Chapter One

Introduction to
E-Business & E‑Commerce
Learning Outcomes of this Chapter
 Understand the main concepts & meaning of e-business & e-commerce.
 Understand the Disruptive digital technologies.
 Understand the Supply Chain Management & Value Chain.
 Understand the impact of e-communications on traditional businesses.
 Understand the Social Media Marketing.
 Understand the Mobile Commerce.
 Understand the drivers of digital technology adoption & the risks and barriers to
digital business adoption.
 Understand the Business or Consumer models of e-commerce transactions.
 Understand the Six C’s benefits of online services.

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 Introduction

 Organizations have now been applying technologies based on the Internet , World Wide Web and
wireless communications to transform their businesses for over 30 years since the creation of the first
websites in 1991.

 The Internet: refers to the physical network that links computers across the globe.
 It consists of the infrastructure of network servers and wired and wireless communication links between them
that are used to hold and transport data between the client devices and web servers.

 World Wide Web (WWW): Is the most common technique for publishing information on the Internet.
 It is accessed through desktop or mobile web browsers which display interactive web pages of embedded
graphics and HTML/ XML encoded text.

 Deploying these disruptive digital technologies has offered many opportunities for innovative
businesses to transform their services.

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 Cont..

 Mentioning Disruptive Digital Technologies, what does it mean?

 Disruptive Digital Technologies: Technologies which offer opportunities for business for new products and
services for customers and can transform internal business processes.
 Relying on customer needs, they drive customers to seek certain benefits in the products they use and form the basis
for customer choices between competing products.

 The term Digital Business or (E-business): Means how businesses apply digital technology and media to
improve the competitiveness of their organization through optimizing internal processes with online and
traditional channels to market and supply.

 By applying technology to help change these processes to add value to the business and its customers.

 To be effective in digital business management, a broad understanding of various business processes and
activities across the value chain is required, including (marketing and sales, new product development,
production, and inbound and outbound logistics).
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 Cont..
 It is apparent that digital business involves looking at how electronic communications can be used to
enhance all aspects of an organization's supply chain management.
 It also involves optimizing an organization's value chain, a related concept that describes the different
value-adding activities that connect a company’s supply side with its demand side.
 Which Brings us to two questions:

 1) What is a Value Chain?

 Value Chain: It’s a model for analysis of how supply chain activities can add value to products and
services delivered to the customer.

 2) What is Supply Chain Management?

 Supply Chain Management (SCM): The coordination of all supply activities of an organization from
its suppliers and partners to its customers.

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 What Is E-commerce Management?
 As we mentioned in the previous section the term “Digital Business” & now we are going to mention a new term that is
called “E-Commerce”.

 Electronic Commerce (e-commerce): All electronically mediated information exchanges between an organization and
its external stakeholders.

 The scope of (e‑commerce) is narrower than digital business. It’s often thought simply to refer to buying and selling
using the Internet; people immediately think of consumer retail purchases from companies such as Amazon.
 But e-commerce should be considered as all electronically mediated transactions between an organization and any third party it
deals with.
 By this definition, non- financial transactions such as customer support and requests for further information would also be part of e-
commerce.

 Both terms (Digital Business & E-Commerce) are applied in a variety of ways; to some they mean the same, to others
they are quite different.

 What is most important is that they are applied consistently within organizations so that employees and external
stakeholders are clear about how the organization can exploit electronic communications.

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 Cont..
 The distinction made in this chapter is to use:
 Electronic commerce (e-commerce): to refer to all types of electronic transactions between
organizations and stakeholders, whether they are financial transactions or exchanges of information
or other services.
 These e-commerce transactions are either buy-side e-commerce or sell-side e-commerce:
 Buy-side e-commerce: E-commerce transactions between an organization and its suppliers and other
partners.
 Sell-side e-commerce: E-commerce transactions between an organization and its customers.

 As for the term ‘Digital business’ It’s applied as a broader term encompassing e-commerce but also
including all electronic transactions within an organization.

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 Cont.
 Activities of E-Business are:

 Online store setup

 Customer education
 Buying and selling products
 Monetary business transactions
 Supply Chain Management
 E-mail marketing

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 Timeline of web sites

Table 1.1: Timeline of

websites indicating
innovation in business
model or marketing
communications
approach

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Figure 1.1

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 The Impact Of Electronic Communications On Traditional Businesses
 Existing businesses have evolved their approaches to digital business through a series of stages.
 Innovation is relentless, with the continuous introduction of new technologies, new business models and
new communications approaches.
 So, all organizations have to review new electronic and Internet- based communications approaches for their
potential to make their business more competitive and manage ongoing risks such as security and
performance.
 For example, many businesses are reviewing the benefits, costs and risks of digital business
technologies they are currently implementing as part of digital business transformation projects.

