E-Commerce Jason C.H. Chen, Ph.D. School of Business Administration Gonzaga University, Washington, U.S.A. Senior Consultant, Taskco.com
E-Commerce
Jason C.H. Chen, Ph.D.School of Business Administration
Gonzaga University, Washington, U.S.A.Senior Consultant, Taskco.com
[email protected]. 20, 2000
Topics
• E-Commerce:From B2C to B2B and Beyond
• e-Bid Process• Features of a B2B application.• Business plan for an e-Marketplace (next
year)• e-CRM and 1-1 Marketing (next year)
E-Commerce:From B2C to B2B and Beyond
Jason C.H. Chen, Ph.D.School of Business Administration
Gonzaga University, Washington, U.S.A.Senior Consultant, Taskco.com
[email protected]. 22, 2000
Outline of Topics• EC, B2C and B2B and their models.• How big is B2B?• Where is the Evidence?• What are the revenue models in B2B?• What is driving adoption of B2B? • Why now?• TASKCo.com
eBusiness Key Concepts
• eBusiness– The strategy of how to automate old business models
with the aid of technology to maximize customer value• eCommerce
– The process of buying and selling over digital media• eCRM (eCustomer Relationship Management)
– The process of building, sustaining, and improving eBusiness relationships with existing and potential customers through digital media
What is E-Commerce ?
• Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information via computer networks, including the Internet.
9%6%6%
22%
15%
8%
26%24%
21%
In pilot stage Starting toimplement
In use
1997 1998 1999
Figure: E-commerce on the rise.Source: 1999 SG Cowen/Datamation Networked Computing Survey
364434
775
623
E-commerce status at sitesFigure:E-commerce apps are a big driver for storage. Average installed online storage in gigabytes.Source: 1999 SG Cowen/Datamation Networked Computing Survey No plans Start in 99/00 Expand in 99/00 Largely done
BenefitNewchannel forexistingbusiness
Improvedcustomerservice
Enabledentire newline ofbusiness
Reducedoperatingcosts
Improvedcycle time
% ofRespondents
25% 23% 18% 7% 5%
BenefitKeep pacewithtechnology
Reduced costof sales
Other Notavailable
None
% ofRespondents
5% 4% 6% 4% 3%
Table: E-commerce’s most promising potential benefits
eBusiness Processes
WHY Customer Relationship
Redesign Business Processes (Outside-In)
Applying Technology
WHAT
HOW
eBusiness Processes
WHY Customer Relationship
Redesign Business Processes (Outside-In)
Applying Technology
WHAT
HOW
C
B
C
B
Traditional versus E-Business Models?
C: Individual ConsumerB: Business
What is B2C?
• B2C (or Extranets) is just web-enabled relationships between existing partners; they tend to be run by a single company seeking to lower the cost of doing business with its current suppliers or individual customers.
• Examples?– Amazon.com– Egghead.com
Enterprise
User ProfilesWorkflow
Business rulesPaymentAnalytics
Internet
Intranet
Figure: A B2C e-business Model
B2C Applications
• Electronic storefront• Electronic malls• Advertising online• Service online
– selling books, toys, computers– e-banking (cyberbanking)– online stock trading– online job market, travel, real estate
Figure : B2C and B2B Internet Commerce in the U.S. (Source: Forrester Research)
$0$200$400$600$800
$1,000$1,200$1,400$1,600
1998 1999 2000 2001 2002 2003
B2CB2B
Billion
What is B2B?
• “B2B” is business-to- business commerce conducted over the Internet (called B2B e-commerce space, or e-marketplaces)
N
B2B e-Markepplaces:A CEO’s Perspective
“The next chapter in the e-business revolution involves the transformation of entire markets and the redefinition of industries. We will see the rise of a new class of entities -- e-Marketplaces -- that will help online buyers and sellers find each other, attack the inefficiencies of traditional markets, and carve out for themselves important roles in the e-business economy.”
