E business and

By: Vikram.G.B

Lecturer, P.G Dept. of Commerce

Vivekananda Degree College

Bangalore

Meaning & Definitions:-

Electronic business, commonly referred to as "e-business", or an internet business, may be defined as theapplication of information and communicationtechnologies in support of all the activities of business.

e-business may be defined as the conduct of industry, trade,and commerce using the computer networks.

The term "e-business" was coined by IBM's marketing andInternet teams in 1996.

Electronic business methods enable companies to link theirinternal and external data processing systems more efficientlyand flexibly, to work more closely with suppliers andpartners, and to better satisfy the needs and expectations oftheir customers. The internet is a public through way. Firmsuse more private and hence more secure networks for moreeffective and efficient management of their internalfunctions.

In practice, e-business is more than just e-commerce. Whilee-business refers to more strategic focus with an emphasis onthe functions that occur using electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue streams using the WorldWide Web or the Internet to build and enhance relationshipswith clients and partners and to improve efficiency usingthe Empty Vessel strategy. Often, e-commerce involves theapplication of knowledge management systems.

E-Commerce refers to buying and selling of productsand services by business and consumer through anelectronic medium, without using any paper documents.E-commerce is widely considered the buying and sellingof products over the internet, but any transaction that iscompleted solely through electronic measures can beconsidered e-commerce.

E-commerce is subdivided into three categories: businessto business or B2B (Cisco), business to consumer or B2C(Amazon), and consumer to consumer or C2C(eBay). also called electronic commerce.

Differences between E-business and E-commerce

E-business is broader in scope and e-commerce is just an aspect or a subset of it.

E-business involves marketing, product design, consumer service evaluation, and more.

E-commerce only covers business transactions such as buying and selling of goods and services over the internet.

E-commerce essentially involves monetary trade while in e-business, money transactions are not necessary.

Electronic business methods enable companies to link theirinternal and external data processing systems more efficientlyand flexibly, to work more closely with suppliers andpartners, and to better satisfy the needs and expectations oftheir customers.

In practice, e-business is more than just e-commerce. While e-business refers to more strategic focus with an emphasis on thefunctions that occur using electronic capabilities, e-commerceis a subset of an overall e-business strategy. E-commerce seeksto add revenue streams using the World Wide Web or theInternet to build and enhance relationships with clients andpartners and to improve efficiency using the Empty Vesselstrategy. Often, e-commerce involves the application ofknowledge management systems.

E-business involves business processes spanning the entirevalue chain: electronic purchasing and supply chainmanagement, processing orders electronically, handlingcustomer service, and cooperating with business partners.Special technical standards for e-business facilitate theexchange of data between companies. E-business softwaresolutions allow the integration of intra and inter firmbusiness processes. E-business can be conducted using theWeb, the Internet, intranets, extranets, or somecombination of these.

Differences b/n Traditional business and E-business

Location's requirements:- In traditional business thelocation should be in proximity to the source of rawmaterials or the market for products. Whereas there is nosuch specific location is required for e-business.

Operating cost:- Operating cost is high in traditionalbusiness due to fixed charges associated with theinvestment in procurement and storage, production,marketing and distribution facilities. But on the other handoperating cost is low as a result of reliance on network ofrelationship rather than ownership of resources.

Nature of contact with suppliers and customers:- Intraditional business contact is through the intermediariesand there is no direct contact with customers. But in e-business there is a direct relation with customers.

Response Time:- In traditional business it will take longtime to get a response from the customer. But the businessman gets instant response in e-business.

Shape of organizational structure:- Traditional businessstructure is vertical/tall due to hierarchy of chain ofcommand. But structure of e-business is horizontal/flatdue to directness of command and communication.

Opportunity for interpersonal touch:- Traditionalbusiness has fewer opportunities to have internationaltouch. But at the same time e-business have much moreopportunities to go international.

Virtual Communities:- A virtual community is a social network of individuals who

interact through specific social media, potentially crossinggeographical and political boundaries in order to pursuemutual interests or goals. One of the most pervasive types ofvirtual community operate under social networkingservices consisting of various online communities.

A virtual community is a community of people sharingcommon interests, ideas, and feelings over the Internet orother collaborative networks.

The term virtual community is attributed to the book of thesame title by Howard Rheingold, published in 1993. Thebook's discussion ranges from Rheingold's adventures on TheWELL, computer-mediated communication and social groupsand information science.

Virtual Community is a collective group of entities,individuals or organizations that come together eithertemporarily or permanently through an electronic mediumto interact in a common problem or interest space.

