The E-Commerce Imperative Chapter 1 challenges issues and

The E-Commerce Imperative Chapter 1 challenges, issues and strategies

• Internet – profoundly change the business world – enabled a new way of conducting commerce • e-commerce • Electricity and power motor • Computer and Internet

• Customer relationship management are – the competitive advantage – the bottom–line for market leadership of the information age Customer information is the currency of success in the 21 st century marketplace

• Amazon. com – Earth’s biggest bookstore – The real prize • Earth’s biggest customer database – Not: name, address, balance – Buying behavior – Shop the WEB • The place to find anything customers want to buy online

• Amazon’s customer acquisition technique – Selling product – Planet. All • Help 1. 5 million members – To keep up important professional and personal contacts – Electronically remind a member of a special occasion • 15 millions items happen to be a mouse click away – One stop convenience – Bring buyers, sellers of everything, everywhere

• Business-to-Business marketplace – Establish industrial communities-of-interests – Ariba and Commerce One • Change from selling procurement software • To establishing multi-seller, multi-buyer procurement market-places • Owning the customer, the whole customer, is the ultimate prize of 21 st century business

• Economies shift – From producer – To consumer • The secret is – Customize offerings – One customer at a time • Seller Beware

• Magic in owning customers – Give them what they want, when and where they want it • Key: – Capturing and analyzing info about buying behavior

• Knowing what the customers want • Buying experience is nothing less than delight – Providing full spectrum of individualized goods and service Concept is simple, implementation is HARD – Internet

• Three pillars of any business transformation – Technology, process and people • Goal of course: – Understanding how internet changes the world of business – E-commerce • is not a single event • Is a ongoing journey – Support the complete external business process • • Information stage (electronic marketing, networking) Negotiation stage (electronic markets) The fulfillment (order process, electronic payment) Satisfaction stage (after sales supports)

Internet & business landscape • Industrial age – Automobile, interstate highway • Information age – Internet • Eliminates the constraints of time and distance • Business ubiquity: conduct business everywhere, all the time

• From “The network is the computer” – Sun Microsystems’ slogan • To “The network is the business” – Company information available worldwide – Business transaction flow friction-free anywhere, anytime to customers, suppliers, and trading partners – Information appliances are business touch points • Cell phone, pagers, palm tops, web TV, …

Power shift to the customers • Digital economy – IS customer-centric – NOT product centric • IMB Global service vs. IBM MAPICS • Company engineers customer processes that delight will win

• Information is power – Authoritarian society • One-way hierarchical • Info flow down: One to many – Democracy • Matrix forms of communication • Many to many

– Industrial age • Info flow one way: from producer to customers – Information age • Internet provide many to many connection • Turn the produce-customer relationship upside down • Customer Age – Customer centric – Mass customization (vs. mass production)

• EC is – Reengineering end-to-end customer process • • • Complete solution Reducing time Eliminate steps where possible Build consumer communities-of-interest Provide full service consumer process OR someone else will

• EC is – Reaching out the ultimate consumer • B 2 B, B 2 C • B 2 B’s customer – The one who requisitions, received and often recommends – The one who actually place orders (the purchasing agent) • Ultimate customer: the only who recommend

Global sales channel • NO geographic market territories • Global potential and perspective – The net levels the playing field – Daunting task • Multiple languages, legal systems and business cultures • French ban yahoo. com auction – Expect new entrants from anywhere, anytime – Never rest to compete in the global marketplace

Reduced the cost of buying and selling • Company MUST take this opportunity or find itself at a significant competitive disadvantage – Dell vs. Compaq, …. – Variable cost are near ZERO – Potential customers are tremendous – Initial cost is high – Printing and distribution cost are nil

• Direct online sales – Simple (see-buy-get) • Book – Complex (see-configure-negotiate-contractfulfill-settle) • Dell, Cisco

• Direct online sale dramatically “TURN” physical inventory – Dell • 1993, sales (2. 9 billions) inventory (220 million) • 1997, sales (12. 3 billions) inventory (233 million) – 8 days of inventory • 2000, 5 days • Aiming for HOURS instead of DAYS

– Wal-Mart • Just in time inventory – Outsourcing inventory control directly to its major suppliers in real-time

Converging touch points • E-Commerce applications and systems must be available regardless of device or location – Web browser – Customers, suppliers, trading partners’ touch points – Mobile workforce

– Integrate • Telephone • Call centers • Palm top, lap top, cell phone, PDA, fax, pager, IP telephone, email, digital postal mail, kiosk – Digital touch points create new sources of customer information • Analyze buying behavior • Customize offering to individual

Always open for business • A web site follows the sun, greeting markets as they arise each day – Demands non-stop systems and network assets – Redundancy, scalability, and fail-safe

