Sec. 3.doc

Business Research Practices The obstacle of development of E-commerce in Bangkok

CHAPTER THREE

SECONDARY DATA ANALYSIS

3.1 Introduction

Electronic commerce (EC, or e-commerce) describes the process of buying selling, transferring, or exchanging products, services, and/or information via computer network, including the Internet. E-business refers to a broader definition of EC, not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, conducting e-learning, and conducting electronic transactions within an organization. Other s view e-business as the “other than buying and selling” actives on the Internet

Bricks and clicks is a business strategy or business model in e-commerce by which a company attempts to integrate both online and physical presences. It is also known as Click-and-mortar or clicks-and-bricks. For example, an electronics store may allow the user to order online, but pick up their order immediately at a local store. Conversely, a furniture store may have displays at a local store from which a customer can order an item electronically for delivery.

The bricks and clicks strategy has typically been used by traditional retailers who have extensive logistical and supply chains. Part of the reason for its success is that it is far easier for a traditional retailer to establish an online presence than it is for a start-up company to employ a successful pure dot.com strategy, or an online retailer to establish a traditional presence. This strategy has contradicted analysts who believed that the internet would render traditional retailers obsolete through disintermediation.

3.2 Types of E-Commerce TransactionE-commerce transactions can be done between various other parties, as follows.

Business to business (B2B): in B2B transactions, both the sellers and the buyers are business organizations. The vast majority of EC volume is of this type.

Collaborative Commerce (c-commerce): In c-commerce, business partners collaborate electronically. Such collaboration frequently occurs between and among business partners along the supply chain

Business to consumer (B2C): In B2C, the sellers are organization, and the buyers are individuals.

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Consumer to business (C2B): IN C2B, consumers make known a particular need for a product or service, and suppliers compete to provide the product or service to consumers. An example is Priceline.com, where the customer names a product and the desired price, and Priceline tries to find a supplier to fulfill stated need.

Consumer to consumer (C2C): In C2C, an individual sells products or services to other individuals. (You also will see the term C2C used as “customer to customer.” The terms are interchangeable, and both will be used in this book to describe individuals selling products and services to each other.)

Intrabusiness (intraorganizational) Commerce: In this case an organization uses EC internally to improve its operations. A special case of this is known as B2E (business to its employees) EC. Which was illustrated in the opening case.

Government to citizens (G2G) and to others: In this case the government provides services to its citizens via EC technologies. Governments can do business with other governments as well as with businesses (G2B).

Mobile commerce (m-commerce): When e-commerce is done in a wireless environment, such as using cell phones to access the Internet, we call it m-commerce.

Electronic business is any information system or application that empowers business processes. Today this is mostly done with web technologies.

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Figure 2 A framework for E-Commerce

Electronic Commerce Applications

Direct Marketing Stocks, Job Online Banking Procurement and Purchasing Malls Auctions Travel Online Publishing Customer Services Intrabusiness Transactions

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3Marketing

and Advertising :

Marketing Research,

Promotions and Web Content

1 People:

Buyers, Sellers, Intermediaries,

Services, IS People, and

Management

2Public Policy:

Taxes, Legal, Privacy Issues, Regulations.

And Technical Standards.

4Supply

Services:Logistics, Payments,

Content, Security System

Department

5Business

Partnership:Affiliate

Programs, Joint Ventures,

Exchanges, e-marketplaces

Common Business Services Infrastructure (security smart cards/authentication, electronic payments directories/catalogs.Messaging and Information Distribution Infrastructure (EDI, e-mail, Hypertext Transfer Protocol. Chat rooms)Multimedia Content and Network Publishing Infrastructure (HTML, JAVA, Word, Wide Web, BRML)Network Infrastructure (telecom, cable TV, wireless, Internet, VAN, WAN, LAN, Internet, Extranet, Access, cell phones)Interfacing Infrastructure databases, logistics, customers, and applications.


B2B Applications

In business to business (B2B) applications, the buyer, sellers, and

transactions invole only organizations. Business –to-business comprises

about 85% of EC volume. The are several business models for B2B

applications, The major ones are sell-side mareketplace, buy-side

marketplaces, and electronic exchanges.

Sell-Side Marketplaces

In the sell-side marketplace model, organizations attempt to sell their products or service to other organizations electronically. From their own private e-marketplace and/or from a third-party site.

The Key mechanisms in the sell-side model are : (1) electronic catalogs that can be customized for each large buyer (2) Forward auctions.

