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Introduction

When the Graham bell invented the telephone, perhaps he himself was unaware of the potential of the telephonic. A tiny desire of talking to each other through a distance has now grown up to a whole New World of doing complete business and transacting with each other all over the globe. The power of these interconnected telephone lines is the major reason for what we say the world is a global village.


Now the a whole new virtual world is in front of us that is perhaps so much the daily part of our life that it is becoming really difficult to draw the line between the virtual world and the real one. Imagine of a shop that welcomes about 625million views every day and the shop is only one not even having any of its branches. It looks more imaginary that the shop even does not have any bricks and mortar existence, but it does exists in the real world with the name of Yahoo. Com which is most visited site every day. Imagine the power of technology giant on the information super high way, when you just receive a video clip of your beloved one in the very next movement. Although you are in Pakistan and other is sitting in his or her room in any part of earth with a laptop not connected to any wire.

Reason to select the topic

E-commerce is the one world that really matters and can really pave the path of a country’s future. Its a trillion-dollar market today and is mushrooming up every day. No one can deny the potential that the world of e-commerce has got today weather you are a customer, business man or just a loyal subject of your nation. Its scope starts from the speedy communication to cost containment, gaining and maintaining competitive advantage to earning bucks that can change your life and ultimately the economic out look of your country.

E-commerce

Defining e-commerce

Now I like to define e-commerce in its real true sense. There are many definitions that have been associated with this world before but here are some of them.

Microsoft Encarta Computer Dictionary defines e-commerce as following.

“Commercial activity that takes place by means of connected computers. Electronic commerce can occur between a user and a vendor through an online information service on the Internet, or a BBS, or between vendor and customer computers through electronic data interchange (EDI).”

The KPMG research group defines and explains e-commerce as following

“Electronic Commerce is a generic term for applications of information technology (IT).

These enable new ways of conducting business between and across organizations. Electronic Commerce includes smart cards, Intranets, GroupWare, workflow and Internet information access. Smart cards are like credit or payment cards but replace the magnetic strip with a microchip, which can hold information, for instance about the user, and can also, operate as electronic purses. Intranets provide a means of establishing Internet-style communication within a closed user group, such as within an organization. GroupWare enables personnel to work together in teams through the computerized sharing of information. Workflow is an electronic means of mapping business processes to track the movement of work between people.

E -commerce can also be defined in the following manner

“E-commerce is the buying and selling of the goods and services on the Internet, especially World Wide Web.”

We can also define it in the following way

“E-Commerce is online shopping via the Internet.”

“Commerce is any commercial activity conducted electronically, particularly via private or open networks, such as

The Internet.”

The simple and widely accepted definition is

“E-commerce is doing online transaction on the Internet.”

Under the e-commerce we can see that following are the main activities that are being performed over the Internet. These business operations include all the business to business and business to consumer activities.

Ø Information exchange

Ø Goods and services trading

Ø Online digital content delivery

Ø Electronic funds transfer and transaction processing

Ø Electronic share trading

Ø Collaborative work orientation

Ø Manufacturing management

Ø Accounts settlement

Ø Online Sourcing


Types of E-Commerce

Here we are going to define the types of e-commerce. These are not exactly the types in their true sense but are like constituents to the e-commerce. E-commerce includes all the following things but it does not mean that every one of them is exactly the e-commerce itself. In order to is an e-commerce activity, one of them or the group of them join together to form an e-commerce activity.

Basically there are only two major types of e-commerce that includes following.

Ø B2B (Business to Business e-commerce )

Ø B2C (Business to Consumer e-commerce )

Under these two major types there are subtypes that can be included under the both main types of e-commerce. These subtypes include following.

Ø B2B2C

Ø G2B and G2C

Ø EDI

Ø E- Tailing

Ø E-mail

Ø Fax, Internet telephony

Ø M-Commerce (Mobile commerce)

Ø C-Commerce (Collaborative Commerce)

Now we are going to explain all these main types and the subtypes in detail.

B2B commerce

B2B or businesses to business systems are designed for businesses to collaborate or sell goods and services to each other. B2B commerce is in fact the major portion of e-commerce that is going on Internet this time. Almost 60% of the e-commerce activity on the Internet are between the businesses. The big giants like Intel, Sony, and alibaba. Com is earning their major share on the Internet through b2b transactions.

