Professional Documents
Culture Documents
Online retailing
ESCM
Online Services
E-Governance
1
Whats New in Online Retail
Mobile commerce exploding
Social networks experiment with social commerce
Online retail still the fastest growing retail channel
Buying online a normal, mainstream experience
Selection of goods increases, includes luxury goods
Informational shopping for big-ticket items expands
Specialty retail sites show rapid growth
Integration of multiple retailing channels
Big Data used for predictive marketing
Slide 1-2
The Online Retail Sector
Most important theme in online
retailing is effort to integrate online
and offline operations
$17 trillion U.S. economy
U.S. retail market
Personal consumption of goods and services
accounts for $11.8 trillion (about 69%) of total
gross domestic product (GDP)
Slide 1-3
The Retail Industry
7 segments (clothing, durable goods,
etc.)
For each, uses of Internet may differ
Information vs. direct purchasing
Mail order/telephone order (MOTO)
sector most similar to online retail
sector
Sophisticated order entry, delivery,
inventory control systems
Slide 1-4
Composition of the U.S. Retail
Industry
Figure 11.1, Page 724 SOURCE: Based on data from U.S. Census
Slide 9-5 Bureau, 2012.
E-commerce Retail: The Vision
Reduced search and transaction costs;
customers able to find lowest prices
Lowered market entry costs, lower operating
costs, higher efficiency
Traditional physical store merchants forced out
of business
Some industries would be disintermediated
Few of these assumptions were correct
structure of retail marketplace has not
been revolutionized
Internet has created new venues for omni-
channel firms and supported
Slide 1-6 a few pure-
The Online Retail Sector Today
Smallest segment of retail industry (6%)
Growing at faster rate than offline segments
Revenues have resumed growth
Around 75% of Internet users bought online
in 2014
Primary beneficiaries:
Established offline retailers with online presence
(e.g., Staples)
First mover dot-com companies (e.g., Amazon)
Slide 1-7
The Online Retail Sector Today
(cont.)
Omni-channel integration
Integrating Web operations with traditional
physical store operations
Leverage value of physical store
Types of integration, e.g. online order, in-store pickup
Slide 1-8
Analyzing the Viability of
Online Firms
Economic viability:
Ability of firms to survive as profitable
business firms during specified period
(i.e., 13 years)
Two business analysis approaches:
Strategic analysis
Focuses on both industry as a whole and
firm itself
Financial analysis
How firm is performing
Slide 1-9
Strategic Analysis Factors
Key industry strategic factors
Barriers to entry
Power of suppliers
Power of customers
Existence of substitute products
Industry value chain
Nature of intra-industry competition
Firm-specific factors
Firm value chain
Core competencies
Synergies
Technology
Social and legal challenges
Slide 1-10
Financial Analysis Factors
Statements of Operations
Revenues
Cost of sales
Gross margin
Operating expenses
Operating margin
Net margin
Pro forma earningsEBITDA
Balance sheet
Assets, current assets
Liabilities, current liabilities, long-term debt
Working capital
Slide 1-11
E-commerce in Action: Amazon.com
Vision:
Earths biggest selection, most customer-centric
Business model:
Retail, Third-Party Merchants, and Amazon Web Services
(merchant and developer services)
Financial analysis:
Continued explosive revenue growth, profitable
Strategic analysis/business strategy:
Maximize sales volume, lower costs and prices, acquisitions,
mobile shopping, new products and services, Amazon Fire phone
and TV
Strategic analysis/competition:
Online and offline general merchandisers, Web services
Slide 1-12
E-commerce in Action: Amazon.com
Strategic analysis/technology:
Largest, most sophisticated collection of online
retailing technologies available
Strategic analysis/social, legal:
Sales tax, patent lawsuits
Future prospects:
In 2014, Amazon registered more than $39 billion in
sales, compared to $31 billion in 2013
Increased selection and in-stock availability
Increased spending on new technology initiatives (Fire
phone), new warehouses, video library, original
programming, and new products/services
Slide 1-13
E-tailing Business Models
Virtual merchant
Amazon
Omni-channel (bricks-and-clicks)
Walmart, Macys
Catalog merchant
Lands End, L.L. Bean
Manufacturer-direct
Apple, Dell, Sony
Channel conflict
Move from supply-push model to demand-pull