Buy-Side Marketplace

The buy side marketplace is a model in which organizations attempt to buy needed product or services from other organization electronically, usually from their own private e-marketpalace. A major method of buying goods and services in the buy-side model is reverse auction. Here, a company that wants to buy items places a request for quotation on its Web site, or in a third party bidding marketplace.

Electronic Exchanges

E-marketplace in which there are many sellers and many buyer are called public exchanges (Electronic exchanges) They are open to all and frequently are owned and operated by a third party.

Business-To-Consumer Applications

Electronic Retailing : Storefronts and MallsFor generation home shopping from catalogs has flourished, and television shopping channels have been attracting millions of shoppers for more than two decades. Both methods can be expensive; paper catalogs are sometimes not up-to-date; many people are troubled by the waste of paper use in catalogs that just get tossed out; and television shopping is limited to what is shown on the screen at any give time. Shopping online offers and alternative to catalog and television shopping that appeals to many consumers. It offers a wide variety of products and services, including the most unique items, often at lower prices. Furthermore, within seconds, shoppers can compare competitors product and prices. Electronic retailing (e-tailing) is the direct sale of products through electronic storefronts or

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electronics malls, usually designed around and electronic catalog format and /or auction.

Electronic Storefronts. There are two type of storefronts, general and specialized. The specialized store sells one or a few products. The general storefronts sell many products.

Electronic Malls. An electronic mall, also known as cybermal or e-mall, is a collection of individual shops under one Internet address, The basic idea of an electronic mall is the same as that of a regular shopping mall to provide a one-stop shopping place the offers many products and services.

3.3 E-business includes

Applications can be divided into three categories: 1) Internal business systems:

customer relationship management enterprise resource planning employee information portals knowledge management workflow management document management systems human resource management process control internal transaction processing

2) Enterprise communication and collaboration e-mail voice mail discussion forums chat systems data conferencing collaborative work systems

3) electronic commerce - Business-to-business electronic commerce or business-to-consumer electronic commerce

electronic funds transfer supply chain management e-marketing online transaction processing

Scope of e-business applications

These applications can be available to different kind of users: all users of the internet only the employees on the intranet a specified targeted group of users of an extranet (like customers,

partners etc.)

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Resource

Start an online company, business information and resources. Resource and Directory of E-Commerce marketplace,how to eatablish online store, payment processor, fraud prevention, accept credit cards on line.

Electronic Commerce

Electronic commerce or e-commerce consists of the buying, selling, marketing, and servicing of products or services over computer networks. The information technology industry might see it as an electronic business application aimed at commercial transactions.

An alternative definition of e-commerce might view it as the conduct of business commercial communications and management through electronic methods, such as electronic data interchange and automated data-collection systems.

Electronic commerce may also involve the electronic transfer of information between businesses (EDI).

Historical development The meaning of the term "electronic commerce" has changed over time. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI, introduced in the late 1970s) to send commercial documents like purchase orders or invoices electronically.

Later it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web via secure servers (note HTTPS, a special server protocol which encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic pay services, like credit card payment authorizations.

Key success factors in e-commerce Several factors have a role in the success of any e-commerce venture. They may include:

Providing value to customers. Vendors can achieve this by offering a product or product-line that attracts potential customers at a competitive price, as in non-electronic commerce.

Providing service and performance. Offering a responsive, user-friendly purchasing experience, just like a flesh-and-blood retailer, may go some way to achieving these goals.

Providing an attractive website. The tasteful use of colour, graphics, animation, photographs, fonts, and white-space percentage may aid success in this respect.

Providing an incentive for customers to buy and to return. Sales promotions to this end can involve coupons, special offers, and discounts. Cross-linked websites and advertising affiliate programs can also help.

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Providing personal attention. Personalized web sites, purchase suggestions, and personalized special offers may go some of the way to substituting for the face-to-face human interaction found at a traditional point of sale.

Providing a sense of community. Chat rooms, discussion boards, soliciting customer input, loyalty schemes and affinity programs can help in this respect.

Providing reliability and security. Parallel servers, hardware redundancy, fail-safe technology, information encryption, and firewalls can enhance this requirement.

Providing a 360-degree view of the customer relationship, defined as

ensuring that all employees, suppliers, and partners have a complete view, and the same view, of the customer. However, customers may not appreciate the big brother experience.

Owning the customer's total experience. E-tailers foster this by treating any contacts with a customer as part of a total experience, an experience that becomes synonymous with the brand.

Streamlining business processes, possibly through re-engineering and information technologies. Letting customers help themselves. Provision of a self-serve site, easy to use without assistance, can help in this respect.

