Ecommerce Lec for Mgt
Content
Electronic Commerce
(E-commerce) Compiled by: Mr. J.de Chavez
CEU, ST, ComputerScience Dpt.
Electronic commerce sometimes called e-business, is a financial business transaction that occurs over an electronic network. E-commerce refers to business activities like selling and purchasing of products and services carried out over electronic systems like the Internet and computer networks. Ecommerce is the marketing of products and services on the internet. E-commerce means commerce with anyone, anywhere anytime emphasizing new business opportunities that results in greater efficiency and effective transaction. E-Business means connecting critical business system directly to critical constituencies – customers, vendors, and suppliers- via Internet, Extranet, and Intranets. Intranet – internal network that applies Internet technologies – use to make company information accessible to employees and facilitate working in group. Extranet – network that allows customers or suppliers to access part of the company’s intranet.
If you want an easier way to memorize the difference, remember this sentence: “Being effective is about doing the right things, while being efficient is about doing the things in the right manner.”
ADVANTAGES AND DISADVANTAGES OF ECOMMERCE The invention of faster internet connectivity and powerful online tools has resulted in a new commerce arena. Ecommerce offered many advantages to companies and customers but it also caused many problems. ADVANTAGES OF ECOMMERCE • Faster buying/selling procedure, as well as easy to find products. even small enterprises can access the global market for selling and purchasing products and services. Even time restrictions are nonexistent while conducting businesses- Buying/selling 24/7. More reach to customers, there is no theoretical geographic limitations. Low operational costs and better quality of services. No need of physical company set-ups. Easy to start and manage a business. Customers can easily select products from different providers without moving around physically.
•
• • • • •
1
DISADVANTAGES OF ECOMMERCE • • • Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money. Internet has still not touched the lives of a great number of people, either due to the lack of knowledge or trust. Many people have reservations regarding the requirement to disclose personal and private information for security concerns. Not suitable for perishable commodities like food items Time period required for delivering physical products can also be quite significant There is no guarantee of product quality. Mechanical failures can cause unpredictable effects on the total processes. As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check. There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.
• •
• • • •
The Role of Strategy in E-Commerce
• • • • Sound strategy that has the full support of top management A clear goal of long-term customer relationships and value. Making full use of Internet and related technologies. A scalable and integrated business process and infrastructure
Value Chain in E-commerce Value chain – is a way of organizing an activities of a business so that each activity adds value (value added activity) or productivity to the total operation of the business. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices Competitive advantage is achieved when an organization links the activities in its value chain more cheaply and more effectively than its competitors. Example of competitive advantage using value chain. The purchasing function assists the production activity that the raw materials and supplies are available on time and meet the requirement of the products to be manufactured. The manufacturing function, in turn, has the responsibility to produce quality products that the sales staff can depend on. The human resource function must hire, retain, and develop the right personnel to ensure continuity in manufacturing, sales, and other area of the business.
2
Porter’s Value Chain: Primary Activities:
1. Inbound Logistics - involve relationships with suppliers: procurements – vendor
selection, comparative shopping, negotiating, supply contracts, and just in time (JIT) arrival of goods.
2. Operations - are all the activities required to transform inputs into outputs
(products and services)- fabrication, assembly, testing, and packaging..
3. Outbound Logistics - include all the activities required to store, distribute , collect
the output.
4. Marketing and Sales - activities inform buyers about products and services :
advertising, product promotions, sales management, identifying the pro customer base, and distribution channels. duct’s
5.
Service - includes all the activities that focus on after-sale services to the customers: Testing, maintenance, repairs, warranty work, and replacement parts.
Secondary activities
1. Procurement - is the acquisition of inputs, or resources, for the firm. 2. Human Resource management - consists of all activities involved in recruiting,
hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
3. Technological Development - pertains to the equipment, hardware, software,
procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs.
