1 chapter 5 electronic commerce strategies for the new economy

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Chapter 5

Electronic Commerce

Strategies for the New Economy

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Sales

-Cost of goods sold

-= Gross margin

--expenses

-Wages

-Rent

-Insurance

-Phone

-Advertising

-Postage

-Electric

-=Net income

Income Statement

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Introduction

The new economy introduced by the www has been interesting.

Fortunes have been made and lost. Dot-com millionaires have been created. Others have seen their company turn into a dot-bomb. The revolution of ebusiness promised by the internet

has just began. We are still learning what works and what does not

work. There is still a lot of uncharted territory ahead.

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The Growth of E-Commerce

Figure 5.1Four Categories of E-Commercepage 178

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E-commerce Enables customers, consumers and

companies to form powerful new relationships that would not be possible without the enabling technologies

The internet facilitates commerce by its ability to move ________ information at low cost.


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The Digital Divide

Digital divideExpresses the fact that different

peoples, cultures, and areas of the world or within a nation do not have the same access to ___________ and telecommunications technologies.

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The Advantages of Business To Consumer E-Commerce

just another channel by which to reach their customers??

a channel with some unique and powerful advantages over traditional channels

Know When to use it How to use it effectively and When to use it in ___________ with other channelsIs key.

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advantages over ‘_________’ stores: Shopping can be faster and more

convenient Offerings and prices can change

instantaneously Call centers can be integrated with the web

site Broadband telecommunications will

enhance the buying experience

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Shopping Can Be Faster and More Convenient

Figure 5.3Alternative Channels for Selling to Customerspage 182

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Offerings and Prices Can Change Instantaneously

E-tailers can change product offerings and prices instantaneously in response to changes in customer demand.

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Keys To Success In Business To Consumer E-Commerce

Important lessons of e-commerce: Commodity like items work best. Digital products are the best of all. Attracting and retaining customers. Remember the importance of

merchandising. You must execute well. Watch the competition.

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Keys To Success In Business To Consumer E-Commerce

Remember the Importance of Merchandising

Figure 5.3Dos and Don’ts of Web Site Designpage 188

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Business to Business E-Commerce

B2B e-commerce is e-commerce that takes place between organization.

Companies do business with other companies all over the world.

Example: an airline needs to buy Aircraft fuel Spare parts Food Other From other companies

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Relationships in B2B take different forms in the e-commerce environment: Value networks Corporate purchasing segments Next-generation solutions B2B marketplaces Intranets and extranets

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Value Networks

More and more in e-commerce involves a complex network of relationships to operate between the enterprise, its customers, intermediaries, complemetors and suppliers

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Value Networks

Figure 5.6The Value Networkpage 194

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Corporate Purchasing Segments

In B2B, most attention has been given to the ways that e-commerce could streamline the purchasing of materials

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Purchasing applications are usually divided into three segments:

1. Purchasing of direct materials

2. Purchasing of indirect materials (MRO)

3. Purchasing of services

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The most important form of B2B e-commerce today is electronic data interchange or EDI



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Figure 5.7An EDI Hub-and-Spoke Arrangementpage 196



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Figure 5.8How Value-Added Networks (VANs) Facilitate EDIpage 197

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Next Generation Solutions

Efforts are underway to create a new generation of EDI for the B2B transactions that would be Easier to setup and use More attractive to small businesses

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B2B Marketplaces

B2B marketplaces - Internet-based services that bring together buyers and sellers. They give the potential to bring together

large numbers of buyers and sellers giving buyers more choices and aggregating demand for the sellers

Transaction costs can be reduced

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Intranets and Extranets

Figure 5.10Intranet Structure page 201

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Intranets and Extranets

Figure 5.11Extranet Structure page 202

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The Role OF E-Government

E-Government - describes the application of e-commerce technologies in governmental agencies.

In many countries the government is the largest hub to use EDI for ecommerce activities.

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E-Commerce Payment Systems

EDI transactions are for purchase orders and other standard business documents

Financial EDI (FEDI) - the use of EDI for payments.

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E-Commerce Payment Systems

E-payments would solve traditional timing problems such that: Epayments would clear faster and The payer would lose the use of that

money for those extra few day it would have taken for the check to clear.

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E-Commerce Payment Systems Credit Cards and Smart Cards

Smart cards - plastic cards the size of a credit card that contain an embedded chip on which digital information can be stored.

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E-Commerce Payment Systems Financial Cybermediaries

Figure 5.12The PayPal Web Sitepage 204

1 chapter 5 electronic commerce strategies for the new economy

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