Examples of Virtual Communities

VW Vortex.com is an automobile enthusiast communitywho’s common interests are engine, suspension and bodyrepairs, modifications, upgrades and enhancements of allmodels of Volkswagen automobiles. Here one can seekadvice for anything from how to change their oil, toupgrading your engine to a VR6 Turbo with nitrous. Thiswebsite was created by VW enthusiasts for VW enthusiastsfor informational purposes.

FreeAdvice.com is an informational website where one can goto seek any kind of law, legal, or insurance questions orinformation. It is maintained by nationally renown specialistsat dozens of leading American law firms, and by other capableattorneys and legal professionals. This website was created forthe sole purpose of helping people understand legal situationsbetter, and to help them handle all sorts of legal issues.FreeAdvice.com has been online for over 10 years now and hasover 600,000 topics and answers in their law forums.

Overclock.net is a website is geared toward the pursuit ofcomputer performance. Overclocking a computer is atechnique that, when applied properly, can yield amazingcomputer performance improvements. If applied improperly, itcan lead to one heck of a headache, or at worst, It’s a greatinformational hotspot for novice and advanced overclockersalike.

Web Portal:-

Portal is a major visiting center for internet users.

Portal is a single, web based interface to content data,aggregated and customized, based on the user’s profile,subscription and access.

an Internet portal is a Web site that acts as a starting point forbrowsing the Web. Portals typically include search enginesand large directories of websites. Some popular portalsare Yahoo, Excite, Lycos,Netscape, AltaVista, MSN,and AOL.com. There are also many smaller portals, known as"niche portals," for specific interests.

Portal v/s Website:- A portal is generally a vehicle by which to gain access to a

multitude of 'services'. A web site is a destination in itself.

As such the term website refers to a location on the Internetthat is unique and can be accessed through a URL. By thatdefinition a web portal is in fact also a website.

A website is also a web portal if,It transmits information from several independent sourcesthat can be, but not necessarily are, connected in subject;thus offering a public service function for the visitor which isnot restricted to presenting the view(s) of one author.

Customization :

Portal: You will select and organize the materials you want to access. Organized with the materials you want to access.Website: Searchable, but not customizable. All content is there for every visitor.e.g. you can navigate to yahoo mail, yahoo shopping, geo cities, yahoo group. If you wish to use any of these services you will either have to authenticate yourself and see things personalized to you or you can simply visit sections that are for everyone like yahoo news were if you are not signed in then the default sign in is guest.

Best way can say that web portal is all about the high featured and site is just with information. Another good difference forum is come with lot of pages(more than 100k pages even) where site have few pages.

The Portal and website can be differentiated as :

Authentication:

Portal: It provides facility of Logging-In. Provides youwith information based on who you are.e.g. mail.yahoo.com, gmail.com, rediffmail.comWebsite: No log-in. e.g. www.yahoo.com

Personalization:

Portal: Limited, focused content. Eliminates the need tovisit many different sites.e.g. You type in your user name and password and seeyour yahoo mail only.Website: Extensive, unfocused content written toaccommodate anonymous users needs.

Web Auctions:- In an auction, a seller offers an item or items for sale, but does

not establish a price. This is called “putting an item up for bid”or “putting an item on the (auction) block.”

Potential buyers are given information about the item or someopportunity to examine it; they then offer bids, which are theprices they are willing to pay for the item. The potentialbuyers, or bidders, each have developed private valuations, oramounts they are willing to pay for the item.

The whole auction process is managed by an auctioneer.

Online auctions are popular places for trading goods.Individuals registered as users can buy and sale almostanything online. Online auctions companies are, forinstances, eBay and Amazon.

The price is normally cheaper than market price; with "pasthistory" functions, users can evaluate sale’s honesty andtrustworthy before buying; more information is also providedonline, or could be answered in Q&A section.

However some vendors refuse to ship overseas and risks arethat vendors are registered but are not official businesses, thecredibility is unknown.

Types of auction:-

Dutch auctions: A form of open auction in which biddingstarts at a high price and drops until a bidder accepts theprice. Because the price drops until a bidder claims the item,Dutch auctions are also called descending-price auctions.

First-Price Sealed-Bid Auctions: In sealed-bid auctions,bidders submit their bids independently and are usuallyprohibited from sharing information with each other. In afirst-price sealed-bid auction, the highest bidder wins.

Second-price sealed-bid auction: The same as the first-price sealed bid auction except that the highest bidder isawarded the item at the price bid by the second-highest bidder.

Open-outry double auctions: Buy and sell offers areshouted by traders standing in a small area on the exchangefloor called a trading pit.

Double auction: Buyers and sellers each submit combinedprice quantity bids to an auctioneer. The auctioneermatches the sellers’ offers (starting with the lowest priceand then going up) to the buyers’ offers (starting with thehighest price and then going down) until all the quantitiesoffered for sale are sold to buyers.

