Chapter 9 E-Business and E-Commerce
B2C Models: Service Provider
Online services (google, google maps, gmail, social networking sites, dropbox, icloud value proposition: valuable, convienient, time-saving, low-cost alternatives to traditional service providers Revenue models: -sales of services, subscription fees, advertising, sales of marketing data
Virtual (or pure play) Organizations
amazon, Newegg
Electronic Commerce (e-Commerce)
the process of buying, selling, transferring, or exchanging products, services, or information via computer networks,including the internet.
Mobile Payment Systems
use of mobile handsets as payment devices well-established in Europe, Japan, South Korea Japanese mobile payment systems -e money -mobile debit cards -mobile credit cards Apples "Apple pay" -Not as well established yet in US
B2C Models: Content Provider
-Digital content on the web (news, music, video/movies) Revenue models: subscription; pay per download (micropayment) advertising, affiliate referral fees Variations: content owners syndication web aggregators, shopping.com
B2B Models: Industry Consortia
-Industry owner vertical digital marketplace that serve specific industries More successful than exchanges -sponsored by powerful industry players -strengthen traditional purchasing behavior Revenue Model: transaction, commission fees Example: Exostar (online trading exchange for aerospace and defense industries)
Fraud on the Internet
-Stock promoters spread positive false rumors to boost stock prices -Auctions by both sellers and buyers. -Selling bogus investments -Setting up phantom business opportunities
B2C Models: Market Creator
-create digital environment where buyers and sellers can meet and transact (priceline, ebay) Revenue model: transaction fees
B2B Models: Exchanges
-independently owned vertical digital marketplace for direct inputs Revenue Model: transaction, commission fees Create powerful competition between suppliers Tend to force suppliers into powerful price competition; number of exchanges has dropped dramatically
B2C Models: Transaction Broker
-process online transactions for consumers primary value proposition---saving time and money -revenue model : transaction fees -Industries using this model: financial services travel services job placement services, monster.com
B2B Models: E distributor
-version of retail and wholesale store, MRO goods and indirect goods -owned by one company seeking to serve any customers/companies Revenue model: sales of goods
Types of E-commerce
...Business to consumer (B2C) -Amazon ...Business to Business (B2B) -JMU buys from staples ...Consumer-to-consumer (C2C) -auction site ...Business-to-employee (B2E) ...E government ...Government to Citizen (G2C) ...Government-to-Business (G2B) ...Mobile Commerce (m-commerce)
Taxes and Other Fees
1. Federal, state, and local authorities are now scrambling to create some type of taxation policy for e-business within their jurisdictions. 2. Based on location, should electronic businesses pay business license taxes, franchise fees, gross receipts taxes, excise taxes, privilege taxes, and utility taxes? 3. How should tax collection be controlled?
Unique Features of E-commerce Technology
1. Ubiquity 2. Global reach 3. Universal standards 4, Information richness 3. Interactivity 6. Information density 7. Personalization/customization 8. Social technology
8 Key Elements of a Business Model
1. Value Proposition 2. Revenue Model 3. Market opportunity 4. competitive environment 5. competitive advantage 6. market strategy 7. organizational development 8. management team
5. Competitive Advantage
Achieved when firm: -produces superior product or -can bring product to market at lower price than competitors Concepts: -asymmetries (one has more resources than others) -first mover advantage (amazon, ipod, iphone -unfair competitive advantage, brand name, patent -leverage (amazon moved into online grocery)
Domain Names
Cybersquatting the practice of registering or using domain names for the purpose of profiting from the goodwill or the trademark that belongs to someone else. (i.e. Taylor Swift) The Anti-Cybersquatting Consumer Protection Act (1999) permits trademark owners in the United States to sue for damages in such cases.
E commerce Payment Systems
Digital wallets -emulated functionality of wallet by authenticating consumer, storing and transferring value, and securing payment process from consumer to merchant -early efforts to popularize filed -newest effort: google checkout Digitial Cash: value storage and exchange using tokens -most early examples have disappeared; protocols and practices too complex
Domain Tasting
Domain Tasting lets registrars profit from the complex money trail of pay-per-click advertising. companies register domain names that are very similar to their competitors' domain names in order to generate traffic from people who misspell Web addresses. Domain tasters exploit this policy by claiming Internet domains for five days at no cost.
