CS453: The Business of E-Commerce Readings: Chap. 1-2.

CS453: The Business ofE-Commerce

CS453: The Business ofE-Commerce

Readings: Chap. 1-2Readings: Chap. 1-2

Why E-Commerce?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

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

Better Access to Customers

Reasons?Quantity, frequency, qualityExplain! Examples!

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

Reasons?Quantity, frequency, qualityExplain! Examples!

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

Better Access to Customers (2)

Better Access to Customers (2)

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

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

Benefits for a Traditional Business View

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

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

Has the Net Changed the Business World?

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?

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. EmpowermentConcentration vs. Empowerment

Big storeMany customer benefitsTakes over

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

Discuss: examples in E-commerce?

Big storeMany customer benefitsTakes over

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

Discuss: examples in E-commerce?

Your ExamplesYour Examples

Concentration vs. EmpowermentConcentration 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

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

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,…

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 CostsCreeping Costs

SW 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 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?

SW Engin. Lessons?SW Engin. Lessons?

Maintenance costs over timeSuccess hurtsNew features neededEnvironment changes

Systems degrade over timeUsability mattersScalability

Maintenance costs over timeSuccess hurtsNew features neededEnvironment changes

Systems degrade over timeUsability mattersScalability

Commerce Value ChainCommerce Value Chain

Chap. 2 of our textbook1. The commerce value chain2. Identifying customers3. Marketing to customers4. International issues5. Legal issues

Chap. 2 of our textbook1. The commerce value chain2. Identifying customers3. Marketing to customers4. International issues5. Legal issues

1. What’s the Commerce Value Chain?

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

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

Our Book’s ViewOur Book’s View

Certainly a commerce-value chain (CVC here) for underlying business’ products

Also one directly tied to e-commerceFocused on customers

Certainly a commerce-value chain (CVC here) for underlying business’ products

Also one directly tied to e-commerceFocused on customers

Chain for Internet SystemsChain for Internet Systems

Attract; Interact; Act; ReactAttract

Get and keep customer interestActivities: advertising, marketing

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

query results, etc.Activities:

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)

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)

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)

Chain for Internet Systems (3)

ReactService customers, order tracking,

returns, warranties, rebates, help services

ReactService customers, order tracking,

returns, warranties, rebates, help services

Another ViewAnother ViewOf course it’s not linear

Not necessarily even sequential now

Of course it’s not linearNot necessarily even sequential now

Attract

React Act

Interact

Comments on ThisComments on This

Relatively simple ideas hereReasonable 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?

Relatively simple ideas hereReasonable 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 Customer2. Defining the Customer

With the web, anyone can beThat’s good news and bad news

General public vs. specialized companies or employees within companiesE.g. a Motorola engineer looking for ICs for a

new cell-phone design

How that person’s need different than you or me buying a book or song?

With the web, anyone can beThat’s good news and bad news

General public vs. specialized companies or employees within companiesE.g. a Motorola engineer looking for ICs for a

new cell-phone design

How that person’s need different than you or me buying a book or song?

Is it Important to Design for Customer Types?

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

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

3. Marketing on the Internet

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

Your ideas:

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

Your ideas:

Why is Marketing Different on the Internet?

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,…

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?What’s the Same?

Customer identity, needs, wantsClear messagesEffective presentation

Tracking and measuring success

Customer identity, needs, wantsClear messagesEffective presentation

Tracking and measuring success

Internet Customer Demographics

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

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

StrategiesStrategies

One-to-one marketingEmailProfiles 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

One-to-one marketingEmailProfiles 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 MarketingSearch and Marketing

Originally, 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?)

Originally, 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 Issues4. International Issues

Global 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

Global 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 Issues5. Legal Issues

PrivacyPoliciesPractical security for customer info and

company info

Authorization, digital signatures, etc.Government regulation

PrivacyExport rules (e.g. cryptography)

PrivacyPoliciesPractical security for customer info and

company info

Authorization, digital signatures, etc.Government regulation

PrivacyExport rules (e.g. cryptography)

SummarySummary

Internet 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

Internet 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