CS453: The Business of E-Commerce

CS453: The Business ofE-Commerce

Readings: Handout

Why E-Commerce?Using the Internet is a given nowLet’s reflect (back perhaps) on

what it offers companiesBetter access to customersCost reductions for services providedOpportunity to deliver new products

or services that would be impossible without the network

Better Access to Customers

Reasons?Quantity, frequency, qualityExplain! Examples!

Quantity, FrequencyMore people can visit a site than a storeGlobal presenceAnytime access

Better Access to Customers (2)

QualityLearn preferences, target advertisingEmail news and informationOffer discounts, etc.Customer serviceTwo-way communication

Benefits for a Traditional Business View

Global presence not as hardMass distribution now easier,

cheaperMaybe: costs shifted? Scalability?Others pay part of costs (NWs,

access)Up to date info and productsSearchable

Another List: 8 Unique FeaturesUbiquityGlobal ReachUniversal StandardsRichnessInteractivityInformation DensityPersonalization / CustomizationSocial Technology

Discussion

Has the Net Changed the Business World?

Of course, in many waysConsider concentration vs. empowerment

Think of Walmart vs. the local small-town general store

What are some issues here?

Concentration vs. EmpowermentBig store

Many customer benefitsTakes over

How can a small store survive?Meet some need Walmart can’tNiche market, specialization

Discuss: examples in E-commerce?

Your Examples

Concentration vs. Empowerment

Business on the Internet supports bothBusinesses supporting niche markets

can succeed better than without the net

Of course large companies are successful too

Changes in Competition between Businesses

Traditional roles and distributions are short-circuited

Consider what banks did 20 years agoNo other options

New combinations of loans, investing, money management, getting financial infoBanks, investment houses, insurance

companies, new startups,…

Creeping CostsSW Engineering has taught us

things about system life-cycles and costs over time

How do you think these might apply to companies that begin to provide services on the Web?Discuss!

SW Engin. Lessons?

SW Engin. Lessons?Maintenance costs over time

Success hurtsNew features neededEnvironment changes

Systems degrade over timeUsability mattersScalability

Topics in this Slideset A “commerce value chain” From Chap. 2 Treese and Stewart

textbook Identifying customers Marketing to customers International issues Legal issues

1. What’s the Commerce Value Chain?

Generally:Value added during the process of

creating and delivering a product or service

Commonly used to describe manufacturing of thingsConsider Value-Added Tax (VAT)

based systems

Treese and Stewart’s ViewCertainly a commerce-value chain

(CVC here) for underlying business’ products

Also one directly tied to e-commerceFocused on customers

Value Chains (in general)Way of organizing activities a

business unit does to design, …, support products or services(See p. 26ff in handout)

At each stage, how can things be improved?And can the internet help?

Chain for Internet SystemsFour parts: Attract; Interact; Act; ReactAttract

Get and keep customer interestActivities: advertising, marketing

InteractTurn interest into ordersContent/product driven: web pages, info,

query results, etc.Activities:

Chain for Internet Systems (2)

ActProcess and manage ordersActivities:

Order processing -- shopping carts, taxation, shipping charges)

Payment processing -- account, credit cards, third-party financial companies, etc.

Fulfillment -- deliver hard goods, packing, shipping; carry out e-service; deliver digital goods (file, software, license)

Chain for Internet Systems (3)

ReactService customers, order tracking,

returns, warranties, rebates, help services

Another ViewOf course it’s not linear

Not necessarily even sequential now

Attract

React Act

Interact

Comments on ThisRelatively simple ideas here

Reasonable as a framework for partitioning the domain of e-commerce topics, components

At different points in this chainBusinesses can fail or succeedBusinesses can focus

DifferentiationCan you think of an example?

2. Defining the CustomerWith the web, anyone can be

That’s good news and bad newsGeneral public vs. specialized

companies or employees within companiesE.g. a Motorola engineer looking for ICs for

a new cell-phone designHow that person’s need different than

you or me buying a book or song?

Is it Important to Design for Customer Types?

Many e-commerce sites assume one kind of customerExamples where a mismatch is a problem?Examples of sites that don’t?

Things to considerHome consumer vs. corporateNovice vs. expertAge

3. Marketing on the Internet

Why does this matter more now than, say, in 2000?

Your ideas:

Why is Marketing Different on the Internet?

Can reach many more people anywhereMore competitionIdentity more easy to conceal

Who are you? Big company or not? Scam artist or market leader?

New media and multi-media the normHarder or not clear how to get placement,

presence or attentionNo longer just ads in print, TV or radioSearch, ad auctions, email, blogs, YouTube,…

What’s the Same?Customer identity, needs, wantsClear messagesEffective presentation

Tracking and measuring success

Internet Customer Demographics

Remember when mom and dad didn’t surf the web? :-)Students, university types, technologists,…

One interface, many demographicsE.g. kids and adults use search enginesShould they really be finding the same

thingsNote how in the non-internet world there

are different marketing channels

StrategiesOne-to-one marketing

EmailProfiles on sites like Google (“customers like

you were also interested in…”Mass marketing (dead or not?)Convergence

With other media sourcesTargeted ads

On sites, in applications, with query results

Search and MarketingOriginally, search didn’t include

marketing“Gaming the system” became the normSearch sites tied ads in with user searches

Ad auctionsSpecialized search

Sites by priceSites like PricelineSites like Travelocity (car or hotel with that

flight?)

4. International IssuesGlobal customers, contentMaking sites work for international customers

Language; monetary conversions; taxes; shipping; customs and other laws

Customs, norms, conventionsProducts for international customers

Software: internationalizationServices: sites, games, …

PrivacyLaws governing info privacy etc.E.g. Google and Yahoo in China

5. Legal IssuesPrivacy

PoliciesPractical security for customer info and

company infoAuthorization, digital signatures, etc.Government regulation

PrivacyExport rules (e.g. cryptography)

SummaryInternet Commerce: a brave new world?

Some things aren’t so different?Quickly face global and legal issues that in

the past only large companies dealt withCommerce Value Chain

A guide to organizing a business plan or a system?

A framework for talking about business’ efforts

Next: Business strategies