6. Market Strategy
How do you plan to promote your products or services to attract your target audience? -details how a company intends to enter market and attract customers -best business concepts will fail if not properly marketed to potential customers
2. Revenue Model
How will the firm earn revenue, generate profits, and produce a superior return on invested capital? Major types: -advertising revenue model (facebook) -subscription revenue model (netflix) -transaction fee revenue model (ebay, e trade) -sales revenue model (LL Bean, GAP) -affiliate revenue model (referral fee)
Business to business (B2B) Electronic Commerce
Net Marketplaces -E Distributor (seller side) organizations attempt to sell their products or services to other organizations electronically from their own private e-marketplace Website and/or from a third party website. the buyer is an organization -E procurement (buyer-side) a model in which organizations attempt to procure needed products or services from other organizations electronically. Procurement is the overarching function that describes the activities and processes to acquire goods and services. -exchange -Industry contortium
E commerce Payment systems
Online stored value systems -based on value stored in a consumers bank, checking, or credit card account -paypal, smart cards Digital accumulated balance payment -users accumulate a debit balance for which they are billed at the end of the month Digitial Checking -extends functionality of existing checking accounts for use online
Ethical issues
Threats to Privacy: Business makes it easier to store and transfer personal information To protect the buyers' identities businesses must frequently use encryption to provide this protection Tracking: individuals' activities on the Internet can be tracked by cookies that store a user's browsing history on their PC's hard drive Antivirus software packages must routinely search for potentially harmful cookies. The use of EC may eliminate the need for some of a company's employees, as well as brokers and agents. How should the company handle the layoffs? Should companies be required to retrain employees for new positions? Should the company compensate or otherwise assist the displaced workers?
Legal and Ethical Issues Specific to E-Commerce
Threats to Privacy: Business makes it easier to store and transfer personal information To protect the buyers' identities businesses must frequently use encryption to provide this protection Tracking: individuals' activities on the Internet can be tracked by cookies that store a user's browsing history on their PC's hard drive Antivirus software packages must routinely search for potentially harmful cookies. The use of EC may eliminate the need for some of a company's employees, as well as brokers and agents. How should the company handle the layoffs? Should companies be required to retrain employees for new positions? Should the company compensate or otherwise assist the displaced workers?
8. Management Team
What kinds of experiences and background are important for the companies leaders to have -employees are responsible for making the business model work -strong management team gives instant credibility to outside investors -strong management team may not
Business model
an "abstract representation of an organization, be it conceptual, textual, and/or graphical, of all core interrelated architectural, co-operational, and financial arrangements designed and developed by an organization presently and in the future, as well as all core products and/or services the organization offers, or will offer, based on these arrangements that are needed to achieve its strategic goals and objectives. -a game plan on "where, what, and how" to make your idea works and make a profit Uber, Facebook, Airbnb
Brick-and- Mortar Organizations
coffee shop
B2B Models: E procurement
creates and sells accesses to digital markets where participants transact for indirect goods -B3B service providers, application service providers (ASPs) Revenue model: -service fees, supply chain management, fulfillment services Example: Ariba (helps sellers creating online catalogs)
Clicks-and-Mortar (or Clicks-and-Bricks)
department stores, Macy's, JC Penny
Electronic payment mechanisms
enable buyers to pay for goods and services electronically, rater than writing a check or using cash -electronic checks -electronic cards -virtual credit cards -purchasing cards -stored value money cards -smart cards -person to person payments
Electronic Business (e-business)
in addition to the buying and selling of goods and services, e-business (a broader concept) refers to servicing customers, collaborating with business partners, and preforming electronic transactions within an organization
B2C Models: E-trailer
online version of traditional retailer -revenue model: sales -Variations: amazon walmart LLbean Dell.com Challenges? -low barriers to entry
B2C Models: Community Provider
provide online environment (social network) where people with similar interests can transact, share content, and communicate (facebook, myspace, linkedin, twitter) Revenue models: -typically hybrid, combining advertising, subscriptions, sales, transaction fees, and affiliate fees
B2C Business Models: Portal
search plus an integrated package of content and services (emails, calendar, shopping...) -Revenue model
Degree of Digitazation
the extent to which the commerce has been transformed from physical to digital which can relate to both the product or service being sold and the delivery agent or intermediary. The product can be either physical or digital, and the delivery agent can also be either physical or digital. (music, movie, gaming)
3. Market opportunity
what market space do you intend to serve and what is its size? -Market space: area of actual or potential commercial value in which company intends to operate -Realistic market opportunity: defined by revenue potential in each market niche in which company hopes to compete Market opportunity typically divided into smaller niches
7. Organizational Development
what types of organizational structures within the firm are necessary to carry out the business plan? -describe how firm will organize work ..typically divided into functional departments ..as company grows, hiring moves from generalists to specialists ..ebay from 1 person to specific departments as company grows
4.Competitive Environment
who else occupies your intended market space? -other companies selling similar products in the same market space -includes both direct and indirect competitors influenced by: -number and size of active competitors -each competitors market share -competitors profitability -competitors pricing
1. Value proposition
why should the customer buy from you? -personalization/customization -reduction of product search, price discovery costs -facilitation of transactions by managing product delivery (Amazon.com, UPS tracking system)
