E-Business

Chapter 14 & B11

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 Ch. 14 Learning Outcomes
1 Compare e-commerce and e-business

2 Compare the four types of e-business

models

3 Describe the benefits and challenges

associated with e-business

4 Explain the differences among e-shops, e-

malls, and online auctions 2
 E-Business
• The Internet is a powerful channel that
presents new opportunities for an
organization to:
o Touch customers
o Enrich products and services with
information
o Reduce costs

o (cell phone movies)

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 E-Business
• How do e-commerce and e-business
differ?
o E-commerce – the buying and selling of goods and
services over the Internet
o E-business – the conducting of business on the Internet
including, not only buying and selling, but also serving
customers and collaborating with business partners

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 E-Business
Industries Using E-Business

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 E-Business Models
• E-business model – an approach to conducting electronic
business on the Internet

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E-Business Benefits and Challenges
• E-Business benefits include:
o Highly accessible
o Increased customer loyalty
o Improved information content
o Increased convenience
o Increased global reach
o Decreased cost

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E-Business Benefits and Challenges
• E-business challenges include:
o Protecting consumers
o Leveraging existing systems
o Increasing liability
o Providing security
o Adhering to taxation rules

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

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 Mashups
• Web mashup - a Web site or Web application
that uses content from more than one source to
create a completely new service
o Application programming interface (API) - a set of routines,
protocols, and tools for building software applications
o Mashup editor - WSYIWYGs (What You See Is What You Get) for
mashups

• WhereIsMyMilkFrom.com

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Ch. 14 Opening Case Study Questions
1. Identify the type of e-business model eBay is using
and explain why it has been so successful

2. Other major Web sites, like Amazon.com and

Yahoo!, have entered the e-marketplace with far
less success than eBay. How has eBay maintained
its dominant position?

3. What are the three different types of online

auctions and which one is eBay using?

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 Chapter 14 Case

• There are numerous ways to make

money on the Internet
o Million dollar home page
o One red paperclip

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 Chapter 14 Case Questions

1. How else can you use the Internet to raise money?

(Ashley Qualls video)

2. What types of businesses could benefit from trading

on the Internet?

3. Can you think of any other disruptive or non-

traditional ways that you could use the Internet?

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 B11 Learning Outcomes
1. Describe the four common tools an organization
can use to access Internet information

2. Compare ISPs, OSPs, and ASPs. Be sure to include

an overview of common services provided by each

3. Describe how marketing, sales, financial services,

and customer service departments can use e-
business to increase revenues or reduce costs

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 B11 Learning Outcomes
4. Explain why an organization would use metrics to
determine a Web site’s success

5. Identify the different types of e-government business

models

6. Define m-commerce and explain how an e-

government could use it to increase its efficiency and
effectiveness

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 Introduction
• Pure play – an Internet retailer that has no physical store, such
as Expedia.com and Amazon.com

• E-business – conducting business on the Internet, not only

buying and selling, but also serving customers and
collaborating with business partners

• E-business model – an approach to conducting electronic

business through which a company can become a profitable
business on the Internet

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 Accessing Internet Information

• Four tools for accessing Internet information

1. Intranet – internalized portion of the Internet, protected from outside
access, for employees
2. Extranet – an intranet that is available to strategic allies
3. Portal – Web site that offers a broad array of resources and services
4. Kiosk – publicly accessible computer system that allows interactive
information browsing

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Providing Internet Information
• Three common forms of service
providers
1. Internet service provider (ISP) –provides individuals
and other companies access to the Internet
2. Online service provider (OSP) – offers an extensive
array of unique Web services
3. Application service provider (ASP) – offers access over
the Internet to systems and related services that would
otherwise have to be located in organizational computers

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 Providing Internet Information
• Common ISP services include:
o Web hosting
o Hard-disk storage space
o Availability
o Support

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 Providing Internet Information
Wireless Internet service provider (WISP)

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 Providing Internet Information
• ISPs, OSPs, and ASPs use service level agreements
(SLA) which define the specific responsibilities of the
service provider and set the customer expectations

