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E & ( - 2002)
EDI B2B Electronic Marketplaces( )
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BUSINESS MODELS -- Current State
Most EC Business today areAn online version of traditional
modelsAn extension of physical businesses that are able to reduce
cost and improve customer satisfactionfollow a vertical and rigid
supply chain
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BUSINESS MODELS -- EmergingVirtual Companies and marketsa
consortium of companies build on each others businesses to exploit
opportunitiesOpen buyer centric marketscomparison shoppingCoalition
and outsourcinge.g. in REAL ESTATE: brokers, banks, escrow () ,
lawyers (for title inspection)Supply chain ---- SUPPLY WEB
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Supply-Chain Management
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VIRTUAL STOREFRONT: sells goods, services on-line (Amazon,
Virtual Vineyards, etc.)
MARKETPLACE CONCENTRATOR: concentrates information from several
providers InsureMarket, DealerNet, etc.)
INFORMATION BROKER: provides product, pricing, availability
information Auto-by-Tel, PartNet, etc)INTERNET BUSINESS MODELS
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TRANSACTION BROKER: buyers view rates, terms from various
sources (E*Trade, Ameritrade)
ELECTRONIC CLEARINGHOUSE: auction-like setting, products,
prices, change in response to demand (Bid.com, OnSale, etc.)
REVERSE AUCTION: buyer sets price, submits to multiple sellers
(Priceline.com)INTERNET BUSINESS MODELS
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DIGITAL PRODUCT DELIVERY: sell, download software, other digital
products (SonicNet, Build-a-Card, etc.)
CONTENT PROVIDER: creates revenue through providing client for a
fee, and advertising Tripod, Wall Street Journal, etc.)
ON-LINE SERVICE PROVIDER: provides service, support for
hardware, software products CyberMedia, Tune Up, etc.)
INTERNET BUSINESS MODELS
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Company-CentricB2B
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Typical ClassificationBusiness-to-Business
(B2B)Business-to-Public Body (e.g.,
Government)Business-to-Individual / Consumer
(B2C)Individual-to-Public Body
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Concepts and Characteristics of B2B ECB2B EC definedTransaction
conducted electronically between business over the
networksInternetExtranetsIntranetsPrivate networks (e.g.,
EDI)Automated trading improves the process
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: -to-B vs. B-to-C
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Concepts and Characteristicsof B2B EC (cont.)Market size and
contentExpected to grow from $1.1 trillion in 2003 to $10 trillion
by 2005Percentage of Internet-based B2B from 2.1% in 2000 to 10% in
2005Private and public e-marketplacePrivateone-to-many
modePublicmany-to-many mode
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Concepts and Characteristicsof B2B EC (cont.)How is B2B
conducted?Directly between buyer and sellerVia an online
intermediaryAlong the supply chainWith or without
intermediariesTypes of transactionsSpot buyingdetermined by dynamic
supply and demandStrategic sourcinglong term contracts
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B2B Supply Chain
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Concepts and Characteristicsof B2B EC (cont.)Supply chain
relationshipsInterrelated subprocesses and rolesAcquisition of
materialsProcessing products and servicesMoving to
distributorsPurchase by consumerTraditional process managed through
paper transactionsB2B applications offer competitive advantages for
supply chain management (SCM)
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Concepts and Characteristicsof B2B EC (cont.)Entities of B2B
ECSelling companymarketing management perspectiveBuying
companyprocurement management perspectiveElectronic
intermediariesoptional third party directory service provider
(scope of service may be extended to order fulfillment) Trading
platformspricing and negotiation protocol (auctions, reverse
auctions)
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Concepts and Characteristicsof B2B EC (cont.)Entities of B2B EC
(cont.)Payment servicesmechanism for transferring money to
sellersLogistics providerslogistics to complete transaction
(packaging, storage, delivery)Network platformsInternet, VAN,
intranet, extranetProtocols of communicationEDI or XMLBack-end
integrationconnecting to ERP systems, databases, functional
applications
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Concepts and Characteristicsof B2B EC
(cont.)ProductCustomerSupplierProduct processTransportation
InventorySupply chainCompetitorSales and marketingSupply chain
process and performanceInformation processed in B2B
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Concepts and Characteristicsof B2B EC (cont.)Electronic
intermediaries in B2BConsumers and business may share
intermediariesBusinesses may use different intermediaries with
different suppliers Benefits of B2B modelsEliminate paper-based
systemsExpedite cycle timeReduce errorsIncrease employee
productivityReduce costsIncrease customer service and partnership
management
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B2B ModelsCompany-centric modelsSell-side marketplace
(one-to-many)Buy-side marketplace (many-to-one)Many-to-many
marketplacesthe exchangeBuyers and sellers meet to tradeTrading
communitiesTrading exchangesExchanges
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B2B Models (cont.)Other B2B models and servicesFor the purpose
of sellingFor the purpose of buyingValue chain integratorsValue
chain service providersInformation brokersVertical vs. horizontal
marketplacesVerticalone industry or industry
