E commerce

Lecture 10

e strategy
Industrial age

Information age

hierarchies

Business organized
by

networks

Scarce physical
resources

Economics in
business

Limitless digital
resources

Machine/craft workers Populating business

Knowledge/intelligent
workers

Real estate and

infrastructure

Infrastructure in
business

Information
technology

marketplace

Doing business

e marketplace

e strategy
Integrated e-strategy
Technology
Service
Markets
brand

Physical and new information-based

value chain

Inbou
nd
Logist
ics

opera
tions

Outbo
und
logisti
cs

Marke
ting
and
sales

servic
e

gathe
r

organi
ze

select

synth
esize

distrib
ute

Every business is an information

business
Information business has
Managers are information processors
Business operations are information
based
Organizations are information designs
Entrepreneurs are Info preneurs
Relations are virtual as well as physical
Industry logic based on information

Information strategy
framework
Organization strategy (why)
Information
Information
Information
Information

Systems strategy (what)

management strategy (who)
resources strategy (where)
technology strategy (how)

 To some degree information is derived from

data and knowledge from information. Data has
enormous potential far beyond just being
representative of a transaction
Information has characteristics of human
interpretation above and beyond data.
Knowledge has something more than
information, perhaps learning
Articulating and seeking to classify these
intangible resources alerts people to their value
and different sorts of investment required.

Leadership

Services

Technology

Infrastructure

Brands
Markets

Organization
al learning

Seven dimensions of e-commerce strategy

Structure

Systems

Strategy

Shared
values
Skills
Style

Staff

The Mackenzie seven S framework

Seven factors of mckinsey seven S

framework
Component of
seven S
framework

definition

Strategy

Determination of a course of action to be followed

in order to achieve the desired goal, position or
vision

Structure

Interrelationship of processes and human capital

in order to fulfill enterprise strategic objectives

Systems

Information systems and infrastructure

Staff

Human resources management

Style

Synthesis of the leadership philosophy of

management, internal corporate culture, the
orientation adopted to its markets customers and
competitors

Skills

Unique or distinctive characteristics associated

with the organizations human capital

Shared values

The concepts that organization utilizes to drive

 Structure
Leveraging technology towards reaching a position
of marketplace leadership is dependent on ability
to manage internal structure and dimensions.
Structure must be flexible and agile to meet
market changes effectively and efficiently

Systems
The nervous system through which organization
communicates to its environment. Three major
dimensions of technology infrastructure are ERP
systems, data warehousing, knowledge
management

 Staffing
Human capital is the bedrock of any organization.
Organizations are evolving and becoming
knowledge-based and must have intellectual assets

Skills
Technical skills and relationship management skills

Style
Characterization of how the managers behave in
achieving goals and the cultural style of organization

Shared value
Significant meanings or concepts that an
organization utilizes to drive towards a common goal
to common objectives and common value sets

Value chain and e-strategy

Value activities design, produce, sell and
service products
Gather customer needs
Design products
Purchase materials
Produce products
Promote products
Sell products
Service products
Service customers

Assessing information
intensity
Industry having high information
intensity in value chain will have
Large number of direct suppliers or
customers
Complex product line
Product that needs a lot of information
to sell
Product composed of many parts
Many steps in production process
Long order fulfillment cycle time

High information intensity

product
Characteristics of high information
intensity in the product would be a
product that
Provides information
Involves information processing
Requires the buyer to process a lot of
information
Has high user training cost
Has many alternative uses

Generalized view of value chain for

Internet commerce
Get and
keep
customer
interest
attract

turn
interest
into orders
interact

advertising
marketing

Manage
orders
act

catalogue
sales

service
customers
react

order
capture
and
payment
fulfillment

customer
service
order
tracking

Components of e-commerce value

chain
Attract customers
Draw customers into primary site, whether by paid
advertisements, arrangements on other websites,
email, television, print or other marketing tools. It
should be addictive

Interact with customers

Turning customers interest into orders. This phase is
content oriented and includes catalogues,
publications and other information available. Content
may be static or dynamic. Static pages are recreated
and updated whenever the information changes.
Dynamic content is generated at the time of request

Components of e-commerce value

chain
Act on customer instructions
Order processing.Must include the ability to group
items together for a later purchases (shopping cart),
ability to modify contents of the shopping cart
(discard items, add new ones, change quantities).
Order processing then computes taxes and shipping
and gives our itemized bill to the buyer
Payment can be by credit/debit card, cash on
delivery, net banking et cetera. Most important is
that the seller should be able to use it to collect
payment from buyer. The system may require credit
authorization from bank for partial upfront payment

 Fulfillment
Physical goods to be delivered to the
buyer by forwarding the order to
fulfillment system. Digital goods include
online delivery

React to customer enquiries

Customer questions and difficulties are
handled through appropriate information
system

Quantitative approach for e-strategy

Speed, round-the-clock availability and security are
common indicators of quality of service of an e-business
site.
To keep e-commerce site costs under control, capacity
,reliability ,scalability and security are key issues
E-business workload is complex due to transactional
nature, security requirements, payment protocols and
unpredictable characteristics of service request over
Internet
The architecture is complex with multiple
interconnected layers of software, networks, caching
proxies, Routers, high-speed links and large databases

Planning the e-commerce

project
Business plan for e-commerce project
requires
Identifying the initiatives specific
objectives
Linking objectives to business strategies
Managing the implementation of
Business Strategies
Overseeing the continuing operations of
the initiative once it is launched

Linking object is to business

strategies
E-commerce opportunities can inspire
businesses to undertake activities
Building brands
Enhancing existing marketing programs
Selling products and services
Selling advertising
Improving after sales service and support
Purchasing products and services
Managing supply chains
Operating auctions
Creating virtual communities and web portals