Slide 1-14
Common Themes in Online Retailing
Online retail fastest growing channel in retail
commerce
Profits for startup ventures have been difficult to achieve
Disintermediation has not occurred
Established merchants need to create integrated
shopping experience to succeed online
Growth of online specialty merchants ( e.g., Blue
Nile)
Extraordinary growth of social, local, and mobile
e-commerce
Increasing use of Big Data analytics by retailers
Slide 1-15
The Service Sector: Offline and Online
Service sector:
Largest and most rapidly expanding part
of economies of advanced industrial
nations
Concerned with performing tasks in and
around households, business firms, and
institutions
Includes doctors, lawyers, accountants,
business consultants, and so on
Employs 4 out of 5 U.S. workers
80% of U.S. GDPSlide 1-16
Service Industries
Major service industry groups:
Finance
Insurance
Real estate
Travel
Professional serviceslegal, accounting
Business servicesconsulting, advertising,
marketing, and so on
Health services
Educational services
Slide 1-17
Service Industries
Two categories
Transaction brokers
Hands-on service providers
Features:
Knowledge- and information-intense
Makes them uniquely suited to e-commerce
applications
Personalization and customization
Level differs depending on type of service
Slide 1-18
Online Financial Services
E-commerce has transformed banking
and financial services
Major institutions deploy online services
Online financial consumer behavior
Most online consumers use financial services sites
Check balances
Pay bills
Experienced users move on to more complex
financial services
Number of people using mobile devices for
financial services is surging
Slide 1-19
Online Banking and Brokerage
Online banking pioneered by
NetBank and Wingspan; no longer in
existence
Established brand-name national
banks have taken substantial lead in
market share
Over half of U.S. adults use online
banking
Early innovators in online brokerage
(E*Trade) have been displaced by
Slide 1-20
Multi-channel vs.
Pure Online Financial Service Firms
Slide 1-21
Financial Portals and
Account Aggregators
Financial portals
Comparison shopping services, independent financial
advice, financial planning
Revenues from advertising, referrals, subscriptions
Example: Yahoo! Finance, Quicken.com, MSN Money
Account aggregation
Pulls together all of a customers financial data at a
personalized Web site
Privacy concerns: control of personal data, security, and
so on
Example: Yodlee
Slide 1-22
Online Mortgage and
Lending Services
Early entrants hoped to simplify and speed
up mortgage value chain
Three kinds of online mortgage vendor
today
Established online banks, brokerages, and lending organizations
Traditional mortgage vendors
Pure online mortgage firms
Slide 1-23
Online Insurance Services
Online term life insurance
One of few online insurance with lowered search
costs, increased price comparison, lower prices
Commodity
Most insurance not purchased online
Online industry geared more toward
Product information, search
Price discovery
Online quotes
Influencing the offline purchasing decision
Slide 1-24
Online Real Estate Services
Early vision: Disintermediation of a
complex industry
However, major impact is influence of
purchases offline
Impossible to complete property transaction
online
Main services are online property listings, loan
calculators, research and reference material,
with mobile apps increasing
Despite revolution in available information,
there has not been a revolution in the
industry value chain
Slide 1-25
Online Travel Services
One of the most successful B2C e-
commerce segments
More travel is booked online than offline
Online travel services revenues in 2014: Over $145
billion
For consumers: More convenient than
traditional travel agents
For suppliers: A singular, focused customer
pool that can be efficiently reached
through onsite advertising
Slide 1-26
Online Travel Services (cont.)
Slide 1-29
Online Career Services
Two main players: CareerBuilder, Monster
Five traditional recruitment tools:
Classified and print ads, career expos, on-campus
recruitment, staffing firms, internal referral programs
Online recruiting
More efficient, cost-effective, reduces total time-to-hire
Enables job hunters to more easily distribute resumes
while conducting job searches
Ideally suited for Web due to information-intense nature
of process
Slide 1-30
Its Just Information:
The Ideal Web Business?