• The good news: – “digital sales staff” work around the clock without demanding overtime • The sobering news: – E-commerce systems require availability and reliability that can be achieved only through much effort and investment

• Reliability – e. Bay outage • 1999, lost 3 – 5 millions revenues in the second quarter • Scalability – “stampedes” with breaking news – Speed is important • Online shoppers would wait for 8 seconds for a site to download • Slow securities-trading site (Trade stocks)

Reduced Time-to-Market • Time-to-market – No longer a competitive advantage – A competitive necessity • Microsoft – – Beta version Reach market before release Customers actually involved in product development Customers prefer what they already known

• Time-to-market can and must be successfully managed – Collaborative product development – Knowledge sharing

Enriched buying experience • Multimedia presentation of products – Fit an outfit at Lands’ End. com • Tools assist customers in buying process – Dell. com help you configure a computer

• Chat room – Customer to share their product and service experience • Potential buyer can learn • Specialty goods – Purchase decision have many dimension – Involve multi-step process – Community-of-interest • 大學招生、遊學、留學

• B 2 B: Sharing – product specification – bill of material – product scheduling across suppliers and trading partners in realtime to increase productivity in design, development, and procurement

Customization • Cornerstone for building a customer-centric business • Interacts electronically with customers – Buying behavior can be analyzed to customize – One-to-one marketing revolution • Find solution better fit their need • Saving time in searching – Never presenting a huge catalog

– Greater relationship • Business know what customer will buy • Cross selling – Harvard Business School入學許可， 豪華學生宿舍 • Up-selling – New computer game, luxury video card • Demographics • Biographics: long term interests of the individual

Self service • Customer service with greater satisfaction and reduced cost • Frustrated customers – Navigate call center – Intolerable on-hold – A human abruptly told you to call another number • Customer will go to the self-service lane on the information highway

Reduced barriers of market entry • A benefit and a cause of concern • New entrants can be successful – Discover and delivery value to customer • Hotmail. com – Reaches 1, 000 members in 6 month with 50 k budget – Reaches 12 M in one years – Competitors and replication is sure to follow • Requires constant stream of innovation to sustain competitive advantages

Demographics of the internet users • Information about income, sex, age and geographic – Early users • Young, male, educated – Now • Information appliance • More normative

• Electronic market is much smaller than total consumer market – Not even closer to critical mass – Bandwidth demographic • Business • Individual bandwidth demographic – Keep it simple and snappy – Track bandwidth trend

Power shift to Communities-of-Interest • Customers go communities-of-interest first to explore and discover solution – Yahoo! Chat room vs. U. S. stock trading • People having common interest go to share ideas, information, and opinions • Customer pull info instead of marketing push

• Industrial age – Labor union • Information age – Consumer union • Consumers go there first to discover and explore solution

Cybermediation • The middleman is dead, long live the middleman. • Cybermediaries can provide compelling values – Aggregating many and diverse resources around a complete solution via internet

– An airline ticket is not a vacation • Focus on the bundles of solutions – Customers needs and requirement • Look for ways to aggregate value – Industry portal

Logistics and Physical Distribution • Physical aspect of doing business – Often forgotten component in e-commerce discussion • Time value for info – Internet: ability to move info around the world at the speed of light • Time value of product – Physical distribution channel

• Warehouse of info age – Not a holding bin – An assembly plant • Fedex: Flying warehouse • Factory of the future – Amazon. com take over Fedex? – Fedex take over Amazon. com?

Branding • Loyalty and acceptance still have to be EARNED – Enter a credit card number at the “BEST” price site? ? ? – First on the net • Brand name on the net – Building loyalty and ultimate trust • Convenient, cost-effective, informative, simple, secure, and reliable

When most market behave like the stock market • Death of fixed pricing – Coca cola test price base on weather • The reality of internet pricing: dynamics – Real-time and global – Interactive and close to perfect info • Internet buying decision – Price, availability, perceive quality, and service

Auction everywhere • Liquidate surplus goods – Last minute deal and bargains for unsold media time • Priceline. com: excessive airline capacity • Help company set price on first run goods – Fixed price will fade in the digital economy

Hyper-efficiency • BPR, business process reengineering – Internal efficiency • Internet streamline business processes – Hyper-efficient supply chains – Value chains of information

Conclusions • Manager must know the “look and feel” of – Digital economy – New infrastructure – New way of conducting business and competing – New business models – New rule of competition

• Internet – Is NOT a competitive advantage – Is a NECESSITY

Homework 1 • Pick an Internet phenomenon which attract you most – Find an example from. tw country domain – Write an one page report • Describe the e-commerce site • The upside of the e-commerce site • The downside of the e-commerce site – upload your report to cu. nsysu. edu. tw