Dr. Iyad Zoukar - E-Commerce Lecture 02 - PDF

I NTRODUCTION TO E-B USINESS AND E- C OMMERCE – PART II Information Technology Engineering - Course (306575): STRATEGIES for e-BUSINESS Content 1. E-commerce 2.0: from social commerce to virtual worlds 2. Electronic commerce business models 3. Benefits, limitations, and impacts of el...

I NTRODUCTION TO E-B USINESS AND E- C OMMERCE – PART II Information Technology Engineering - Course (306575): STRATEGIES for e-BUSINESS Content 1. E-commerce 2.0: from social commerce to virtual worlds 2. Electronic commerce business models 3. Benefits, limitations, and impacts of electronic commerce 4. Drivers of E-business and E-Commerce 5. Managerial Issues Dr. Iyad Zoukar E-Business & E-Commerce 2-1 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Social computing An approach aimed at making the human–computer interface more natural Computing that is concerned with the intersection of social behavior and information systems Social computing tools ▪ Blogs: A discussion or informational website published on the Web, consisting of discrete, often informal diary-style text entries ("posts") ▪ Mashups: A web page or web application that uses content from more than one source to create a single new service displayed in a single graphical interface Dr. Iyad Zoukar E-Business & E-Commerce 2-2 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Social computing Social computing tools ▪ Wikis: A website that provides collaborative modification of its content and structure directly from the web browser ▪ Social bookmarking: A centralized online service which allows users to add, annotate, edit, and share bookmarks of web documents ▪ Social network services: An online platform that is used by people to build social networks or social relations with other people who share similar personal or career interests, activities, backgrounds, and real- life connections ▪ Instant messaging: A type of online chat that offers real-time text transmission over the Internet Dr. Iyad Zoukar E-Business & E-Commerce 2-3 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Web 2.0 The second generation of Internet-based services Lets people collaborate and share information online in new ways: ▪ Social networking sites ▪ Wikis ▪ Communication tools ▪ Blogs ▪ Microblogs: e.g.,Twitter ▪ RSS feeds o Rich Site Summary or Really Simple Syndication o A type of web feed which allows users to access updates to online content in a standardized, computer-readable format ▪ Folksonomies o A system in which users apply public tags to online items, typically to aid them in re-finding those items Dr. Iyad Zoukar E-Business & E-Commerce 2-4 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Social network A category of Internet applications that help connect friends, business partners, or individuals with specific interests Provides free services (photo presentation, E-mail, Blogging) Capabilities and services provided by social network sites: ▪ Users can construct a Web page that they can use to present themselves to the larger community ▪ Users can create a circle of friends who are linked together ▪ The site provides discussion forums (by group, by topic) ▪ Photo, video, and document viewing and sharing (streaming videos, user-supplied videos) are supported ▪ Wikis can be used to jointly create documents ▪ Blogs can be used for discussion, dissemination of information, and much more Dr. Iyad Zoukar E-Business & E-Commerce 2-5 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Social network Social networking service (SNS) A service that builds online communities and provides o an online space for people to build free homepages o basic communication and support tools for conducting different activities in the social network Enterprise Social networking ▪ The creation or sponsoring of a social network service and any activity, such as blogging, done in a social network (external or internal) ▪ Social networks whose primary objective is to facilitate business ▪ Similar in function to other social networks ▪ Organized to fulfill a business, as opposed to purely social, purpose Dr. Iyad Zoukar E-Business & E-Commerce 2-6 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Social commerce The e-commerce activities conducted in social networks and/or by using social software (Web 2.0 tools) F-commerce ▪ E-commerce activities on Facebook ▪ Purchases with the social network relying on its user base ▪ Because Facebook has the largest user base, social commerce was termed “f-commerce” Dr. Iyad Zoukar E-Business & E-Commerce 2-7 1. E-Commerce 2.0: From Social Commerce to Virtual Worlds Virtual Worlds A user-defined world in which people can ▪ interact ▪ play ▪ do business The most publicized virtual world is Second Life Virtual worlds are characterized by their immersive, interactive environments Dr. Iyad Zoukar E-Business & E-Commerce 2-8 2. Electronic Commerce Business Models Business model A method of doing business by which a company can generate revenue to sustain itself Examples: ▪ Name your price ▪ Find the best price ▪ Dynamic brokering ▪ Affiliate marketing Dr. Iyad Zoukar E-Business & E-Commerce 2-9 