Scope of e-commerce

Learning objectives• What is e-commerce?

• What are the e-challenges?

• What are the strategies for e-commerce?

Learning objectives• What is e-commerce?

• What are the e-challenges?

• What are the strategies for e-commerce?

E-commerce definitionTechnology-enabled transactions and technology-mediated exchanges of digitized information between parties (individuals or organizations) as well as the electronically based intra-organizational or inter-organizational activities that facilitate such exchanges

E-commerce definitionScope of e-commerce:

1. Exchange of digitized information

2. Technology-enabled transactions

3. Technology-mediated relationships

4. Intra- & inter-organizational activities

E-commerce definition

B2B B2B C2B C2B

B2C B2C P2P P2P

Business Consumers

Business originating from . . . B

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E-commerce categories

Publishers order paper supplies from paper

companies

Amazon orders from publishers

Publishers order paper supplies from paper

companies

Amazon orders from publishers

Consumers aggregate to bulk purchase from Amazon

Consumers aggregate to bulk purchase from Amazon

Consumers buy thousands of Harry Potter books from

Amazon

Consumers buy thousands of Harry Potter books from

Amazon

Business Consumers

Business originating from . . . B

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Consumers resell copies on eBay

Single chain (or converging categories) of e-commerce

E-commerce definitionE-COMMERCE vs TRADITIONAL COMMERCE Key elements E-commerce Traditional commerce Value Creation Information Product/Service Strategy Sense and respond

Simple rules Classical

Competitive edge Speed Quality/Cost Competitive force Low barriers of entry

Power of customers Power of suppliers Product substitution

Resource focus Demand side Supply side Customer interface Screen-to-face Face-to-face Communication Technology-mediated channels Personal Accessibility 24 x 7 Limited time Customer interaction

Self-service Seller influenced

Consumer behavior Personalization One-to-one marketing

Standardization Mass/one-way marketing

Promotion Word of mouth Merchandising Product Commodity Perishables, feel & touch

E-commerce definition1995-2000Innovation

2001-2006 Consolidation

2006-future Reinvention

Technology-driven Business-driven Audience, customer, community-driven

Revenue growth focus Earnings & profits focus Audience & social network growth focus

Venture capital financing Traditional financing Merger & acquisition

Entrepreneurial Traditional/old economy Large pure Web-based firms

Disintermediation Strengthening intermediaries

Proliferation of small online intermediaries

Perfect markets Imperfect markets, brands, network effects

Online market imperfections

Pure-play Bricks & clicks New market (pure play); Retail (bricks & clicks)

First-mover advantages Strategic follower New market (1st mover)

Learning objectives

• What is e-commerce?

• What are the e-challenges?

• What are the strategies for e-commerce?

Role of e-commerce managers

EntrepreneurshipEntrepreneurship

Strategic Management

Strategic Management

TechnologyTechnology New MediaNew Media

AccountingAccounting Operationsand Logistics

Operationsand Logistics

FinanceFinance MarketingMarketing

Role of e-commerce managers

Set VisionSet Vision

Establish GoalsEstablish Goals

Formulate Strategy

Formulate Strategy

Drive Implementation

Drive Implementation

Be Accountablefor Performance

Be Accountablefor Performance

Role of e-commerce managersVision: higher-order societal effects

Goals: performance targets that are measurable and in line with the company’s strategy & business life cycle (process vs outcome)

Strategy: tradeoffs

Implementation: technology & media knowledge

Accountability: performance & results

E-commerce challengesUnderstanding customer evolution

– Invest ahead of customer needs

Charting changing technology– Match technology choices to consumer tastes

Weathering the storm– Reassure stakeholders with clear vision, sensible business

model, and profitable venture

Integrating offline & online activities– Align offline & online business activities, esp. advertising,

branding, retail & online store design, service, warranties, returns (customer-facing activities)

Identifying key levers of competitive advantage– Reallocate resources as competitive advantage levers evolve

Expanding globally– Deal with complex internationalization issues

Learning objectives

• What is e-commerce?

• What are the e-challenges?

• What are the strategies for e-commerce?

E-commerce strategies

ImplementationImplementation

Internal (Company) Analysis

Internal (Company) Analysis

External Analysis

External Analysis

Control and

Monitoring

Control and

Monitoring

Strategy Formulation

Strategy Formulation

Corporate Business Unit Functional Operating

ObjectivesObjectives

MissionMission

Classical Strategic Planning

E-commerce strategiesSense and respond

• Experimenting with intuitive, actionable, easy to implement ideas

• Proactively soliciting feedback from customers

Type Purpose Example

How-to rules They spell out key features of how a process is executed - "What makes our process unique?"

Akamai's rules for the customer service process: staff must consist of technical gurus, every question must be answered on the first call or e-mail, and R&D staff must rotate through customer service.

Boundary rules They focus managers on which opportunities can be pursued and which are outside the pale.

Cisco's early acquisitions rule: companies to be acquired must have no more than 75 employees, 75% of whom are engineers.

Priority rules They help managers rank the

accepted opportunities.

Intel's rule for allocating manufacturing capacity: allocation is based on a product's gross margin.

Timing rules They synchronize managers with the pace of emerging opportunities and other parts of the company.

Nortel's rules for product development: project teams must know when a product has to be delivered to the leading customer to win, and product development time must be less than 18 months.

Exit rules They help managers decide when to pull out of yesterday’s opportunities.

Oticon's rule for pulling the plug on projects in development: if a key team member-manager chooses to leave the project for another within the company, the project is killed.

Simple rules

E-commerce strategiesPosition approach

Where should we be?

Resources approachWhat should we be?

Simple rules approachHow to get there?

E-commerce strategies Position Resources Simple Rules

Strategic Logic Establish position Leverage resources Pursue opportunities

Strategic Steps

Identify an attractive market

Locate a defensible position

Fortify and defend

Establish a vision Build resources Leverage across markets

Jump into the confusion Keep moving Seize opportunities Finish strong

Strategic Question Where should we be? What should we be? How should we proceed?

Source of Advantage Unique, valuable position

with tightly integrated activity system

Unique, valuable, inimitable resources

Key processes and unique simple rules

Works Best In Slowly changing, well-

structured markets Moderately changing, well-

structured markets Rapidly changing,

ambiguous markets

Duration of Advantage Sustained Sustained Unpredictable

Risk It will be too difficult to

alter position as conditions change

Company will be too slow to build new resources as conditions change

Managers will be too tentative in executing on promising opportunities

Performance Goal Profitability Long-term dominance Growth

E-commerce strategies

Framing the Market

Opportunity

Framing the Market

Opportunity

Business

Model

Business

Model

Customer

Interface

Customer

Interface

MarketCommunication

and Branding

MarketCommunication

and Branding Implementation

Implementation Metrics

Metrics

E-commerce strategy formulation process