Louis V. Gerstner Jr.Chairman of the Board and CEOIBM Corporation
E-Market is …Web-based marketplace
• e-market is Web sites where buyers and sellers come together to communicate, exchange ideas, advertise, bid in auctions, conduct transactions, and coordinate inventory and fulfillment
BuyersBuyers
SellersSellers
MarketSiteMarketSite
Figure : A B2B Model(Source: Goldman Sachs Investment Research Report)
Banks,Financial Institutions
eCredit.com
Suppliers
Production materialsOperating goods, services
Enterprise Customers
LogisticsCelarix, NTE
E-ChannelManagement
ProcurementNetwork
TradingNetwork
E-Customer Relationship
E-Commerce
E-Portal ManagementE-Services
SCM/ERP/Legacy Appls
Businesses
Businesses &
C
onsumers
1:NM:1 M:N
Knowledge Management/Business Intelligence
Focus on e-Business Applications
B2B Applications
• Advertising• Auctioning• Procurement• Channel management• E-commerce
$39 $114$294
$522$782
$1,500
$1,113
0
300
600
900
1200
1500
1800
1998 1999 2000 2001 2002 2003 2004
($ B
illio
ns)
B2B
Figure: The Goldman Sachs B2B Sizing in USA
How Big is B2B?
Where is the Evidence• Three highlights from the Goldman Sachs B2B
survey 1.0:– E-Commerce spending on proprietary Web site, e-
market, and procurement (75% say, in 2000)– Business are increasingly likely to develop B2B e-
markets and to favor online auctions (74% say, in 2000)– Outsourcing e-commerce spending is commonplace
among businesses (25% say, up to 75% of e-C spending)
B2B Revenue Model
• B2B companies exhibit varying business models, depending on the key products and services they offer. The models include:– transaction fees,– auction-driving commissions,– advertising,– content subscriptions,– software licensing
B2C vs. B2B B2C B2B
Switching Costs Low with multiple suppliers High when integrated with e-frastructure;few qualified suppliers
RelationshipType
Transactional Long term, mission critical
Transaction Type Smaller average selling price Larger average selling priceRevenue Model Traffic volume is critical;
Large customer base is keyDon’t need every customer, only need theright customers
Source: Goldman Sachs Investmenet Research
The Magnificent Seven B2B Drivers
• Increasing competition and globalization• Growing interactivity• Financial opportunity• Efficiencies and cost savings• Enhanced market and customer reach• Real-time needs• Regulatory and taxation issues
N
Small Business Likely to Fuel B2B
• Small businesses will fuel the B2B market– the use of and dependence on the Internet by
small businesses as a medium for marketing, distribution, and commerce will likely fuel the B2B market.
– as more small business access the Internet and set up corporate Web pages, the more they will employ the Internet to execute their business strategy.
Benefits of B2B
• B2B solutions create competitive dynamics through:– cost savings
• the composition of cost (product versus process costs)• the number of intermediaries in the supply chain.
– new financial (revenue) opportunities• the rate of industry-wide B2B adoption• business model
N
Why Now?
• B2B catalysts are now arising to stimulate adoption (mentioned earlier).
• Interactive networks have recently become ubiquitous and inexpensive, accelerating the use of B2B applications.
• A viral effect will spur copycat behavior throughout the market as more companies continue to implement B2B applications.
Which Industries are Likely to Embrace B2B Solutions
• Industries that are B2B inclined exhibit certain key characteristics:– the supply chain is highly diffuse,– techno-innovators dominate the culture,– process represents more than 20% of total
costs,– products exhibit complex configurations,– expense pressure is intense.
• Research show that leading industries
migrating online and adopting B2B solutions include the following:– Aerospace/Defense: 35%– Electronics: 25%– Chemicals: 20%– Motor vehicles and parts: 18%– Medical equipment and transport: 17%
What Makes a B2B e-market Company Succeed?
• Five Critical Success Factors for e-markets:– Business model,– market size,– industry expertise,– branding and distribution,– management execution hustle (not just the
formulation of strategy)
N
Solutions for e-Enterprise Organizations
• Streamlines buying and selling between trading partners
• Maximizes trade efficiency across the entire supply chain
• Strategic e-commerce capabilities in Internet time
• Delivers compelling ROIBuyersBuyers
SellersSellers
MarketSiteMarketSite
Solutions for Internet Market Makers
• Turn your supply chain into a revenue generation opportunity
• Leverage your industry domain expertise into strategic e-commerce solutions
• Brings e-commerce to businesses of any size, across all industries
Your Your PortalPortal
Global Solution for Businesses:The Global Trading Web
Global Trading
Web
Connect once to trade with anyone,anytime, anywhere in the world.
European e-markets
• B2C e-commerce in Europe is likely to remain approximately two to three years behind the U.S. .
• B2B in Europe currently lags the U.S. by two years.
• How about in Asia?
TASKCo Mission
ExpandMarkets
Improve Efficiencies
RetainCustomers
FundamentalBusiness
Drivers HaveNot Changed
Leveraging Internet to Help Customers to: