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Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.1
Chapter 1
Introduction to e-business and e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.2
Learning outcomes
• Define the meaning and scope of e-business and e-commerce and their different elements
• Summarize the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption
• Outline the ongoing business challenges of managing e-business and e-commerce in an organization.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Management issues
• How do we explain the scope and implications of e-business and e-commerce to staff?
• What is the full range of benefits of introducing e-business and what are the risks?
• How do we evaluate our current e-business capabilities?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.4
Figure 1.1 Google circa 1998Source: Wayback machine archive: http://web.archive.org/web/19981111183552/google.stanford.edu
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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E-business innovation and opportunity
• Since Google was launched in 1998 whiche-business startups have transformed the way we work, live and play?
• How has Google innovated in search and its business model?
• See Table 1.1 for some of major innovators
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.6
E-business innovation
• P. 5, Activity 1.1• Discussion
– Which company / website impacted on Internet or the web?
– How do we measure their success?– What made them successful?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.7
The impact of the Internet on business
• Andy Grove, Chairman of Intel, one of the early adopters of e-commerce, has made a meteorological analogy with the Internet.
• He says:
Is the Internet 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)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.8
E-business opportunities
• Reach– Over 1 billion users globally– Connect to millions of products
• Richness– Detailed product information on 20 billion +
pages indexed by Google. Blogs, videos, feeds…
– Personalized messages for users• Affiliation
– Partnerships are key in the networked economy
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.9
Internet risks – what can go wrong with a transactional site?
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Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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E-consultancy Interview
• How does HP drive traffic to their site?
• How do they communicate with partners?
• What do they syndicate?
• What’s driving their actions?
• What’s the benefit they can get by doing so?
• How do they manage user reviews?
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Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.11
What is e-commerce and e-business?
• You are attending a role in the e-business team of a global bank
• You anticipate you may be asked the distinction between e-commerce ande-business.
• Write down a definition for each
• E-commerce:–
• E-business:–
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.12
What is e-commerce and e-business?
• E-commerce :– All electronically mediated information
exchange between an organization and its external stakeholders (Chaffey)
– Digitally enabled commercial transactions between and among organizations and individuals
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.13
What is e-commerce and e-business?
• E-business:– All electronically mediated information
exchanges, both within an organization and with external stakeholders supporting the range of business process (Chaffey)
– Digital enablement of transactions and processes within a firm, involving information systems under firm’s control. Does not include commercial transactions involving an exchange of value across organizational boundaries (Laudon)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.14
What is e-commerce and e-business?
• P. 10, Activity 1.2
• Use Google, Yahoo, and BING to do the search and report the number of hits
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Figure 1.2 The distinction between buy-side and sell-side e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Figure 1.3 Three definitions of the relationship between e-commerce and e-business
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.17
What is e-commerce and e-business?
Activity 1.3, P. 11 – Discussion—Question 1
Intranet vs. Extranet
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Intranet vs. Extranet
• P. 11, Activity 1.3
• Discussion—Question 1
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.19
Figure 1.4 The relationship between intranets, extranets and the Internet
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Why Study E-commerce?
• E-commerce technology is different, more powerful than previous technologies
• E-commerce bringing fundamental changes to commerce
• Traditional commerce:– Passive consumer– Sales-force driven– Fixed prices– Information asymmetry
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.21
Unique Features of E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.22
Origins & Growth of E-commerce
• Precursors:– Electronic Data Interchange (EDI)
• 1995: Beginning of e-commerce– First sales of banner advertisements
• Since then, e-commerce fastest growing form of commerce in the United States
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.23
The Growth of B2C E-commerce
SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b;
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.24
The Growth of B2B E-commerce
SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.25
E-commerce: A Brief History
• 1995–2000: Innovation– Key concepts developed– Dot-coms; heavy venture capital investment
• 2001–2006: Consolidation– Emphasis on business-driven approach
• 2006–Present: Reinvention– Extension of technologies– New models based on user-generated content, social
networking, services
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.26
Types of E-commerce
• Selling Side
– Transaction e-commerce sites
– Service-oriented relationship-building site
– Brand-building sites
– Portal, publisher or media sites
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.27
Types of E-commerce
• Digital Marketing
• The management and execution of marketing using e-media in conjunction with digital data about customer
– Involves using digital technology
• …………
– To achieve these objectives
• …………..