Electronic Data Interchange (EDI)

EDI (Electronic Data Interchange) is a standard format for exchanging business data on the Internet. We can define EDI as follows.

 

“Computer to Computer Exchange of structured Business documents while using industry defined standards.”

It can also be described as

 

Electronic data interchange (EDI) is a form of electronic communication that allows businesses to exchange transaction data and documents in structured formats that can be processed by computer applications software.

Electronic data interchange (EDI) is a form of electronic communication that allows businesses to exchange transaction data and documents in structured formats that can be processed by computer applications software. EDI is described by Monczka and Carter as the direct electronic transmission, computer to computer, of standard business forms between two organizations. EDI is not a technical solution. It is a complete business process in its implementation. It provides end to end seamless transfer of data between the trading partners, regardless of the respective computer envoirments.


Business to Consumer (E-tailing)

E-tailing (less frequently: e-tailing) is the selling of retail goods on the Internet. Short for “electronic retailing” and used in Internet discussions as early as 1995, the term seems an almost inevitable addition to e-mail, e-business, and e-commerce. E tailing is synonymous with business-to-consumer (B2C) transaction.

E tailing began to work for some major corporations and smaller entrepreneurs as early as 1997 when Dell Computer reported multimillion-dollar orders taken at its Web site. The success of Amazon.com hastened the arrival of Barnes and Noble’s e-tail site. Concerns about secure order taking receded. 1997 was also the year in which Auto-by-Tel reported that they had sold their millionth car over the Web, and Commerce Net/Nielsen Media reported that 10 million people had made purchases on the Web. Jupiter research predicted that e tailing would grow to $37 billion by 2002.


B2B2C systems

B2B2C systems are merely combinations of B2B and B2C systems designed to manage the whole supply chain from the consumer through to raw materials providers. They are design to process orders from consumers and then use this information to place orders with wholesalers and ultimately manufacturers.

G2B and G2C

G2B and G2C systems involve the government providing services to business and consumers. These services may range from the on-line provision of information through to electronic lodgment of forms or tax returns.

Fax, and Internet Telephony

E-commerce is also conducted through the more limited electronic forms of communication called e-mail, facsimile or fax, and the emerging use of telephone calls over the Internet. Most of this is business-to-business, with some companies attempting to use e-mail and fax for unsolicited ads (usually viewed as online junk mail or Spam) to consumers and other business prospects.


E-mail

By definition we can define e – mail as following

“E-mail (electronic mail) is the exchange of computer-stored messages by telecommunication.”

“The use of computer systems to transfer messages between users.”

Messages are usually stored centrally until acknowledged by the recipient. Electronic mail facilities are provided by most large computer systems for their users, and are also available on a national and international basis.

E-mail messages are usually encoded in ASCII text. However, you can also send non-text files, such as graphic images and sound files, as attachments sent in binary streams. E-mail was one of the first uses of the Internet and is still the most popular use. A large percentage of the total traffic over the Internet is e-mail. E-mail can also be exchanged between online service users and in networks other than the Internet, both public and private.

Mobile Commerce

It is quite a new concept still now and many companies are currently working on it. Although it is being used and experimented in the developed countries. Mobile commerce is the used of cellular technologies such as mobile phones, pagers etc for the purpose of conducting electronic commerce. If you can buy a pizza by placing order on your mobile phone than it is going to be a mobile commerce.

In Pakistan it is quite at initial stage as there was no Internet connection was available for the mobile phones. Recently a week ago (October 1, 2000) Nokia has launched its new mobile phone with the Internet facilities in the market and it is gonna open the door of mobile commerce in Pakistan. MCB has also started the Mobile commerce in Pakistan. Mobile commerce will be a big part of e-commerce in the near future as one can foresee the amount of mobile phone users and the increased time saving concerns of the human kind.

Collaborative Commerce

Along with the mobile commerce a new concept of collaborative commerce is also immerging and infact being implemented on the Internet. Collaborative commerce is the fulfillment of consumer order not only by one company or one business but a group of businesses. In this Internet world one may be working with his or her competitor for the sake of an order fulfillment.

Suppose a customer wants a car that have an engine of Ferrari and has an executive out look of Mercedes. He can place this order on the Internet and both companies can join together to fulfill this order with the help of a third company that is actually present on the net and taking the order.


