Introduction to e-Business & e-
Commerce
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Learning Outcomes
After completing this chapter the reader should be
able to:
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.
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Management Issues
The issues for managers raised in this chapter
include:
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?
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The impact of 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)
4
The Internet’s impact on you
How many of you have purchased something
on the Internet in the last 6 months?
How many times have you used the Internet
as an information source, before buying
offline?
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Introduction
The Internet
‘The Internet’ refers to the physical network
that links computers across the globe. It
consists of the infrastructure of network
servers and communication links between
them that are used to hold and transport
information between the client PCs and web
servers.
6
Introduction
World Wide Web (WWW)
The most common technique for publishing
information on the Internet. It is accessed through
web browsers which display web pages of
embedded graphics and HTML/XML-encoded text.
Wireless communications
Electronic transactions and communications
conducted using mobile devices such as laptops,
personal digital assistants (PDAs) and mobile
phones (and fixed access platforms) with different
forms of wireless connection.
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E-commerce defined
‘All electronically mediated information exchanges
between an organization and its external stakeholders’
Examples:
◦ Buying books online (transactional)
◦ Selecting a car online (informational)
◦ Interacting with brand online (relationship building /
experiential, e.g. www.tango.com)
◦ Asking a customer service query, e.g. www.easyJet.com
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E-business defined
All electronically mediated information exchanges, both
within an organization and with external stakeholders
supporting the range of business processes
Examples:
◦ Purchasing from suppliers (e-procurement)
◦ A company intranet (defined in Ch 3)
◦ Supplying partners with information through an extranet
(see Ch 3)
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Buy-Side and Sell-Side e-commerce
Buy-Side e-commerce
E-commerce transactions between a
purchasing organization and its suppliers.
Sell-side e-commerce
E-commerce transactions between a supplier
organization and its customers.
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The distinction between buy-side
and sell-side e-commerce
Figure 1.1 The distinction between buy-side and sell-side e-commerce
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Recap – which is correct?
Figure 1.2 Three definitions of the relationship between e-commerce and
e-business
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Drivers for e-commerce
13
Drivers of consumer Internet
adoption
To determine investment in sell-side e-
commerce, managers need to assess how to
adopt new services such as web, mobile and
interactive TV and specific services such as
blogs, social networks and feeds.
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Drivers of consumer Internet
adoption
Typical benefits of online services are
summarized by the ‘Six Cs’, a simple
mnemonic to show different types of
customer value:
1Content – In the mid-1990s it was often said
that ‘content is king’. Well, relevant rich
content is still king. This means more
detailed, in-depth information to support the
buying process for transactional or
relationship-building sites or branded
experiences to encourage product usage for
FMCG brands.
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Drivers of consumer Internet
adoption
2 Customization – In this casemass
customization of content,whether received as
web site pages such as ‘Amazon
recommends’ or e-mail alerts, and commonly
known as ‘personalization’.
3 Community – The Internet liberates
consumers to discuss anything they wish
through forums, chat-rooms and blog
comments.
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Drivers of consumer Internet
adoption
4 Convenience – This is the ability to select,
purchase and in some cases use products
from your desktop at any time: the classic 24
× 7 × 365 availability of a service. Online
usage of products is, of course, restricted to
digital products such as music or other data
services.
5 Choice – The web gives a wider choice of
products and suppliers than via conventional
distribution channels.
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Drivers of consumer Internet
adoption
6 Cost reduction – The Internet is widely
perceived as a relatively low-cost place of
purchase. Often customers expect to get a
good deal online as they realize that online
traders have a lower cost-base as they have
lower staff and distribution costs than a
retailer that runs a network of high-street
stores.
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Barriers to e-commerce
Figure 1.7 Barriers to development of online technologies
Source: DTI (2002)
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Risks
Web sites that fail because of a spike in visitor traffic after a
peak-hour TV advertising campaign.
Hackers penetrating the security of the system and stealing
credit card details.
A company e-mails customers without receiving their
permission, so annoying customers and potentially breaking
privacy and data protection laws.
Problems with fulfilment of goods ordered online, meaning
customer orders go missing or are delayed and the customer
never returns.
E-mail customer-service enquiries from the web site don’t
reach the right person and are ignored.
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Activity – Changes required by e-
commerce
What changes to the overall business would
be required by e-commerce for the B2C and
B2B Company?
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Answer – the 7 Ss
The McKinsey 7S framework
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End of Chapter 1
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