2. Electronic Commerce Business Models Structure and properties of business models Business plan A written document that identifies the business goals and outlines the plan of how to achieve them Business case ▪ A written document that is used by managers to garner funding for specific applications or projects ▪ Its major emphasis is the justification for a specific investment Revenue Models Description of how the company or an EC project will earn revenue ▪ Sales ▪ Transaction Fees ▪ Subscription Fees ▪ Advertising Fees ▪ Affiliate Fees Dr. Iyad Zoukar E-Business & E-Commerce 2-10 2. Electronic Commerce Business Models Structure and properties of business models Revenue Models Dr. Iyad Zoukar E-Business & E-Commerce 2-11 2. Electronic Commerce Business Models Structure and properties of business models Value proposition The benefits a company can derive from using EC o search and transaction cost efficiency o complementarities o lock-in o novelty o aggregation and interfirm collaboration Dr. Iyad Zoukar E-Business & E-Commerce 2-12 2. Electronic Commerce Business Models Functions of a business model Describe the major business processes of a company Describe the business models’ positioning within the value network linking suppliers and customers Formulate the venture’s competitive strategy and its long-range plans Articulate a customer value proposition Identify a market segment Define the venture’s specific value chain structure Estimate the cost structure and profit potential Dr. Iyad Zoukar E-Business & E-Commerce 2-13 2. Electronic Commerce Business Models Typical EC business models Online direct marketing ▪ Selling online ▪ From manufacturer to a customer o eliminating intermediaries ▪ From retailers to customers o making distribution more efficient Electronic tendering systems (reverse auction) ▪ A buyer requests would-be sellers to submit bids online ▪ The lowest bidder wins Name your own price ▪ A buyer sets the price he is willing to pay, and invites sellers to supply the good or service at that price Dr. Iyad Zoukar E-Business & E-Commerce 2-14 2. Electronic Commerce Business Models Typical EC Business Models Find the best price (search engine model) ▪ A customer specifies his need ▪ then an intermediate company matches the customer’s needs against a database o locates the lower price, o submit it to the customer Affiliate marketing An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site Viral marketing Word-of-mouth marketing in which customers promote a product or service to friends or other people Dr. Iyad Zoukar E-Business & E-Commerce 2-15 2. Electronic Commerce Business Models Typical EC Business Models Group purchasing Quantity purchasing that enables groups of purchasers to obtain a discount price on the products purchased Online auctions ▪ Online shoppers make consecutive bids for various goods and services ▪ the highest bidders get the items auctioned Product and service customization Creation of a product or service according to the buyer’s specifications Electronic marketplaces and exchanges E-marketplaces have introduced new efficiencies to the trading process by going to the internet Dr. Iyad Zoukar E-Business & E-Commerce 2-16 2. Electronic Commerce Business Models Typical EC Business Models Value-chain integrators Aggregates information-rich products into a more complete package for customers, thus adding value Value-chain service providers These providers specialize in a supply chain function such as logistics or payment Information brokers Provide privacy, trust, matching, search, content, and other services Bartering Companies exchange surpluses they do not need for things that they do need Dr. Iyad Zoukar E-Business & E-Commerce 2-17 2. Electronic Commerce Business Models Typical EC Business Models Deep discounting Offering discounts, such as 50% off the retail price Membership A popular off-line mode, in which only members get a discount is also being offered online Social networking Dr. Iyad Zoukar E-Business & E-Commerce 2-18 3. Benefits, Limitations, and Impacts of EC Benefits of EC Benefits to organizations ▪ Global reach ▪ Cost reduction ▪ Supply chain improvements ▪ Extended hours: 24/7/365 ▪ Customization ▪ New business models ▪ Vendors’ specialization ▪ Rapid time-to-market ▪ Lower communication costs ▪ Efficient procurement ▪ Improved customer relations ▪ Up-to-date company material ▪ No city business permits and fees Dr. Iyad Zoukar E-Business & E-Commerce 2-19 3. Benefits, Limitations, and Impacts of EC Benefits of EC Benefits to consumers ▪ Ubiquity ▪ More products and services ▪ Cheaper products and services ▪ Instant delivery ▪ Information availability ▪ Participation in auctions ▪ Electronic communities ▪ “Get it your way” ▪ No sales tax Benefits to society ▪ Telecommuting ▪ Higher standard of living ▪ Hope for the poor ▪ Availability of public services Dr. Iyad Zoukar E-Business & E-Commerce 2-20 3. Benefits, Limitations, and Impacts of EC Limitations of EC Technological limitations ▪ Lake of universally accepted standards ▪ The telecommunications bandwidth ▪ Evolving of software development tools ▪ Integration with legacy applications and databases ▪ Need