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 definition
Technology-enabled transactions and technologymediated 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 definition
Scope of e-commerce:
1. Exchange of digitized information
2. Technology-enabled transactions
3. Technology-mediated relationships
4. Intra- & inter-organizational activities

E-commerce definition

Business
Consumers

And selling to . . .

Business originating from . . .

Business

Consumers

B2B
B2B

C2B
C2B

B2C
B2C

P2P
P2P

E-commerce categories
Business originating from . . .
Business
Consumers

And selling to . . .

Business
Publishers
Publishersorder
order paper
paper
supplies
from
paper
supplies from paper
companies
companies

Consumers

Consumers
Consumersaggregate
aggregate to
to
bulk
purchase
bulk purchase from
fromAmazon
Amazon

Amazon
Amazon orders
ordersfrom
from
publishers
publishers

Consumers
Consumers buy
buythousands
thousands
of
Harry
Potter
books
of Harry Potter booksfrom
from
Amazon
Amazon

Consumers resell
copies on eBay

Single chain (or converging categories) of e-commerce

E-commerce definition

E-commerce definition
1995-2000
Innovation

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

Strategic
Strategic
Management
Management

Finance
Finance

Marketing
Marketing

Entrepreneurship
Entrepreneurship
Operations
Operations
and
and Logistics
Logistics

Accounting
Accounting

Technology
Technology

New
New Media
Media

Role of e-commerce managers

Set
Set Vision
Vision

Establish
Establish Goals
Goals

Formulate
Formulate
Strategy
Strategy

Drive
Drive
Implementation
Implementation

Be
Be Accountable
Accountable
for
Performance
for Performance

Role of e-commerce managers

Vision: higher-order societal effects
Goals: performance targets that are measurable
and in line with the companys strategy &
business life cycle (process vs outcome)

Strategy: tradeoffs
Implementation: technology & media knowledge
Accountability: performance & results

E-commerce challenges
Understanding 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
Mission
Mission

Objectives
Objectives

External
External
Analysis
Analysis

Strategy
Strategy
Formulation
Formulation
Corporate
Business Unit
Functional
Operating

Internal
Internal
(Company)
(Company)
Analysis
Analysis

Implementation
Implementation

Control
Control
and
and
Monitoring
Monitoring

Classical Strategic Planning

E-commerce strategies
Sense and respond
Experimenting with intuitive, actionable,
easy to implement ideas
Proactively soliciting feedback from
customers

Simple rules
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 yesterdays
opportunities.

Oticon's rule for pulling the plug on projects

in development: if a key team membermanager chooses to leave the project for
another within the company, the project is
killed.

E-commerce strategies
Position approach
Where should we be?

Resources approach
What should we be?

Simple rules approach

How to get there?

E-commerce strategies
Position
Strategic Logic

Establish

position

Strategic Steps

an attractive
market
Locate a defensible
position
Fortify and defend

Strategic Question

Where

Resources
Leverage

resources

Identify

Source of Advantage
Works Best In
Duration of Advantage
Risk
Performance Goal

should we be?

Unique,

valuable position
with tightly integrated
activity system

Establish

a vision
Build resources
Leverage across markets
What

should we be?

Pursue

opportunities

Jump

into the confusion

Keep moving
Seize opportunities
Finish strong
How

should we proceed?

Unique,

Key

Slowly

Moderately

Rapidly

Sustained

Sustained

Unpredictable

It

Company

Managers

Profitability

Long-term

changing, wellstructured markets

will be too difficult to

alter position as conditions
change

valuable,
inimitable resources

Simple Rules

changing, wellstructured markets

will be too slow

to build new resources as
conditions change
dominance

processes and unique

simple rules
changing,
ambiguous markets

will be too
tentative in executing on
promising opportunities

Growth

E-commerce strategies
E-commerce strategy formulation process

Framing
Framingthe
the
Market
Market
Opportunity
Opportunity

Business
Business
Model
Model

Customer
Customer
Interface
Interface

Market
Market
Communication Implementation
Communication Implementation
and
andBranding
Branding

Metrics
Metrics