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Chapter 7
E-Business: Doing
Business Online
Define e-business and discuss
1 how it can help achieve business
5
Describe some of the challenges
associated with e-business.
6
Discuss how organizations use
Internet communications to
advance their objectives.
success.
2
Distinguish between a corporate
and a marketing Web site.
3 List the major forms of B2B
e-business.
4
Explain B2C e-business and
identify the products most often
sold online.
7
8
Discuss Web sites and identify
methods for measuring
Web site effectiveness.
Explain the global scope
of e-business.
Electronic business (e-business) - Conducting business
via the Internet.
1. E-tailing, or virtual storefronts on Web sites.
2. Online business-to-business transactions.
3. Electronic data interchange (EDI), the business-to-business
exchange of data using compatible software.
4. E-mail, instant messaging, and other Web-enabled communication
tools and their use as media for reaching prospective and existing
customers.
5. The gathering and use of demographic, product, and other
information through Web contacts.
• Global Reach. Goods and services can be sold to
customers worldwide.
• Personalization. Companies can customize products and
reduce inventory.
• Interactivity. Customers and suppliers can negotiate
prices online.
• Right-time and integrated marketing. Online retailers
provide products when and where customers want them
and promotions can be directed to individual customers.
• Cost savings. E-business can reduce costs.
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 Increase a firm’s visibility, promote its offerings, and
provide information to interested parties.
 Build customer goodwill and assist retailers and
other resellers in their marketing efforts.
 Disseminate financial information to investors.
 Enable prospective employees to apply online for
jobs.
Web
Provide
communication.
sitese-mail
are frequently
used for marketing to attract
visitors/customers.
.
• Business-to-business e-business (B2B)
Electronic business transactions
between businesses using the Internet.
• B2B transactions total $2.5 trillion.
• By some estimates, account for 90% of
all e-commerce activities.
• Can reduce cost of B2B transactions by
almost 25 percent.
• Electronic data interchange (EDI) is a
computer-to-computer exchange of invoices,
purchase orders, price quotations and other
sales information.
• Extranets offer an efficient way for business to
collaborate with vendors, partners and
customers.
• Private Exchanges are the next generation of
extranets where all types of data related to ebusiness is shared.
• Business-to-consumer (B2C)
• E-tailing accounts for 4% of all U.S.
sales.
• Growing at a rate of 18%.
• Services like banking and brokerage are key
aspects of e-tailing
• Many retailers have electronic storefronts.
• Growth of broadband is aiding e-tailing.
 Typical user is young, highly
educated, urban or suburban,
and affluent.
 Demographics are shifting;
there is decreasing difference
in Internet purchasing habits
among groups.
Lower Prices
• Many products cost less online.
• Internet allows customers to easily compare prices from multiple
sellers.
Convenience
• Can order products from around the world anytime, day or night.
• Can register customer information to streamline transactions.
Personalization
• Emphasis on personalized, one-on-one marketing to increase
repeat purchases.
• Through encryption, data is encoded for security
purposes.
• Many companies use Secure Sockets Layer (SSL)
technology to encrypt information and verify senders
and receivers.
• An electronic wallet contains credit card and
identification information. Customers can avoid
retyping purchase information.
 Privacy is among the top concerns of Internet users.
 E-business sites often require passwords and use electronic
signatures, an electronic form of identity verification.
 Companies can track customers’ shopping and viewing habits
through cookies.
 Customers usually prefer that companies do not share their
personal information. Merchants have responded by joining
privacy organizations.
 Privacy protections may soon become legally required.
 Employees also have concerns that employers are monitoring
their Internet behavior.
 Companies worry about data theft.
• Internet Crime Complaint Center logs more than 200,000
complaints annually.
• 50% of the complaints referred to law enforcement
agencies deal with online auctions.
• Phishing is a growing form of Internet fraud that uses email or pop-up messages to get unsuspecting victims to
disclose personal information.
• Vishing, or voice phishing, involves phone calls to credit
card customers to obtain personal and banking
information.
• Payment fraud is growing.
• 50% of shopping carts are abandoned before any
purchase is made.
– Lack of Information
– Inability to find the information they need
– Feeling overwhelmed by too much information
• Companies that have brick-and-mortar experience often
have better success satisfying customers than Internetonly retailers.
• Online sales can compete with business partners such
as retailers and distributors causing disputes called
channel conflict.
• Web has four main functions: e-business,
entertainment, information, and communication.
• Communication is Web’s most popular function.
• Firms use e-mail to communicate with customers,
suppliers, and other partners.
• Online Communities: Internet forums, newsgroups,
electronic bulletin boards, and Web communities that
appeal to people who share common interests.
• Spam is junk e-mail.
• Blog - short for Web log, an online journal written by
a blogger.
• May incorporate wikis, a Web page that anyone can
edit.
• Some incorporate podcasts, video & audio
recordings. Feedburner services more than 200,000
podcasts.
• Corporate blogs can help build brand trust.
– Example: Apple’s iLounge builds the iPod brand and gives
Apple ideas for product improvement.
• Employee blogs may present ethical issues.
• Banner Ads – messages placed on frequently visited
websites
• Pop-up Ads – ads that appear in separate windows
• Pre-roll Video Ads – advertisements that roll as
soon as a page is loaded
• Search marketing – companies pay for top visibility
in search results
Some companies, such as ValPak Marketing
Systems, offer virtual, searchable coupons.
 Future growth of many companies is linked to a global
strategy that incorporates e-business.
 U.S. leads world in Internet users but ranks only 5th in
Internet penetration.
 E-Bay may dominate most markets, but Chinese
company Alibaba.com has 83% of the auction business
in China.
 Three of four Web pages are written in English.
 E-business can heighten competition in the global
marketplace...
It is easier to create a bad website than a good one.
Organizations must think about:
Planning and Preparation
Content and Connections
Costs and Maintenance
• Click-through rate - percentage of people presented with a
Web banner ad who click on it.
• Conversion rate - percentage of visitors to a website who make
a purchase.