sectionHorizontalservice or product used in several types of
industries
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B2B Models (cont.)Virtual service industries in B2BTravel and
tourism servicesReal estateElectronic paymentsOnline stock
tradingOnline financingOther online services
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Sell-Side Marketplace Architecture
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Sell-Side Marketplaces:One-to-ManyVirtual sellersBigboxx.com.hk
of Hong KongB2B office supply retailer servicesLarge corporate
clientsMedium corporate clientsSmall officesGoalsell products in
various SE Asian countriesOffers more than 10,000 itemsUses more
than 300 suppliers
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Sell-Side Marketplaces:One-to-Many (cont.)Virtual
sellersBigboxx.com.hk of Hong Kong (cont.)Company portal
attractive, easy to useBrowse online catalogsUse search
enginesPaymentsCash or check upon deliveryAutomatic paymentsCredit
cardPurchasing card
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Sell-Side Marketplaces:One-to-Many (cont.)Virtual
sellersBigboxx.com.hk of Hong Kong (cont.)Delivery Owns trucks and
warehousesDelivery scheduled onlineSame day (within an
hour)Specifically scheduled timeOrdering system integrated with
SAP-based back-office system
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Sell-Side Marketplaces:One-to-Many (cont.)Virtual
sellersBigboxx.com.hk of Hong Kong (cont.)Value-added servicesTrack
status of orderCheck stock availabilityPromotionsCustomized
pricesGroup accounts and central approvalfor businesses with
multiple branchesStanding orders automatically activatedLarge
number of reports and data available
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Sell-Side Marketplaces:One-to-Many (cont.)Customer
serviceGeneral Electric20 million calls/year about
appliancesReduced cost of each call from $5 to $0.20Milacron,
Inc.Site contains 55,000 productsEasy to useSecurely handles
selection, purchase, applicationTechnical serviceexpanded to
provide a higher level of service than previously available at the
site
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Sell-Side Marketplaces:One-to-Many
(cont.)DellIntelIBMCiscoDirect sales from catalogsConfiguration and
customizationEfficient customization for direct salesBusiness
customersCustomize productsReceive price quoteSubmit
orderSuccessful cases
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Sell-Side Marketplaces:One-to-Many (cont.)Direct sales from
catalogsBenefitsReduces costs (to buyers and sellers) and errors
during the processSpeeds up order cycleAbility to customize
productsOffer different prices to different customers
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Sell-Side Marketplaces:One-to-Many (cont.)Direct sales from
catalogs (cont.)LimitationsChannel conflicts with distribution
systemsHigh cost when traditional EDI usedLarge number of business
partners is needed to justify system
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Selling Side: Auctions and Other ModelsForward auctionsquick
disposal of itemsRevenue generationIncreased page viewsMember
acquisition and retentionbidding transactions result in additional
registered membersSelling from own site when:Large companies that
conduct auctions frequently dont benefit from using
intermediariesE-marketplace already in use, cost of adding auction
not too high
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Selling Side:Auctions and Other Models (cont.)Using
intermediaries when:No resources requiredOwn and control auction
informationFast time to marketSearching and reportingSearch and
report all auction activitiesStandard reports availableAdditional
analysis of complex information
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Selling Side:Auctions and Other Models (cont.)Billing and
collectionAutomatic calculation of shipping weights and
chargesPaymentencrypted credit card dataBilling informationeasily
downloaded into existing systemsSuccessful if:Sufficient number of
loyal customersProducts well knownPrice not major purchasing
criteria
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Sell-Side Case:CISCO Connection Online (CCO)Benefitssaves the
company $363 million per year in:Technical supportHuman
resourcesSoftware distributionMarketing material
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Cisco Connection Online (CCO) (cont.)Customer serviceCisco
Connection onlineOnline orderingInternet Product Center builds
virtually all products to orderOrder statuscustomer tools for
finding answers to order status inquiries
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Cisco Connection Online (CCO) (cont.)Benefits to CiscoReduced
operating costs for order takingEnhanced technical support and
customer serviceReduced technical support staff costReduced
software distribution costsLead times reduced from 4-10 days to 2-3
days
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Cisco Connection Online (CCO) (cont.)Benefits to customersQuick
order configurationImmediate cost determinationCollaboration with
Cisco staff
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Sell-Side IntermediariesMarshall Industries(a subsidiary of
AvnetMarshall) multinational distributor of electronic components
known for its innovative uses of IT and the WebProducts and
servicesMarshallNetMarshall on the Internet (portal)Strategic
European InternetElectronic Design
CenterPartnerNetNetSeminarEducation and News Portal
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Sell-Side Intermediaries (cont.)Marshall Industriesa subsidiary
or AvnetMarshall (cont.)Survival strategyContinuous improvement
programs and innovationsTeam-based organization, flat hierarchy,
