E-Business

The Revolution Is Just Beginning

 E-Business/Commerce
•Need: To extract from our agribusiness
enterprises maximal return on our investment

•Goal: Increase market share AND increase the

number of markets we can sell our products

•Method: utilize E-business and E-Commerce

techniques
E-Business/Commerce
 E-Business/Commerce

The usage or implementation of E-commerce/

business can be as complicated or simple as
you wish to make it!
 E-Business/Commerce
E-Business – Definition:

the conduct of business with the assistance of

telecommunications and
telecommunications-based tools*

* http://www.anu.edu.au/people/Roger.Clarke/EC/ECDefns.html
 E-Business/Commerce
E-Commerce – Definition:

the conduct of commerce in goods and services,

with the assistance of telecommunications and
telecommunications-based tools *
 E-Business/Commerce
E-Commerce – Definition:

Selling online, with or through a website, or by means

of email. Ecommerce or electronic commerce is
usually subdivided into B2B (business to business:
wholesale), B2C (business to customer: retail) and
C2C (customer to customer: auctions and
information portals).
 E-Business/Commerce
E-Commerce – Definition: (cont)

Much more demanding — and not usually served by

off-the-shelf software — is e-business or electronic
business, where information technology is applied
to all aspects of company's operations. In e-business
are to be found systems for CRM (customer
resource management), ERP (enterprise resource
planning), SFM (sales force management), SCM
(supply chain management) and EP (electronic
procurement).
 E-Business/Commerce
E-Business – Definition:
 Any business that is going to become a “on
demand” business
 Any business that is going to “practice”
Electronic data interchange (EDI)
 Any business that is going to leverage their
existing business through web based
interfaces (ie website)
 E-Business/Commerce
Definition(s)/Implementations
“Best Case” – All transactions are performed
electronically, between vendor and
customer. Some companies like Ford
Motor Co., check supplier
inventory/price/shipping options and order
parts all “computer to computer”
 E-Business/Commerce
Definition(s) /Implementations
“Average Case” – Most transactions are
performed electronically, between vendor
and customer. For example, ordering hams
from Burgers’ Smokehouse, where
customer gets notified of specials via e-mail
and can then click and order.
 E-Business/Commerce
Definition(s) /Implementations
“Least Case” – Simple payment portal, or
maybe only a website with business
description and product offerings. For
example, my web hosting business accepts
renewal payments via our website.
E-Business/Commerce
 E-Business/Commerce
Issue: Traditional E-Business
Advertsing/E Usually a Can reach all
xposure local event. 275 million
Reaching people in the
10-50K US, or a large
people portion of the
world
 E-Business/Commerce
Issue: Traditional E-Business
Sales Each personWebsite can
“counter” can handle process
only millions of
hundred of orders per day
people per
day
 E-Business/Commerce
Issue: Traditional E-Business
Fund Mail or in Instant
transfer person.
Can take up
to 7
business
days
 E-Business/Commerce
Issue: Traditional E-Business
Delivery Pickup in Can be via
person, traditional
U.S. Mail, means, or
truck instantly via
delivery. email or
download
 E-Business/Commerce
Issue: Traditional E-Business
Cost If you hire Can be as low
people to as $350/yr to
sell, at least just a coupe of
$12K/yr/pers thousand per
on year
 E-Business/Commerce
Examples:
Auctions
Trading boards
On-line sales
Scheduling (like returning trucks)
Information only (like what I have to sell)
Amazon.com: Before and After
 Amazon.com: Before and After
 Most well-known e-commerce company
 Conceived by Jeff Bezos in 1994
 Opened in July 1995
 Four compelling reasons to shop
 Selection (1.1 million titles)
 Convenience (anytime, anywhere)
 Price (high discounts on bestsellers)
 Service (automated order confirmation, tracking,
and shipping information)
Amazon.com: Before and After
Revenues and Earnings

