Ease of Entry Into

Defining Your E-business Idea

Chapter 2

The Entrepreneur

• Someone who assumes the RISKS of starting and running their own business

• An entrepreneur needs– High energy personality– Self-confidence– High levels of organizational skills– Ability to act

The Entrepreneurial Process

E-business Success Factors

• The network effect

• Scalability

• Innovative Web Marketing Ideas

• Ease of entry into (electronic) markets

• Adaptability to change

The Network Effect

• The greater the number of nodes (participants) the greater the value of the network.

• Metcalf law of network power– Power= number of nodes2

Scalability

• Scalability is the ability of your idea to continue to function regardless of size.

• Scalability is also can refer to the ability of a server or internet service to support increased loads.

Innovative Web Marketing Ideas

• Use the power of the Web and Internet to leverage new ideas.

• Hotmail gave away free e-mail accounts that used a Web interface and was linked to a site.

Hotmail

Ease of Entry Into Markets

• The Internet opened up access to markets by lowering barriers to entry.

• Good ideas can be cloned.

• Advantage frequently goes to First Mover

• Ebay was a “first mover”

Ebay Auction Site

Adaptability to Change

• Internet and Web Technologies facilitate rapid change in business models.– New products or services – New features– Amazon.com added auctions to their

product/service mix.

Amazon.com

Exploiting E-Business Advantages

• Expand the Market

• Acquire greater business visibility

• Maximize customer relationships and improve responsiveness

• Create new services

• Reduce costs

Expand the Market

• Reach more customers

• Lower location barrier

• Lower time zone barrier

Acquire Greater Visibility

• The internet allows companies to get their name and products or services in front of more customers that ever.

• (The problem is getting customers to look.)

• Use or outsource distribution to others.– Fingerhut ditributes for eToys and Pier1

Maximize Customer Relationships

• Build one-on-one relationships with customers

• Use technology to build and sustain links with customers.

Improve Responsiveness

• Use technology to respond more quickly or effectively to customer needs and inquiries.– Use services such as parcel tracking and

delivery confirmation– Allow for on-line purchases

Create New Services

• The Web allows for expansion and refinement of tarditional business.

• Add new products quickly

Reduce Costs

• The Internet can lower costs of doing business by lowering– Distribution costs– Marketing costs

Example Web Sites

• Fingerhut

• Half.com

• Southwest Airlines

• WW Grainger

• Trailmaker

• Sun Micorosystems

• Foodlocker

Fingerhut

Half.com

Southwest Airlines

Grainger.com

Trailmaker

Sun Microsystems

Foodlocker.com

Grocery Works.com