotiation
•quick ordering
•account mgt.
e-procurement process system
Material Flow
Information Flow
Money Flow
需求鏈
Demand Chain
Timely news (filtering)
Document,
Update
Process
Business
Intelligence
Lotus
Notes
1
V.A.
(onestop)
Context
Work
Flow
3
Repository
(Shared)
4
e-portal
Knowledge
Management
Category
Data Mining
Tools (Pattern
Analysis)
2
OLAP
Tools
(Decision
Support)
  
easy access
ASP
Operational
Data
KNOWLEDGE MANAGEMENT PROCESSS in the TASKCo
Platform
Timely news (filtering)
Document,
Update
Process
Business
Intelligence
Lotus
Notes
1
V.A.
(onestop)
Work
Flow
Context
Repository
(Shared)
Category
3
4
e-portal
Knowledge
Management
Data Mining
Tools (Pattern
Analysis)
2
OLAP
Tools
(Decision
Support)
  
easy access
AS
P
Operational
Data
KNOWLEDGE MANAGEMENT PROCESSS in the TASKCo
Platform
So grab your board,
take the challenge
because…