 Digital Business Transformation: Significant changes to organizational processes, structures and

system implemented to improve organizational performance through increasing the use of digital
media and technology platforms.

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 Cont..
 There are two key opportunities of digital transformation open to most businesses: Inbound Marketing And
Mobile Marketing.

 Inbound marketing:
 On the Internet it is often the customer who initiates contact and is seeking information through researching
information on a website.
 In other words, it is a ‘pull’ mechanism where it is particularly important to have good visibility in search
engines when customers are entering search terms relevant to a company’s products or services.
 Amongst marketing professionals this powerful new approach to marketing is now commonly known as
Inbound Marketing.
 Inbound Marketing Definition: The consumer is proactive in actively seeking out information for their
needs, and interactions with brands are attracted through content, search and social media marketing.
 Google have referred to this consumer decision- making before they visit a retailer as the Zero Moment of
Truth (ZMOT)

 Zero Moment of Truth (ZMOT): Means the multichannel consumer decision‑ making for product purchase
where they search, review ratings, styles, prices and comments on social media before visiting a retailer.

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 Cont..
 Inbound marketing is powerful since advertising wastage is reduced. Search marketing, content
marketing and social media marketing can be used to target prospects with a defined need – they are
proactive and self-selecting.
 Search Marketing: Companies seek to improve their visibility in search engines for relevant search
terms by increasing their presence in the search engine results pages.

 Content Marketing: Means the management of text, rich media, audio and video content aimed at
engaging customers and prospects to meet business goals.
 Published through print and digital media including web and mobile platforms.
 Which is repurposed and syndicated to different forms of web presence such as publisher sites, blogs, social
media and comparison sites.

 Social Media Marketing: Monitoring and facilitating customer– Customer interaction and
participation throughout the web to encourage positive engagement with a company and its brands.
 Interactions may occur on a company site, social networks and other third-party sites.

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 Social Media
Since there are so many types of social presence, it is helpful to simplify the options to manage them.
There’s more to social media than social networks:

 Social networking: The emphasis here is on listening to customers and sharing engaging content.
Facebook tends to be most important for consumer audiences and LinkedIn for business audiences.
 Social knowledge: These are informational social networks like Yahoo! Answers, where you can help
an audience by solving their problems and subtly showing how your products have helped others.
 Social sharing: These are social bookmarking sites which can be useful for understanding the most
engaging content within a category.
 Social news: Twitter is the best- known example.
 Social streaming: Rich and streaming media social sites for sharing photos, video and podcasting.
 Company user- generated content and community: Distinct from the other types of social presence
which are independent of companies, these are the company’s own social space which may be
integrated into product content (reviews and ratings), a customer support community or a blog.

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 Social Media Concepts

 Really Simple Syndication (‫( )خالصات‬RSS) feeds

Blogs, news or other content is published by an XML standard and syndicated for other sites or
read by users in RSS reader software services. Now typically shortened to ‘feed’.
Ex, news feed or sports feed.
 Blog
An online journal or news source prepared by an individual or a group of people.

 Rich Media
Digital assets such as ads are not static images, but provide animation, audio or interactivity as
a game or form to be completed.

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 Social Media User Growth

Figure 1.4

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 Mobile Commerce
 The potential of mobile commerce (m‑commerce) is evident from the presentation called Internet
Trends, One of the bravest predictions from 2008 was that mobile web use would surpass desktop web
use by 2014, and this is currently on plan to occur at a global level.
 The growth in popularity of mobile apps, from the iPhone store, Google Android Play, Microsoft
Windows app store and other handset vendors, is another significant development in mobile
communications.
 A summary of categories of app usage was released across smartphones and tablets and it showed that
80% of mobile time was in apps rather than the browser.

 Mobile Commerce (m‑commerce): Electronic transactions and communications conducted using

mobile devices such as smartphones and tablets, and typically with a wireless connection.

 Mobile Apps: A software application that is designed for use on a mobile-phone, typically
downloaded from an app store.
 iPhone Apps are best known, but all smartphones support the use of apps which can provide users with
information, entertainment or location-based Services such as mapping.

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 Digital Business
 Digital business is broader in its scope than e‑commerce.
 It is similar to the term e‑business (which was first coined by IBM), who described it in 1997
as: e‑business is – the transformation of key business processes through the use of Internet
technologies.

 Relying on the sixth edition release of this book resource, the term e‑business was replaced
with digital business since it reflects the current usage in industry and research on the impact
of digital technologies on business.