Recruitment ideally suited for the
Web
Information-intense process
Initial match-up doesnt require much
personalization
Saves time and money for both job
hunters and employers
One of most important functions:
Ability to establish market prices and terms
(online national marketplace)
Slide 1-31
Online Recruitment Industry Trends
Consolidation
Diversification: Niche employment sites
Localization:
Local vs. national, Craigslist
Job search engines/aggregators:
Scraping listings
Social networking:
LinkedIn; Facebook apps
Mobile Web sites and apps
Slide 1-32
Sharing Economy Companies
Platforms for users to share/lease
assets and resources
Bikes, cars, homes, rooms with beds, etc.
Fees collected from sellers and buyers
Use of online reputation systems,
peer review
Successful firms are disrupters,
lowering cost of services
Uber
Airbnb
Slide 1-33
E-tailing: Why Its Important
Section 3-1 35
35
Retailing Before
E-Commerce
Wholesalers wholesalers
businesses that sell
supply retailers products to
with products. distributors or
retailers and not
usually to the end-
user or consumer
Section 3-1 36
36
The History of Retailing
Retailing Timeline
direct-to-
consumers bought
consumer mail-
directly from big-box retailers
order
craftsmen, and category
farmers, and local Main Street killers
manufacturers shopping
37
Section 3-1 37
The History of Retailing
E-tailing enables
consumers to choose
from an almost infinite
variety of products and
purchase them without
leaving their own
homes.
Section 3-1 38
38
The History of Retailing
Section 3-1 39
39
The History of Retailing
Section 3-1 40
40
Retailing Today
Major Categories of Retailers
services non-store
retailers retailers
41
Section 3-1 41
Retailing Today
Section 3-1 42
42
Retailing Today
Section 3-1 46
46
The Nature of E-Tailing
Electronic
credit cards debit cards Funds Transfer
(EFT)
smart cards
$ eWallets
e-cash e-checks
52
Section 3-2 52
Payment Options
Section 3-2 54
54
Payment Options
Section 3-2 56
56
Payment Options
Section 3-2 57
57
Payment Options
E-checks, or electronic checks, provide
a handy way to get payment from
customers who do not own or use
credit cards.
Section 3-2 58
58
Order Fulfillment and
Customer Service
Part of your customers e-tail
experience consists of receiving the
goods they ordered quickly and
efficiently.
You need to consider how to
warehouse your products and what
methods to use to deliver them.
Section 3-2 59
59
Security Issues and
Concerns
One issue that may keep customers
from making purchases on your Web
site is security.
It is important to protect customers
personal information and have proof
that you are a legitimate business.
Section 3-2 60
60
Security Issues and
Concerns
Secure Sockets Secure Sockets
Layer (SSL) helps
Layer (SSL) encrypt and protect
encrypts customers the information that
customers enter into
personal Web pages when
information, keeping making a purchase;
this protocol is built
it safe from hackers. into most browsers
and is supported by
most Web servers
Section 3-2 61
61
Security Issues and
Concerns
To help your customers digital certificate
feel confident that you run a computer file used to
reputable business, verify to customers
that a company is
purchase a digital
what it claims to be
certificate.
Disadvantages
Customers concerned about security may
be reluctant to release personal information.
Customers are not able to examine
merchandise.
Section 3-2 63
63
E-Supply Chains
Definitions and Concepts
supply chain
The flow of materials, information,
money, and services from raw material
suppliers through factories and
warehouses to the end customers
e-supply chain
A supply chain that is managed
electronically, usually with Web
technologies
7-64
E-Supply Chains
7-65
E-Supply Chains
Supply Chain Parts
Upstream supply chain
procurement
The process made up of a range of activities
by which an organization obtains or gains
access to the resources (materials, skills,
capabilities, facilities) they require to
undertake their core business activities
Internal supply chain
Downstream supply chain
7-66
E-Supply Chains
supply chain management (SCM)
A complex process that requires the
coordination of many activities so that the
shipment of goods and services from
supplier right through to customer is done
efficiently and effectively for all parties
concerned. SCM aims to minimize
inventory levels, optimize production and
increase throughput, decrease
manufacturing time, optimize logistics and
distribution, streamline order fulfillment,
and overall reduce the costs associated
with these activities
7-67
E-Supply Chains
e-supply chain management (e-SCM)
The collaborative use of technology to
improve the operations of supply chain
activities as well as the management of
supply chains
The success of an e-supply chain depends
on:
The ability of all supply chain partners to view