4. Infrastructure - serves the company's needs and ties its various parts together, it
consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management. Launching a Business on the Internet The Life Cycle Approach 1. Business Planning and Strategic Phase • Preparing a business plan • Defining the target market • Setting immediate and long range goals 2. Technology Infrastructure - Deciding on hardware, software, security, and set up phase 3. Design phase
3
- Building the site and placing it on the Web and making your Web pages rich in content and interactive. 4. Marketing phase - Advertising the site, setting up the feedback mechanism and providing customer service. 5. Fulfillment phase - Selling and shipping the product 6. Maintenance and enhancement phase - Maintaining and growing the business Goals that can make e-business venture • • • • • • • • Create and maintain a competitive advantage Reduce operational costs Improve employee communication and satisfaction Find new market for product and services Improve relationships with partners who provide the goods Create distinct distribution channels Ensure customer satisfaction Improve supply chain management
• Supply chain – is the interrelated network of facilities and distribution methods that obtains materials, transforms materials into finished products, delivers the finished products to customers. Deciding the Type of Site Classification of e-commerce business models:
1. Community: message board (An Internet based equivalent of an actual
message board where people can post and reply to posted messages), chat rooms 2. Information content: provides a wide variety of data such as stock quotes. 3. Commerce: involves consumers and organizations paying to purchase E-Commerce Business Models
1. Business-to- Consumer E-Commerce (B-to-C or B2C) consists of the sale of
products and services from a business to a general public or end user. In this model, the seller is the business and the buyer is the consumer (public). B2C is the equivalent of the traditional mail order telephone-based ordering system. Ex.: Subscribing on-line magazine, online banking, air line reservation.
4
Disintermediation – business sell products directly to consumers without using traditional retail channels.
2. Consumer-to-Consumer E-Commerce (C-to-C) consists of individuals using the
Internet to sell products and services directly to other individuals. The most popular vehicle to C2C e-commerce is the online auction.
3. Business-to-Business E-Commerce consist of the sale and exchange of products
and services between businesses. Ex.: Bicycle manufacturers might use the Internet to purchase tires from other suppliers. Vendor B2B site, also called an e-procurement site, is a product supplier that allows purchasing agents to use a network to shop, submit request for quotes (RFQs), and purchase items. Service B2B site uses a network to provide one or more services to business such a financing, warehousing, or shipping. Brokering B2B site acts as a middleman by negotiating the contract of a purchase and a sale. An infomediary, short for information intermediary, B2B site provides specialized information about suppliers and other businesses.
4. Busines-to-Employee E-Commerce (B2E) sometimes called intrabusiness ecommerce, refers to the use of intranet technology to handle activities that take place within a business. B2E does not generate revenue, insead, it increases profit by reducing expenses within a company.
The Web Storefront
• Web Storefront is an online website where, your customer would visit and buy your products. It offers product listing, shopping cart and payment processing functionality that provide the business-to-consumer interface. Example: Retailers: Officedepot.com Manufacturer: Dell.com
Types of Storefront:
1. Specialized store sells one or few products (e.g., chocolates, flowers or dog toys ). 2. General storefronts sell many products (e.g., Amazon.com).
Characteristics of a Web site
• • • The web site should load quickly and be simple to navigate It should provide lots of information about your business It should include your physical address, phone, and fax numbers
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• • • • • •
The theme of the design should be geared towards meeting the needs of your business The goal should not just be showcasing the designer's talent It should be about highlighting the unique selling proposition of the brand that is being designed for The goal of the entire website should focus on what the visitors are looking for. The site would have to be convenient and very user friendly. It should communicate the vision and mission of the business.
Other Storefront Attributes:
1. Customer should be able to find the product quickly (8 seconds guideline) 2. The site should have mechanism to process the order and send it to fulfillment center for quick and secure packaging and shipping. 3. The site should have mechanism to generate a summary of the order and produce a printable receipt. 4. The site should have a mechanism to send a confirming e-mail to customers
CREATING AN ONLINE STORE (EXAMPLE)
Factors or concern to address in building online store: 1. Building a storefront
⇒ How will I build a storefront?
i. Do I have the expertise to develop the e-commerce site myself? ii. Should I hire a consulting firm? iii. How about a Web hosting service? Web host is an outside company that provides the hardware, software, and communications required for a webserver.