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 Information Communication Technology
ICT
 ICT: The software applications, computer hardware and networks used to create e-
business systems.
 The majority of Internet services are available to any business or consumer that has access
to the Internet.
 However, many digital business applications that access sensitive company information
require access to be limited to qualified individuals or partners.

 If information is restricted to employees inside an organization, this is an Intranet

 A service provided through Internet and web technology delivered by extending an intranet
beyond a company to customers, suppliers and collaborators, this is an Extranet

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Figure 1.5 The relationship between intranets, extranets and the Internet
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 Drivers Of Digital Technology Adoption
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

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 Drivers Of Digital Technology Adoption
Competitiveness Drivers:

 Customer demand
 Improving the range and quality of services offered
 Avoiding losing market share to businesses already using e‑commerce

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Risks And Barriers To Digital Business Adoption
 Opportunities must be balanced against the risks of introducing digital business services, which include
strategic and practical risks.

 One of the main strategic risks is making the wrong decision about digital business investments.

 In every business sector, some companies have taken advantage of digital business and gained a
competitive advantage.

 But others have invested in digital business without achieving the hoped- for returns, either because the
execution of the plan was faulty, or simply because the approaches were inappropriate.

 The impact of the Internet and technology varies by industry.

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Risks And Barriers To Digital Business Adoption

The Internet is a typhoon force, a ten times force, or is it a bit of wind? Or is

it a force that fundamentally alters our business? (Grove, 1996)

This statement still seems to encapsulate how managers must respond to

different digital technologies; the impact will vary through time from minor
for some companies to significant for others, and an appropriate response is
required.

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Risks And Barriers To Digital Business Adoption
There are also many practical risks to manage which, if ignored, can lead to
bad customer experiences and bad news stories which damage the
reputation of the company.

Examples Of Poor Online Customer Experience Include:

 Websites that fail because of a spike in visitor traffic after a peak- hour
TV advertising campaign.

 Hackers penetrating the security of the system and stealing credit card
details.

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Risks And Barriers To Digital Business Adoption

 Problems with fulfilment of goods ordered online, meaning

customer orders go missing or are delayed.

 A company emails customers without receiving their permission, so

annoying customers and potentially breaking privacy and data
protection laws

 Email customer service enquiries from the website don’t reach the
right person and are ignored.

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 Barriers To Consumer Internet Adoption

 No perceived benefit
 Lack of trust
 Security problems
 Lack of skills
 Cost

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 Digital Marketing
 E‑marketing or Internet marketing is yet another field that is closely related to e‑commerce.

 Digital Marketing: This has a similar meaning to ‘electronic marketing’ - both describe the
management and execution of marketing using electronic media such as the web, email, IP TV and
mobile media in conjunction with digital data about customers’ characteristics and behavior.

 To Achieve These Objectives:

 Support marketing activities aimed at achieving profitable acquisition and retention of customers
within a multichannel buying process and customer lifecycle.

 Through Using These Marketing Tactics:

 Recognising the strategic importance of digital technologies and developing a planned approach to reach
and migrate customers to online services through e‑communications and traditional communications.
 Retention is achieved through improving our customer knowledge (of their profiles, behaviour, value and
loyalty drivers), then delivering integrated, targeted communications and online services that match their
individual needs.

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Options For Companies To Reach Their
Audience Online

For companies to be successful in their digital

communications they must decide how they invest
their time and budget in the sometimes-confusing
range of online communications tools.
The main options for investment in media options
are:

 Paid
 Earned
 Owned

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 Paid
 Paid media

 These are bought media where there is investment to pay

for visitors, reach or conversions through search, display
advertising networks or affiliate marketing.

 Offline, traditional media like print and TV advertising

and direct mail remain important, accounting for the
majority of paid-media spend.

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 Earned
 Earned Media

 Targeting influencers to increase awareness about a brand.

 Earned media also includes word‑of‑mouth that can be
stimulated through viral and social media marketing and
includes conversations in social networks, blogs and other
communities.
 Another way of thinking about earned media is as different
forms of conversations between consumers and businesses
occurring both online and offline.

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 Owned
 Owned Media:

 This media is owned by the brand.

 Online owned media, this includes a company’s own websites, blogs,
email list, mobile apps or their social presence on Facebook, LinkedIn or
Twitter.
 Offline owned media, may include brochures or retail stores.

It emphasizes the need for all organizations to become multichannel

publishers.

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 Business Or Consumer Models Of E‑commerce Transactions

 Referring to the well-known online companies mentioned in the figure on

the right, initially shows that these companies are mainly focused on B2C
markets.
 However, B2B communications are still important for many of these
companies since business transactions can drive revenue, as for example
eBay Business (http://business.ebay.com/), or the B2C service may need to
be sustained through advertising provided through B2B transactions.

