Slide 1.1
Chapter 1
Introduction to e-business and
e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.2
Learning outcomes
• Define the meaning and scope of e-business
and e-commerce and their different elements
• Summarize the main reasons for adoption of
e-commerce and e-business and barriers that
may restrict adoption
• Outline the ongoing business challenges of
managing e-business and e-commerce in an
organization.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.3
Management issues
• How do we explain the scope and implications
of e-business and e-commerce to staff?
• What is the full range of benefits of
introducing e-business and what are the
risks?
• How do we evaluate our current e-business
capabilities?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.4
Figure 1.1
Google circa 1998
Source: Wayback machine archive: http://web.archive.org/web/19981111183552/google.stanford.edu
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.5
E-business innovation and
opportunity
• Since Google was launched in 1998 which
e-business startups have transformed the way
we work, live and play?
• How has Google innovated in search and its
business model?
• See Table 1.1 for some of major innovators
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.6
E-business innovation
• P. 5, Activity 1.1
• Discussion
– Which company / website impacted on
Internet or the web?
– How do we measure their success?
– What made them successful?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.7
The impact of the Internet on
business
• Andy Grove, Chairman of Intel, one of the
early adopters of e-commerce, has made a
meteorological analogy with the Internet.
• He says:
Is the Internet a typhoon force, a ten times
force, or is it a bit of wind? Or is it a force that
fundamentally alters our business? (Grove,
1996)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.8
E-business opportunities
• Reach
– Over 1 billion users globally
– Connect to millions of products
• Richness
– Detailed product information on 20 billion +
pages indexed by Google. Blogs, videos,
feeds…
– Personalized messages for users
• Affiliation
– Partnerships are key in the networked
economy
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.9
Internet risks – what can go wrong
with a transactional site?
•
•
•
•
•
•
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.10
E-consultancy Interview
•
•
•
•
•
•
•
How does HP drive traffic to their site?
How do they communicate with partners?
What do they syndicate?
What’s driving their actions?
What’s the benefit they can get by doing so?
How do they manage user reviews?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.11
What is e-commerce and e-business?
• You are attending a role in the e-business
team of a global bank
• You anticipate you may be asked the
distinction between e-commerce and
e-business.
• Write down a definition for each
• E-commerce:
–
• E-business:
–
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.12
What is e-commerce and e-business?
• E-commerce :
– All electronically mediated information
exchange between an organization and its
external stakeholders (Chaffey)
– Digitally enabled commercial transactions
between and among organizations and
individuals
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.13
What is e-commerce and e-business?
• E-business:
– All electronically mediated information
exchanges, both within an organization and with
external stakeholders supporting the range of
business process (Chaffey)
– Digital enablement of transactions and
processes within a firm, involving information
systems under firm’s control. Does not include
commercial transactions involving an exchange
of value across organizational boundaries
(Laudon)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.14
What is e-commerce and e-business?
• P. 10, Activity 1.2
• Use Google, Yahoo, and BING to do the
search and report the number of hits
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.15
Figure 1.2
The distinction between buy-side and sell-side e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.16
Figure 1.3
Three definitions of the relationship between e-commerce and e-business
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.17
What is e-commerce and e-business?
Activity 1.3, P. 11
– Discussion—Question 1
Intranet vs. Extranet
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.18
Intranet vs. Extranet
• P. 11, Activity 1.3
• Discussion—Question 1
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.19
Figure 1.4
The relationship between intranets, extranets and the Internet
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.20
Why Study E-commerce?
• E-commerce technology is different, more
powerful than previous technologies
• E-commerce bringing fundamental
changes to commerce
• Traditional commerce:
–
–
–
–
Passive consumer
Sales-force driven
Fixed prices
Information asymmetry
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.21
Unique Features of E-commerce
Technology
1.
2.
3.
4.
5.
6.
7.
8.
Ubiquity
Global reach
Universal standards
Information richness
Interactivity
Information density
Personalization/customization
Social technology
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.22
Origins & Growth of E-commerce
• Precursors:
– Electronic Data Interchange (EDI)
• 1995: Beginning of e-commerce
– First sales of banner advertisements
• Since then, e-commerce fastest growing
form of commerce in the United States
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.23
The Growth of B2C E-commerce
SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b;
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.24
The Growth of B2B E-commerce
SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.25
E-commerce: A Brief History
• 1995–2000: Innovation
– Key concepts developed
– Dot-coms; heavy venture capital investment
• 2001–2006: Consolidation
– Emphasis on business-driven approach
• 2006–Present: Reinvention
– Extension of technologies
– New models based on user-generated content, social
networking, services
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.26
Types of E-commerce
• Selling Side
– Transaction e-commerce sites
– Service-oriented relationship-building site
– Brand-building sites
– Portal, publisher or media sites
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.27
Types of E-commerce
• Digital Marketing
• The management and execution of marketing
using e-media in conjunction with digital data
about customer
– Involves using digital technology
• …………
– To achieve these objectives
• …………..