Revenues Earnings

1996 $15.6 Million ($6.24 Million)

1997 $148 Million ($31 Million)

1998 $610 Million ($125 Million)

1999 $1.6 Billion ($720 Million)

2000 $2.7 Billion ($1.4 Billion)

 E-commerce vs. E-business
E-commerce involves
 Digitally enabled commercial transactions
between organizations and individuals.
 Digitally enabled transactions include all
transactions mediated by digital technology
 Commercial transactions involve the exchange of
value across organizational or individual
boundaries in return for products or services
 E-commerce vs. E-business
E-business involves
 Digital enablement of transactions and

processes within a firm, involving

information systems under the control
of the firm
 E-business does not involve

commercial transactions across

organizational boundaries where value
is exchanged
The Difference Between E-
commerce and E-Business
 Unique of E-commerce Technology and Their
Business Significance

E-commerce:
 is ubiquitous

 has global reach

 operates according to universal standards

 provides information richness

 is interactive

 increases information density

 permits personalization
 Seven Unique Features of E-commerce
Technology and Their Business Significance
Changing Trade-Off Between
Richness and Reach
 Major Types of E-Commerce
 Market relationships
 Business-to-Consumers (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Technology-based
 Peer-to-Peer (P2P)
 Mobile Commerce (M-commerce)
Major Types of E-Commerce
 Business-to-Consumer E-
commerce
 Most commonly discussed type
 Online businesses attempt to
reach individual consumers
 Consumers will spend $65 billion
in 2001.
Business-to-Business E-commerce
 Businesses focus on sell to other
businesses
 Largest form of e-commerce
 $700 billion in transactions in 2001
 Primarily involved inter-business exchanges
at first
 Other models have developed
 e-distributors
 infomediaries
 B2B service providers
 Consumer-to-Consumer E-commerce

 Provide a way for consumers to sell to each

other
 Estimated $5 billion market
 Consumer:
 prepares the product for market
 places the product for auction or sale
 relies on market maker to provide catalog,
search engine, and transaction clearing
capabilities
 Consumer-to-Consumer E-
commerce
 Provide a way for consumers to sell to each
other
 Estimated $5 billion market
 Consumer:
 prepares the product for market
 places the product for auction or sale
 relies on market maker to provide catalog,
search engine, and transaction clearing
capabilities
 Peer-to-Peer E-commerce
 Enables Internet users to share
files and computer resources
 Napster
 Mobile E-commerce
 Wireless digital devices enable
transactions on the Web
 Uses personal digital assistants
(PDAs) to connect
 Used most widely in Japan and
Europe
 Growth of the Internet and the
Web
 Created in the late 1960s
 About 350 million computers worldwide to
date
 Links businesses, educational institutions,
government agencies, and individuals
 Provides services such as e-mail,
document transfer, newsgroups, shopping,
research, instant messaging, music, video,
and news
 Growth of the Internet and the
Web
 Internet hosts are growing at a rate of
45% per year
 Extraordinary growth -- time to reach
30% US households
 Radio - 38 years
 Television - 17 years
 Internet/Web - 8 years (1993)
The Growth of the Internet
The Growth of Web Content
The Growth of B2C E-Commerce
The Growth of B2B E-Commerce
 Origins and Growth of E-
Commerce
Baxter Healthcare
Primitive form of B2B using telephone-based modem to permit
hospitals to reorder supplies (early 1970s)
PC-based remote order entry system (1980s)
Electronic Data Interchange (EDI) standards developed that permitted
firms to exchange commercial documents and conduct digital
commercial transactions across private networks (1980s)
 Origins and Growth of E-
Commerce
 French Minitel videotext system
 First B2C arena (1981)
 15 million in use throughout France
 World Wide Web
 1993 first browsers
 1995 first banner ads
Technology and E-Commerce in
Perspective
Internet and the Web are just two of a long
list of technologies that have greatly
change commerce
 Other technologies spawned business
models and strategies
 Explosive early growth followed by
retrenchment and then long-term successful
exploitation of the technology
 Technology and E-Commerce in
Perspective
Although e-commerce has grown explosively,
there is no guarantee it will continue to grow
 Confront own fundamental limitations
 B2C only about 1% of overall retail market
 With current growth rates, B2C will roughly equal
the annual revenue of Wal-Mart in 2005
Limitations of the Growth of B2C
E-Commerce
 Web Access Via Wireless
Devices in the United States
 E-Commerce I and II
 E-Commerce I
 Explosive growth starting in 1995
 Widespread of Web to advertise products
 Ended in 2000 when dot.com began to collapse
 E-Commerce II
 Began in January 2001
 Reassessment of e-commerce companies
 E-Commerce I 1995-2000
 For computer scientist and
information technologists
 Vindication of a set of information
technologies developed over 40 years
 Extending from the early Internet to the
PC and local area networks
 The vision of universal communications
 E-Commerce I 1995-2000
 For economists
 Raised realistic prospect of perfect Bertrand
Market
 where price, cost, and quality information is equally
distributed
 where a nearly infinite set of suppliers compete
against one another
 where customers have access to all revelant market
information worldwide
 Merchants have equal direct access to
hundreds of millions of customers
 E-Commerce I 1995-2000
Disintermediation
 displacement of market middlemen

