COMP2113COMP2113Introduction to Introduction to

Electronic CommerceElectronic Commerce

Richard HensonRichard Henson

University of WorcesterUniversity of Worcester

FebruaryFebruary 20082008

Week 3: The electronic marketplace

Objectives:Objectives:Identify and describe macro-environmental

influencesIdentify and describe micro-environmental

influencesIdentify and describe structural aspects of

the electronic marketplace

The e-commerce environment 2 categories of influences on companies:

macro-environment (SLEPT)micro-environment

let’s look at macro-environmental factors first.....SocialLegalEconomicPoliticalTechnological

Over to you…Over to you…(small groups)(small groups)

Consider each of the first FOUR factors Consider each of the first FOUR factors in turn (skip technology as that was in turn (skip technology as that was considered last week)….considered last week)….suggest examples of where it has impacted

on e-commerce

E-commerce: micro-environmental factors

All businesses operate within a market A market has 3 main functions (Turban

et al, 2004):matching buyers and sellershelping the exchange of information,

goods, services and payments associatedwith market transactions

providing an institutional infrastructure

Marketing Channels

Traditional channel structure:relates directly to the supply chain…

Manufacturer/producer

wholesaler retailer consumer

Over to you again…

Why would any supplier want to go through a “middleman” (intermediary)?

Come up with a list of possible reasons…

Disintermediation

Now read the brief e-commerce case study for “Jane Brooks wines”…

why would e-commerce potentially reduce the need for intermediaries in the supply chain?

ReReintermediation

The nature of e-commerce is such that it is heavily dependent on information

Reintermediation is simply the insertion of (information-based) third-parties back into the supply chain

such as? – read case study 2

Traditional/electronic markets

Useful factors to consider:Importance of informationNature of digital products/servicesReach/scopeAvailabilityOpportunities

“Business Model” A method of doing business by which a

company can generate revenue in order to sustain itself

“An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources revenue” (Timmers (1999)

Some aspects that need to be considered when developing a

Business Model Does the company operate in B2B/B2C

arena, or a combination of both? How is the company positioned in the

value chain between customers and suppliers?

What is its value proposition, and for which target customers?

More aspects to consider in developing a Business Model

What are the specific revenue models that will generate different income streams?

What is its representation in the physical and virtual worldshigh street?online only?clicks and mortar?

Some terms used by those involved with developing

Business models Value chain

the chain/series of activities that add value in the process of producing andsupplying goods and services to the customer

» developed by Michael Porter (Porter, 1985)

Value propositionwhat a company offers that may be unique and/or

valuable to a customer (such as?)…

More terms associated with developing Business models

Revenue modelhow a company raises money in order to

finance its operations and to make a profit Supply chain

the chain of activities involved in getting products and services from suppliers to customers

includes flow of materials, information, services, organisations and processes

Electronic commerce business models

Online auctions Electronic marketplaces/hubs Supply chain enhancers Affiliate marketing Brokering Direct to consumer

Revenue models Traditional model:

companies generate revenue is by selling product/service direct to a customer

Electronic commerce offers variations on this:commission on servicesadvertising spacecommission on affiliate marketing fees for provision of electronic marketplace,

portals, e-mallscommission on auctionsSubscriptions

The impact of e-commerce

Customisation Cycle time Personalisation Changing the nature of organisations Research:

see www.simnet.org (enter “Marshall Industries” in search)

see also “American Airlines and Canadian Tyres ..…”

Another two Case Studies…

“American Airlines” “Canadian Tire”

Read and discuss in groups…Focus on customisation, cycle time,

personalisation, and the changing nature of organisations in your discussions

Practical Work on E-commerce Websites

After the break…After the break…

Websites for B2C Websites for B2C e-commercee-commerce

Plenty of development environments Plenty of development environments available that can:available that can:work with business logicwork with business logicuse software to generate the code…use software to generate the code…

» even for sites that work with remote databases!even for sites that work with remote databases!

Navigation through the site is all Navigation through the site is all importantimportantpages must link together in a coherent pages must link together in a coherent

way...way...