Internet to E-Commerce

The basic reason for which the Internet was formed by the ARPAnet was a part of defense strategy of US defense department. Then it leads to the use for the education and research purposes and ultimately it evolved into a new way of ding business. So now we see that how Internet was born and how a new branch of commerce formed called the e-commerce today.

Defining Internet

The Internet, in its broadest sense, can be defined as a collection or interconnection of any different networks of computer hosts, clients, and servers that collectively provide and use information and connection services.


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Replies to This Discussion

"Network of computer networks"

This "network of computer networks" now includes a community that literally spans the globe and counts among its members nearly every country in the world.

It developed in the 1970s as an experimental network designed to support military research, and steadily grew to include federal, regional, campus, and other users. The majority of computers on the Internet are connected using standard telephone lines, while others use direct connections by way of a cable. This means that practically everyone can have access to the whole world with a local telephone call. A call goes from your computer to a computer nearby, which then handles the information to and from the Internet.

Computers with access to the Internet come in all sorts of makes and models and run a variety of operating systems and applications. Strictly speaking, computers connected to the Internet are those that use the Transport Control Protocol/Internet Protocol (TCP/IP) suite, which is a common, set of rules that, allow a variety of systems to communicate. Computers on non-TCP/IP networks, however, can access the Internet through gateways that perform the necessary protocol translations and allow appropriate communications.

The Internet uses client/server computing to control the sending and receiving of information across the Internet. Client/server computing can be explained like this: one computer (the server) has a supply of information; another computer (the client), wants to use that information, usually because a person has asked the computer to use it. The two computers are connected, in this case, through the Internet networks. The client requests something from the server, and the server sends back a response.


Scope of e-commerce

Businesses need to place electronic commerce within the context of broader uses of the Internet than the traditional commercial framework. As a market, electronic commerce impacts not only marketing but also production and consumption. Information collected through web stores is used to customize products, to forecast future demand, and to formulate business strategies. Consumers not only order and pay for products online, but also search for product information, reveal their preferences, negotiate with sellers, exchange information about products and firms, and use products online by filtering, processing, and linking them with other computer programs. Likewise, supply chain relationships among businesses and competitive strategies need to aim at increasing the overall market efficiency, not just transactional efficiency.

The size of the market, judged by the number of agents or domain names, is growing rapidly on the Internet. The growth rate in the number of Internet hosts is exponential; it grew from about 300,000 in 1990 to over 12 million by the end of 1996 most of these Internet sites are only potentially commercial. But the awareness of its commercial use among businesses is growing. According to the O'Reilly & Associates' Internet Survey (http://www.ora.com), almost half of all large companies with 1000 or more employees surveyed in 1995 have created an Internet presence through publicly accessible World Wide Web pages


Use as Alternative Market Channel

The Internet can certainly be used as an alternative marketing channel, selling existing products online, but the future of electronic commerce will be guided by innovative digital products and services that will emerge in the electronic marketplace. The core of digital commerce comes from selling digital products, but no one is certain how big the digital product market will become.

To get an idea, one only needs to list products that can be digitized:

All paper-based information products such as newspapers, magazines, books, journals, and databases

Ø Computer software

Ø Games

Ø Audio products, including music, and speeches; video and multimedia products, such as movies and television programs;

Ø Other information products, such as weather reports, stock quotes, government information, consumer information, and even personal information;

Ø Digital counterparts for existing products, such as room keys, digital currency, digital checks and other financial instruments, airline and concert tickets, and so on.

Factors Broadening the scope

The Web represents a marketplace embodying a number of unique elements that can help a business maintain or enhance its competitiveness and position its target markets: Following are some of the factors that not only broaden the scope of e-commerce for any organization but can dramatically effect the performance of any organization.

Ø Image enhancement

Ø New channel for delivery of products

Ø Improved customer services

Ø Expansive reach

Ø Qualified sales leads

Ø Communication (internal and external)

Ø Corporate logistics

Ø Leveling the playing field (globalization)

Ø Gaining and maintaining a competitive advantage

Ø Cost containment

Ø Collaboration and development

Ø Information retrieval and utilization

Ø Marketing and sales

Ø Transmission of data

Ø Creating a corporate presence

Image Enhancement

Corporate image is an important element of any business's marketing strategy. Web sites tailored to project a certain image to a certain clientele are becoming common. These sites may contain a wide spectrum of information related not only to the products and services they provide, but also to the unique qualities and capabilities that separates them from the competition. Some firms post additional information, such as `social causes in which they are involved, or their corporate mission, goals, and philosophies. Still other firms choose to cite core capabilities and past performance. A small, high-technology firm may develop a Web site that describes the variety of highly technical research and development contracts it has performed successfully, for example, complete with project abstracts that detail corporate capabilities.