who traditionally are intermediaries

between producers and consumers
by a new direct relationship between
manufacturers and content
originators with their customers
 E-Commerce I 1995-2000
Friction-free commerce
 a vision of commerce in which
 information is equally distributed
 transaction costs are low
 prices can be dynamically adjusted to reflect
actual demand
 intermediaries decline
 unfair competitive advantages are eliminated
 E-Commerce I 1995-2000
 First mover
 a firm that is first to market in a
particular area and that moves quickly
to gather market share
 Network effect
 occurs where users receive value from
the fact that everyone else uses the
same tool or product
Amounts Raised by Venture-Backed Internet
Companies in 1996-2000
 E-Commerce II 2001-2006
 Crash in stock market values of E-commerce I
companies throughout 2000 is an end to E-
commerce I
 Led to a sobering reassessment of the prospects
of e-commerce and the methods of achieving
business success.
 E-commerce II begins in 2001 and ends five year
later -- the limit for making technology and
business projections
 E-Commerce II 2001-2006
 Reasons for the end of E-Commerce I
 run-up in technology stocks due to enormous information
technology capital expenditure of firms rebuilding their
internal business systems to withstand Y2K
 telecommunications industry had built excess capacity in
high-speed fiber optic networks
 1999 e-commerce Christmas season provided less sales
growth that anticipated and demonstrated e-commerce was
not easy (eToys.com)
 valuations of dot.com and technology companies had risen
so high supporters were questioning whether earnings could
justify the prices of the shares.
 Insight on Business:
A Short History of dot.com IPOS
 Between 1998 and 2000 venture capitalists
poured an estimated $120 billion into
approximately 12,450 dot.com start-up ventures
 Investment bankers took 1,262 of these
companies public in IPOS
 IPO shares were targeted to open around $15
per share, and it was not uncommon for them to
be trading at $45 a share or more later the same
trading day
E-Commerce I and E-Commerce
II Compared
April 2001 NRF/Forrester Online Retail Index
Top 25 Properties (Combined Home and Work)
Top 20 Web Retailers Among U.S. Home Users
 Understanding E-Commerce:
Organizing Themes
 Technology: Infrastructure
 development and mastery of digital computing
and communications technology
 Business: Basic Concepts
 new technologies present businesses and
entrepreneurs with new ways of organizing
production and transacting business
 Society: Taming the Juggernaught
 global nature of e-commerce poses public
policy issues of equity, equal access, content
regulation, and taxation
The Internet and the Evolution of Corporate Computing
Disciplines Concerned with E-
Commerce