– Through using these marketing tactics
• ………..
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Figure 1.5 First Direct Interactive (www.firstdirect.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Figure 1.6 Blendtec viral campaign micro-site (www.willitblend.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Web 2.0 and Beyond
• Web 2.0
– Features-p. 24
– Web 2 examples
• Web 3.0 Features-pp. 24-25 Box 1.1
– Research the web to discover what Web 3.0 technology and features have been used by which company
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.31
Figure 1.7 Evolution of web technologiesSource: Adapted from Spivack (2007)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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e-Commerce and SCM
• What’s Supply Chain Management (SCM)
– The coordination of all supply activities of an organization from its supplier and partners to its customers
• Value Chain
• How e-Commerce impact SCM?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.33
Business-Consumer Model of e-Commerce
• P. 26, Fig. 1.8
• Classified by market relationship
– Business-to-Consumer (B2C)
– Business-to-Business (B2B)
– Consumer-to-Consumer (C2C)
• Classified by technology used
– Peer-to-Peer (P2P), e.g., BitTorrent and Napster
– Mobile commerce (M-commerce)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.34
Figure 1.8 Summary and examples of transaction alternatives between businesses, consumers and governmental organizations
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.35
Mini Case Study
P. 27, Betfair
– How does Betfair gains profit
– What’s the challenges they may face
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Figure 1.9 Betfair peer-to-peer gambling exchange
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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E-government
What is?
What are the benefits?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.38
E-Business Opportunities
what goals does a business can achieve through e-business?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.39
Business Adoption of E-Commerce/Business
• Activity: You are in a team of advisers at a local business link
• List– Drivers to adoption of sell-side e-commerce by
business and how you can reinforce these by marketing benefits
– Barriers to adoption of sell-side e-commerce by business and how you can reinforce these by stressing benefits
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.40
Cost/efficiency and competitiveness drivers
• 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– Avoid losing market share to businesses already
using e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.41
Business Adoption of E-Commerce/Business
• Drivers for Adoption-Profit generation and cost reduction
• Tangible and Intangible benefits from e-business.-ref. p.31, table 1.3
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.42
Figure 1.10 Usage of different e-business services in European countriesSource: European Commission, 2008
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Case Study
• P. 33, Case Study 1.2 North West Supplies
• Read the case and discuss the questions on p. 35
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.44
Figure 1.11 North West Supplies Ltd site (www.northwestsupplies.co.uk)Source: Opportunity Wales
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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E-business Risks and Barriers for Adoption
• Strategy level issues
• Practical risks
– Ref. p. 35
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.46
Figure 1.12 Barriers to development of online technologiesSource: DTI (2002)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Potential Limitations on B2C E-commerce*
• Expensive technology
• Sophisticated skill set
• Persistent cultural attraction of physical markets and traditional shopping experiences
• Persistent global inequality limiting access to telephones and computers
• Saturation and ceiling effects
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.48
Evaluating an Organization’s E-business Capability
• Is any company ready for e-commerce?
• Stage model of e-commerce
– –Ref. p. 37 Fig. 1.13
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.49
Figure 1.13 A simple stage model for buy-side and sell-side e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Drivers of consumer adoption
Driver Marketing approach
1
2
3
4
5
6
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Barriers to consumer adoption
Barrier Marketing approach
1
2
3
4
5
6
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.52
Figure 1.14 Variation in different online activities by genderSource: UK National Statistics (2006) Individuals accessing the Internet – Report from the UK National Statistics Omnibus Survey . Published online at www.statistics.gov.uk
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.53
Management Responses to E-Commerce
• This will be addressed in the part 2 of the book
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.54
Case Study
• Case Study 1.3. eBay
• Read the case and discuss the question on page 46.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Next Class
• McKinsey 7S framework was referenced but not introduced in detail. Research the Internet to find some background information about it and bring back your discovery to next class.
• Preview Chapters 2
• Read the Real-world E-Business Experience Interview on pp.53-57.
• Visit the www.morethan .com web site to get a sense on their business
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
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Next Class
• Be prepared to discuss these questions:
– What type of business does MoreTh>n do?
– What key issues has the interview covered?
– Why people would go online than offline according to the interview?
– Do you see a similar business model in Canada?