decentralized decision makingProfit sharing compensation for
salespeople
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Sell-Side Intermediaries (cont.) Marshall Industriesa subsidiary
of AvnetMarshall (cont.)Survival strategyCRM highly
promotedWeb-based services create value between suppliers and
customersEC initiatives supported by:Changing internal
organizationChanging internal procedures
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Sell-Side Intermediaries (cont.) Boeings PARTActs as an
intermediary between the airlines and parts suppliersProvides a
single point of online access through which airlines and parts
providers can access the data neededGoal: provide its customers
with one-stop shopping for online parts and maintenance information
and ordering capability
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Sell-Side Intermediaries (cont.)Boeings PARTSpare parts business
using traditional EDI Mechanic tells purchasing department parts
are needed, purchase is approved, purchase is madeLarge airlines
connect to Boeing's VANBoeing finds part and deliversDebut of PART
on the InternetEncourages customers to order parts
electronicallycheap, easy, fast50% of customers using Internet
within first year
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Sell-Side Intermediaries (cont.)Boeings PARTBenefits of PART
onlineImproved customer serviceSignificant operating savingsNew
sales opportunitiesCustomer service online reducedPhone calls
(purchasing, order status etc.)Data entry
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Sell-Side Intermediaries (cont.) Boeings PARTPortable access to
technical drawings/supportBoeing On Line Data (BOLD) provides
availability to:Engineering drawings ManualsCatalogsOther technical
informationPortable Maintenance Aid (PMA)solves maintenance
problems
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Sell-Side Intermediaries (cont.)Boeings PARTBenefits to Boeings
customersIncreased productivityless time searching for
informationReduced costsdelays at gate reduced because all
information is availableIncreased revenuesfaster service provides
time savings
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Buy Side: One-from-Many,E-ProcurementPurchasing agents
(buyers)Direct purchasingUse of material is scheduledNot a shelf
itemIndirect purchasingMROsNonproduction materialsInefficiencies in
procurement management of indirect materials
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A Traditional Purchasing Process Flow
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Buy Side: One-from-Many,E-Procurement (cont.)Innovative
procurement managementInnovative purchasing as strategic approach
to increase profit marginsWeb facilitation includes:Electronic
tenderingVolume purchasingAggregating supplier catalogs at buyers
siteGroup purchasingOthers
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Buy Side: One-from-Many,E-Procurement (cont.)Goals of
procurement reengineeringIncrease purchasing agent
productivityLower purchasing prices of itemsImprove information
flow and managementMinimize maverick (unplanned) buyingImprove
payment processStreamline purchasing process to make
it:SimpleFast
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Buy Side: One-from-Many,E-Procurement (cont.)Goals of
procurement reengineering (cont.)Reduce administrative processing
cost per orderFind new suppliers and vendors to provide
faster/cheaper goods and servicesIntegrate procurement process with
budgetary control in an efficient and effective wayMinimize human
errors in buying or shipping process
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Buy-Side B2BMarketplace Architecture
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Buy Side: One-from-Many,E-Procurement (cont.)Direct vs. indirect
sourcingTools to automate purchasing goodsDirect or mission
critical80% of manufacturers expenditureLong-term relationship with
vendor of known quality goodsTight integration with suppliers along
supply chainIndirectuse of public exchanges for indirect
sourcing
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Buy Side: Reverse AuctionsPre-Internet Reverse auction
processPrepare description of product to be producedAnnounce
project via ads, mail, telephoneSend detailed information to
interested vendorsVendors prepare proposalsBidders submit document
proposalsProposals evaluatedProblems:LawsExpensiveErrors
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Buy Side: Reverse Auctions (cont.)Web-based reverse auction
processBuyers prepare bidding project informationBuyers post
project on portalIdentify potential suppliersInvite suppliers to
bidSuppliers download project informationSuppliers submit
electronic bidReverse auction in real-time, or it can take a few
daysBuyers evaluate and award contract
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Buy Side: Reverse Auctions (cont.)Web-based reverse auction
processBenefits:Electronic process is fasterAdministratively much
less expensiveEnables location of cheapest possible products
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Procurement Revolution at GETPN at GE Lighting
DivisionPurchasing was inefficienttoo many administrative
transactionsProcess for each requisition took 7 daysComplex and
time-consumingCould only send out bids for 2 or 3 suppliersTrading
Process Network (TPN)electronic bidsEntire process takes 7 days
(for suppliers to bid)2 hours to send information to
suppliersEvaluate and award bids same day
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Procurement Revolution at GE (cont.)Benefits to GEInvolvement in
procurement processLabor declined 30%Material costs declined
5%-20%--wider base of suppliers onlineRedeployment60% of the
staffSourcing department concentrates on strategic activities
instead of paperwork, etc.