partner collaboration as a strategic asset
A well-defined supply chain strategy
Information visibility along the entire supply
chain
Speed, cost, quality, and customer service
Integrating the supply chain more tightly 7-68
E-Supply Chains
Activities and infrastructure of E-SCM
Supply chain replenishment
E-procurement
Supply chain monitoring and control using RFID
Inventory management using wireless devices
Collaborative planning
Collaborative design and product development
E-logistics
Use of B2B exchanges and supply webs
7-69
E-Supply Chains
e-procurement
The use of Web-based technology to support the
key procurement processes, including
requisitioning, sourcing, contracting, ordering,
and payment. E-procurement supports the
purchase of both direct and indirect materials and
employs several Web-based functions such as
online catalogs, contracts, purchase orders, and
shipping notices
collaborative planning
A business practice that combines the business
knowledge and forecasts of multiple players
along a supply chain to improve the planning and
fulfillment of customer demand
7-70
E-Supply Chains
Infrastructure for e-SCM
Electronic Data Interchange (EDI)
Extranets
Intranets
Corporate portals
Workflow systems and tools
Groupware and other collaborative tools
7-71
E-Supply Chains
Determining the Right Supply Chain
Strategy
Functional products are staple products that
have stable and predictable demand and call
for a simple, efficient, low-cost supply chain
Innovative products tend to have higher profit
margins, volatile demand, and short product
life cycles. These products require a supply
chain that emphasizes speed, responsiveness,
and flexibility rather than low costs
7-72
Supply Chain
Problems and Solutions
Typical Problems along the Supply
Chain
With increasing globalization and offshoring,
supply chains can be very long and involve
many internal and external partners located in
different places
A lack of logistics infrastructure might prevent
the right goods from reaching their
destinations on time
Quality problems with materials and parts also
can contribute to deficiencies in the supply
chain
bullwhip effect 7-73
Supply Chain
Problems and Solutions
The Need for Information
Sharing along the Supply Chain
EC Solutions along the Supply
Chain
Order taking
Order fulfillment
Electronic payments
Managing risk
Inventories can be minimized
Collaborative commerce
7-74
Key Enabling Supply Chain
Technologies: RFID and Rubee
7-76
Key Enabling Supply Chain
Technologies: RFID and Rubee
7-77
Key Enabling Supply Chain
Technologies: RFID and Rubee
7-78
Key Enabling Supply Chain
Technologies: RFID and Rubee
LIMITATIONS OF RFID
For small companies, the cost of the system
may be too high
The restriction of the environments in which
RFID tags are easily read
Different levels of read accuracy at different
points along the supply chain
Concerns over customer privacy
Agreeing on universal standards
Connecting the RFIDs with existing IT systems
7-79
Key Enabling Supply Chain
Technologies: RFID and Rubee
RuBee
Bidirectional, on-demand, peer-to-
peer radiating transceiver protocol
under development by the Institute
of Electrical and Electronics
Engineers
7-80
Key Enabling Supply Chain
Technologies: RFID and Rubee
7-81
Collaborative Commerce
collaborative commerce (c-commerce)
The use of digital technologies that enable
companies to collaboratively plan, design,
develop, manage, and research products,
services, and innovative EC applications
collaboration hub
The central point of control for an e-
market. A single c-hub, representing one
e-market owner, can host multiple
collaboration spaces (c-spaces) in which
trading partners use
c-enablers to exchange data with the c-
hub
7-82
Collaborative Commerce
7-83
Collaborative Commerce
7-84
Collaborative Commerce
grid computing
A form of distributed computing that involves
coordinating and sharing computing, application,
data, storage, or network resources across
dynamic and geographically dispersed
organizations
service-oriented architecture (SOA)
An architectural concept that defines the use of
services to support a variety of business needs. In
SOA, existing IT assets (called services) are
reused and reconnected rather than the more
time consuming and costly reinvention of new
systems
7-85
Collaborative Commerce
Representative Examples of
E-Collaboration
vendor-managed inventory (VMI)
The practice of retailers making suppliers
responsible for determining when to order
and how much to order
Information sharing between retailers and
suppliers
Retailersupplier collaboration
Lower transportation and inventory costs and
reduced stockouts
Reduction of design cycle time
Reduction of product development time
7-86
Collaborative Commerce
7-87
Collaborative Commerce
Barriers to C-Commerce
Most organizations have achieved only
