MGT300 - Chapter 13

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E-Business



What is E-Business? 

The internet is so powerful channel that presents new opportunities for an organization to: 
  • Touch customers
  • Enrich products and services with information
  • Reduce costs


How do E-Commerce and E-Business differ?

E-commerce – the buying and selling of goods and services over the Internet (online transactions)

E-business – the conducting of business on the Internet including, not only buying and selling but also serving customers and collaborating with business partners (online transactions, serving customers and collaborating with a business partner)




E-business model 

An approach to conducting electronic business on the Internet






Business-to-business(B2B)

Electronic marketplace (e-marketplace) - Interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activities.




Electronic marketplace (e-marketplace)

  • Electronic marketplaces, or e-marketplaces, present structures for conducting a commercial exchange, consolidating supply chains, and creating new sales channels
  • Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers
  • Existing e-marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials





Business-to-consumer(B2C)


Common B2C e-business models include:
  • e-shop – a version of a retail store where customers can shop at any hour of the day without leaving their home or office
  • e-mall – consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shops




Business types:
  • Brick-and-mortar business- operates in a physical store without an Internet presence. Eg: Bata.
  • Pure-play business- a business that operates on the Internet only without a physical store. Examples include fashionvalet.com.
  • Click-and-mortar business– a business that operates in a physical store and on the Internet. Eg: Hijabs by Hanami



Consumer-to-business(C2B)


Priceline.com is an example of a C2B e-business model

The demand for C2B e-business will increase over the next few years due to customer’s desire for greater convenience and lower prices.





Consumer-to-consumer(C2C)

Online auctions:
  • Electronic auction (e-auction) - Sellers and buyers solicit consecutive bids from each other and prices are determined dynamically
  • Forward auction - Sellers use as a selling channel to many buyers and the highest bid wins
  • Reverse auction - Buyers use to purchase a product or service, selecting the seller with the lowest bid

C2C communities include:
  • 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 experiences, 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-on-one with Michael Jordan



E-Business Benefits?


E-Business benefits include:

1. Highly accessible
  • Businesses can operate 24 hours a day, 7 days a week, 365 days a year

2. Increased customer loyalty

  • Additional channels to contact, respond to, and access customers help contribute to customer loyalty

3. Improved information content
  • In the past, customers had to order catalogues or travel to a physical facility before they could compare price and product attributes. Electronic catalogues and Web pages present customers with updated information in real-time about goods, services, and prices

4. Increased convenience
  • E-business automates and improves many of the activities that make up a buying experience

5. Increased global reach
  • Businesses, both small and large, can reach new markets


6. Decreased cost
  • The cost of conducting business on the Internet is substantially smaller than traditional forms of business communication


E-business Challanges


E-business challenges include:

1. Identifying Limited Market Segments
  • The main challenge of e-business is the lack of growth in some sectors due to product or service limitation.


2. Managing Consumer Trust
  • Internet marketers must develop a trustworthy relationship to make that initial sale and generate customer loyalty.
3. Ensuring Consumer Protection
  • Implement Internet Security, protect from misuse of customer information.


4. Managing Consumer Trust
  • Companies that operate online must obey a patchwork of rules about which customers are subject to sales tax on their purchase and which are not.


There are numerous advantages and limitations in e-business revenue models including:
  • Transaction fees
  • License fees
  • Subscription fees
  • Value-added fees
  • Advertising fees

Mashups


Web mashup - a Web site or Web application that uses content from more than one source to create a completely new service
  • Application programming interface (API) - a set of routines, protocols, and tools for building software applications

  • Mashup editor - WSYIWYGs (What You See Is What You Get) for mashups




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