Topic 1 – eBusiness and eCommerce eBusiness

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eBUSINESS

Topic 1:
eBUSINESS and eCOMMERCE
eBusiness and eCommerce

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Scope and Coverage Commerce

This topic will cover: The term ‘Commerce’ refers primarily to trading –the
• Definitions of eBusiness and eCommerce sourcing, buying and selling of goods and services.
• The importance of the internet for eBusiness
• The impact that the Internet has on the way Many sorts of organisations take part in buying, selling
business activities are carried out and providing goods and services.

Notably, governments, charities and many not-for-

profit organisations are involved in ‘commerce’ to a
greater or lesser extent.

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Learning Outcomes Business

By the end of this topic students will be able to: What we think of as businesses are also involved in
commerce, normally with the motive to make a profit;
• Understand the terms eBusiness and eCommerce
certainly to do whatever they do efficiently and
and what activities they cover
effectively.
• Understand the impact of the Internet and
associated technologies and applications for
So, when we think of more effective and efficient means of
eBusiness and eCommerce achieving certain outcomes, be they ‘commercial’ or
• Appreciate the transformative nature of the Internet without the aim to make profit, it makes sense to use the
and related communications technology on how term ‘business’ to indicate what organisations do.
organisations work

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eBusiness Business to Business - continued

When organisations use computers, the Internet, and In the 1970s and 1980s many larger commercial
communications and mobile technology to help them organisations made use of the EDIFACT standard
carry out their day to day business we can refer to this to exchange transactions electronically.
as eBusiness.

Orders, Invoices and other key transaction

eBusiness then, is about the application of current and information were exchanged via Value Added
emerging computer and communications technologies
Networks (VANs) operated by a number of
to improve the effectiveness and efficiency with which
independent communications operators.
organisations work.

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Business to Consumer
The most obvious aspect of eBusiness is purchasing items,
software or services in an online shop.

This is certainly one example of Business to Consumer or B2C

eBusiness.

Obvious examples of online shopping sites are Amazon and

eBay eBusiness and The Internet

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Business to Business Emergence of the Internet

In contrast to B2C, Business to Business (B2B) is The Internet emerged as a peer-to-peer networking
the process by which all sorts of organisations infrastructure in the 1980s and 1990s, providing an
conduct business by the exchange of information increasingly worldwide means of exchanging information
between organisations and individuals.
in a number of electronic forms.

Electronic Mail springs to mind as the first important

This had been taking place for a long time, for ‘public’ application of the internet. But the Internet was
example the Bankers Automatic Clearing System quickly identified as an obvious way to communicate
(BACS) in the U.K. B2B, once security concerns had been addressed.

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P2P Communication Between

Business and Life ‘Online’
Computers
• No one computer is more important than another • Working online for a business, organisation or
• No centralised control – hence no single point of individual offers a number of potential benefits
failure • Investing to set up, maintain and operate a
• Massive redundancy – parts of the network may fail, website costs money and resources
Internet continues to work • Because of the resource costs, an organisation
• Software applications that users interact with are needs to get a return on their investment, so it is
resilient. If a transaction fails, the user can start important to consider the Online Value
again without any negative consequences Proposition

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Online Value - 1
A common resource
• Content – Above all we go online to find content
• The Internet is like the Ocean. Although some that is useful, valuable and interesting to us.
organisations exercise control over parts of it, Websites that provide this, for example search
the Internet, in a sense, belongs to all engines or special interest sites, attract huge
organisations and people numbers of visitors and become a magnet for
• By providing a means of sharing and accessing advertising revenue
information, a variety of important facilities can • Customisation – This allows the online content
be exploited to be tailored to our individual needs. For
example ‘Amazon recommends’ and we can buy
with a single click

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Online Value - 2
Information sharing
• Community – We can use forums, chat-rooms,
• Electronic Mail, Blogs and Wikis and blogs to discuss and share anything
• Websites (accessible using a Unique Resource • Convenience – We can select, purchase and
Locator or URL) allow organisations, individuals, use (digital) products such as music from our
governments and businesses to establish a desktop (or mobile).
presence on the Web. People may visit these • Choice – We have a wider and less restrictive
URLS to obtain and share information, shop, choice of products than visiting physical shops.
exchange ideas etc. All are more easily available together with
comparisons using special comparison sites

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Online Value - 3
• Cost Reduction – There are often significant
cost advantages to buying online. And even if
we find it costs a little more to do so, factoring in
the time and travel involved with ‘traditional’
shopping may tip the balance in favour of the
online option.

Internet and Organisations

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Growth of Online Shopping

[Link]
Internet Effects

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Online Value Propositions

B2B bigger than B2C
• Bargaining Power of Suppliers
In all OECD countries the share of business-to-business (B2B)
transactions exceeds business-to-consumer (B2C) - Increase in possible suppliers
transactions. On average, over 35% of all businesses (with ten • Bargaining Power of Buyers (Customers)
or more employees) use the Internet for purchasing and about
18% for selling goods or services. - Increasingly knowledgeable customers
• Threat of New Entrants
OECD (2011), “E-commerce uptake”, in OECD Science, Technology
and Industry Scoreboard 2011, OECD Publishing. - Online book store vs physical store
[Link]
• Threat of Substitute Products
OECD (Organisation for Economic Cooperation and Development) - Music downloads vs physical disks

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Rivalry between Competitors Organisational Responses

• There are new ‘spaces’ for competition. The Internet and the • REQUIREMNETS
ubiquity of mobile devices both provide new ways of
reaching customers and consumers. - Responsiveness
- Flexibility
• The speed with which organisations are able to digitise or - Innovation
digitally augment products can provide vital edges over
competitors in terms of speed convenience and product
features (e.g. on-line ordering of pizzas for home delivery) • Likely to lead to dramatic changes to
organisations over time

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Information takes Centre Stage Changes in How Value is Added

Information
‘Virtual’
‘Virtual’ activity Traditional Value Flow
activity

eBusiness

Business
Physical Inbound Outbound Sales and
Operations Services
activity Logistics Logistics Marketing
Physical activity
Products and Services

‘Virtualisation’ of Commerce - eBusiness

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Information becoming the Product Disaggregation of Value Creation

Meet Transact Deliver
Traditional Customers Business Product Outsourcing of Less Valuable Activities
Business
Exchange
Exchange Deliver
20th Century Money &
Information Product Inbound
Operations
Outbound Sales and
Services
Business Information Logistics Logistics Marketing

Deliver
Exchange Exchange
eBusiness Product &
Information Information
Information

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BrickCo and ClickCo

• BrickCo - Has fixed locations where people work, assets
are buildings, machinery and natural resources, processes
have strict routines and organisational change can often
take considerable time

• ClickCo - Has some physical locations but main resources

are ‘online’, assets are embodied in software and data,
processes are agile, organisation is flexible and easily
changed or adapted

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References
• Chaffey D. (2011) E-Business and E-Commerce Management; Strategy,
Implementation and Practice FT Prentice Hall ISBN-10 0273752014,
ISBN-13978-0273752011
• [Link]

• [Link]

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Topic 1 – eBusiness and eCommerce

Any Questions?

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