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Procurement Revolution at GE (cont.) Benefits to GETime to
identify suppliers, prepare a request for bid, negotiate a price,
and award the contractWas 18-23 days Now 9-11 daysInvoices
automatically reconciled reflecting modificationsGE procurement
departments share information about their best suppliers across the
world
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Procurement Revolution at GE (cont.)Benefits to buyersWorldwide
supplier partnershipsCurrent business partnersStrengthen
relationshipsStreamline sourcing processRapid distribution of
informationTransmit electronic drawings to multiple
suppliersDecrease sourcing cycle timeQuick receipt and comparison
of pricing bids
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Procurement Revolution at GE (cont.)Benefits to
suppliersIncreased sales volumeExpanded market reach, finding new
buyersLowered administration costs for sales and marketing
activitiesShortened requisition cycle timeImproved sales staff
productivityStreamlined bidding process
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Procurement Revolution at GE (cont.) Deployment strategiesStart
EC in one division and slowly go to all divisionsUse the site as
public bidding marketplace to generate commission income to GE
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Aggregating CatalogsAggregating suppliers catalogs: an internal
marketplaceMaverick buying to save time leads to high
pricesAggregating all approved suppliers catalogs in one
placeReduced number of suppliersBuyers at multiple corporate
locationsFewer and remote suppliersLarger quantity/lower costs
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Group PurchasingGroup purchasingorders from several buyers are
aggregatedInternal aggregationEconomy of scaleReduced transaction
processing costExternal aggregationAggregating demand onlinePutting
together orders from multiple buyers to make large volumes/lower
costs
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Electronic BarteringElectronic barteringExchange of goods or
services without the use of moneyExchange a surplus for other
needBartering exchangeSubmit surplus to exchange for pointsPoints
used to buy what company needsBenefits:Faster than manuallyEasier
to match
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Collaborative Commerce (C-Commerce)Web-based systems used
between and among suppliers for:CommunicationDesignPlanning
Information sharingInformation discovery
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Collaborative Commerce(C-Commerce) (cont.)Webcore construction
goes online with its partners
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Suppliers Extranet: Hudson Dayton Case
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Collaborative Commerce(C-Commerce) (cont.)Reduce design cycle
time by connecting suppliers: Adaptec, Inc.Microchip manufacturer
supplying electronic equipment makersOutsources manufacturing
tasksDelivery times exceeded their competitorsSolution to the
problemExtranet and enterprise-level supply chain integrated
softwareSignificantly reduced order-to-product delivery time
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Collaborative Commerce(C-Commerce)
(cont.)SuppliersDistributorsOverseasFactories CustomersReduce
product development time by connecting suppliers: Caterpillar,
Inc.Heavy machinery manufacturer uses extranetRequest for
customized component directly to designers and suppliers ship to
buyersConnect engineering and manufacturing division with
worldwide
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Collaborative Commerce(C-Commerce) (cont.)Other examples of
c-commerceTricon Restaurant Internationalglobal brand marketing
managementRE/MAXreal estate franchiser improved communication and
collaboration between independent ownersMarriott Internationallinks
corporations, franchising partners, suppliers, customersNygard of
Canadainterorganizational collaboration
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B2B InfrastructureServer to host database and
applicationsSoftware for executing sell-side (catalogs)Software for
conducting auctions and reverse auctionsSoftware for e-procurement
(buy-side)
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B2B Infrastructure (cont.)Software for CRMSecurity hardware and
softwareSoftware for building a storefrontTelecommunications
networks and protocols
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Extranet and EDISecure interorganizational networksTraditional
EDI limits accessibility of small companiesInternet-based EDI
offers wide accessibility to companies around the world
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Extranet
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IntegrationERP softwareCustomer, supplier, and other
databasesLegacy systemsCatalog (product) informationInventory
systemsSales statisticsDecision support systems (DSS) and SCM
applications
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Integration (cont.)Integration with existing information
systemsIssues in integrating with back-end information
systems:Intranet-based work flowDatabase management systems
(DMBS)Application packagesERPBack-end sell-side integration works
for sellers but not buyers and vice versa
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Integration (cont.)Integration with business partnersEasy
integration with one company-centric sideNot easy to integrate for
many buyers or sellersNeed buyer owned shopping cart that can
interface with back-end information systems
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Intelligent Agent-Based CommerceB2B Agents
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Implementation IssuesJustification and prioritizationMust
conduct cost benefit analysis of proposed projectsInclude
organizational impactsPossible channel conflictsDealing with
resistance to change due to processes reengineering Cost-benefit
analysis related to:Finding B2B opportunitiesPrioritizing potential
initiatives
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Implementation Issues (cont.)Vendor selectionPrimary vendor uses
its software and procedures, adds partners as neededIntegrator
mixes and matches existing products and vendors to create best of
the breedAffiliate programsReferral programUseful for B2B
intermediaries
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Implementation Issues (cont.)Implementing e-procurementFit
e-procurement into EC strategyReview and change procurement process
