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Examining Electronic Commerce

Examining Electronic Commerce. Simanta C. Chakraborty Sapient Corporation 18 November, 1998. Agenda. Introduction Internet Background Internet Business Models Trends and the Horizon How to Capitalize on the Internet. Introduction. What is Electronic Commerce?.

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Examining Electronic Commerce

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  1. Examining Electronic Commerce Simanta C. Chakraborty Sapient Corporation 18 November, 1998

  2. Agenda • Introduction • Internet Background • Internet Business Models • Trends and the Horizon • How to Capitalize on the Internet

  3. Introduction

  4. What is Electronic Commerce? • The ability for buyers and sellers to conduct business and/or exchange information without real-time human interaction

  5. Products Information Support Electronic Commerce Vision

  6. The Internet

  7. What is the Internet? • Worldwide network of networks • Overseen by governments but run by private companies • Driving force behind shift from voice to data traffic over US public network • World Wide Web has 2.5 million sites and 134 million users worldwide

  8. Internet Facts / Trends • Internet took four years to reach 50 million users • Digital economy 8% of US GNP • E-Commerce market in US $14 billion in 1997, estimated to grow to $300 billion by 2002

  9. Internet Consumer Demographics • Ave Age: 35 years old • 54% have college degree • 64% make more than $30k, 25% make more than $75k • 85% use the web at least once per day and more than 4 hours per week • Places / devices to access web are proliferating

  10. Brief Internet History • Concept first generated in 1962 • United States Department of Defense contract • Communications after nuclear holocaust • Envisioned to support remote login and file sharing

  11. Brief Internet History (continued) • ARPANET pioneers of packet switching • Open Architecture networking • Development of LANs, PCs, workstations spur growth • Email and web catalyst for commercialization • Businesses move to capitalize on business to business commerce

  12. Uses of Internet Technologies • Internet • Business to consumer • Wide business to business • Intranet • Internal to company • Extranet • Partnered business to business

  13. Physical Network • The Internet is evolving into more than a “data” network • The backbone bandwidth is increasing exponentially

  14. What is the Significance of the Internet? • Medium for collaboration and interaction without regard to geographic location, time zone, etc. • Advancing technology, organizations, and communities • Ubiquitous

  15. Buyers More choices, more power Personalization Anywhere, anytime Community Sellers Real time feedback Target marketing New markets 24 hour/day operation Lower costs Small guy look big... Customer loyalty Benefits

  16. The Internet and E-Commerce • You can use the internet for the following purposes: • Automating existing internal processes to cut costs • Extend automated process outside the enterprise to capture new business opportunities • Introduce a new process for service delivery • Create a new business model

  17. Internet Business Models

  18. Internet Business Models • Content • Advertising • Transactions (E-Commerce)

  19. Content Model

  20. What is “Content”? • Content is information that is created / packaged / distributed for a specific audience • Examples on the Web include AOL, WSJ, C/NET, Boston.com, etc. • Early pioneers of on-line content (CompuServe, Prodigy, AOL) utilized proprietary networks / software for distribution

  21. Early Content Efforts • If it’s good enough, people will pay • Users can subscribe or use micro-payments • Most people won’t pay for content • People like user generated content • Market growth slow - find new markets • Results were below expectations

  22. Advertising Business Model

  23. What is Compelling about Internet Advertising? • The internet has the potential to be the most effective direct marketing tool yet • It’s possible to target specific messages to an audience with specific demographics and interests • Internet first medium to allow brand conversion to sale • Internet less costly than direct mail

  24. Online Branding/Marketing Convergence

  25. Internet Advertising Revenues

  26. Transaction Business Model (E-Commerce)

  27. Examples of Internet Commerce • Service offerings • Wells Fargo • Product / company specific sites • Amazon • Dell • Business to business • Cisco

  28. Web Banking WELLS FARGO

  29. On-Line Bookstore AMAZON

  30. Amazon (Created New Business Model) • Virtual booksellers (2.5 million titles) • Store credit card and billing information • $137 million in sales (1997) up from $15.8 • Multi-billion dollar market cap • Vision to become the “Walmart of the Web” • Compact Disks

  31. Electronic Channel DELL COMPUTER

  32. Dell (New Channel) • Pioneered the direct computer sales model • $11 billion revenues • $3 million day over the internet • Target tech savvy and affluent buyer • Save $8 per order • Custom web pages for major customers

  33. Cisco (Automation of an Existing Process) • Product information, order entry, status • Eliminates errors, shortened order to delivery time by 3 days • 40% of revenue (approx. $1.5 bil) • Saved $230 million in operating costs

  34. Trends and the Horizon

  35. E-Commerce Trends • Consumers are becoming more comfortable with spending on the internet • Companies are developing internet strategies as integral parts of their corporations • Heavy investments in migrating to internet technologies • Business to business commerce is becoming the focus

  36. On the Horizon • Greater bandwith and more mature technology will converge media • Data, Video, Telephony • Personalization/customization will create brand loyalty • Businesses will form strong partnerships to protect themselves from extremely free markets

  37. How to Capitalize on the Internet

  38. Components of a Solution Business Strategy Internet Strategy Cognitive Engineering Technology & Architecture

  39. Enterprise Architecture Multi-channel integration Business Logic re-use IV: Transform the Enterprise Secure eCommerce Legacy Integration III: Intranet / Extranet On-line Customer Service Catalogs and Fulfillment II: Search Corporate Information Multimedia I: E-Commerce Growth Complexity of Implementation Increase in Business Value

  40. Long Term Plan • Competitive Assessment • Customer Segmentation • Business Case • Usability Testing Approach • Long Term Vision • Success Measurement Criteria • Initiative Communication Plan • Phasing Strategy • Impact Analysis and • Mitigation Strategy • IT Transformation Plan • Long Term Strategy • Corporate Architectural Strategy • Technical Migration Strategy • Change Management Plan Components of an InternetStrategy IV: + III: + • Business Drivers • Success Measurement Criteria • Business Requirements Prioritization Approach • Customer Service Strategy • Vendor Criteria and Selection Strategy Complexity of Implementation II: + • Navigation • Metaphor • Brand Extension • Content Strategy I: Increase in Business Value

  41. Technology Recommendations • Consider short term business and technical needs, but build for the future business needs • Use component based architectures to expedite time to market and manage maintenance costs • Execute within a well defined migration strategy and plan • Use proven technology

  42. DB DB The Current Situation Customer Service Web PC Phone ATM DB

  43. DB DB The Future Customer Service Web PC Phone ATM SBA: Common Business Functionality

  44. Ecommerce Recommendations • Get in early • Spend to attract customers • Provide “one to one” experience • Provide value proposition • cheaper • faster • easier • exclusive

  45. Summary • The net is becoming mainstream • The rate of advancement / learning is astounding • Re-visit your supply chain and customer value proposition. Can you reach new markets, build customer loyalty, cut costs? • Don’t let someone change the game on you

  46. Thank You

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