The Internet and e-Commerce

1. The Internet and e-Commerce

2. Remember Networks? There’s no reason why every network can’t be connected to some other network . . . . . . until any computer can connect to millions of other computers throughout the world.

3. The Internet • the Internet has no . . . • central hub or control point • controlling body • fees or subscriptions • (although most of its component networks have some or all of the above) • it is a world-wide, self-governed network connecting thousands of smaller networks, millions of computers and people, and massive sources of data • the closest things to centralized governing bodies are the Internet Society and the Internet Activities Board (IAB)

4. How the Internet Works • each computer on the Internet has an assigned address to distinguish it from other hosts (eg 123.45.67.89) • most also have names, which are much easier to remember than the numbers (eg flash.acme.com) • Domain Name Servers (DNS) map digital addresses with unique names.

5. DNS • Domain Name Servers are dedicated to sections of the internet. • Country code (.au) • Domain name (.com, .org) • When You type the URL, the (digital) address is handled by (one or more) DNSs and the connection is made

6. Internet Zones Added in 1997 firm: businesses/firms info: information service providers web: entities related to World Wide Web activities arts: cultural and entertainment activities rec: recreational activities nom: individuals Original com: commercial sites edu: educational sites mil: military sites gov: government sites net: networking organisations org: organisations

7. Intranets • internal corporate networks built using Internet and World-Wide Web standards and products • most companies have a network that uses the Internet’s IP, and therefore have the foundation for an intranet • next stage of intranet usage: interactive transaction-based applications

8. Common Intranet Uses • establish an intranet to provide information to your employees • provide intranet access for employees to corporate databases • enable selected customers and suppliers access to transaction processing systems • use the Internet to support workgroup computing

9. Uses of the Internet E-Commerce

10. What is eCommerce? “Every type of business transaction in which the participants prepare or transact business or conduct their trade in goods or services electronically” Dept. Industry, Science and Tourism, 1998 “The commencement, completion and continuation of commercial transactions using electronic environments and applications.” Dow Digital, 1998 “Doing business by way of computer networks.” Everyone Else

11. A forerunner of ecommerce • Electronic Data Interchange (EDI) • Computer-to-computer exchange of electronic documents • forms • information • contracts • Computer-to-computer exchange of electronic transactions • stock queries • purchase orders • invoices • statements

12. EDI • Barriers • expensive • proprietary • vendor lock-in • limited participation & markets • early technology • clumsy • limited ‘business to consumer’ potential Benefits • saves time • saves people • real-time information • lower costs • stronger connection to client

13. Potential benefits of ecommerce Increasing revenue • creating new information-based products • establishing new service delivery channels • creating new markets for old products Reducing operating costs • enabling better coordination in sales, production and distribution processes • consolidating operations and reducing overheads • cheaper transactions, communications, physical resources Other benefits • stronger connection to customers • fastest time to market, real-time transactions • low-involvement, high-value service • potential global reach

14. Hazards fornon-participants Opportunitiesfor participants • new brands • new markets • new online customers uncompetitive disintermediation (!) brand obliteration lost markets obsolete business models lost customers

15. Mediating Technology • Connects parties that are able to remain independent • B2B - business buy and sell goods and services to and from each other (Telstra) • B2C - business sell to consumers (Amazon) • C2C - consumers sell to consumers (eBay) • C2B - consumers state their price and businesses react (PriceLine)

16. Universality • Market place is now global • Customers can buy from anywhere in the world • Employees can live and work in different countries • Advertising is no longer to a local market

17. Distribution Channel • Many goods and services can be delivered on-line • software, music, video, insurance, tickets, research data • If not on-line delivery, then on-line information • replacement - new method for old customers • extension - getting new customers

18. Network Externialities • A technology becomes more valuable the more people use it. • phone network • internet • portals and chat rooms • operating systems

19. Cost Reducer • Internet costs are very low (cf EDI) • Open standard allows access to anyone • Transaction costs are reduced • negotiating, writing and enforcing contracts • collecting information on products • finding markets

20. The Online Organisation Service Delivery Communication and Collaboration Financial Management Marketing Internet, Intranet and Extranet Technology Management Information Management Operational Management

21. Telephone Telex Telegraph Fax TECHNOLOGY Internet / WWW Mainframe Computer ATM’s Mobile Computer Network

22. Single-window delivery Service and Information Systems Business A Information broker Target “theme” Service and Information Systems Business B Client Service and Information Systems Business C Service broker

23. Amazon.com Service and Information Systems Publishers Amazon .com Service and Information Systems Warehousing Client Service and Information Systems Shipping Agent

24. 3rd Parties Security Marketing Operations Suppliers Customers Corporate Intranet Internet/WWW Internet/WWW IT Systems Finance Private Audience intranet + internet = extranet

25. A sampler of ecommerce sites • virtual bookshop http://www.amazon.com • virtual greengrocer http://www.greengrocer.com.au • total ecommerce solution http://www.fedex.com • smart ecommerce strategy http://www.statewest.com • online software purchase http://www.outpost.com • online banking http://www.stgeorge.com.au • online tourism http://www.previewtravel.com • online real estate http://property.com.au/ • online government http://www.business.gov.au http://www.sacentral.sa.gov.au • online community http://www.ci.seattle.wa.us • global info links, Ipswich http://infoservice.gil.com.au • philanthropy http://www.hungersite.com

26. Twelve strategic imperatives for ecommerce success • commit to building your ecommerce business • know your payback • allocate relevant resources • create a strong ecommerce team • develop ecommerce partnerships • formulate an ecommerce business plan • connect to your customers, and own your ‘marketspace’ • build a robust & sustainable platform • manage the site & services • manage the risk • measure performance • expect & manage internal change

27. Advertising your site on the web Attracting the customer • Why will people shop at your online store? Price? Selection? Service? Speed? Availability? What do you offer customers that makes you competitive? It is common to spend as much on web advertising as on web development! Methods • banner ads • buying search engine key words – AltaVista auctions words like “football” and “cars” that return more than 100,000 hits • buying search engine position with GoTo.com • image traps

28. GoTo.comoverture.com • An original business model • Most search engines make their money from selling banner advertising on their site – • GoTo lets companies buy favorable search results. • Companies bid to be placed high up in online searches, with the highest bidder getting the best spot. • Companies’ payments are published. • Many Yellow Pages directory now follow suit