New Channel for Delivery of Products

The Web quickly has moved from simply being a tool for public relations and enhancement of corporate image to a whole new means of delivering products and services. Many sites now offer the capability to order products online directly. Some products are available for immediate delivery online as well. Many software vendors, for example, now enable customers to purchase and download registered software. Other companies, such as market-research firms, can provide copies of marketing studies and services online to paying customers.

Improved Customer Services

What do customers want? In addition to low prices, customers demand quality service. Web technologies allow businesses to provide improved "human-in-the-loop" and autonomous services much more effectively. No longer are laborious phone calls required to find technical product information or the answers to many common technical questions. Customers now can find much of this information directly on a vendor's Web site--any time of day, any day of the year.

When a customer needs direct support, Web technologies such as e-mail, the Internet, and Intranet applications allow employees to handle and track far greater volumes of trouble and support calls than phone systems alone. Additionally, Web-based systems enable your company to record specific customer preferences and provide more individualized and personalized service.

Expansive Reach

The Web holds potential as a leveling technology and offers many advantages over traditional forms of advertising. Unlike many forms of print, radio, or television advertising, Web advertisements are not limited geographically. You have almost no boundaries on the audience you can reach. Even small companies, which historically had no way to attract business outside their immediate region, now can attract business outside their normal regions--even globally--in a cost-effective way.

Qualified Sales Leads

The Web offers a number of services, such as search engines, with which users can locate providers of products and services of interest. Someone interested in specialty products, such as handcrafted Scandinavian wood furniture, easily can perform a Net search to find out whether and where any vendors of such products exist. What does this mean to a business? Visitors to your Web site are coming there for a purpose: They are interested in what you have to offer. These visitors represent highly qualified sales leads and business opportunities. If even a small percentage of these leads results in direct sales, the cost of generating those sales is virtually nonexistent when compared to more traditional (and expensive) methods of sales, such as sending catalogs and direct mailings.

Internal and External Communication

E-mail is a low-cost method for maintaining local, regional, national, and international communication. Messages can be exchanged in minutes as opposed to days or even months using regular mail. E-mail is a utility for sharing information and is said to be one of the most important productivity packages around. Often, the primary and most frequent business use of Internet connectivity involves internal and external communications (Ellsworth and Ellsworth 1994). Use of the Internet lets a business be in touch with branches and work teams at many locations, and permits high-speed access to vendors and customers.

Improving communication with colleagues, government agencies, the academic community, researchers, and even competitors, can help improve the industry in general. The culture of the Internet is such that genuine exchanges on industry-wide questions and improvement are increasingly more common (Ellsworth and Ellsworth 1994).

Corporate Logistics

Logistical concerns that can dominate production planning can be eased through better contact via the Internet. The Internet is the "anytime/anywhere" network, so exchanges with markets across time zones can be facilitated by the use of e-mail and conferencing. Actual "real time" communication is also possible, through the use of Talk, MOOs, and Internet Relay Chat (IRC). Distance and time barriers are lessened by using the Internet for communication (Krol 1992).

In some cases, businesses have created a virtual company composed of individuals who work at a distance from one another. They may meet face-to-face only occasionally (Ellsworth and Ellsworth 1994).

Globalization and Leveling a Playing Field

Using the Internet, many organizations are able to bring a global edge to a homespun business. With the Internet, you are much less aware of national boundaries and distance. Individuals from Norway converse with others in Toronto, Taiwan and Austin, Texas, easily. This opportunity for rapid communications can increase a business's visibility from local to global overnight.

For many companies, the use of the Internet creates a level playing field. Small businesses can create an image on the network to compete with large businesses. It makes the pursuit of customers, vendors, and resources possible worldwide--allowing competition in a world market.

Competitive advantage can be increased due to access to state-of-the-art information on products, material, new ideas and even the status quo in a given industry. Many corporations use the Internet to engage in what some call "techno watch" --keeping a finger on the pulse of emerging and new technologies, and the market response to those technologies, both anecdotal and in terms of financial performance and the stock market (Ellsworth and Ellsworth 1994).