itselfIf ERP or SCM is in placeintegrate e-procurement, If not in
placeBPR before implementationCoordinate buyers information system
with sellers
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Managerial IssuesB2B marketingsell-side marketplaces require
advertisement and incentivesWhich models to use and whenneed for
implementation strategies and prioritizationPurchase process
reengineering (BPR)Establish buy-side marketplace on its server if
volume is big enough to attract major vendorsJoin third-party
intermediary-oriented marketplace if volume is small
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Managerial Issues (cont.)Integrationtrading in e-marketplaces is
interrelated with logisticsParticularly true in many-to-many
exchangesCompany-centric marketplaces must integrate:Logistics
Other support services
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Managerial Issues (cont.)Business ethicsAccessing unauthorized
areas in the tracing system should not be allowedPrivacy of
partners should be protected technically and legallyAuctionsboth
forward and reverseBenefits are substantialImplementation is
relatively simpleConsiderable flexibility in implementation
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Managerial Issues (cont.)E-procurementcritical success
factorsNeed to cut down number of routine tasksReduce overall
procurement cycle using appropriate information
technologiesWorkflow GroupwareERP softwareB2B models
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E-Marketplaces andB2B Exchanges
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Opening Case:ChemConnect & CovisintChemConnect uses a B2C
business model where customers look for:Lowest priceFast
shipmentGood return policyHelpful customer service
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ChemConnect & Covisint (cont.)ChemConnectworld chemical
exchangeProvides free membership in trading marketplaces and
information portalsPublic exchange floor for anonymous
bidsCommodities floor for buying and exchangingCorporate trading
roomsprivate online auctionsUp-to-the-minute market
informationLarge electronic catalogIndependent intermediary
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ChemConnect & Covisint (cont.)Covisinte-market of automotive
industryB2B integrated buy-side marketplaceGeneral
MotorsFordDaimlerChryslerEntire industry gainsLower costsEasier
business practicesIncreased efficiency
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ChemConnect & Covisint (cont.)Covisint (cont.)Co stands
forConnectivityCollaborationCommunicationVis stands for visibility
provided by the InternetInt stands for integrated solutions
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ChemConnect & Covisint (cont.)Covisint (cont.)Collaborative
commerceFacilitate product designEnable procurement processProvide
broad marketplace of buyers and suppliersVertical consortia trading
exchangeFew large buyersMany sellers (suppliers to the
industry)
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Trading Communities
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B2B E-Marketplacesand Exchanges (cont.)Dynamic pricingOwnership
of exchangesGains and risks of B2B exchange participationGovernance
Organization of exchanges
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MarketplacesYassas 350 Yassas.com. 10,000 Yassas.com Pepsico, SC
Johnson, Vileda, Creta Farm, , Lavazza, Misko-Barilla, Hepp, .To
Yassas.com o i@Marketplace state-of-the-art, (XML, LDAP, COM, )
3-tier Microsoft Windows DNA
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Marketplaces 2 -Be24 Business Exchanges S.A , , www.be24.gr .
Business Exchanges .. , EFG Eurobank Ergasias, Panafon-Vodafone
Hellas On Line
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Marketplaces 3 -Cosmo-one cosmoONE Hellas MarketSite A.E ,
(Marketplace) (Business to Business). cosmoONE COSMOTE
(www.cosmote.gr), (www.ote.gr), (www.dienekis.gr) - Commerce One
(www.commerceone.com) , cosmoONE - Alpha Bank (www.alpha.gr)
(www.nbg.gr).
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Marketplaces 4 -Onianet , 2001 , , - : , , , , , Agrino, BDF,
Bingo, Chipita, Colgate-Palmolive, Georgia Pacific, Sara Lee, SC
Johnson & Son, Schwarzkopf & Rilken, Wella, -, .
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( MICROSOFT)H GTW (Global Trading Web)
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H GTW (Global Trading Web) :British Telecom , BT Marketsite
Singapore Telecom, SESAMi.net Nippon Telephone and Telegraph, NT
Marketsite Cable and Wireless Optus, Optus Marketsite - Banacci,
Banacci Marketsite Tronto Dominion Bank, TD Marketsite o EMediate
Consortium, MarketSite CosmoONE,
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Information PortalsThomas registerAlibaba.comThe databaseThe
portals featuresReverse auctionsServicesLanguagesRevenue modelMore
on information portals
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B2B Classified Ads
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Supplier Aggregation Model
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Buyer Aggregation Model
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Third-Party (Trading) ExchangesSuitability of third-party
exchangesFragmented marketsBuyer-concentrated
marketsSeller-concentrated markets
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Consortium Trading Exchanges (CTE)CTE is a subset of third-party
exchanges, the 4 types are:Vertical, purchasing-orientedHorizontal,
purchasing-orientedVertical, selling-orientedHorizontal,
selling-oriented
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Consortium Trading Exchanges (cont.)E-Procurement Consortia can
be:Vertical purchasing-orientedHorizontal
purchasing-orientedVertical selling-orientedSelling-oriented
consortiaLegal challenges for B2B consortiaSignals that may prompt
legal scrutiny
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Consortium Trading Exchanges (cont.)Critical success factors of
consortiaSize of industryAbility to drive user
adoptionElasticitymeasure of incremental spending by buyers as a
result of savings generatedStandardization of commodity-like
productsManagement of intensive information flowSmoothing
inefficiencies in supply chain
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Dynamic Trading:Auctions and MatchingAuctionsPrivate trading
roomsmembers conduct auctions at the exchangeAuction services may
be one of the activitiesExchange may be fully dedicated to
auctionsMatchingMarket makers conduct matching supply and demand
(e.g., stocks)More complex than auctions because they
