Slide 1.
Chapter 1
Introduction to e-business and
e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.2
Learning outcomes
• Define the meaning and scope of e-business
and e-commerce and their different elements
• Summarize the main reasons for adoption of
e-commerce and e-business and barriers that
may restrict adoption
• Outline the ongoing business challenges of
managing e-business and e-commerce in an
organization.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.3
Management issues
• How do we explain the scope and implications
of e-business and e-commerce to staff?
• What is the full range of benefits of
introducing e-business and what are the
risks?
• How do we evaluate our current e-business
capabilities?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.4
Figure 1.1 Google circa 1998
Source: Wayback machine archive: http://web.archive.org/web/19981111183552/google.stanford.edu
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.5
E-business innovation and
opportunity
• Since Google was launched in 1998 which
e-business startups have transformed the way
we work, live and play?
• How has Google innovated in search and its
business model?
• See Table 1.1 for some of major innovators
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.6
E-business innovation
• P. 5, Activity 1.1
• Discussion
– Which company / website impacted on
Internet or the web?
– How do we measure their success?
– What made them successful?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.7
The impact of the Internet on
business
• Andy Grove, Chairman of Intel, one of the
early adopters of e-commerce, has made a
meteorological analogy with the Internet.
• He says:
Is the Internet a typhoon force, a ten times
force, or is it a bit of wind? Or is it a force that
fundamentally alters our business? (Grove,
1996)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.8
E-business opportunities
• Reach
– Over 1 billion users globally
– Connect to millions of products
• Richness
– Detailed product information on 20 billion +
pages indexed by Google. Blogs, videos,
feeds…
– Personalized messages for users
• Affiliation
– Partnerships are key in the networked
economy
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.9
Internet risks – what can go wrong
with a transactional site?
•
•
•
•
•
•
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.10
E-consultancy Interview
• How does HP drive traffic to their site?
• How do they communicate with partners?
• What do they syndicate?
• What’s driving their actions?
• What’s the benefit they can get by doing so?
• How do they manage user reviews?
•
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.11
What is e-commerce and e-business?
• You are attending a role in the e-business
team of a global bank
• You anticipate you may be asked the
distinction between e-commerce and
e-business.
• Write down a definition for each
• E-commerce:
–
• E-business:
–
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.12
What is e-commerce and e-business?
• E-commerce :
– All electronically mediated information
exchange between an organization and its
external stakeholders (Chaffey)
– Digitally enabled commercial transactions
between and among organizations and
individuals
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.13
What is e-commerce and e-business?
• E-business:
– All electronically mediated information
exchanges, both within an organization and with
external stakeholders supporting the range of
business process (Chaffey)
– Digital enablement of transactions and
processes within a firm, involving information
systems under firm’s control. Does not include
commercial transactions involving an exchange
of value across organizational boundaries
(Laudon)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.14
What is e-commerce and e-business?
• P. 10, Activity 1.2
• Use Google, Yahoo, and BING to do the
search and report the number of hits
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.15
Figure 1.2 The distinction between buy-side and sell-side e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.16
Figure 1.3 Three definitions of the relationship between e-commerce and e-business
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.17
What is e-commerce and e-business?
Activity 1.3, P. 11
– Discussion—Question 1
Intranet vs. Extranet
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.18
Intranet vs. Extranet
• P. 11, Activity 1.3
• Discussion—Question 1
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.19
Figure 1.4 The relationship between intranets, extranets and the Internet
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.20
Why Study E-commerce?
• E-commerce technology is different, more
powerful than previous technologies
• E-commerce bringing fundamental
changes to commerce
• Traditional commerce:
– Passive consumer
– Sales-force driven
– Fixed prices
– Information asymmetry
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.21
Unique Features of E-commerce
Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.22
Origins & Growth of E-commerce
• Precursors:
– Electronic Data Interchange (EDI)
• 1995: Beginning of e-commerce
– First sales of banner advertisements
• Since then, e-commerce fastest growing
form of commerce in the United States
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.23
The Growth of B2C E-commerce
SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b;
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.24
The Growth of B2B E-commerce
SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.25
E-commerce: A Brief History
• 1995–2000: Innovation
– Key concepts developed
– Dot-coms; heavy venture capital investment
• 2001–2006: Consolidation
– Emphasis on business-driven approach
• 2006–Present: Reinvention
– Extension of technologies
– New models based on user-generated content, social
networking, services
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.26
Types of E-commerce
• Selling Side
– Transaction e-commerce sites
– Service-oriented relationship-building site
– Brand-building sites
– Portal, publisher or media sites
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.27
Types of E-commerce
• Digital Marketing
• The management and execution of marketing
using e-media in conjunction with digital data
about customer
– Involves using digital technology
• …………
– To achieve these objectives
• …………..