The public information and discussion groups available on the Internet provide insight and feedback that is hard to get in any other manner. Here, workers at all levels of industry, researchers, and the public exchange of information on marketing, research, technological developments, internal processes such as accounting and personnel, and external activities such as purchasing and public relations. These discussion groups are useful both for the information presented in them and for the pointers they provide to important sites, contacts, and databases. Having the most up-to-date information about your markets and the state-of-the-art in your industry allows you to keep or increase your competitive edge.

In some cases, the Internet is a tool for solving problems by accessing information, documents, and experts. Many companies cannot afford in-house experts on every process or activity, and use the Internet to locate and network with experts, through mailing lists or e-mail (Vine 1995).

Cost Containment

Many businesses are using the Internet to contain long distance telephone and mailing costs. Recent studies have shown that businesses can save thousands of dollars using e-mail, in lieu of some long distance phone calls and postal deliveries (Vine 1995).

With first class letters costing $ .32 each, a mailing of 1,000 pieces to customers would cost $320 for postage alone, whereas the same information sent by e-mail would cost 2 to 3 cents each--and the messages would arrive in seconds as opposed to days. Overnight mail (which typically costs $8-$12 for each delivery) cannot compete with e-mail for speed or cost.

Collaboration and Development

It is increasingly common for companies to form partnerships and collaborative development efforts--even IBM and Apple have done. The development team and project participants often use the Internet to keep in touch and to exchange data, programs, and working papers from far-flung locations. The Internet also allows several small businesses to band together much more easily for product development.

Information Retrieval and Utilization

Rich in resources, the Internet provides software, communications connections worldwide, and files of text, data, graphs, and images. The Internet provides access to databases, books, manuals, training information, experts in various fields, even sound and video clips.

And much of that information is free. With roughly 2.5 million machines connected to the Internet, with databases, Usenet, Gopher servers, FTP archives, and conferences, the amount of information available is astounding (Fraase 1994).

Scientific and research data is available in large quantities. There are electronic newsletters, searchable databases, and online experts--in some cases causing information overload. Some have compared using the Internet to drinking from a fire hose (Ellsworth and Ellsworth 1994).


Marketing and sales

As businesses use the Internet more, and Internet users become more accustomed to marketing activities, Internet marketing is becoming much more popular. Marketing on the Internet involves both research and active outflow of information.

Marketing research is common on the Internet, where attitudes are tested, conversations actively pursued, and opinions solicited from many groups (Ellsworth and Ellsworth 1994). Marketing plans are increasingly counting on Internet access for success.

One of the prime business uses of the Internet is in the area of customer support. Customers can reach a company on their own schedules--day or night--and obtain information from conferences, FTP, e-mail, and Gopher. The customer support information only has to be transferred to an archive once, and yet it may be accessed by thousands of customers and potential customers--a labor-efficient and cost-effective way of distributing information. In addition, a business with a presence on the Internet is perceived as modern, advanced, and sophisticated.

In these days of a highly competitive global marketplace, the company that can reach and satisfy customers will have an advantage--and the Internet can help in maintaining relationships with customers. The Internet is also a fast and efficient way of networking with vendors and suppliers. With its global reach, the Internet can assist businesses in locating new suppliers and keeping in better touch with them to aid, for example, zero inventory planning. A business might locate and coordinate with suppliers in Taiwan, Norway, and Austin, Texas; and the Internet system in some countries is often more stable than telephone service, which is often less reliable and less convenient.

Maintaining up-to-date postings of a company's product information and prices also allows vendors to have continuous access to the information that is needed in order to promote and sell your products. Small suppliers find that they can compete with larger industries by being easily available via the Internet (Ellsworth and Ellsworth 1994).

In a business where the concept of getting closer to the customer is prevalent, the Internet is becoming increasingly important. Internet-assisted sales, where customers are sought and served online through Gophers and a variety of virtual storefronts, are also becoming more popular. Customers are sought before the sale and supported after the sale.

Customer and product support and technical assistance by way of the Internet are time efficient. Many companies provide e-mail assistance, including both individual and automated replies to e-mail questions and requests for information (Hahn and Stout 1994). Technical sheets, specifications, and support are offered through Gophers and FTP. Relationships with vendors and outlets are maintained via the Internet.

