>>>>>>>> Chapter 7

E-Business: Doing
Business Online
 n g G o a l s
Learni
Define e-business and discuss
1 how it can help achieve business
success.
2 Distinguish between a corporate
and a marketing Web site.
3 List the major forms of B2B
e-business.
Explain B2C e-business and
4 identify the products most often
sold online.
5 Describe some of the challenges
associated with e-business.
Discuss how organizations use
6
Internet communications to
advance their objectives.
7
Discuss Web sites and identify
methods for measuring
Web site effectiveness.
8 Explain the global scope
of e-business.
 s E -B u s i n e s s ?
W ha t i

Electronic business (e-business) - Conducting business

via the Internet.
1. E-tailing, or virtual storefronts on Web sites.
2. Online business-to-business transactions.
3. Electronic data interchange (EDI), the business-to-business
exchange of data using compatible software.
4. E-mail, instant messaging, and other Web-enabled communication
tools and their use as media for reaching prospective and existing
customers.
5. The gathering and use of demographic, product, and other
information through Web contacts.
 i li t i e s an d
Capab s
E - B us i nes
Benefits of
Global Reach. Goods and services can be sold to
customers worldwide.
Personalization. Companies can customize products and
reduce inventory.
Interactivity. Customers and suppliers can negotiate
prices online.
Right-time and integrated marketing. Online retailers
provide products when and where customers want them
and promotions can be directed to individual customers.
Cost savings. E-business can reduce costs.
 B u s i n es s
Some E-
Successes

University of Phoenix
FreshDirect
Boston Symphony Orchestra
 s s W e b S i t e s
Bu s i n e
Increase a firms visibility, promote its offerings, and
provide information to interested parties.
Build customer goodwill and assist retailers and
other resellers in their marketing efforts.
Disseminate financial information to investors.
Enable prospective employees to apply online for
jobs.
Web
Provide
sitese-mail communication.
are frequently used for marketing to attract
. visitors/customers.
 to- B u si n ess
Business-
(B2B)
Business-to-business e-business (B2B)
Electronic business transactions
between businesses using the Internet.

B2B transactions total $2.5 trillion.

By some estimates, account for 90% of

all e-commerce activities.

Can reduce cost of B2B transactions by

almost 25 percent.
 In t er c h an ge s,
le c t ro n i c D ata
E E xc h an g es
e ts , & P rivat e
Ex t ra n

Electronic data interchange (EDI) is a

computer-to-computer exchange of invoices,
purchase orders, price quotations and other
sales information.
Extranets offer an efficient way for business to
collaborate with vendors, partners and
customers.
Private Exchanges are the next generation of
extranets where all types of data related to e-
business is shared.
 op p i ng an d
Online Sh
B2 C

Business-to-consumer (B2C)
E-tailing accounts for 4% of all U.S.
sales.
Growing at a rate of 18%.
Services like banking and brokerage are key
aspects of e-tailing
Many retailers have electronic storefronts.
Growth of broadband is aiding e-tailing.
 li n e b u yers
Who are on
an d se l l er s?

Typical user is young, highly

educated, urban or suburban,
and affluent.
Demographics are shifting;
there is decreasing difference
in Internet purchasing habits
among groups.
 f it s o f B 2 C
Bene
E -B u s in es s

Lower Prices
Many products cost less online.
Internet allows customers to easily compare prices from multiple
sellers.
Convenience
Can order products from around the world anytime, day or night.
Can register customer information to streamline transactions.

Personalization
Emphasis on personalized, one-on-one marketing to increase
repeat purchases.
 g Sa f e O nl i ne
Dev el op i n
t S y s te m s
Paymen

Through encryption, data is encoded for security

purposes.
Many companies use Secure Sockets Layer (SSL)
technology to encrypt information and verify senders
and receivers.
An electronic wallet contains credit card and
identification information. Customers can avoid
retyping purchase information.
 s Chal len g es
E-B u sin es
(privacy)
Privacy is among the top concerns of Internet users.

E-business sites often require passwords and use electronic

signatures, an electronic form of identity verification.
Companies can track customers shopping and viewing habits
through cookies.
Customers usually prefer that companies do not share their
personal information. Merchants have responded by joining
privacy organizations.
Privacy protections may soon become legally required.
Employees also have concerns that employers are monitoring
their Internet behavior.
Companies worry about data theft.
 s C ha l len g es
E-B u sin es
et F r a u d )
(Intern
Internet Crime Complaint Center logs more than 200,000
complaints annually.
50% of the complaints referred to law enforcement
agencies deal with online auctions.
Phishing is a growing form of Internet fraud that uses e-
mail or pop-up messages to get unsuspecting victims to
disclose personal information.
Vishing, or voice phishing, involves phone calls to credit
card customers to obtain personal and banking
information.
Payment fraud is growing.
 s C h al len g e s
E- B u si n es
b sit e d e si g n)
(p o o r w e
50% of shopping carts are abandoned before any
purchase is made.
Lack of Information
Inability to find the information they need
Feeling overwhelmed by too much information
Companies that have brick-and-mortar experience often
have better success satisfying customers than Internet-
only retailers.
Online sales can compete with business partners such
as retailers and distributors causing disputes called
channel conflict.
 n g th e W e bs
Usi o n
c a ti o n F u n cti
Co mm u n i

Web has four main functions: e-business,

entertainment, information, and communication.
Communication is Webs most popular function.
Firms use e-mail to communicate with customers,
suppliers, and other partners.
Online Communities: Internet forums, newsgroups,
electronic bulletin boards, and Web communities that
appeal to people who share common interests.
Spam is junk e-mail.
 m un i cati on
Web Com
Blogs
Blog - short for Web log, an online journal written by
a blogger.
May incorporate wikis, a Web page that anyone can
edit.
Some incorporate podcasts, video & audio
recordings. Feedburner services more than 200,000
podcasts.
Corporate blogs can help build brand trust.
Example: Apples iLounge builds the iPod brand and gives
Apple ideas for product improvement.
Employee blogs may present ethical issues.
 m u n i cati o n
Web Com io n
as ed P ro m o t
Web B
Banner Ads messages placed on frequently visited
websites
Pop-up Ads ads that appear in separate windows
Pre-roll Video Ads advertisements that roll as
soon as a page is loaded
Search marketing companies pay for top visibility
in search results
Some companies, such as ValPak Marketing Systems,
offer virtual, searchable coupons.
 v i r on m en t of
G lob a l E n
E -B u s i n ess

Future growth of many companies is linked to a global

strategy that incorporates e-business.
U.S. leads world in Internet users but ranks only 5th in
Internet penetration.
E-Bay may dominate most markets, but Chinese
company Alibaba.com has 83% of the auction business
in China.
Three of four Web pages are written in English.
E-business can heighten competition in the global
marketplace...
 r ld In ter net
Wo
Statistics
 Dev el o p i ng a
f ul W eb sit e
Success

It is easier to create a bad website than a good one.

Organizations must think about:
Planning and Preparation
Content and Connections
Costs and Maintenance
 i n g a W e b s i t e
Ma n a g

Click-through rate - percentage of people presented with a

Web banner ad who click on it.
Conversion rate - percentage of visitors to a website who make
a purchase.