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E-CommerceChapter: 01
Overview of e-Commerce
Framework
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Overview of E-Commerce Framework Todays Objective
Develop an understanding of the framework of e-commerce
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Chapter 1
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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Definition of E-Commerce
E-commerce is characterized by several specific attributes:
It is about the exchange of digitalized information between parties
It is technology-enabled
It is technology-mediated
It includes intra- and inter-organizational activities that support the exchange
E-commerce can be defined as technology-mediated exchange between parties
(individuals, organizations or both) as well as the electronically based intra- and inter-
organizational activities that facilitate such exchange
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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B2B
B2C
C2B
C2CConsumers
Business
And selling
to...
Business originating from...
Business Consumers
Table 1 1: Four Categories of E-Commerce
Four distinct categories of e-commerce can be defined, based on the business origination andthe customer type
e.g., Freemarket,Covisint e.g., Mercata.com
e.g., Groupsgoogle.com,Monster.com
e.g., Amazon,Staples.com
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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How Is E-Commerce Different From Traditional Commerce?
1. Core Strategic Decisions Are Technology-Based
Digital businesses cannot separate technology choices from the strategic decision-making process
1. Real-Time Competitive Responsiveness
Speed is becoming increasingly important as a means to increase differentiation as well as tocompete with competitors
1. 24/7 Access
Consumers expect to be able to constantly access a businesss online storefront, forcing
businesses to adjust their level of responsiveness (both strategic and tactical)1. Technology-Based Consumer Interface
Screen-to-face customer interaction has increased the importance of capturing and delivering apositive customer experience
1. Customer in Control of the Interaction
Technology-based interfaces limit the companys influence on the buying process and give the
customer more control of the interaction1. Increased Knowledge of Customer Behavior
A technology-based interface, however, gives the company the opportunity to more accuratelytrack consumer behavior
1. Networked Economics and Positive Feedback
Networked economics and positive feedback can allow increasing returns
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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Exhibit 1 2: Importance (Estimated Savings From E-Commerce)
E-commerce is important for the cost savings. it can generate as well as for its impact onindustry boundaries and on many aspects of the social life
Cost savings from e-commerce are expectedto exceed $1 trillion by
the end of year 2002
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Importance
An article on e-Commerce and e-Business has been attached to get to know the importanceof e-Commerce.
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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E-Commerce Decision-Making Process
New E-Commerce
Business
Whichcustomers
should I target?
What uniquebenefits should I
provide?
How do Icommunicate
with customers?
How can Iprovide a
compellingonline
experience?
How should Istructure theorganization?
Who should bemy partners?
What metricsshould be used to
trackperformance?
How will the
business createshareholder
value?
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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Exhibit 1 3: Framework for E-Commerce
The E-commerce framework helps managers develop a sound E-commerce strategy
Frame the MarketFrame the Market
OpportunityOpportunitySelect theSelect the
Business ModelBusiness ModelDesign CustomerDesign Customer
InterfaceInterface
Develop MarketingDevelop Marketing
CommunicationCommunication
StrategiesStrategies
Implement theImplement the
StrategyStrategyDefineDefine
MetricsMetricsEstimateEstimate
Market ValueMarket Value
Where will I play? The emphasis ismore on potentialbusinesspartnerships
What is the value proposition? What products/services shouldbe offered? What resources are necessary? What financial model should beused?
What should the onlineinterface look like? Look and feel Content Transaction capabilities Community building
How do I attract andretain customers? Includes all offline andonline methods to reachcustomers
How do we go tomarket?
How are we doing? What metrics should beused to track thebusiness performance?
What value are wecreating forshareholders?
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FulfillmentSystems
Customer
Interface
Online Offline
Yahoo!
Amazon.com
BN.com
Mc
Dona
lds
Egg
he
ad
Exhibit 1 4: Where to Play Online and Offline
Many companies are combining both online and offline capabilities to serve customers. Thereare different positions a company can hold when deciding where to play.
Yahoo only plays online; it onlycommunicates with its customersonline
Egghead also plays online only,but the Internet is used for bothcustomer interface and back-office systems
Amazon employs both onlineand offline back-office resources,but interacts with customers onlyonline
McDonalds interacts withcustomers offline (mainly) andonline, but only uses offline back-office systems
BN.com plays in all fourquadrants
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Exhibit 1 5: Market Infrastructure
Underlying each e-commerce decision is the industry environment or market infrastructure,which is generally outside the companys control and presents both opportunities and
constraints. This environment can be divided into two broad categories:
Network Infrastructure Media Infrastructure
Basic, underlying group of electronic
devices and connecting circuitrydesigned as a system to shareinformation
Devices: telephone, radio, cable TV,computer, satellite, etc.
Companies: ISPs, hardware providers,software companies etc.
All the various communication
companies and their channel ofcommunication
Media infrastructure refers to thecontent of communication
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Telephone/DSL
Cable
Broadcast Radio & TV
Satellite
Wireless
Print(Newspapers and Magazines)
Television
Radio
Music
Motion Pictures
DigitalConvergence
DigitalConvergence
Network
Infrastructure
Network
InfrastructureMedia
Infrastructure
Media
Infrastructure
Network and media infrastructure are independently converging due to the digitalization ofinformation, causing competition in the market to increase
The network to deliver digitizedcontent has converged, leading tocross-industry competition
The major content players arenow competing to deliver contentto the same target segments
Exhibit 1 6: Media Convergence to a Digital Platform
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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Exhibit 1 7: A Framework for E-Commerce
There are six interrelated, sequential decisions to make to implement an e-commercestrategy. These decisions are made in the context of a changing market-level infrastructure
Vertical boxes are analyses and decisions that are controllable by the firm Horizontal boxes represent forces that are non-controllable by the firm
Framing theMarket
Opportunity
Implemen-tation
MarketCommunica-
tions and
Branding
Evaluation:Metrics and
Valuation
BusinessModel
CustomerInterface
Network Infrastructure
Media Infrastructure
Publics and Politics
E-Commerce
Strategy
Market
Infrastructure
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Chapter 1:
Overview of E-Commerce Framework
Definition of e-commerce
Distinct categories of e-commerce
E-commerce vs. traditional commerce
The importance of e-commerce
Decision-making in e-commerce
A framework for e-commerce
What is to come?
Conclusion
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E-Commerce Framework Overview Conclusion
After todays lesson, you should be able to answer the following questions:
1. What is the definition of e-commerce?
2. What are the distinct categories of e-commerce?
3. What are the key characteristics of e-commerce that make it different from
traditional commerce?
4. Why is understanding e-commerce so critical?
5. What is the e-commerce framework? What are its main components?Which of them are controllable and which are non-controllable?