Web hosting service is a type of Internet hosting service that allows individuals organizations to make their own website accessible via the World Wide Web. Web hosts are companies that provide space on a server they own or lease for their clients as well as providing Internet connectivity,
and use by
2. Managing payment
⇒ How will I manage payments?
3. Managing product delivery
i. Should I accept credits?
⇒ How will I deliver products to customers?
i. Postal service? ii. Delivery service?
4. Designing a site that attracts customers and keeps them returning
⇒ How should I design the site so it attracts and retains customers? 6
5. Managing the site
⇒ How will the e-commerce Web site be managed?
6. Promoting the site
⇒ How will I promote my Web site? DESIGNING A WEB SITE
WEB site is a series of pages with links to other sites. The pages contain text, graphics, banners (ads), and sometimes audio and video.
Key Component of a Site 1. Home Page. This is the first page of a site that appears when visiting URL
address. It contains the link that takes you to specific areas within the site and buttons to help you navigate the site. 2. Web Page. The carrier of specific information matched by clicking a button on the home page. A Web page is related to home page like a series of paragraphs is related to a heading in a text chapter. 3. Link is a connector that makes it possible to go another Web page on the site or the Internet or to go back to the home page. 4. Banner is a graphic display on the web page usually used for advertising. A banner is usually linked to the advertiser’s Web page.
Life Cycle of Site 1. Planning the site.
Planning means defining the site’s goal - determine who will be involve in defining the goals - whether there is time or need for formal processing.
2. Defining the audience and the competition
-
-
include not just who the users are, but their goals and objective. generate a list and categorize them identify what prospective customer wants (well product representation, ontime delivery, competitive product price, easy ordering, valuable inf. About the products, good product selection, posted privacy policy, etc.)
3. Building site content Parts of a Web page a. Images are a visual element of almost every Web page. They
draw the eye and help direct readers to specific parts of the page
b. Headlines or titles are the next most prominent element on most Web
pages. c. Body content is the text that makes up the majority of your Web page.
- Content should be easy to read and grammatically correct. - Content should be keyword rich so that searchbots will be able to read the keywords and classify your site.
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- Content should be written so that a visitor can scan the web page and be able grasp most of the meaning without reading word for word
d. Navigation plays a crucial role for most Web pages to keep customers
on the site and reading other pages. But Web pages can also have internal navigation, especially long pages with lots of content. Navigation helps your readers stay oriented and make it possible for them to find their way around the page and the site as a whole.
e. Credits on a Web page are the informational elements of a page that
aren't content or navigation, but provide details about the page. They include things like: the publication date, copyright information, privacy policy links, and other information about the designers, writers, or owners of the Web page. Most Web pages include this information at the bottom, but you can also include it in a sidebar, or even at the top if it fits with your design.
Web Hosting Philippines-Guide in Selecting Web Host
Because of the competitive business world, it is important nowadays to be known globally so that customers not just local, will be infromed about your business.
1. First is you have to choose a web hosting that will render a service 24/7 without the
great cost. Domain registration and web hosting (Cost as of july 2006 ) Domain registration (1 to 2 years, depending on the domain registration companies: gTLD domains - Php 600 – Php 1500/yr ccTLD domains has a cost of three times Web hosting (where you upload your html files): Php 30 – Php 3000
gTLD - Global Top Level Domain : .com / .net / .info / .org - and many more ccTLD - Country Code Top Level Domain: .co.uk / .fr / .us / .de /.ph,.com.ph and .org.ph
2. Another thing is the location. What do I mean of location? Well, choose the location
where majority of your customers are. Let say for example you have business here in Philippines, and most of your customers are in the USA, then choose of the web host that are in USA.
3. Consider also the disk space and bandwidth, how many account may be allotted
for each client
Disc space is the amount of space needed for your site.
Bandwidth refers to the amount of data that website visitors can download from a website.
8
Web Hosting provides:
- maintaining the flow of your business, -should have full the control of your web hosting environment. - install the applications - protect and secure your hosting space. - should be 24/7 ready to support
9
(E-commerce) Compiled by: Mr. J.de Chavez
CEU, ST, ComputerScience Dpt.