– Through using these marketing tactics
• ………..
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.28
Figure 1.5
First Direct Interactive (www.firstdirect.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.29
Figure 1.6
Blendtec viral campaign micro-site (www.willitblend.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.30
Web 2.0 and Beyond
• Web 2.0
– Features-p. 24
– Web 2 examples
• Web 3.0 Features-pp. 24-25 Box 1.1
– Research the web to discover what Web 3.0
technology and features have been used by
which company
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.31
Figure 1.7
Evolution of web technologies
Source: Adapted from Spivack (2007)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.32
e-Commerce and SCM
• What’s Supply Chain Management (SCM)
– The coordination of all supply activities of an
organization from its supplier and partners to
its customers
• Value Chain
• How e-Commerce impact SCM?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.33
Business-Consumer Model of e-Commerce
• P. 26, Fig. 1.8
• Classified by market relationship
– Business-to-Consumer (B2C)
– Business-to-Business (B2B)
– Consumer-to-Consumer (C2C)
• Classified by technology used
– Peer-to-Peer (P2P), e.g., BitTorrent and Napster
– Mobile commerce (M-commerce)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.34
Summary and examples of transaction alternatives between businesses,
consumers and governmental organizations
Figure 1.8
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.35
Mini Case Study
P. 27, Betfair
– How does Betfair gains profit
– What’s the challenges they may face
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.36
Figure 1.9
Betfair peer-to-peer gambling exchange
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.37
E-government
What is?
What are the benefits?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.38
E-Business Opportunities
what goals does a business can achieve
through e-business?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.39
Business Adoption of E-Commerce/Business
• Activity: You are in a team of advisers at a
local business link
• List
– Drivers to adoption of sell-side e-commerce by
business and how you can reinforce these by
marketing benefits
– Barriers to adoption of sell-side e-commerce
by business and how you can reinforce these
by stressing benefits
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.40
Cost/efficiency and competitiveness
drivers
• Cost/efficiency drivers
– Increasing speed with which supplies can be
obtained
– Increasing speed with which goods can be
dispatched
– Reduced sales and purchasing costs
– Reduced operating costs
• Competitiveness drivers
– Customer demand
– Improving the range and quality of services offered
– Avoid losing market share to businesses already
using e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.41
Business Adoption of E-Commerce/Business
• Drivers for Adoption-Profit generation and
cost reduction
• Tangible and Intangible benefits from ebusiness.-ref. p.31, table 1.3
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.42
Figure 1.10
Usage of different e-business services in European countries
Source: European Commission, 2008
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.43
Case Study
• P. 33, Case Study 1.2 North West
Supplies
• Read the case and discuss the questions
on p. 35
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.44
Figure 1.11
North West Supplies Ltd site (www.northwestsupplies.co.uk)
Source: Opportunity Wales
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.45
E-business Risks and Barriers for Adoption
• Strategy level issues
• Practical risks
– Ref. p. 35
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.46
Figure 1.12
Barriers to development of online technologies
Source: DTI (2002)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.47
Potential Limitations on B2C E-commerce*
• Expensive technology
• Sophisticated skill set
• Persistent cultural attraction of physical
markets and traditional shopping
experiences
• Persistent global inequality limiting access
to telephones and computers
• Saturation and ceiling effects
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.48
Evaluating an Organization’s E-business
Capability
• Is any company ready for e-commerce?
• Stage model of e-commerce
– –Ref. p. 37 Fig. 1.13
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.49
Figure 1.13
A simple stage model for buy-side and sell-side e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.50
Drivers of consumer adoption
Driver
Marketing approach
1
2
3
4
5
6
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.51
Barriers to consumer adoption
Barrier
Marketing approach
1
2
3
4
5
6
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.52
Figure 1.14
Variation in different online activities by gender
Source: UK National Statistics (2006) Individuals accessing the Internet – Report from the UK National Statistics Omnibus Survey. Published online at www.statistics.gov.uk
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.53
Management Responses to E-Commerce
• This will be addressed in the part 2 of the
book
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.54
Case Study
• Case Study 1.3. eBay
• Read the case and discuss the question on
page 46.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.55
Next Class
• McKinsey 7S framework was referenced but
not introduced in detail. Research the
Internet to find some background information
about it and bring back your discovery to next
class.
• Preview Chapters 2
• Read the Real-world E-Business Experience
Interview on pp.53-57.
• Visit the www.morethan .com web site to get
a sense on their business
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.56
Next Class
• Be prepared to discuss these questions:
– What type of business does MoreTh>n do?
– What key issues has the interview covered?
– Why people would go online than offline according to
the interview?
– Do you see a similar business model in Canada?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009