Helping customers do their job of consuming. E-tailers can provide such help through ample comparative information and good search facilities. Provision of component information and safety-and-health comments may assist e-tailers to define the customers' job. Constructing a commercially sound business model. If this key success factor had appeared in textbooks in 2000, many of the dot.coms might not have gone bust. Engineering an electronic value chain in which one focuses on a "limited" number of core competencies -- the opposite of a one-stop shop. (Electronic stores can appear either specialist or generalist if properly programmed.) Operating on or near the cutting edge of technology and staying there as technology changes (but remembering that the fundamentals of commerce remain indifferent to technology). Setting up an organization of sufficient alertness and agility to respond quickly to any changes in the economic, social and physical environment.

E-commerce problems Even if a provider of E-commerce goods and services rigorously follows these fourteen "key factors" to devise an

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exemplary e-commerce strategy, problems can still arise. Sources of such problems include:

1. Failure to understand customers, why they buy and how they buy. Even a product with a sound value proposition can fail if producers and retailers do not understand customer habits, expectations, and motivations. E-commerce could potentially mitigate this potential problem with proactive and focused marketing research, just as traditional retailers may do.

2. Failure to consider the competitive situation. One may have the capability to construct a viable book e-tailing business model, but lack the will to compete with Amazon.com.

3. Inability to predict environmental reaction. What will competitors do? Will they introduce competitive brands or competitive web sites. Will they supplement their service offerings? Will they try to sabotage a competitor's site? Will price wars break out? What will the government do? Research into competitors, industries and markets may mitigate some consequences here, just as in non-electronic commerce.

4. Over-estimation of resource competence. Can staff, hardware, software, and processes handle the proposed strategy? Have e-tailers failed to develop employee and management skills? These issues may call for thorough resource planning and employee training.

5. Failure to co-ordinate. If existing reporting and control relationships do not suffice, one can move towards a flat, accountable, and flexible organizational structure, which may or may not aid co-ordination.

6. Failure to obtain senior management commitment. This often results in a failure to gain sufficient corporate resources to accomplish a task. It may help to get top management involved right from the start.

7. Failure to obtain employee commitment. If planners do not explain their strategy well to employees, or fail to give employees the whole picture, then training and setting up incentives for workers to embrace the strategy may assist.

8. Under-estimation of time requirements. Setting up an e-commerce venture can take considerable time and money, and failure to understand the timing and sequencing of tasks can lead to significant cost overruns. Basic project planning, critical path, critical chain, or PERT analysis may mitigate such failings. Profitability may have to wait for the achievement of market share.

9. Failure to follow a plan. Poor follow-through after the initial planning, and insufficient tracking of progress against a plan can result in problems. One may mitigate such problems with standard tools: benchmarking, milestones, variance tracking, penalties for negative variances, rewards for positive variances, and remedial realignments.

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10.Product suitability Certain products/services appear more suitable for online sales; others remain more suitable for offline sales. Many successful purely virtual companies deal with digital products, including information storage, retrieval, and modification, music, movies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Schwab, Google, eBay, Paypal, Egghead, and Morpheus.

11.Virtual marketers can sell some non-digital products/services successfully. Such products generally have a high value-to-weight ratio, and/or involve embarrassing purchases, and/or typically go to people in remote locations, and/or have shut-ins as their typical purchasers.

12.Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets -- in such cases, e-commerce solutions in in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number.

13.Purchases of pornography and of other sex-related products and services fulfil the requirements of both virtuality (or if non-virtual, generally high-value) and potential embarrassment; unsurprisingly, provision of such services has become the most profitable segment of e-commerce.

14.Products unsuitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings, and products where colour integrity appears important.

Acceptance of e-commerce Consumers have accepted the e-commerce business model less readily than its proponents originally expected. Even in product categories suitable for e-commerce, electronic shopping has developed only slowly. Several reasons might account for the slow uptake, including:

Concerns about security. Many people will not use credit cards over the Internet due to concerns about theft and fraud.

Lack of instant gratification with most e-purchases (non-digital purchases). Much of a consumer's reward for purchasing a product lies in the instant gratification of using and displaying that product. This reward does not exist when one's purchase does not arrive for days or weeks.

The problem of access to web commerce, particularly for poor households and for developing countries. Low penetration rates of

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Internet access in some sectors greatly reduces the potential for e-commerce.

The social aspect of shopping. Some people enjoy talking to sales staff, to other shoppers, or to their cohorts: this social reward side of retail therapy does not exist to the same extent in online shopping.

Suppliers offering services to electronic commerce practitioners PayPal Yahoo!

