OHT 1.

Chapter 1 Introduction to e-business and e-commerce

Marketing Insights Limited 2004

OHT 1.2

Learning objectives
Define the meaning and scope of e-business and e-commerce and their different elements; Summarise the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption; Use resources to define the extent of adoption of the Internet as a communications medium for consumers and businesses; Outline the business challenges of introducing ebusiness and e-commerce to an organization.
Marketing Insights Limited 2004

OHT 1.3

Issues for managers How do we explain the scope and implications of e-business and e-commerce to staff? What are the full-range of benefits of introducing e-business and what are the risks? How great will the impact of the Internet be on our business? What are the current and predicted adoption levels? How do we assess the validity of forecasts?
Marketing Insights Limited 2004

OHT 1.4

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)

Marketing Insights Limited 2004

OHT 1.5

The impact on one industry - banking

Metric
Financial institutions with Web banking (WW) Financial institutions with Web sites (WW) Total online banking households (WW) Total online banking households (US) Monthly bank and credit card Web traffic (US) Monthly credit apps submitted via Web (US)

May 1995
1 50 5 million 300,000 100,000 0

Dec. 2002
6,000 14,000 100 million 28 million 50 million 1.5 million

Table 1.1 7.5 years of web banking. Source: Online banking report, Number 89, December 10, 2002. Source: Online Banking Report estimates, +/- 25%, 11/02 Marketing Insights Limited 2004

OHT 1.6

UK adults online? 31% 41% 51% 61% 16-24 year olds online? 50% 60% 80% 90% Percentage bought groceries online? 6% 16% 26% 36%
Source: www.statistics.gov.uk Oct 2002
Marketing Insights Limited 2004

OHT 1.7

The Internets 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?

Marketing Insights Limited 2004

OHT 1.8

Popularity of online purchases

Source: The Internet Monitor, BMRB, November 2001 (www.bmrb.co.uk)

Marketing Insights Limited 2004

OHT 1.9

Definitions You are asked to distinguish between ecommerce and e-business at a job interview. Write down your definitions. Use examples to illustrate your points.

Marketing Insights Limited 2004

OHT 1.10

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
Marketing Insights Limited 2004

OHT 1.11

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)
Marketing Insights Limited 2004

OHT 1.12

The distinction between buy-side and sell-side e-commerce

Figure 1.1 The distinction between buy-side and sell-side e-commerce

Marketing Insights Limited 2004

OHT 1.13

Recap which is correct?

Figure 1.2 Three definitions of the relationship between e-commerce and e-business Marketing Insights Limited 2004

OHT 1.14

Activity drivers and barriers to adoption You are in a team of advisers at a local Business Link (a local government agency encouraging adoption of e-commerce) 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
Marketing Insights Limited 2004

OHT 1.15

Business drivers to going online

Marketing approach
Give real examples Give examples of SME Data on those researching and buying online Ditto

Driver
1 Reduced costs 2 Increase reach to new markets 3 Customer demand 4 Competitive threats 5 6

Marketing Insights Limited 2004

OHT 1.16

Business barriers to going online

Marketing approach
Reassurance Illustrate with data of businesses researching and buying online Illustrate low cost options Summarise skills alternatives

Barrier
1 Security 2 No need 3 Costs 4 Skills 5

6
Marketing Insights Limited 2004

OHT 1.17

Drivers for e-commerce

Figure 1.6 Attitudes to benefits of online technologies

Source: DTI (2002)
Marketing Insights Limited 2004

OHT 1.18

Barriers to e-commerce

Figure 1.7 Barriers to development of online technologies

Source: DTI (2002)
Marketing Insights Limited 2004

OHT 1.19

Intro to B2B Company

Employs 600 people worldwide Turnover 100m Products composites and speciality polymers
See www.globalcomposites.com

Distribution 90 companies worldwide via joint ventures and agents Competitors:

Derakan (www.dow.com/derakane) Scott Bader (www.scottbader.com) Owens Corning (www.owenscorning.com)
Marketing Insights Limited 2004

OHT 1.20

Intro to B2C Company Established 1984, 80 staff Products Kitchenware Distribution

Through retailers and transactional web sites

Competitors
Cooking.com (www.cooking.com) Lakeland (www.lakelandlimited.com) Tupperware (www.tupperware.com).
Marketing Insights Limited 2004

OHT 1.21

Activity - Benefits to B2B and B2C Company See activity 1.6 Give examples of these benefits of an online presence. Which of these are most important to each:
Cost reduction New capability Communication Customer service Control Competitive advantage
Marketing Insights Limited 2004

OHT 1.22

Activity Changes required by e-commerce What changes to the overall business would be required by e-commerce for the B2C and B2B Company?

Marketing Insights Limited 2004

OHT 1.23

Answer the 7 Ss

Figure 1.9 The McKinsey 7S framework

Marketing Insights Limited 2004