match:PricesQuantitiesTimesLocations
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Building and Integrating Marketplaces and ExchangesStep 1Think
aheadStep 2PlanningStep 3System analysis and designStep 4Building
the exchangeStep 5Testing, installation, and operationStep 6System
evaluation and improvement
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Building and Integrating Marketplaces and Exchanges
(cont.)IntegrationBetween 3rd-party exchange and back-office
systems of participantsAcross multiple, incompatible
exchangesExternal communicationsWeb/client accessData
exchangeDirect application integrationShare process
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Building and Integrating Marketplaces and Exchanges
(cont.)Process and information coordinationhow to coordinate
external communications with internal information systemsExternal
process Internal processData transformationException handlingSystem
and information managementinvolves management of:SoftwareHardware
Information components
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Building and Integrating Marketplaces and Exchanges
(cont.)Shopping cartsallow customers to shop at any participating
vendorBuyer maintains order information on its own site in order to
integrate it with its internal e-procurement systemSell-side cannot
support this capabilityB-cart approach: cart resides on buyers PC
instead of sellers siteInteroperable interface between
heterogeneous e-marketplaces and e-procurement system
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The B-Cart
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Managing ExchangesRevenue modelsTransaction feesFee for
serviceMembership feesAdvertisement feesNetworks of
exchangesCentralized managementFinding a CEO and independent
management team
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Critical Success FactorsEarly liquidityLiquidity refers to
volume of business conductedBusinesss chance of survival is best
when liquidity is achieved earlyRight ownersPartner with companies
that can bring liquidity to the exchangeBest owner may be
intermediary that can push both buyers and sellers
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Critical Success Factors (cont.)Right governanceGood management
and fair /effective operations and rules are criticalGovernance
provides:The rules for the exchangeMinimized conflictsDecision
making support Good management induces necessary liquidity
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Critical Success Factors (cont.)OpennessExchanges must be open
to all from:Organizational point of viewTechnical point of viewOpen
standards require:Commitment by all involvedUniversal agreement on
the standardsUsing the wrong standards can hurt the exchange
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Critical Success Factors (cont.)Full range of
servicesParticipants are attracted by an exchange that helps cut
costsExchanges team up with banks, logistic services and IT
companies to helpImportance of domain expertiseMarket makers need
an in-depth understanding of: The industryBusiness processes
inherent in the industryKnowledge of industry structureGovernment
and policy stipulations
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Critical Success Factors (cont.)Targeting inefficient industry
processesContribute to increased costs and time delaysVertical
exchanges can add valueTargeting right industriesLarge base of
transactionsMany fragmented buyers and sellersDifficulties bringing
together buyers and sellersHigh vendor and product
search/comparison costsStrong pressure to cut expenses
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Critical Success Factors (cont.)Brand building is
criticalIncrease switching costs by adding features and
functionalityInvest in:Gaining brand awarenessAttracting businesses
to exchangeCustomer retention
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Critical Success Factors (cont.)Exploiting economics of
scopeValue-added services make exchange compellingIndustry
newsExpert adviceDetailed product specification sheetsAdjacent
servicesBanks and financial information providersIdentification
supported by sophisticated digital certificate architecture
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Critical Success Factors (cont.)Garner diverse and multiple
revenue streamsSoftware licensingAdvertisingSponsorshipCritical
mass of users will garner more value-added servicesAuction
servicesFinancial servicesBusiness reportingData mining
servicesChoice of business/revenue models
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Critical Success Factors (cont.)Blending content, community, and
commerceContent and community perspectivestimulate trafficEC
transaction perspectivecreates higher level of customer
stickinessManaging channel conflictHostile phase as buyers interact
directly with sellers (disintermediation of supply chain)Short-term
revenues impacted by backlash from existing fulfillment channels
result in price erosion affecting medium-term profitability
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B2B Networks and ExtranetThe InternetIntranetsintra-business
delivery systemsExtranets
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An Extranet
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Implementation IssuesProblems with exchangesProblems with public
exchangesTransaction feesCost savingsRecruiting suppliersToo many
exchangesSupply chain improvements
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Implementation Issues (cont.)Problems with private exchangesLack
of trustLiquidity is questionableSoftware agents in B2B
exchangesDisintermediationEvaluating exchanges
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Managerial IssuesPlan most secure and economical choice for
implementationReview current network and find out if it can be
replaced by intranets or extranetsParticipate in which
exchange?Determine in which exchange to participate
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Managerial Issues (cont.)Joining exchange may require a BPR of
internal supply chainChannel conflicts may arise when a company
joins an exchangeRisks of joining an exchange must be carefully
considered
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B2B Support Services
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Hewlett Packard Closes thePayment Gap in B2B E-CommerceHP
payment solutionseamless electronic B2B paymentTwo components are
preintegrated and provide end-to-end automationEmbedded options