Entities using electronic commerce Amazon.com, eBay

3.4 Benefits and Limitations / Failures of E-Commerce

Few innovations in human history encompass as many benefits to organizations. Individuals, and society as does e-commerce. These benefits have just begun to materialize, but they will increase significantly as EC expands.

Counterbalancing its many benefits, EC has some limitations, both technological and nontechnological, which have slowed its growth and acceptance. Some have been contributing factors in the failures of many EC projects and dot-com companies in recent years. As time passes, the limitations, especially the technological ones, the negative impact of some of them.

Despite its limitations and failures, e-commerce has made very rapid progress. Also, various B2B activities, e-auctions, e-government, e-learning, and some B2C activities are ballooning. As experience accumulates and technology improves, the ratio of EC benefits to cost will increase, resulting in an even greater rate of EC adoption.

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Benefits of E-Commerce

To Organizations Expands a company’s marketplace to national and international markets.

With minimal capital outlay, a company can quickly locate more customers, the best suppliers, and the most suitable business partners worldwide.

Enables companies to procure material and services from other companies, rapidly and at less cost.

Shortens or even eliminates marketing distribution channels, making products cheaper and vendors’ profits higher.

Decreases the cost of creating, processing, distributing, storing, and retrieving information by digitizing the process.

Allows lower inventories by facilitating “pull”-type supply chain management. This allows product customization and reduces inventory costs.

Lowers telecommunications costs because the Internet is much cheaper than value-added networks (VANs).

Helps some small businesses compete against large companies. Enables a very specialized niche market.

To Customers Frequently provides less expensive products and services by allowing

consumers to conduct quick online searches and comparisons. Gives consumers more choices in selecting products and venders. Enables customers to shop or make other transaction 24 hours a day,

from almost any location. Delivers relevant and detailed information in seconds. Enables consumers to get customized products, from PCs to cars, at

competitive prices. Makes it possible electronic auctions that benefit buyers and seller Allows consumers to interact in electronic communities and to exchange

ideas and compare experiences.

To Society Enables individuals to work at home and to do less traveling, resulting in

less road traffic and less air pollution. Allows some merchandise to be sold at lower prices, thereby increasing

people’s standard of living. Enables people in developing countries and rural areas to enjoy products

and services that otherwise are not available. This includes opportunities to learn professions and earn college degrees, or to receive better medical care.

Facilitates delivery of public services such as government entitlements, reducing the cost of distribution and chance of fraud, and increasing the quality of social, police work, health care, and education.

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Limitations of E-Commerce

Technological Limitations Lack of universally accepted standards for quality, security, and

reliability. Insufficient telecommunications bandwidth. Still-evolving software development tools. Difficulties in integrating the Internet and EC applications and software

with some existing (especially legacy) application and databases. Need for special Web servers in addition to the network servers. Expensive and /or inconvenient Internet accessibility for many would-be

users.

Nontechnological Limitations Unresolved legal issues Lack of national and international government regulations and industry

standards. Lack of mature methodologies for measuring benefits of and justifying

EC. Many sellers and buyer waiting for EC to stabilize before they take part. Customer resistance to changing from a real to a virtual store. People do

not yet sufficiently trust paperless, faceless transactions. Perception that EC is expensive and unsecured. An insufficient number (critical mass) of sellers and buyers exists for

profitable EC operations.

The Scope of EC. The field of e-commerce is broad, and we use Figure 1 to describe it. As can be seen in the figure, there are many EC applications (top of the figure), some of which were illustrated in the opening case about Hi-Life Copr; others will be shown throughout the book.

To execute these applications. Figure 1 shows that the EC applications are supported by infrastructure and by five support areas.

People: Seller, buyer, intermediaries, information systems specialists and other employees, and any other participants.

Public policy: Legal and other policy and regulation issues, such as privacy protection and taxation, that are determined by the government.

Marketing and advertising: Like any other business, EC usually requires the support of marketing and advertising. This is especially important in B2C online transaction where the buyers and sellers usually do not know each other.

Support services: Many services are needed to support EC. These range from payment to order delivery and content creation.

Business partnerships: Joint ventures, e-marketplaces, and business partnerships of various sorts are common in EC. These occur frequently throughout the supply chain (i.e., the interactions between a company and its suppliers, customers and other partners.

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Top 10 eCommerce MistakesBy: Jeff Ropelato

1. Weak Website DesignFirst impressions count. Everything about your website’s design – graphics, navigation, text, products, buying system – your visitor takes these in within seconds and judges your website. You don’t want overwhelming graphics, glaring text errors, or confusing navigation to scare your customers away. Have several people look at your website and give you honest feedback.