 Example, Google’s revenue is largely based on its B2B adwords

AdWords: Google AdWords is one of the services, advertisers use for online
promotion of their content, brand, website, etc through certain defined keywords
to achieve traffic or leads.

(http://adwords.google.com/) and advertising service, and advertising-based

revenue is also important to sites such as YouTube, MySpace and Facebook.

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Figure 1.2: Summary and examples of transaction alternatives between businesses, consumers and
governmental organisations
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 Business Or Consumer Models Of E‑commerce
Transactions
 C2C: (Consumer to Consumer) It refers to transactions that occur directly between individual consumers,
where one consumer sells a product or service to another consumer. (Ex, Ali Express, Amazon)

 B2C: (Business to Consumer) refers to the process of selling products and services directly between a business
and consumers who are the end-users of its products or services. (Ex, Online shopping websites)

 G2C: (Government-to-Consumer) the process of government agencies providing products or services directly
to consumers through the internet. (Ex, Healthcare or education services, licenses)

 C2B: (Consumer to Business) the customer provides a service or product to the business. (Ex, Fiverr,
customer's supply (freelancers' services) and businesses' demand

 B2B: (Business to Business) is a transaction or business conducted between one business and another, such as a
wholesaler and retailer. (Ex, Amazon Business & Alibaba)

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 Business Or Consumer Models Of E‑commerce
Transactions
 G2B: (Government-to-Business) is a relationship between businesses and government, where government
agencies of various levels provide services or information to a business entity via government portals or with the
help of other IT solutions. (Ex, Business licenses)

 C2G: (Consumer-to-Government) the process of consumers purchasing products or services from government
agencies through the internet. In a C2G transaction, the consumer is the buyer, and the government agency is the
seller. (Ex, making online payments through a government website for things like electricity, health insurance
or taxes)

 B2G: (Business To Government) the marketing and sale of goods, services, and information to government
entities. (Ex, Construction of buildings, highways, and infrastructure)

 G2G: (Government to Government) is the sharing of data and/or information systems electronically between
government agencies, departments or organizations.

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 Business Or Consumer Models Of E‑commerce
Transactions

 A different term that was more commonly used in the past is (P2P Service), which is the same
as the Consumer-to-consumer interaction (also known as peer-to-peer or person-to-person,
P2P) were relatively uncommon, but are now quite popular in the form of social networks.

 It has only recently grown in popularity due to the increasing number of broadband
connections and mobile internet access.

 P2P transactions are also the foundation of various online business models for digital firms,
such as Betfair and eBay, which are still managed as businesses, as well as some blogs that
are maintained by individuals rather than organizations.

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 Business Or Consumer Models Of E‑commerce
Transactions

 Finally, the figure includes government and public-service organizations that provide online or e-
government services.

 In addition to the models shown in Figure1.2, it has been recommended that employees should
be treated as a different sort of consumer using intranets, known as Employee-to-Employee
(E2E).

 An Intranet: is a private network contained within an enterprise that is used to securely share
company information and computing resources among employees.

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 ‘Six Cs’ Benefits Of Online Services

Figure 1.7

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 Six C’s
Typical Benefits Of Online Services Are Summarized By The ‘Six C’s:

1- Content:
This means more detailed, in-depth information to support the buying process for
transactional or relationship-building sites or branded experiences to encourage
product usage for Fast Moving Consumer Goods (FMCG) brands

2- Customization:
In this case mass customization of content, whether received as website pages
such as ‘Amazon recommends’ or e-mail alerts, and commonly known as
‘personalization’

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 Six C’s
3- Community:
The Internet liberates consumers to discuss any thing they wish through
forums, chat-rooms and blog comments.

4- Convenience:
This is the ability to select, purchase and in some cases use products from
your desktop at anytime: the classic 24×7×365 availability of a service.
Online usage of products is, of course, restricted to digital products such as
music or other data services

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 Six C’s

5- Choice:
 The web gives a wider choice of products and suppliers than via
conventional distribution channels.
 The success of online intermediaries such as Kelkoo (www.kelkoo.com)
and Screentrade (www.screentrade.com) is evidence of this.
 Similarly, Tesco.com provides Tesco with a platform to give consumers a
wider choice of products (financial, travel, whitegoods) with more
detailed information than are physically available in-store.

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 Six C’s
6- Cost Reduction:

 The Internet is widely perceived as a relatively low-cost place of

purchase.
 Often customers expect to get a good deal online as they realize that
online traders have a lower cost base as they have lower staff and
distribution costs than a retailer that runs a network of high-street
stores.
 A simple price differential is a key approach to encouraging usage
of online services.

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