• http://www.youtube.com/watch?v=3LkQrtCIFA4

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 Organizational Strategies for
E-Business
• Primary business areas taking advantage
of e-business include:
o Marketing/sales
o Financial services
o Procurement
o Customer service
o Intermediaries

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 Marketing and Sales
• Generating revenue on the Internet:
o Online ad (banner ad) - box running across a Web page that
contains advertisements
o Pop-up ad - a small Web page containing an advertisement
o Associate programs (affiliate programs) - businesses generate
commissions or royalties
o Viral marketing - a technique that induces Web sites or users
to pass on a marketing message
o Mass customization - gives customers the opportunity to
tailor products or services

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 Marketing and Sales

• Generating revenue on the Internet:

o Personalization - occurs when a Web site can fashion offers
that are more likely to appeal to that person
o Blog - Web site in which items are posted on a regular basis
and displayed in reverse chronological order
o Real simple syndications (RSS) - a Web feed format used for
Web syndication of content
o Podcasting - the distribution of audio or video files, such as
radio programs or music videos, over the Internet to play on
mobile devices

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 Marketing and Sales
• Generating revenue on the Internet:
o Search engine optimization (SEO) - a set of methods
aimed at improving the ranking of a Web site in search
engine listings
(smartest professor ever)
o Spamdexing - uses a variety of deceptive techniques in an
attempt to manipulate search engine rankings, whereas
legitimate SEO focuses on building better sites and using
honest methods of promotion

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 Financial Services

• Online consumer payments include:

o Financial cybermediary
o Electronic check
o Electronic bill presentment and payment (EBPP)
o Digital wallet

o Google Checkout

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 Procurement
• Maintenance, repair, and operations (MRO)
materials (also called indirect materials) – materials
necessary for running an organization but do not
relate to the company’s primary business activities
o E-procurement - the B2B purchase and sale of supplies
and services over the Internet
o Electronic catalog - presents customers with information
about goods and services offered for sale, bid, or auction
on the Internet

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 Customer Service
• Customer service is the business process where the most
human contact occurs between a buyer and a seller

• e-business strategists are finding that customer service via

the Web is one of the most challenging and potentially
lucrative areas of e-business

• The primary issue facing customer service departments

using e-business is consumer protection

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 Consumer Protection

• E-business security
o Encryption
o Secure socket layer (SSL)--HTTPS
o Secure electronic transaction (SET)

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 Measuring E-Business Success
• Most companies measure the traffic on a Web site as
the primary determinant of the Web site’s success

• However, a large amount of Web site traffic does not

necessarily equate to large sales

• Many organizations with high Web site traffic have

low sales volumes

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 Measuring E-Business Success

• Web site traffic analysis can include:

o Cookie
o Click-through
o Banner ad
o Interactivity

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 Behavioral Metrics
• Clickstream data tracks the exact pattern of a
consumer’s navigation through a Web site

• Clickstream data can reveal:

o Number of pageviews
o Pattern of Web sites visited
o Length of stay on a Web site
o Date and time visited
o Number of customers with shopping carts
o Number of abandoned shopping carts

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 New Trends in E-Business:
E-Government and M-Commerce
• Mobile commerce - the
ability to purchase
goods and services
through a wireless
Internet-enabled device.

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 Closing Case Two:
Made-To-Order Businesses
• Mass customization is a new trend in the retail
business

• Lands’ End, Nike, and Stamps.com are a few of the

companies using mass customization to enhance
the way they do business

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 Closing Case Two Questions
1. What role does e-business play in a mass customization
business strategy?

2. How can Lands’ End use additional sales and marketing e-

business techniques to improve its business?

3. How can Nike use e-business financial services to improve

its business?

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Closing Case Two Questions
4. How can Stamps.com use ASPs and electronic bill
payment to improve its business?

5. Choose one of the examples above and analyze its e-

business approach. Would you invest $20,000 in the
company?

6. Choose one of the examples above and explain how

the company is attempting to gain a competitive
advantage with mass customization and
personalization. How could this company use
podcasts, blogs, and SEO to improve its business?

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