that establish rules to facilitate direct debit payment
optionsBuyer accountsPurchasing limitsCorporate discountingThe
system connects all these accounts with their online financial
institutions
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Hewlett Packard Closes the Payment Gapin B2B E-Commerce
(cont.)HP payment solutionThe integrated system reduces cost of:
Order processingContract administrationCustomer serviceCaptures and
analyzes information that allows company to offer unique purchasing
experienceCustomersbest value online experiencePartnershandle
complex transactions quickly and securelyEmployeesreduce cost and
time for processing
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Electronic Commerce Services and AnalysisInsert Fig 8.1 here
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EC Services:Overview & Services (cont.)Why outsource B2B
services?Desire to concentrate on core businessNeed to have
services up and running quicklyLack of expertise for support
servicesEconomy of scale for project not possible from
insideIn-house options do not keep up with rapidly changing
demandsToo many services for one company to handle
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EC Services:Overview & Services (cont.)Steps in the process
of developing and managing EC applicationsEC strategy
formulationApplication designBuilding (or buying)
applicationHosting, operating, and maintaining EC
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EC Application Development Process
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he Evolution of E-Marketplaces
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Consulting ServicesE-strategyConsultants help determine which
specific EC applications to implementFirst step in infrastructure
developmentTechnologyConsultants advise companies on technology
issuesEC architectureSecurity
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Consulting Services (cont.)Four types of consulting firmsProvide
expertise in area of ECTraditional firms that maintain divisions
focused on ECA large firm that consists of many small firms that
specialize in ECHardware and software vendors that provide
consulting services
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Application-Building Services and Required StandardsServices
that support B2B applicationsUtilized by in-house design teams
putting together system that incorporates best-of-breed EC
components (building blocks)Vendors and system integrators may do
the jobEC components can be:Special-purpose niche tools
(tax-calculation)Broad packages that facilitate all aspects of
successful transactions online
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Application-Building Services and Required Standards
(cont.)Industry standardsXML, XSL, and support
organizationsEfficient interaction between B2B companies
necessitates connection of:ServersApplicationsDatabasesStandard
protocols and data representation schemes are needed
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Application-Building Services and Required Standards
(cont.)Industry standardsXMLimprove compatibility between disparate
system by defining meaning of data in business documentsXSL and XML
require international agreements and cooperationSupport
organizationsUN body for facilitation of ECW3CXML and other EC
standardsRosettaNetsupply chain topics
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ELECTRONIC COMMERCE SUPPORT SYSTEMS
WEB HOSTING SERVICES: provides large servers for Web sites of
fee-paying customer
ELECTRONIC PAYMENT SYSTEMS: using Web for electronic funds
transfers, credit , smart & debit cards
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Electronic Commerce ServersICAT: on-line catalog shopping, order
placement (Icat)
NET.COMMERCE: merchant server supporting Secure Electronic
Transactions protocol (IBM)
MerchantXpert:: search tools, order management, tax, payment,
logistics modules (Netscape)
Microsoft - Commerce Server 2000
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Electronic Commerce Services
OPEN MARKET TRANSACT: customer authentication, order &
payment processing, tax, multi-language customer service (Open
Market)
INTERNET COMMERCE SERVER: integrates orders, inventory, customer
service, payments (Oracle)
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Web Hosting and Other ServicesBusiness hostinghosting is popular
for SMEs; large businesses need more advanced servicesDedicated
serverassigned for specific purpose or customerCo-location
(physical location for the server)Free Web hosting attractive
option for small start-upsProvider company inserts a banner ad on
their siteStarting point for small companyminimize start-up
costs
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Web Hosting and Other Services (cont.)Sources of information
about Web hostingWeb Host Review (hostreview.com): how to select
free Web hosting based on various criteriaHost Search
(hostsearch.com): search engine recommends best host based
on:Monthly costDisk space requirementsMonthly transfer volumeOther
WebHosting Magazine (whmag.com):comprehensive information for
members of Web hosting industry and those looking for
outsources
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Web Hosting and Other Services (cont.)
Management service provider (MSP)Deliver IT infrastructure
management servicesMultiple customers over networks on a
subscription basisSpecialize in e-business and enterprise
solutionsSee imspassociation.org and crosscommerce.com
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Web Hosting and Other Services (cont.)End-to-end solutionsBuilds
Web sites and EC applications from conceptual design to
deploymentAlso supply:Payment systemsDelivery managementSite
monitoringOther servicesSee bccentral.com and WebVision.com
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Participants and Process of Using a Purchasing Card
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Financial B2B Services (cont.)Payments (cont.)Electronic letters
of creditBenefits to sellerCredit risk reducedPayment highly
assuredPolitical/country risk reducedBenefits to the buyerAllows
negotiation of lower purchase priceExpansion of supply sources
Payment received after document inspected by issuing bank
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Financial B2B Services (cont.) Payments (cont.)Payments in B2B
global tradingVenture capital to fund e-commerce
initiativesInternet incubatorsTax calculation
servicesDPCHotSambaSales tax clearinghouseTaxware
internationalImplementing tax collection in the U.S.
