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E-Business: Doing Business Online

Chapter 7

Define e-business and discuss how it can help achieve business success.

Distinguish between a corporate and a marketing Web site.

List the major forms of B2B e-business.

Explain B2C e-business and identify the products most often sold online.

Describe some of the challenges associated with e-business.

Discuss how organizations use Internet communications to advance their objectives.

Discuss Web sites and identify methods for measuring Web site effectiveness.

Explain the global scope of e-business.

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Learning Goals

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Electronic business (e-business) - Conducting business via the Internet.

1. E-tailing, or virtual storefronts on Web sites.

2. Online business-to-business transactions.

3. Electronic data interchange (EDI), the business-to-business exchange of data using compatible software.

4. E-mail, instant messaging, and other Web-enabled communication tools and their use as media for reaching prospective and existing customers.

5. The gathering and use of demographic, product, and other information through Web contacts.

What is E-Business?

• Global Reach. Goods and services can be sold to customers worldwide.

• Personalization. Companies can customize products and reduce inventory.

• Interactivity. Customers and suppliers can negotiate prices online.

• Right-time and integrated marketing. Online retailers provide products when and where customers want them and promotions can be directed to individual customers.

• Cost savings. E-business can reduce costs.

Capabilities and

Benefits of E-

Business

University of Phoenix

FreshDirect

Boston Symphony Orchestra

Some E-Business

Successes

Increase a firm’s visibility, promote its offerings, and provide information to interested parties.

Build customer goodwill and assist retailers and other resellers in their marketing efforts.

Disseminate financial information to investors.

Enable prospective employees to apply online for jobs.

Provide e-mail communication.

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Business Web

Sites

Web sites are frequently used for marketing to attract visitors/customers.

Business-to-

Business (B2B)

• Business-to-business e-business (B2B) Electronic business transactions between businesses using the Internet.

• B2B transactions total $2.5 trillion.

• By some estimates, account for 90% of all e-commerce activities.

• Can reduce cost of B2B transactions by almost 25 percent.

Electronic Data

Interchanges, Extranets,

& Private Exchanges

• Electronic data interchange (EDI) is a computer-to-computer exchange of invoices, purchase orders, price quotations and other sales information.

• Extranets offer an efficient way for business to collaborate with vendors, partners and customers.

• Private Exchanges are the next generation of extranets where all types of data related to e-business is shared.

• Business-to-consumer (B2C)

• E-tailing accounts for 4% of all U.S. sales.

• Growing at a rate of 18%.

• Services like banking and brokerage are key aspects of e-tailing

• Many retailers have electronic storefronts.

• Growth of broadband is aiding e-tailing.

Online Shopping

and B2C

Who are online

buyers and

sellers?

Typical user is young, highly educated, urban or suburban, and affluent.

Demographics are shifting; there is decreasing difference in Internet purchasing habits among groups.

Lower Prices

• Many products cost less online.

• Internet allows customers to easily compare prices from multiple sellers.

Convenience

• Can order products from around the world anytime, day or night.

• Can register customer information to streamline transactions.

Personalization

• Emphasis on personalized, one-on-one marketing to increase repeat purchases.

Benefits of B2C

E-Business

• Through encryption, data is encoded for security purposes.

• Many companies use Secure Sockets Layer (SSL) technology to encrypt information and verify senders and receivers.

• An electronic wallet contains credit card and identification information. Customers can avoid retyping purchase information.

Developing Safe

Online Payment

Systems

Privacy is among the top concerns of Internet users.

E-business sites often require passwords and use electronic signatures, an electronic form of identity verification.

Companies can track customers’ shopping and viewing habits through cookies.

Customers usually prefer that companies do not share their personal information. Merchants have responded by joining privacy organizations.

Privacy protections may soon become legally required. Employees also have concerns that employers are monitoring

their Internet behavior. Companies worry about data theft.

E-Business

Challenges

(privacy)

• Internet Crime Complaint Center logs more than 200,000 complaints annually.

• 50% of the complaints referred to law enforcement agencies deal with online auctions.

• Phishing is a growing form of Internet fraud that uses e-mail or pop-up messages to get unsuspecting victims to disclose personal information.

• Vishing, or voice phishing, involves phone calls to credit card customers to obtain personal and banking information.

• Payment fraud is growing.

E-Business

Challenges

(Internet Fraud)

• 50% of shopping carts are abandoned before any purchase is made.

– Lack of Information

– Inability to find the information they need

– Feeling overwhelmed by too much information

• Companies that have brick-and-mortar experience often have better success satisfying customers than Internet-only retailers.

• Online sales can compete with business partners such as retailers and distributors causing disputes called channel conflict.

E-Business

Challenges (poor

website design)

• Web has four main functions: e-business, entertainment, information, and communication.

• Communication is Web’s most popular function.

• Firms use e-mail to communicate with customers, suppliers, and other partners.

• Online Communities: Internet forums, newsgroups, electronic bulletin boards, and Web communities that appeal to people who share common interests.

• Spam is junk e-mail.

Using the Web’s

Communication

Function

• Blog - short for Web log, an online journal written by a blogger.

• May incorporate wikis, a Web page that anyone can edit.

• Some incorporate podcasts, video & audio recordings. Feedburner services more than 200,000 podcasts.

• Corporate blogs can help build brand trust.

– Example: Apple’s iLounge builds the iPod brand and gives Apple ideas for product improvement.

• Employee blogs may present ethical issues.

Web

Communication

Blogs

• Banner Ads – messages placed on frequently visited websites

• Pop-up Ads – ads that appear in separate windows

• Pre-roll Video Ads – advertisements that roll as soon as a page is loaded

• Search marketing – companies pay for top visibility in search results

Some companies, such as ValPak Marketing Systems, offer virtual, searchable coupons.

Web

Communication

Web Based

Promotion

Future growth of many companies is linked to a global strategy that incorporates e-business.

U.S. leads world in Internet users but ranks only 5th in Internet penetration.

E-Bay may dominate most markets, but Chinese company Alibaba.com has 83% of the auction business in China.

Three of four Web pages are written in English.

E-business can heighten competition in the global marketplace...

Global

Environment of E-

Business

World Internet

Statistics

Developing a

Successful

Website

It is easier to create a bad website than a good one. Organizations must think about:Planning and PreparationContent and ConnectionsCosts and Maintenance

• Click-through rate - percentage of people presented with a Web banner ad who click on it.

• Conversion rate - percentage of visitors to a website who make a purchase.

Managing a

Website