Scope of E- Commerce

Module-I
Lecture 7

ARVIND BANGER
ASSISTANT PROFESSOR
DEPARTMENT OF MANAGEMENT
D.E.I.
 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 technology-mediated

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 originating from . . .

Business Consumers
Business

B2B C2B
Consumers

B2C P2P
E-commerce categories

Business originating from . . .

Business Consumers

Publishers order paper

Business

supplies from paper

companies Consumers aggregate to
bulk purchase from Amazon
Amazon orders from
publishers
Consumers

Consumers buy thousands

of Harry Potter books from Consumers resell
Amazon copies on eBay

Single chain (or converging categories) of e-commerce

 E-commerce definition
E-COMMERCE vs TRADITIONAL COMMERCE

Key elements E-commerce Traditional commerce

Value Creation Information Product/Service
Strategy Sense and respond Classical
Simple rules
Competitive edge Speed Quality/Cost
Competitive force Low barriers of entry Power of suppliers
Power of customers Product substitution
Resource focus Demand side Supply side
Customer interface Screen-to-face Face-to-face
Communication Technology-mediated channels Personal
Accessibility 24 x 7 Limited time
Customer Self-service Seller influenced
interaction
Consumer behavior Personalization Standardization
One-to-one marketing Mass/one-way marketing
Promotion Word of mouth Merchandising
Product Commodity Perishables, feel & touch
 E-commerce definition
1995-2000 2001-2006 2006-future
Innovation Consolidation 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 Proliferation of small
intermediaries online intermediaries
Perfect markets Imperfect markets, Online market
brands, network effects imperfections
Pure-play Bricks & clicks New market (pure play);
Retail (bricks & clicks)
First-mover advantages Strategic follower New market (1st mover)
Role of e-commerce managers
Set Vision

Establish Goals

Formulate
Strategy

Drive
Implementation

Be Accountable
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
 E-commerce strategies
Mission

Objectives

Internal
External
(Company)
Analysis Strategy Analysis
Formulation
Corporate
Business Unit
Functional
Operating

Implementation

Control
and
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
How-to rules They spell out key features of
how a process is executed -
"What makes our process
unique?"
Boundary rules They focus managers on which
opportunities can be pursued and
which are outside the pale.
Priority rules They help managers rank the
accepted opportunities.
Timing rules They synchronize managers with
the pace of emerging
opportunities and other parts of
the company.
Exit rules They help managers decide when
to pull out of yesterdays
opportunities.
Example
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.
Cisco's early acquisitions rule: companies to
be acquired must have no more than 75
employees, 75% of whom are engineers.
Intel's rule for allocating manufacturing
capacity: allocation is based on a product's
gross margin.
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.
Oticon's rule for pulling the plug on projects
in development: if a key team member-
manager 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 Resources Simple Rules

Strategic Logic Establish position Leverage resources Pursue opportunities

Identify an attractive Jump into the confusion

market Establish a vision
Keep moving
Strategic Steps Locate a defensible Build resources
Seize opportunities
position Leverage across markets
Finish strong
Fortify and defend

Strategic Question Where should we be? What should we be? How should we proceed?

Unique, valuable position

Source of Advantage with tightly integrated
activity system
Slowly changing, well-
Works Best In structured markets
Unique, valuable, Key processes and unique
inimitable resources simple rules
Moderately changing, well- Rapidlychanging,
structured markets ambiguous markets

Duration of Advantage Sustained Sustained Unpredictable

Itwill be too difficult to Company will be too slow Managers will be too
Risk alter position as conditions to build new resources as tentative in executing on
change conditions change promising opportunities

Performance Goal Profitability Long-term dominance Growth

 E-commerce strategies
E-commerce strategy formulation process

Framing the Business Customer Market

Market Communication Implementation Metrics
Opportunity Model Interface and Branding