Electronic commerce sometimes called e-business, is a financial business transaction that occurs over an electronic network. E-commerce refers to business activities like selling and purchasing of products and services carried out over electronic systems like the Internet and computer networks. Ecommerce is the marketing of products and services on the internet. E-commerce means commerce with anyone, anywhere anytime emphasizing new business opportunities that results in greater efficiency and effective transaction. E-Business means connecting critical business system directly to critical constituencies – customers, vendors, and suppliers- via Internet, Extranet, and Intranets. Intranet – internal network that applies Internet technologies – use to make company information accessible to employees and facilitate working in group. Extranet – network that allows customers or suppliers to access part of the company’s intranet.
If you want an easier way to memorize the difference, remember this sentence: “Being effective is about doing the right things, while being efficient is about doing the things in the right manner.”
ADVANTAGES AND DISADVANTAGES OF ECOMMERCE The invention of faster internet connectivity and powerful online tools has resulted in a new commerce arena. Ecommerce offered many advantages to companies and customers but it also caused many problems. ADVANTAGES OF ECOMMERCE • Faster buying/selling procedure, as well as easy to find products. even small enterprises can access the global market for selling and purchasing products and services. Even time restrictions are nonexistent while conducting businesses- Buying/selling 24/7. More reach to customers, there is no theoretical geographic limitations. Low operational costs and better quality of services. No need of physical company set-ups. Easy to start and manage a business. Customers can easily select products from different providers without moving around physically.
•
• • • • •
1
DISADVANTAGES OF ECOMMERCE • • • Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money. Internet has still not touched the lives of a great number of people, either due to the lack of knowledge or trust. Many people have reservations regarding the requirement to disclose personal and private information for security concerns. Not suitable for perishable commodities like food items Time period required for delivering physical products can also be quite significant There is no guarantee of product quality. Mechanical failures can cause unpredictable effects on the total processes. As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check. There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.
• •
• • • •
The Role of Strategy in E-Commerce
• • • • Sound strategy that has the full support of top management A clear goal of long-term customer relationships and value. Making full use of Internet and related technologies. A scalable and integrated business process and infrastructure
Value Chain in E-commerce Value chain – is a way of organizing an activities of a business so that each activity adds value (value added activity) or productivity to the total operation of the business. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices Competitive advantage is achieved when an organization links the activities in its value chain more cheaply and more effectively than its competitors. Example of competitive advantage using value chain. The purchasing function assists the production activity that the raw materials and supplies are available on time and meet the requirement of the products to be manufactured. The manufacturing function, in turn, has the responsibility to produce quality products that the sales staff can depend on. The human resource function must hire, retain, and develop the right personnel to ensure continuity in manufacturing, sales, and other area of the business.
2
Porter’s Value Chain: Primary Activities:
1. Inbound Logistics - involve relationships with suppliers: procurements – vendor
selection, comparative shopping, negotiating, supply contracts, and just in time (JIT) arrival of goods.
2. Operations - are all the activities required to transform inputs into outputs
(products and services)- fabrication, assembly, testing, and packaging..
3. Outbound Logistics - include all the activities required to store, distribute , collect
the output.
4. Marketing and Sales - activities inform buyers about products and services :
advertising, product promotions, sales management, identifying the pro customer base, and distribution channels. duct’s
5.
Service - includes all the activities that focus on after-sale services to the customers: Testing, maintenance, repairs, warranty work, and replacement parts.
Secondary activities
1. Procurement - is the acquisition of inputs, or resources, for the firm. 2. Human Resource management - consists of all activities involved in recruiting,
hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
3. Technological Development - pertains to the equipment, hardware, software,
procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs.