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Financial B2B Services (cont.) Payments (cont.)Other financial
servicesCredit reporting firmsNew credit intermediaries broker
credit risksAssurance firms guarantee qualityExchanges strike
insurance dealsE-credit services
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Transaction-Based Financing
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Order Fulfillment, Logistics,and Supply Chain ServicesSupply
chain managementReengineering & managing complex supply
chainsSupplierManufacturerDistributorCustomer Transportation
servicesManages complexTransportation networksDedicated
fleetsCarriersMultimodel shipmentsUPS Logistics Group
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Order Fulfillment, Logistics,and Supply Chain Services
(cont.)Parts distributionComprehensive return-and-repairParts
distributions operationsLogistics technologiesIntegration of
logistics information systemsServices to provide supply chain
visibilityEC solutionsLogistics servicesWeb-based businesses
worldwideGlobal servicesLogistics facilitiesStaffingExpertise about
global commerce
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Order Fulfillment, Logistics,and Supply Chain Services
(cont.)Call center servicesCustomer careCommunications (call center
services to EC capabilities)Financial servicesfull range of
financial services that complement:LogisticsTransportingAdditional
business needsSolutions for EC initiativesTracking systemsProduct
return systemsShipping solutionsE-document exchangeCustomizationEC
software/providersE-services/partners
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Marketing and AdvertisementAdvertising methods used by offline
marketersVertical trade showAds in industry magazinesSalespeople
call on: Existing customersPotential buyersDigital advertisersAd
server network providerElectronic wholesalers
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The Architecture of Ad Server Networks
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Affiliate ProgramsAffiliate programs (B2C services)Affiliates
invited to put a banner of a vendor on their sitesConsumer clicks
on the banner and brings up that companys EC siteCommission paid to
affiliate if customer makes a purchase*
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InfomediariesInfomediary servicesCollect data about consumer
behaviorAnalyze itRepackage itSell the resultsAs marketing and
profiling informationPurpose to increase customer loyaltyIdentify
likely buyersIncreased salesReduced marketing costs
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Online Data Mining ServicesClickstream datadata collected by
monitoring what people do onlineAnalyzed and mined to produce
useful knowledge used to improve:ServicesMarketing effortsFirms use
these services to extend their ability to execute EC a successful
strategyNetTrackerWebTrends
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Other Marketing ServicesThree examples of other
services:Digitalcement.com provides corporate marketing portals;
builds stronger relationships with customersVantagenet.com free
tools that help ease traffic to a companys Web siteBusinesstown.com
has an online directory that enables small businesses to identify
and evaluate service companies
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Digital Delivery Content Life Cycle
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Content Generation, Syndication, Delivery, and Management
(cont.)Syndication Content-delivery networks (CDNs)Catalog
contentContent management optionsDo it yourselfLet the suppliers do
itBuy the content from an aggregatorSubscribe to a vertical
exchangeOutsource to full-service Internet exchange
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Content Generation, Syndication, Delivery, and Management
(cont.)Content maximization and streaming servicescompanies provide
media rich content to reach target audienceVideo clipsMusicFlash
mediaUse content delivery solutions that do not cause traffic jams
with slow download times (e.g., Akamai Corporation)
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Directory Services &Search EnginesDirectory
servicesB2Business.netB2BToday.comCommunityb2b.comA2zofb2b.comI-stores.co.ukWebsteronline.comThomasregister.comBocal.comB2b.yahoo.comSearch
engines and news
aggregatorsMoreover.comGoogle.comIentry.comNewsletters
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E-CommunitiesE-communitiesChat roomsBulletin boardsPersonalized
Web pagesB2B are basically communities of transactionsClassified
adsJob vacanciesAnnouncementsIndustry newsE-communities
connect:PersonnelPartnersCustomersAny combination of these
threeService providersDesign of exchange portalsE-community
service
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Partner RelationshipManagement (PRM)In B2B environment the
partners include:SuppliersPartners in joint venturesService
providersPRMrelies on: TrustCommitmentQuality of
servicesContinuityStrategy for e-serviceHow much to invest in
servicesWhat services to provide
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Other B2B ServicesTrust servicesTrust Trademark and domain
namesDigital photosGlobal business communitiesClient matching
E-business rating sitesPromotion programsEncryption sitesWeb
research servicesCoupon-generating sites
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IntegrationIntegration in e-marketplaces and exchangesB2X hubs
connect:All Internet business servicesMerchant servicesExchange
infrastructureBuying and sellingMember enterprisesOther B2X
exchanges
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HypermediationHypermediators are:Content providersAffiliate
sitesSearch enginesPortalsISPsSoftware makersOther entities
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Managerial IssuesWhich services and to what level?Complex
decision situation for managers; use:Check out the
competitionVendors can provide useful directionRead white papers
etc.Hire a reputable EC consultantSelecting service providersPublic
ratings and rankings of service providersTalk to others in the
industryExamine growth rate of providers businessTry vendor with
small projects first
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Managerial Issues (cont.)E-infrastructurelarge part of
outsourcing funds go to e-infrastructureJoin ventureslook for
potential partnerships with service providersEnd-to-end outsourcing
vs. best-of-breedComplete end-to-end serviceDifferent vendors for
best-of-breed approach