CS453: The Business of E-Commerce

1. CS453: The Business ofE-Commerce Readings: Handout

3. Why E-Commerce? • Using the Internet is a given now • Let’s reflect (back perhaps) on what it offers companies • Better access to customers • Cost reductions for services provided • Opportunity to deliver new products or services that would be impossible without the network

4. Better Access to Customers • Reasons? • Quantity, frequency, quality • Explain! Examples! • Quantity, Frequency • More people can visit a site than a store • Global presence • Anytime access

5. Better Access to Customers (2) • Quality • Learn preferences, target advertising • Email news and information • Offer discounts, etc. • Customer service • Two-way communication

6. Benefits for a Traditional Business View • Global presence not as hard • Mass distribution now easier, cheaper • Maybe: costs shifted? Scalability? • Others pay part of costs (NWs, access) • Up to date info and products • Searchable

7. Another List: 8 Unique Features • Ubiquity • Global Reach • Universal Standards • Richness • Interactivity • Information Density • Personalization / Customization • Social Technology

8. Discussion

9. Has the Net Changed the Business World? • Of course, in many ways • Consider concentration vs. empowerment • Think of Walmart vs. the local small-town general store • What are some issues here?

10. Concentration vs. Empowerment • Big store • Many customer benefits • Takes over • How can a small store survive? • Meet some need Walmart can’t • Niche market, specialization • Discuss: examples in E-commerce?

11. Your Examples

12. Concentration vs. Empowerment • Business on the Internet supports both • Businesses supporting niche markets can succeed better than without the net • Of course large companies are successful too

13. Changes in Competition between Businesses • Traditional roles and distributions are short-circuited • Consider what banks did 20 years ago • No other options • New combinations of loans, investing, money management, getting financial info • Banks, investment houses, insurance companies, new startups,…

14. Creeping 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!

15. SW Engin. Lessons?

16. SW Engin. Lessons? • Maintenance costs over time • Success hurts • New features needed • Environment changes • Systems degrade over time • Usability matters • Scalability

18. Topics in this Slideset • A “commerce value chain” • From Chap. 2 Treese and Stewart textbook • Identifying customers • Marketing to customers • International issues • Legal issues

19. 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 things • Consider Value-Added Tax (VAT) based systems

20. Treese and Stewart’s View • Certainly a commerce-value chain (CVC here) for underlying business’ products • Also one directly tied to e-commerce • Focused on customers

21. Value Chains (in general) • Way of organizing activities a business unit does to design, …, support products or services • (See p. 26ff in handout) • At each stage, how can things be improved? • And can the internet help?

22. Chain for Internet Systems • Four parts: Attract; Interact; Act; React • Attract • Get and keep customer interest • Activities: advertising, marketing • Interact • Turn interest into orders • Content/product driven: web pages, info, query results, etc. • Activities:

23. Chain for Internet Systems (2) • Act • Process and manage orders • Activities: • 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)

24. Chain for Internet Systems (3) • React • Service customers, order tracking, returns, warranties, rebates, help services

25. Another View • Of course it’s not linear • Not necessarily even sequential now Attract Interact React Act

26. Comments on This • Relatively simple ideas here • Reasonable as a framework for partitioning the domain of e-commerce topics, components • At different points in this chain • Businesses can fail or succeed • Businesses can focus • Differentiation • Can you think of an example?

27. 2. Defining the Customer • With the web, anyone can be • That’s good news and bad news • General public vs. specialized companies or employees within companies • E.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?

28. Is it Important to Design for Customer Types? • Many e-commerce sites assume one kind of customer • Examples where a mismatch is a problem? • Examples of sites that don’t? • Things to consider • Home consumer vs. corporate • Novice vs. expert • Age

29. 3. Marketing on the Internet • Why does this matter more now than, say, in 2000? • Your ideas:

30. Why is Marketing Different on the Internet? • Can reach many more people anywhere • More competition • Identity more easy to conceal • Who are you? Big company or not? Scam artist or market leader? • New media and multi-media the norm • Harder or not clear how to get placement, presence or attention • No longer just ads in print, TV or radio • Search, ad auctions, email, blogs, YouTube,…

31. What’s the Same? • Customer identity, needs, wants • Clear messages • Effective presentation • Tracking and measuring success

32. Internet Customer Demographics • Remember when mom and dad didn’t surf the web? :-) • Students, university types, technologists,… • One interface, many demographics • E.g. kids and adults use search engines • Should they really be finding the same things • Note how in the non-internet world there are different marketing channels

33. Strategies • One-to-one marketing • Email • Profiles on sites like Google (“customers like you were also interested in…” • Mass marketing (dead or not?) • Convergence • With other media sources • Targeted ads • On sites, in applications, with query results

34. Search and Marketing • Originally, search didn’t include marketing • “Gaming the system” became the norm • Search sites tied ads in with user searches • Ad auctions • Specialized search • Sites by price • Sites like Priceline • Sites like Travelocity (car or hotel with that flight?)

35. 4. International Issues • Global customers, content • Making sites work for international customers • Language; monetary conversions; taxes; shipping; customs and other laws • Customs, norms, conventions • Products for international customers • Software: internationalization • Services: sites, games, … • Privacy • Laws governing info privacy etc. • E.g. Google and Yahoo in China

36. 5. Legal Issues • Privacy • Policies • Practical security for customer info and company info • Authorization, digital signatures, etc. • Government regulation • Privacy • Export rules (e.g. cryptography)

37. Summary • 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 with • Commerce Value Chain • A guide to organizing a business plan or a system? • A framework for talking about business’ efforts • Next: Business strategies