Shopping website categoriesShopping website categories Several possibilities in order of Several possibilities in order of

increasing complexity/functionality:increasing complexity/functionality:““Small Ad” on a page on another websiteSmall Ad” on a page on another website““Billboard” web pageBillboard” web page““Cyberbrochure” of linked pagesCyberbrochure” of linked pagesDetailed Product InformationDetailed Product InformationPortalPortal““Virtual shopfront”Virtual shopfront”

Each type can now be scrutinised...Each type can now be scrutinised...

E-Commerce website types: E-Commerce website types: “small ad”“small ad”

Most basic solutionMost basic solution Example website: Example website:

provides basic company informationprovides basic company informationshould also include telephone number and should also include telephone number and

addressaddresscan also be the basis for e-commerce by can also be the basis for e-commerce by

including an e-mail address that can be used including an e-mail address that can be used to make ordersto make orders

E-Commerce website types: E-Commerce website types: “billboard”“billboard”

Use of a whole web page allows more detailed Use of a whole web page allows more detailed information to be includedinformation to be included

User can become interactive through use of a User can become interactive through use of a HTML form to send an email to a contact HTML form to send an email to a contact

Unique URL:Unique URL: Emails and stationary (letters/faxes/business cards) Emails and stationary (letters/faxes/business cards)

can include the URL of the website in their can include the URL of the website in their “signatures” to advertise the existence of the web “signatures” to advertise the existence of the web site to contacts/customers site to contacts/customers

The site can be made accessible to search engines The site can be made accessible to search engines in a focused way through use of keywordsin a focused way through use of keywords

Example: musicians site Example: musicians site Rod Rod PooleyPooley - Organist - Organist

E-Commerce website types: E-Commerce website types: “Cyber brochure” “Cyber brochure”

Much larger undertaking than a billboardMuch larger undertaking than a billboard Information sheets, brochures and general Information sheets, brochures and general

information about the business and its information about the business and its products/servicesproducts/services

Includes items that point to other web-Includes items that point to other web-based sources and informationbased sources and information

Gives businesses greater coverage and a Gives businesses greater coverage and a higher profilehigher profile

Example Web site:Example Web site: Left BankLeft Bank – riverside complex in Hereford – riverside complex in Hereford

E-Commerce website types: E-Commerce website types: “Local Portal”“Local Portal”

Gateway to other sitesGateway to other sites Can be used with cyberbrochure type Can be used with cyberbrochure type Provides a way into the web, and could Provides a way into the web, and could

be used as a user “home page”be used as a user “home page” Example website: Example website:

ChaddsChadds - department store in Hereford - department store in Hereford » links to related websiteslinks to related websites

» local & community news/informationlocal & community news/information

E-Commerce website types: E-Commerce website types: “International portal”“International portal”

Sells space for advertising goods and Sells space for advertising goods and services - national or internationalservices - national or international

Has a facility to search the webHas a facility to search the weballows directed advertisingallows directed advertisingif user is searching on a keyword relating if user is searching on a keyword relating

to a type of product or service, particular to a type of product or service, particular advertising banners may flash up on the advertising banners may flash up on the screenscreen

Example website: Example website: BBCBBC web site web site

E-Commerce website types: E-Commerce website types: Virtual StorefrontVirtual Storefront

A full e-commerce implementationA full e-commerce implementation Provides combinations of:Provides combinations of:

Full information about the company (cyber Full information about the company (cyber brochure approach)brochure approach)

Links to other local/international) sites and search Links to other local/international) sites and search engines (Portal approach)engines (Portal approach)

On-line ordering of products and servicesOn-line ordering of products and services Secure on-line payment systemsSecure on-line payment systems

Example website:Example website: Amazon.co.Amazon.co.ukuk

E-Commerce website types: E-Commerce website types: “subscription only”“subscription only”

Members/customers only siteMembers/customers only site make money by offering service not productsmake money by offering service not products

Username/password only available by: Username/password only available by: subscribing to an on-line magazinesubscribing to an on-line magazine filling in an on-line formfilling in an on-line form

An increasing number of sites are requiring An increasing number of sites are requiring payment before subscription is allowed…payment before subscription is allowed… e.g. Information Finders like e.g. Information Finders like 192.com192.com e.g. e.g. Business TravelBusiness Travel