moderate levels of collaboration
because of:
A lack of internal integration, standards, and
networks
Security and privacy concerns, and distrust
over who has access to and control of
information stored in a partners database
Internal resistance to information sharing
and to new approaches
A lack of internal skills to conduct c-
commerce 7-88
Collaborative Planning, CPFR,
and Collaborative Design
collaborative planning,
forecasting, and replenishment
(CPFR)
Project in which suppliers and
retailers collaborate in their planning
and demand forecasting to optimize
flow of materials along the supply
chain
7-89
Collaborative Planning, CPFR,
and Collaborative Design
7-90
Collaborative Planning, CPFR,
and Collaborative Design
7-91
Collaborative Planning, CPFR,
and Collaborative Design
7-92
Collaborative Planning, CPFR,
and Collaborative Design
7-93
Collaborative Planning, CPFR,
and Collaborative Design
7-94
Supply Chain Integration
How Information Systems Are
Integrated
Internal integration includes connecting
applications with databases and with each
other and connecting customer-facing
applications (front end) with order fulfillment
and the functional information systems (back
end)
Integration with business partners connects an
organizations systems with those of its
external business partners
7-95
Supply Chain Integration
Web Services
An architecture enabling assembly of
distributed applications from
software services and tying them
together
Integration along the Extended
Supply Chain
Information integration along the
extended supply chainall the way from
raw material to the customers door
7-96
Corporate (Enterprise)
Portals
corporate (enterprise) portal
A gateway for entering a corporate
Web site, enabling communication,
collaboration, and access to
company information
7-97
Corporate (Enterprise)
Portals
Types of Corporate Portals
Types of generic portals
Portals for suppliers and other partners
Customer portals
Employee portals
Executive and supervisor portal
mobile portals
Portals accessible via mobile devices,
especially cell phones and PDAs
7-98
Corporate (Enterprise)
Portals
The Functionalities of Portals
information portals
Portals that store data and enable users to
navigate and query these data
collaborative portals
Portals that allow collaboration
7-99
Corporate (Enterprise)
Portals
7-100
Corporate (Enterprise)
Portals
Justifying Portals
Portals offer benefits that are difficult
to quantify
Developing Portals
Many vendors offer tools for building
corporate portals as well as hosting
services
7-101
Collaboration-Enabling Tools:
From Workflow to Groupware
Workflow Technologies and Applications
workflow
The movement of information as it flows
through the sequence of steps that make up
an organizations work procedures
workflow systems
Business process automation tools that place
system controls in the hands of user
departments to automate information
processing tasks
workflow management
The automation of workflows, so that
documents, information, and tasks are passed
7-102
Collaboration-Enabling Tools:
From Workflow to Groupware
Types of Workflow Applications
Collaborative workflow
Production workflow
Administrative workflow
The benefits of workflow management systems
include:
Cycle time reduction
Productivity gains
Improved process control
Improved quality of services
Lower staff training costs
Lower management costs
Improved user satisfaction
More effective collaboration and knowledge sharing
7-103
Collaboration-Enabling Tools:
From Workflow to Groupware
groupware
Software products that use networks
to support collaboration among
groups of people who share a
common task or goal
Synchronous versus Asynchronous
Products
7-104
Collaboration-Enabling Tools:
From Workflow to Groupware
Electronic Teleconferencing
teleconferencing
The use of electronic communication
that allows two or more people at
different locations to have a
simultaneous conference
7-106
Collaboration-Enabling Tools:
From Workflow to Groupware
video teleconference
Virtual meeting in which participants in
one location can see participants at other
locations on a large screen or a desktop
computer
data conferencing
Virtual meeting in which geographically-
dispersed groups work on documents
together and exchange computer files
during videoconferences
7-107
Collaboration-Enabling Tools:
From Workflow to Groupware
Voice-over-IP (VoIP)
Communication systems that transmit
voice calls over Internet Protocolbased
networks
Interactive whiteboards
screen-sharing software
Software that enables group members,
even in different locations, to work on the
same document, which is shown on the PC
screen of each participant
7-108
Collaboration-Enabling Tools:
From Workflow to Groupware
Instant video
Integration and groupware suites
Lotus Notes/Domino
Microsoft NetMeeting
Novell GroupWise
7-109