Measuring benefits of e-commerce

initiatives
E-commerce initiatives

Common measurements of
benefits provided

Build brands

Surveys and polls that major

brand awareness

Enhance existing marketing

programs

Change in per-unit sales volume

Improve customer service

Customer satisfaction surveys,

the number of customer
complaints

Reduce cost of after sales support Quantity and type (telephone fax
email) of support activities
Improve supply chain operations

Cost, quality and on-time delivery

of materials or services
purchased

Hold auctions

Quantity of auctions, bidders,

sellers, items sold, registered
participants, value of items sold

Provide reporters in virtual

Number of visitors, number of

Measuring cost objectives

While hardware costs are declining,
software costs are increasing due to
frequent changes.
Cost of hiring training and paying
personal who will design websites,
customize software, create content
,operate and maintain site are
increasing.

E-business strategy and data

warehousing and data mining
Data warehouse is a structured extensible
environment designed for analysis of nonvolatile
data, logically and physically transformed from
multiple source applications to align with business
structure, updated and maintained for a long period
of time, and summarized for a quick analysis
A data warehouse
Immediate information delivery
Data integration from across and even outside
organization
Future vision from historical trends
Tools for looking at data in new ways

 A data warehouse
Is subject oriented
Integrated
Nonvolatile
Time variant

It is used for extracting, integrating,

filtering, standardizing, transforming
and cleaning of data

Data mining
Data mining in simple terms is
extraction of hidden predictive
information from large databases or
data warehouses
Data mining tools predict future
trends and behaviors for proactive
knowledge driven decisions

Building an e-commerce
website
Two most important management
challenges are
(1) developing a clear understanding of
your business objectives and
(2) knowing how to choose the right
technology to achieve these objectives

Planning a website
What do we want the e-commerce site to do for our
business?
Let the business decisions and drive the technology and not
the reverse

Identify specific business objectives for the site and

then develop a list of system functionalities and
information requirements
Business objectives are simply capabilities of the site
and system functionalities are types of information
systems capabilities that are required to achieve this
objectives. The information requirements are the
information elements that the system must produce in
order to achieve the business objectives

Business objectives, system

functionality and information
requirements for a typical e-commerce
site
Business objective
System
Information
functionality

requirement

Display goods

Digital catalogue

Dynamic text and

graphics catalogue

Provide product
information (content)

Product catalogue

Product description,
stocking numbers,
inventory levels

Personalize/customize Customer on-site

products
tracking

Site log for every

customer visit, data
mining capability to
identify common
customer parts and
appropriate responses

Execute transaction
payment

Shopping
cart/payment system

Secured credit card

clearing, multiple
options

Accurate customer

Customer database

Name, address,

Business objectives, system

functionality and information
requirements for a typical e-commerce
site
Business objective
System
Information
Provide after sales
customer support

functionality

requirement

Sales database and

customer relationship
management system

Customer ID, product,

date, payment,
shipment date

Coordinate
Ad server, email
marketing/advertising server, email,
campaign manager,
ad banner manager

Side behavior log of

prospects and
customers link to
email and banner ad
campaigns

Understand
marketing
effectiveness

Site tracking and

reporting system

Number of unique
visitors, pages
visited, products
purchased, identified
by marketing
campaign

Provided production
and supply links

Inventory
management system

Product and inventory

levels, supplier ID and

Building the website: in-house

process outsourcing
Decision to build a website in-house has risks
considering complexity of shopping carts, credit
card indication and processing, inventory
management and order processing.
In the past bricks and mortar retailers typically
designed their e-commerce sites. Today large
retailers rely heavily on external vendors to
provide sophisticated website at capabilities.
Medium-size start-ups often purchase
sophisticated packages and modify it to suit their
needs. Very small mom-and-pop firms seeking
simple storefronts use templates

Site widgets
Typical website budget components
are
Content design and development 15%
Hardware 10%
Software 8%
Telecommunications10%
System development 22%
System maintenance 35%

10 Easy Steps to Establishing an Online Retail

Store

Step
Step
Step
Step
Step
Step
Step
Step
Step
Step

1: The Business Plan

2: Choosing a Business Structure
3: Choosing the Products You Will Sell
4: Getting Bar Codes for Your Products
5: Building Inventory
6: Choosing a Domain Name and Site Location
7: Building the Site
8: Setting up the Shopping Cart
9: Launching, Advertising, and Marketing
10: Maintaining the Business

Ecommerce Business Blueprint: How To Build,

Launch And Grow A Profitable Online Store

Choosing a Product, Finding A Product To Sell

Evaluating Your Idea
Obtaining Your Product
Research & Prepare, Research Your Competition
Writing Your Business Plan
Registering Your Business
Naming Your Business
Creating A Logo
Understanding Search Engine Optimization (SEO)
Building Your Store

10 Dos and Don'ts of Launching an E-commerce Site

1. DO test your product.

2. DON'T assume that people will just find your site.
3. DO set aside a budget to test marketing.
4. DON'T bank on raising more money.
5. DO listen to your customers.
6. DON'T try to be everything at once.
7. DO build a solid foundation before launch.
8. DON'T give up quickly.
9. DO have a business model that makes money.
10. DON'T spend 12 hours a day sustaining your company

How to Start a Business Online

Step 1: Find a need and fill it

Step 2: Write copy that sells
Step 3: Design and build your website
Step 4: Use search engines to drive targeted
buyers to your site
Step 5: Establish an expert reputation for yourself
Step 6: Use the power of e-mail marketing to
turnvisitors into buyers.
Step 7: Increase your income through back-end
sales and upselling