4. Infrastructure - serves the company's needs and ties its various parts together, it
consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management. Launching a Business on the Internet The Life Cycle Approach 1. Business Planning and Strategic Phase • Preparing a business plan • Defining the target market • Setting immediate and long range goals 2. Technology Infrastructure - Deciding on hardware, software, security, and set up phase 3. Design phase
3
- Building the site and placing it on the Web and making your Web pages rich in content and interactive. 4. Marketing phase - Advertising the site, setting up the feedback mechanism and providing customer service. 5. Fulfillment phase - Selling and shipping the product 6. Maintenance and enhancement phase - Maintaining and growing the business Goals that can make e-business venture • • • • • • • • Create and maintain a competitive advantage Reduce operational costs Improve employee communication and satisfaction Find new market for product and services Improve relationships with partners who provide the goods Create distinct distribution channels Ensure customer satisfaction Improve supply chain management
• Supply chain – is the interrelated network of facilities and distribution methods that obtains materials, transforms materials into finished products, delivers the finished products to customers. Deciding the Type of Site Classification of e-commerce business models:
1. Community: message board (An Internet based equivalent of an actual
message board where people can post and reply to posted messages), chat rooms 2. Information content: provides a wide variety of data such as stock quotes. 3. Commerce: involves consumers and organizations paying to purchase E-Commerce Business Models
1. Business-to- Consumer E-Commerce (B-to-C or B2C) consists of the sale of
products and services from a business to a general public or end user. In this model, the seller is the business and the buyer is the consumer (public). B2C is the equivalent of the traditional mail order telephone-based ordering system. Ex.: Subscribing on-line magazine, online banking, air line reservation.
4
Disintermediation – business sell products directly to consumers without using traditional retail channels.
2. Consumer-to-Consumer E-Commerce (C-to-C) consists of individuals using the
Internet to sell products and services directly to other individuals. The most popular vehicle to C2C e-commerce is the online auction.
3. Business-to-Business E-Commerce consist of the sale and exchange of products
and services between businesses. Ex.: Bicycle manufacturers might use the Internet to purchase tires from other suppliers. Vendor B2B site, also called an e-procurement site, is a product supplier that allows purchasing agents to use a network to shop, submit request for quotes (RFQs), and purchase items. Service B2B site uses a network to provide one or more services to business such a financing, warehousing, or shipping. Brokering B2B site acts as a middleman by negotiating the contract of a purchase and a sale. An infomediary, short for information intermediary, B2B site provides specialized information about suppliers and other businesses.
4. Busines-to-Employee E-Commerce (B2E) sometimes called intrabusiness ecommerce, refers to the use of intranet technology to handle activities that take place within a business. B2E does not generate revenue, insead, it increases profit by reducing expenses within a company.
The Web Storefront
• Web Storefront is an online website where, your customer would visit and buy your products. It offers product listing, shopping cart and payment processing functionality that provide the business-to-consumer interface. Example: Retailers: Officedepot.com Manufacturer: Dell.com
Types of Storefront:
1. Specialized store sells one or few products (e.g., chocolates, flowers or dog toys ). 2. General storefronts sell many products (e.g., Amazon.com).
Characteristics of a Web site
• • • The web site should load quickly and be simple to navigate It should provide lots of information about your business It should include your physical address, phone, and fax numbers
5
• • • • • •
The theme of the design should be geared towards meeting the needs of your business The goal should not just be showcasing the designer's talent It should be about highlighting the unique selling proposition of the brand that is being designed for The goal of the entire website should focus on what the visitors are looking for. The site would have to be convenient and very user friendly. It should communicate the vision and mission of the business.
Other Storefront Attributes:
1. Customer should be able to find the product quickly (8 seconds guideline) 2. The site should have mechanism to process the order and send it to fulfillment center for quick and secure packaging and shipping. 3. The site should have mechanism to generate a summary of the order and produce a printable receipt. 4. The site should have a mechanism to send a confirming e-mail to customers
CREATING AN ONLINE STORE (EXAMPLE)
Factors or concern to address in building online store: 1. Building a storefront
⇒ How will I build a storefront?
i. Do I have the expertise to develop the e-commerce site myself? ii. Should I hire a consulting firm? iii. How about a Web hosting service? Web host is an outside company that provides the hardware, software, and communications required for a webserver.