– Through using these marketing tactics
• ……….. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.28
Figure 1.5 First Direct Interactive (www.firstdirect.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.29
Figure 1.6 Blendtec viral campaign micro-site (www.willitblend.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.30
Web 2.0 and Beyond
• Web 2.0
– Features-p. 24
– Web 2 examples
• Web 3.0 Features-pp. 24-25 Box 1.1
– Research the web to discover what Web 3.0
technology and features have been used by
which company
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.31
Figure 1.7 Evolution of web technologies
Source: Adapted from Spivack (2007)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.32
e-Commerce and SCM
• What’s Supply Chain Management (SCM)
– The coordination of all supply activities of an
organization from its supplier and partners to
its customers
• Value Chain
• How e-Commerce impact SCM?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.33
Business-Consumer Model of e-Commerce
• P. 26, Fig. 1.8
• Classified by market relationship
– Business-to-Consumer (B2C)
– Business-to-Business (B2B)
– Consumer-to-Consumer (C2C)
• Classified by technology used
– Peer-to-Peer (P2P), e.g., BitTorrent and Napster
– Mobile commerce (M-commerce)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.34
Summary and examples of transaction alternatives between businesses,
Figure 1.8
consumers and governmental organizations
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.35
Mini Case Study
P. 27, Betfair
– How does Betfair gains profit
– What’s the challenges they may face
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.36
Figure 1.9 Betfair peer-to-peer gambling exchange
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.37
E-government
What is?
What are the benefits?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.38
E-Business Opportunities
what goals does a business can achieve
through e-business?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.39
Business Adoption of E-Commerce/Business
• Activity: You are in a team of advisers at a
local business link
• List
– Drivers to adoption of sell-side e-commerce by
business and how you can reinforce these by
marketing benefits
– Barriers to adoption of sell-side e-commerce
by business and how you can reinforce these
by stressing benefits
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.40
Cost/efficiency and competitiveness
drivers
• Cost/efficiency drivers
– Increasing speed with which supplies can be
obtained
– Increasing speed with which goods can be
dispatched
– Reduced sales and purchasing costs
– Reduced operating costs
• Competitiveness drivers
– Customer demand
– Improving the range and quality of services offered
– Avoid losing market share to businesses already
using e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.41
Business Adoption of E-Commerce/Business
• Drivers for Adoption-Profit generation and
cost reduction
• Tangible and Intangible benefits from e-
business.-ref. p.31, table 1.3
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.42
Figure 1.10 Usage of different e-business services in European countries
Source: European Commission, 2008
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.43
Case Study
• P. 33, Case Study 1.2 North West
Supplies
• Read the case and discuss the questions
on p. 35
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.44
Figure 1.11 North West Supplies Ltd site (www.northwestsupplies.co.uk)
Source: Opportunity Wales
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.45
E-business Risks and Barriers for Adoption
• Strategy level issues
• Practical risks
– Ref. p. 35
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.46
Figure 1.12 Barriers to development of online technologies
Source: DTI (2002)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.47
Potential Limitations on B2C E-commerce*
• Expensive technology
• Sophisticated skill set
• Persistent cultural attraction of physical
markets and traditional shopping
experiences
• Persistent global inequality limiting access
to telephones and computers
• Saturation and ceiling effects
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.48
Evaluating an Organization’s E-business
Capability
• Is any company ready for e-commerce?
• Stage model of e-commerce
– –Ref. p. 37 Fig. 1.13
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.49
Figure 1.13 A simple stage model for buy-side and sell-side e-commerce
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.50
Drivers of consumer adoption
Driver Marketing approach
1
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.51
Barriers to consumer adoption
Barrier Marketing approach
1
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.52
Figure 1.14 Variation in different online activities by gender
Source: UK National Statistics (2006) Individuals accessing the Internet – Report from the UK National Statistics Omnibus Survey. Published online at www.statistics.gov.uk
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.53
Management Responses to E-Commerce
• This will be addressed in the part 2 of the
book
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.54
Case Study
• Case Study 1.3. eBay
• Read the case and discuss the question on
page 46.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.55
Next Class
• McKinsey 7S framework was referenced but
not introduced in detail. Research the
Internet to find some background information
about it and bring back your discovery to next
class.
• Preview Chapters 2
• Read the Real-world E-Business Experience
Interview on pp.53-57.
• Visit the www.morethan .com web site to get
a sense on their business
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 1.56
Next Class
• Be prepared to discuss these questions:
– What type of business does MoreTh>n do?
– What key issues has the interview covered?
– Why people would go online than offline according to
the interview?
– Do you see a similar business model in Canada?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