2. Unclear PurposeMake sure your websites purpose is clear and easy to see. You should make it obvious why your website exists right on the homepage. Help customers—don’t make them guess. If you sell, make your product obvious.

3. Shopping ObstaclesCustomers leave websites within seconds if they meet with any obstacle blocking their purpose. If you confuse or frighten customers with an awkward checkout procedure, ask too many questions, don’t let them know what’s coming next, or they don’t feel safe buying from you, they will leave. Make your shopping experience friendly—again ask for input from a few friends willing to look at your website. Once you’ve got your shopping system set up just right, check the links once a week to be certain it stays that way.

4. Poor MarketingThere are over four billion webpages on the Internet. How will people find yours? You must develop a plan to drive people to your website. You need to have a good marketing strategy. You can learn about marking tools and strategies from most ecommerce web host providers. Use the resources of your host, learn the ways of web marketing and you will keep your website in the public eye.

5. Weak Customer ServiceIf you sell a product, you need a customer service plan. The best way to develop one is to put yourself in your customer’s shoes. How would you want a problem resolved? Do your best to serve customers well and they will reward you by sending their friends to your website.

6. Poor Product ChoiceNot everything should be sold on the Internet. Shipping costs, for example, are a big obstacle for heavy products that your customer can get locally—you can’t compete. (But if your large product is unique, you may succeed in spite of shipping costs.) Clothing and shoes are difficult for some people to purchase online as they prefer to try on before buying. Food products may spoil, candy may melt, glass may break. Evaluate your potential products with a “worst-

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case-scenario” mentality. Pick products that will give you the best chance to succeed first, then expand and take more chances after your business develops roots.

7. Fail to Prepare for SuccessYou’ve heard of online businesses succeeding “overnight.” If you are so lucky, do you have a plan to deal with a sudden onslaught of orders? Even if your growth is gradual (as most growth is) do you have a plan for the time you outgrow your shopping cart your bandwidth allowance? Plan ahead; plan for growth. What seems like a great five-year shopping cart deal may not work for you in three.

8. Slow ShippingWorking out fast, reliable shipping is key to keeping your customers happy. If your website promises two day shipping but your customer doesn’t get the product until day four, guess who the customer will blame? Use reputable shippers that offer guarantees.

9. Lack of SpecializationInstead of trying to serve a huge market, pick a niche and work to be the best in that niche. You’ll need to specialize in a small area to build up a good reputation. Reputation is key to have clout in the online world.

10. Missing SecurityMaking your website secure is vital; customers will leave before buying if they don’t feel your system is safe. Visitors won’t be anxious to divulge even their email address if they feel your website is untrustworthy.

Electronic theft and website sabotage happens. Often overlooked when it comes to security is protecting your client's information: e-mail address, billing address, phone numbers.

Pick reputable services to process your customer’s credit cards. And write a privacy policy for your website. Reassure your customers, then honor your promises to protect their privacy.

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Ecommerce Solution

Ecommerce or Electric commerce is the business of communication and transactions over networks and through computers. Specifically, ecommerce is the buying and selling of goods and services, and the transfer of funds, through digital communications. An ecommerce solution is the system that facilitates online sales, including cataloguing, order taking, and payment processing. Finding ecommerce solutions that are specifically designed for your business is vital. Ecommerce solutions can help you target your most profitable customers with pinpoint accuracy, save money through cost-effective tracking and fulfillment, efficiently handle customer service, and more. Ecommerce solutions can also help your customers can get information when, where and how they want it. Ecommerce solution include strategy, web site design and development, online marketing, storefront, catalog, shopping cart, payment processing, fulfillment, customer service, and tracking/analysis. Choosing the most appropriate ecommerce solution involves mapping your customers' needs and your company’s unique requirements to the market offerings. The key to making the right ecommerce solution decision is recognizing the importance of the entire ecommerce solution and realistically evaluating your company’s internal capabilities.

SUMMARY

The major application areas of B2C commerce are indirect retailing, banking, securities trading, job markets, travel, and real estate. Several issues slow the growth of B2C, notably channel conflict, order fulfillment, and customer acquisition. B2C e-tailing can be pure (such as Amazon.com), or part of click-and-mortar organization.

The major B2B application are selling from catalogs and by forward auctions, buying reverse auctions and in group and desktop purchasing, and trading in exchanges.

E-Commerce can be conducted on theWeb, by email, and on other networks. It is divided into the following major types: business-to-consumer, consumer-to-consumer, business-to-business, e-government, collaborative commerce, and intrabusiness.

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