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CHAPTER 14 : EBUSINESS

ü Biggest benefit of the internet: how it enables organizations to perform business with anyone, anywhere, anytime.

ü Ecommerce- the buying and selling of goods and services over the internet.

ü It refers only to online transactions.

ü Ebusiness- derived from the term Ecommerce. It is the conducting of business on the internet, not only buying and selling, but also serving customers and collaborating with business partners.

ü Also refers to online exchanges if information.

v Ebusiness Models

ü Ebusiness Model- is an approach to conducting electronic business on the internet

ü Takes place between two major entities- business and consumers.

Ø Business-to-business (B2B)

§  Applies to business buying from and selling to each other over the internet.

§  Electronic marketplaces represent a new wave in B2B ebusiness models.

§  Electronic marketplaces or emarketplaces- are interactive business communities providing a central market space where multiple buyers and sellers can engage in business activities.

§  They represent structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels.

Ø Business-to-business Emarketplace Overview.

§  Their sell almost anything, from services to direct materials.

Ø Business-to-consumer (B2C)

§  Applies to any business that sells its products or services to consumers over the internet.

§     Eshop

ü Sometimes referred to as an estore or etailer. It is a version of a retail store where customers can shop at any hour of the day without leaving their home or office.

§  These online stores sell and support a variety of products and services.

§  The other online businesses channeling their goods and services via the internet only, such as Amazon.com, are called pure plays.

v Types of Businesses:

ü   Brick-and-mortar business- a business that operates in a physical store without an internet presence.

ü   Pure-play (virtual) business- a business that operates on the internet only without a physical store. Examples include Amazon.com and Expedia.com

ü   Click-and-mortar business- a business that operates in a physical store and on the internet. Examples include REI and Barnes and Noble.

v Email

ü   Email- consists of a number of eshops. It serves as a gateway through which a  visitor can access other eshops.

ü   It may be generalized or specialized depending on the products offered by the eshops it hosts.

ü   Eshops in emails benefit from brand reinforcement and increased traffic as visiting one shop on the email often leads to browsing “neighboring” shops.

v Consumer-to-business (C2B)

· Applies to any consumer that sells a product or service to a business over the internet.

· An example is Priceline.com where bidders (or customers) ser their prices for items such as airline tickets or hotel rooms, and a seller decides whether to supply them.

v Consumer-to-consumer (C2C)

· Applies to sites primarily offering goods and services to assist consumers interacting with each other over the internet.

·The internet’s most successful C2C online auction website, eBay, links like-minded buyers and sellers for a small commission.

· C2C online communities, or virtual communities, interact via email groups, web-based discussion forums, or chat rooms.

Online auctions:

· Electronic auction (eauction)- sellers and buyers solicit consecutive bids from each other and prices are determined dynamically.

· Forward auction- an auction that sellers use as a selling channel to many buyers and the highest bid wins.

· Reverse auction- an auction that buyers use to purchase a product or service, selecting the seller with the lowest bid.

C2C Communities:

· Communities of interest- people interact with each other on specific topics, such as golfing and stamp collecting.

·Communities of relations- people come together to share certain life experience, such as cancer patients, senior citizens, and car enthusiasts.

· Communities of fantasy- people participate in imaginary environments, such as fantasy football teams and playing one-to-one with Michael Jordan.

v Ebusiness Benefits and Challenges.

ü Ebusiness Benefits:

· Highly Accessible- businesses can operate 24 hours a day, 7 days a week, and 365 days a year.

· Increased Customer Loyalty- additional channels to contact, respond to, and access customers helps contribute to customer loyalty.

· Improved Information Content- in the past, customers had to order catalogs or travel to a physical facility before they could compare price and product attributes. Electronic catalogs and web pages present customers with updated information in real time about goods, services, and prices.

· Increased Convenience- Ebusiness automates and improves many of the activities that make up a buying experience.

· Increased Global Reach- Business, both small and large, can reach new markets.

·Decreased Cost- the cost of conducting business on the Internet is substantially less than traditional forms of business communication.

ü Ebusiness Challenges:

·Protecting Consumers- consumers must be protected against unsolicited goods and communication, illegal or harmful goods, insufficient information about goods or their suppliers, invasion of privacy, and cyberfraud.

·Leveraging Existing Systems- most companies already use information technology to conduct business in non-Internet environments, such as marketing, order management, billing, inventory, distribution, and customer service. The internet represents an alternative and complementary way to do business, but it is imperative that ebusiness systems integrate existing sytsems in a manner that avoids duplicating functionality and maintains usability, performance, and reliability.

· Increasing Liability- Ebsuiness exposes suppliers to unknown liabilities because internet commerce law is vaguely defined and differs from country to country. The internet and its use in ebusiness have raised many ethical, social, and political issues, such as identity theft and information manipulation.

·Providing Security- The internet provides universal access, but companies must protect their assets against accidental or malicious misuse. System security, however, must not create prohibitive complexity or reduce flexibility. Customer information also needs to be protected from internal and external misuse. Privacy systems should safeguard the personal information critical to building sites that satisfy customer and business needs. A serious deficiency arises from the use of the internet as a marketing means. Sixty percent of internet users do not trust the internet as a payment channel. Making purchases via the internet is considered unsafe by many. The issue affects both the business and the consumer. However, with encryption and the development of secure websites, security is becoming less of a constraint for ebusinesses.

·Adhering to Taxation Rules- the internet is not yet subject to the same level of taxation as traditional businesses. While taxation should not discourage consumers from using electronic purchasing channels, it should not favor internet purchases over store purchases either. Instead, a tax policy should provide a level playing field for traditional retail businesses, mail-order companies, and internet-based merchants. The internet marketplace is rapidly expanding, yet it remains mostly free from traditional forms of taxation. In one recent study, uncollected state and local sales taxes from ebusiness were projected to exceed $60 billion in 2008.

v Mashups

· Web mashup- a website or web application that uses content from more than one source to create a completely new service.

·The web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on.

·Application Programming Interface (API)- set of routines, protocols, and tools for building software applications. A good API makes it easier to develop a program by providing all the building blocks.

· Mashup editors- they are WYSIWYGs (What You See Is What You Get) for mashups. They provide a visual interface to build a mashup, often allowing the user to drag and drop data points into a web application