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BUSINESS PLUG-IN B11

Ebusiness

B11-2

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 ebusiness to increase revenues or reduce costs

B11-3

LEARNING OUTCOMES

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

5. Identify the different types of egovernment business models

6. Define m-commerce and explain how an egovernment could use it to increase its efficiency and effectiveness

B11-4

INTRODUCTION

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

• Ebusiness – conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners

• Ebusiness model – an approach to conducting electronic business through which a company can become a profitable business on the Internet

B11-5

Accessing Internet Information

• Four tools for accessing Internet information1. 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

B11-6

Providing Internet Information

• Three common forms of service providers1. 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

B11-7

Providing Internet Information

• Common ISP services include:– Web hosting– Hard-disk storage space– Availability– Support

B11-8

Providing Internet Information

Wireless Internet service provider (WISP)

B11-9

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

• Review Figure B11.3 for a listing of the top ISPs, OSPs, and ASPs

B11-10

Organizational Strategies for Ebusiness

• Primary business areas taking advantage of ebusiness include:– Marketing/sales– Financial services– Procurement– Customer service – Intermediaries

B11-11

MARKETING/SALES

• Generating revenue on the Internet: – Online ad (banner ad) - box running across a Web

page that contains advertisements– Pop-up ad - a small Web page containing an

advertisement – Associate programs (affiliate programs) - businesses

generate commissions or royalties – Viral marketing - a technique that induces Web sites or

users to pass on a marketing message – Mass customization - gives customers the opportunity

to tailor products or services

B11-12

MARKETING/SALES

• Generating revenue on the Internet:– Personalization - occurs when a Web site can fashion

offers that are more likely to appeal to that person– Blog - Web site in which items are posted on a regular

basis and displayed in reverse chronological order– Real simple syndications (RSS) - a Web feed format

used for Web syndication of content– Podcasting - the distribution of audio or video files,

such as radio programs or music videos, over the Internet to play on mobile devices

B11-13

MARKETING/SALES

• Generating revenue on the Internet:– Search engine optimization (SEO) - a set of methods

aimed at improving the ranking of a Web site in search engine listings

– 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

B11-14

FINANCIAL SERVICES

• Online consumer payments include:– Financial cybermediary– Electronic check – Electronic bill presentment and payment (EBPP)– Digital wallet

B11-15

FINANCIAL SERVICES

• Online business payments include:– Electronic data interchange (EDI)

• Value-added network (VAN)

– Financial EDI (financial electronic data interchange)

B11-16

FINANCIAL SERVICES

Electronic Trading Network

B11-17

PROCURMENT

• 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– Eprocurement - the B2B purchase and sale of

supplies and services over the Internet– Electronic catalog - presents customers with

information about goods and services offered for sale, bid, or auction on the Internet

B11-18

CUSTOMER SERVICE

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

• Ebusiness strategists are finding that customer service via the Web is one of the most challenging and potentially lucrative areas of ebusiness

• The primary issue facing customer service departments using ebusiness is consumer protection

B11-19

Consumer Protection

B11-20

Consumer Protection

• Ebusiness security – Encryption– Secure socket layer (SSL)– Secure electronic transaction (SET)

B11-21

INTERMEDIARIES

• Intermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance ebusiness

• Reintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways

B11-22

Measuring Ebusiness 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

B11-23

Measuring Ebusiness Success

• Web site traffic analysis can include:– Cookie – Click-through– Banner ad – Interactivity

B11-24

Behavioral Metrics

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

• Clickstream data can reveal:– Number of pageviews– Pattern of Web sites visited– Length of stay on a Web site– Date and time visited– Number of customers with shopping carts– Number of abandoned shopping carts

B11-25

Behavioral Metrics

• Web site metrics include– Visitor metrics– Exposure metrics– Visit metrics– Hit metrics

B11-26

New Trends in Ebusiness: Egovernment and Mcommerce

• Egovernment - involves the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government

B11-27

New Trends in Ebusiness: Egovernment and Mcommerce

B11-28

New Trends in Ebusiness: Egovernment and Mcommerce

• Mobile commerce - the ability to purchase goods and services through a wireless Internet-enabled device.

B11-29

CLOSING CASE ONEMail with PostalOne

• United States Postal Service’s (USPS) productivity has grown by only 11 percent over the past three decades

• USPS is pursuing several ebusiness projects to help increase growth including:– NetPost Mailing Online– Post Electronic Courier Service– NetPost.Certified– EBillPay

B11-30

CLOSING CASE ONE QUESTIONS

1. Do you think the USPS’s steps are far-reaching enough to ensure its relevance in ebusiness?

2. What other strategic alliances, akin to its partnership with CheckFree, can the Postal Service develop to stay competitive?

3. Why would the USPS compete in a market that private companies already serve well?

B11-31

CLOSING CASE ONE QUESTIONS

4. How can the USPS use portals to help grow its business?

5. How can the USPS use ebusiness sales and marketing techniques such as blogs, podcasts, and SEO to improve its business?

6. How can the USPS use ASPs to improve its business?

B11-32

CLOSING CASE TWOMade-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

B11-33

CLOSING CASE TWO QUESTIONS

1. What role does ebusiness play in a mass customization business strategy?

2. How can Lands’ End use additional sales and marketing ebusiness techniques to improve its business?

3. How can Nike use ebusiness financial services to improve its business?

B11-34

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 ebusiness 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?