Web hosting service is a type of Internet hosting service that allows individuals organizations to make their own website accessible via the World Wide Web. Web hosts are companies that provide space on a server they own or lease for their clients as well as providing Internet connectivity,
and use by
2. Managing payment
⇒ How will I manage payments?
3. Managing product delivery
i. Should I accept credits?
⇒ How will I deliver products to customers?
i. Postal service? ii. Delivery service?
4. Designing a site that attracts customers and keeps them returning
⇒ How should I design the site so it attracts and retains customers? 6
5. Managing the site
⇒ How will the e-commerce Web site be managed?
6. Promoting the site
⇒ How will I promote my Web site? DESIGNING A WEB SITE
WEB site is a series of pages with links to other sites. The pages contain text, graphics, banners (ads), and sometimes audio and video.
Key Component of a Site 1. Home Page. This is the first page of a site that appears when visiting URL
address. It contains the link that takes you to specific areas within the site and buttons to help you navigate the site. 2. Web Page. The carrier of specific information matched by clicking a button on the home page. A Web page is related to home page like a series of paragraphs is related to a heading in a text chapter. 3. Link is a connector that makes it possible to go another Web page on the site or the Internet or to go back to the home page. 4. Banner is a graphic display on the web page usually used for advertising. A banner is usually linked to the advertiser’s Web page.
Life Cycle of Site 1. Planning the site.
Planning means defining the site’s goal - determine who will be involve in defining the goals - whether there is time or need for formal processing.
2. Defining the audience and the competition
-
-
include not just who the users are, but their goals and objective. generate a list and categorize them identify what prospective customer wants (well product representation, ontime delivery, competitive product price, easy ordering, valuable inf. About the products, good product selection, posted privacy policy, etc.)
3. Building site content Parts of a Web page a. Images are a visual element of almost every Web page. They
draw the eye and help direct readers to specific parts of the page
b. Headlines or titles are the next most prominent element on most Web
pages. c. Body content is the text that makes up the majority of your Web page.
- Content should be easy to read and grammatically correct. - Content should be keyword rich so that searchbots will be able to read the keywords and classify your site.
7
- Content should be written so that a visitor can scan the web page and be able grasp most of the meaning without reading word for word
d. Navigation plays a crucial role for most Web pages to keep customers
on the site and reading other pages. But Web pages can also have internal navigation, especially long pages with lots of content. Navigation helps your readers stay oriented and make it possible for them to find their way around the page and the site as a whole.
e. Credits on a Web page are the informational elements of a page that
aren't content or navigation, but provide details about the page. They include things like: the publication date, copyright information, privacy policy links, and other information about the designers, writers, or owners of the Web page. Most Web pages include this information at the bottom, but you can also include it in a sidebar, or even at the top if it fits with your design.
Web Hosting Philippines-Guide in Selecting Web Host
Because of the competitive business world, it is important nowadays to be known globally so that customers not just local, will be infromed about your business.
1. First is you have to choose a web hosting that will render a service 24/7 without the
great cost. Domain registration and web hosting (Cost as of july 2006 ) Domain registration (1 to 2 years, depending on the domain registration companies: gTLD domains - Php 600 – Php 1500/yr ccTLD domains has a cost of three times Web hosting (where you upload your html files): Php 30 – Php 3000
gTLD - Global Top Level Domain : .com / .net / .info / .org - and many more ccTLD - Country Code Top Level Domain: .co.uk / .fr / .us / .de /.ph,.com.ph and .org.ph
2. Another thing is the location. What do I mean of location? Well, choose the location
where majority of your customers are. Let say for example you have business here in Philippines, and most of your customers are in the USA, then choose of the web host that are in USA.
3. Consider also the disk space and bandwidth, how many account may be allotted
for each client
Disc space is the amount of space needed for your site.
Bandwidth refers to the amount of data that website visitors can download from a website.
8
Web Hosting provides:
- maintaining the flow of your business, -should have full the control of your web hosting environment. - install the applications - protect and secure your hosting space. - should be 24/7 ready to support
9