In some cases, companies are doing actual product sales transactions on the Internet. In addition, if the product is amenable to Internet delivery, as with software and information, the actual product is delivered via the Internet. Some companies are arranging product delivery through the Internet, where companies can create and support actual distribution channels.


Transmission of Data

Many companies have been using the Internet for the transmission of data. The major financial institutions in the world use the Internet extensively for exchanging information and files. Publishers are using the Internet to receive manuscripts, and transmit files for printing over the Internet. Books are written and collaboratively edited using the Internet (Fraase 1994).

The Internet protocols allow the exchange of both ASCII and binary information. Binary information includes executable programs (software), program data files (word processing files, spreadsheets, databases, etc.), graphics (pictures, maps, digitized images, CAD/CAM files, etc.), and sound files. The network's backbone can send the equivalent of a 20-volume set of an encyclopedia in just seconds (Ellsworth and Ellsworth 1994).

Research and scientific organizations and educational institutions, the original inhabitants of the Internet, are using the Internet to transmit large quantities of data as well, but corporate users now transfer the largest portion of data (Ellsworth and Ellsworth 1994).

Corporate Presence on the Internet [1]

By creating a corporate presence on the Internet, businesses can participate in all the benefits of online marketing, publicity, and sales. They can use such tools as Gopher, FTP Telnet, e-mail, and Usenet to build a virtual storefront, create catalogs that can be browsed online, announce products, take orders, and get customer feedback. Yet the most interesting and comprehensive of resources available to businesses on the Internet is the World Wide Web. The Web provides businesses and their consumers with all of these tools, accessible through a graphics-based Web-browser. The available Web-browsers vary in name, but their functions are indistinguishable. Web-browsers provide consumers with the information they want at their fingertips, just a click away from a sale.


Starting Your Own E- Commerce

Now we move to the some detailed and technical discussion that how e-commerce is actually being done and managed. In the following chapter, we will be concentrating on the following main points.

Ø The very first decision to enter into the e-commerce field is to decide about your business. There can be two main options for this.

1- You are starting totally a new business right from the scratch. And every thing is to be decided about your product, customers, target market etc.

2- You are already running a business and e-commerce is used to support the existing business by offering the same product or another product or service that enhances the sale of your major product category. It is not necessary to even sell the product. Apart from increase in the marketing and sales, Internet can be used in various ways to support your business as it has already been discussed under the scope of e-commerce (chapter #2).

Ø The next step includes deciding about your 4Ps in detail. Here it is continuation of the first step. In this we define every thing operationally that how it will be done. What type of resources will be required and what technology will be used. Decision about resources may not be very clear till this step as it varies to a great extent with the technical specification.

Ø Third step is to decide about the type of web site you need. There are different types and category of Web sites that suit to any particular business. It will be discuss in detail in this chapter later.

Ø Next step is to make your shop or web site. Here following types of decision come under discussion.

1- technological decisions

2- Decisions about software to be used

3- Decisions about hardware

4- Decisions about technical human resource necessary to run the operations for ongoing basis.

5- The money you will be requiring to make your shop. It includes fixed and variable cost decisions.

Ø Next steps lead to the management of the web site. What business strategies will be used and how to get competitive advantage on the Internet. So finally we have to develop complete e-commerce strategy that will be used to run our business on the Internet.

So over all we can say that a new dot-com business can be divided into following steps.

1) What is your strategic vision for the dot-com operations?

2) How will your govern those dot-com operations.

3) How will you allocate key resources to those dot-com operations?

4) What will be your operating infrastructure for those dot-com operations?

5) Is you and your management teams are aligned with the dot-com agenda and the dot-com strategy that your have designed for your business.


Your Dot–COM Agenda [2]

clip_image001


1- Building your dot-com Vision

When one is going to enter in a dot-com business. There are two major options. The strategy is to be decided when one of these options are choose.[3]

Primary Objective of a Web site [4]

1- Are you going to build strategy on your current business models?

2- Are you going to create a new business model?

clip_image004

Current Business Model Strategy

If you are already running a business, then the new strategy is definitely to be aligned with the old one. The already ready running business may be possibly running on the following strategy.