Reverse auction: Multiple sellers submit price bids to anauctioneer who represents a single buyer. The bids are for agiven amount of a specific item that the buyer wants topurchase. The prices go down as the bidding continuesuntil no seller is willing to bid lower.

Types of online auction:-

Online auctions are one of the fastest growing segments ofonline business today. Millions of people buy and sell all typesof goods on consumer auction sites each year. Although theonline auction business is changing rapidly as it grows,websites like eBay provides real time bidding, three broadcategories of auction web sites have emerged:

General consumer auction.

Specialty consumer auction.

Business-to-business auction.

General consumer auction: In this type of auction, bidders are listed, but the bid amounts are not

disclosed until after the auction is over.

The most successful consumer auction Web sites is eBay and themost common format used is a computerized version of the Englishauction.

Note that in the eBay English auction sellers are allowed to set areserve price. In this type of auction, bidders are listed, but the bidamounts are not disclosed until after the auction is over.

The main difference between eBay and a live English auction is thatbidders do not know who placed which bid until the auction is over.The eBay English auction also allows sellers to specify that an auctionbe made private.

Specialty consumer auction: It is very hard to compete with a well-established rival such as

eBay in the general consumer auction market, a number offirms have decided to identify special-interest market targetsand create specialized Web auction sites that meet the needsof those market segments.

Several early Web auction sites started by featuring technologyitems such as computers, computer parts, photographicequipment, and consumer electronics.

pottery auctio.com and justbeads.com are best examples ofauction sites that cater to buyer and sellers who aregeographically dispersed but share highly focused interests.

Business-to-business auction: Unlike consumer online auctions, business-to –business online

auction evolved to meet a specific existing need. Two of threeemerging business-to-business web auction are directdescendants of these two traditional methods for handlingexcess inventory.

In the large company model the business creates its ownauction site that sells excess inventory. In the small companymodel, a third party web auction site takes the place of theliquidation broker and auction excess inventory listed on thesite by a number of smaller sellers.

The third business to business web auction model resemblesconsumer online auction.

Revenue Models:- Revenue model describes how the firm will earn revenue,

generate profits, and produce a superior return on investedcapital.

The terms revenue model and financial model are usedinterchangeably. The function of business organizations isboth to generate profits and to produce returns on investedcapital that exceed alternative investments. Profits alone arenot sufficient to make a company “successful”.

So, in order to be considered successful, a firm must producereturns greater than alternative investments. Firms that failthis test go out of existence.

Different Revenue Models:

Although there are many different e-commerce revenuemodels that have been developed, most companies rely onone, or some combination, of the following major revenuemodels:

the advertising model,

the subscription model,

the transaction fee model,

the sales model, and

the affiliate model.

Advertising revenue model, a Web site that offers its userscontent, services, and/or products also provides a forum foradvertisements and receives fees from advertisers.

Those Web sites that are able to attract the greatestviewership or that have a highly specialized, differentiatedviewership and are able to retain user attention (“stickiness”)are able to charge higher advertising rates.

In the subscription revenue model, a Web site that offersits users content or services charges a subscription fee foraccess to some or all of its offerings.

Experience with the subscription revenue model indicatesthat to successfully overcome the disinclination of users topay for content on the Web, the content offered must beperceived as a high-value-added, premium offering that isnot readily available elsewhere nor easily replicated.

Transaction fee revenue model, a company receives a feefor enabling or executing a transaction.

For example, eBay provides an online auction marketplace andreceives a small transaction fee from a seller if the seller issuccessful in selling the item.

Sales revenue model, companies derive revenue by sellinggoods, information, or services to customers. Companies suchas Amazon (which sells books, music, and other products),LLBean.com, and Gap.com, all have sales revenue models.

Affiliate revenue model, sites that steer business to an“affiliate” receive a referral fee or percentage of the revenuefrom any resulting sales.

For example, MyPoints makes money by connectingcompanies with potential customers by offering special dealsto its members. When they take advantage of an offer andmake a purchase, members earn “points” they can redeem forfreebies, and MyPoints receives a fee.

R E V E N U E M O D E L E XA M P L E S R E V E N U E S O U R C E

Advertising

Subscription

Transaction Fee

Sales

Affiliate

Yahoo

WSJ.com Consumerreports.org

eBayE-Trade

AmazonLLBeanGapJCPenny.com

MyPoints

Fees from advertisers in exchange for advertisements

Fees from subscribers in exchange for access to content or services

Fees (commissions) forenabling or executing aTransaction

Sales of goods, information, or services

Fees for business referrals