special Web servers ▪ Internet accessibility is expensive ▪ Need special automated warehouses for large B2C Dr. Iyad Zoukar E-Business & E-Commerce 2-21 3. Benefits, Limitations, and Impacts of EC Limitations of EC Non-technological limitations ▪ Customers reluctance ▪ Lack of trust in EC ▪ Legal and public policy issues ▪ National and international government regulations ▪ Lack of mature measurement methodology ▪ Resistance to the change from real to virtual store ▪ Insufficient trust in paperless and faceless transactions ▪ Insufficient number of sellers and buyers ▪ Fraud on Internet ▪ Venture capital due to the dot-com disaster Dr. Iyad Zoukar E-Business & E-Commerce 2-22 3. Benefits, Limitations, and Impacts of EC Limitations of EC Limitations to organizations ▪ Lack of sufficient system security, reliability, standards and communication protocols ▪ Rapidly evolving and changing technology ▪ Facing increased competition ▪ Problems with compatibility of older and newer technology Dr. Iyad Zoukar E-Business & E-Commerce 2-23 3. Benefits, Limitations, and Impacts of EC Limitations of EC Limitations to consumers ▪ Computing equipment ▪ Cost of access to the Internet ▪ Lack of security and privacy ▪ Physical contact and relationships are replaced by electronic processes ▪ A lack of trust Dr. Iyad Zoukar E-Business & E-Commerce 2-24 3. Benefits, Limitations, and Impacts of EC Limitations of EC Limitations to society ▪ Breakdown in human interaction ▪ Social division ▪ Wasted resources ▪ Difficulty in policing the Internet Dr. Iyad Zoukar E-Business & E-Commerce 2-25 3. Benefits, Limitations, and Impacts of EC Barriers of EC ▪ Security ▪ Trust and risk ▪ Lack of qualified personnel ▪ Lack of business models ▪ Culture ▪ Organization ▪ Fraud ▪ Slow navigation on the Internet ▪ Legal issues ▪ Ethics ▪ User authentication and lack of public key infrastructure Dr. Iyad Zoukar E-Business & E-Commerce 2-26 4. Drivers of E-business and E-Commerce Drivers of E-business and E-Commerce Technological factors ▪ Telecommunications infrastructure Political factors ▪ Government legislation, initiatives and funding Social factors ▪ IT education and training Economic factors ▪ Wealth and commercial health of the nation ▪ Organizational culture ▪ Commercial benefits ▪ Skilled and committed workforce ▪ Requirements of customers and suppliers ▪ Competition Dr. Iyad Zoukar E-Business & E-Commerce 2-27 4. Drivers of E-business and E-Commerce Drivers of E-business and E-Commerce Cost/efficiency drivers ▪ Increasing speed with which supplies can be obtained ▪ Increasing speed with which goods can be dispatched ▪ Reduced sales and purchasing costs ▪ Reduced operating costs. Competitiveness drivers ▪ Customer demand ▪ Improving the range and quality of services offered ▪ Avoiding losing market share to businesses already using e-commerce. Dr. Iyad Zoukar E-Business & E-Commerce 2-28 4. Major Trends of E-Commerce Business Retail e-commerce continues to grow worldwide Mobile retail e-commerce explodes Mobile app ecosystem continues to grow Social e-commerce emerges and grows Local e-commerce is growing On-demand service firms show explosive growth Mobile and social advertising platforms show strong growth Small businesses and entrepreneurs continue to flood into the e- commerce marketplace B2B e-commerce worldwide continues to strengthen and grow Dr. Iyad Zoukar E-Business & E-Commerce 2-29 4. Major Trends of E-Commerce Technology A mobile computing and communications platform based on smartphones, tablet computers, and mobile apps becomes a reality, rivaling the PC platform Cloud computing completes the transformation of the mobile platform Computing and networking component prices continue to fall Big Data is being produced Business analytics can identify purchase patterns as well as consumer interests and intentions in milliseconds Dr. Iyad Zoukar E-Business & E-Commerce 2-30 4. Major Trends of E-Commerce Society User-generated content continues to grow Social networks encourage self-revelation Participation by adults in social networks increases Conflicts over copyright management and control continue Taxation of online sales poses challenges for governments Surveillance of online communications grows Concerns over commercial and governmental privacy invasion increase Online security continues to decline Spam remains a significant problem On-demand service e-commerce produces a flood of temporary, poorly paid jobs without benefits Dr. Iyad Zoukar E-Business & E-Commerce 2-31 5. Managerial Issues 1. Is EC real? 2. Why is B2B e-commerce so essential and successful? 3. Which EC business model should I choose? 4. How can we exploit social commerce? 5. What are the top challenges of EC today? Dr. Iyad Zoukar E-Business & E-Commerce 2-32 Summary 1. E-commerce 2.0: from social commerce to virtual worlds 2. Electronic commerce business models 3. Benefits, limitations, and impacts of electronic commerce 4. Drivers of E-business and E-Commerce 5. Managerial Issues Dr. Iyad Zoukar E-Business & E-Commerce 2-33  I NTRODUCTION TO E-B USINESS AND E- C OMMERCE – PART II Information Technology Engineering - Course (306575): STRATEGIES for e-BUSINESS