1- Cost Leadership

2- Enhancing services

Many companies are pursuing the same business strategies in the dot-com world. Merrill Lynch, Dell Computers, Sony are the example of it. I n the same way some companies are going to use Internet for the purpose of enhancing services and hence creating a differentiation strategy. American Air lines is selling plane tickets on line. Toyota is planning to sell cars with the help of Internet. Cellular phone companies are getting feedback about the best tone that there customer like on their mobile phone.

Creating a New Business

The benefits that buyers in electronic markets receive from lower prices and search costs are in many instances more than enough to offset the potential additional risk, distribution and market costs. This is apparent from the continued growth of the sports trading card e-market that was studied. Sellers benefit from potential new sources for revenue in the e-market. The impact of e-markets on other organizations that support commercial transactions is more mixed. They reduce the need for certain types of intermediaries, such as wholesalers and retail stores, while increasing consumer demand for new intermediaries, ISP’s, online better business bureaus, and so forth. They also have potential implications for state and federal government tax revenue collection.

Our overall there are economic incentives, both from reduction of costs and from creation of new revenue sources, for electronic markets. It is not just a fad that will go away. Electronic markets are a new institution of capitalism and they are useful because there are instances when they economize on transaction costs when compared with other available transaction governance mechanisms such as traditional markets.

Running totally a new Business Model

The second option is that you are going to start a totally new business on the Internet. It is starting from the scratch. It requires quite more decision making than adding a dot-com world into your previous business. The great example of this is Internet portals, yahoo.com etc. Selling music for listening on the Internet is quite a new idea that has gained momentum these days and its going to be quite a new business market that never existed before. The financial industry has also found quite new uses of Internet. They are using this medium for lots of service enhancement.

The caution point is to keep an eye on the cannibalization. Your new business strategy should not be a threat to your already currently running business.


Governing your dot-com Business

The next step is to decide that how you’re new business will be governed. The major categories of decisions that leads to governing your dot-com business includes following.

Ø Operational decisions that include production, marketing, human resources.

Ø Financial decisions that includes your investment logic, finding and resources.

Ø How you balance the trade off between your operational and financial decisions.


Allocating Resources

The next step is to allocate resources to your dot-com world. There are four different types of approaches that help you to allocate resources for your dot-com world.[5]

1. Placing strategic bets

2. Leveraging your alliances

3. Outsourcing your dot-com operations.

4. Operational maintenance

Distinctions
Approaches to deploy your dot-com resources
clip_image005
Alliance Resources
Internal resources

Parity

Placing strategic bet means that company commits internal resources to differentiate its dot-com operations form those of competitors. These resources may be financial, technological or the human resources. Many companies have given their brains to the web startups, for example a former wal mart officer now controls the logistics of the amazom.com

You can also have differentiation and capabilities by alliances and partnerships in the dot-com world. Alliances are a rapid growing trend in the dot-com world. Micro soft never puts its hands on the hardware development. It makes software and then asks IBM and its other alliances to make hardware that will run the software of Microsoft in a better way.

Outsourcing is also a big tool for managing your resources. One can easily get web-hosting facility, back end processing and other related operational facilities from any of other e business that are in this field already. You can have a free domain name with the .com extension on the Internet by going to namedemo.com and hence you have saved $75 for your first year. If you are a new comer and is just posting your resume than this may be a significant amount for you. Some of the companies that are providing outsourcing facilities includes IBM, HP, oracle, Microsoft, EDS, And AT&T.

Operating Infrastructure

Finally we have to decide about our operational infrastructure. That is the technical requirements to say that we are wired and we are enabled. In the future your may not be wired and may be enabled as WAP is making its way to a whole New World of wireless communication.

Operational Decisions are based on the following building blocks.

Ø Attaining Superior Funciotanlity

Ø Offering personalize Interactions

Ø Streamlining transactions

Ø Ensuring Privacy

Ø Superior functionality results in the easy use of web site for the customer. It is done with the help of better quality images, sound effects and 3D options.

Ø Personalize transaction results into the site loyalty. MY yahoo is the best example of it. In Future one will have a totally customized web that will satisfy all the needs that one has without spamming and undesired data.

Ø The back end operations decisions also require simplicity and efficiency. Handling a terabyte or a penta-byte data is not an easy task but this data is the only asset of an e organization.

Ø Finally keeping privacy is one the most important and most difficult operational decision. Spamming, data theft, viruses, firewall, hacking, all aspects are to be properly handled and are needed to be operationalized.


Management and Team Aligning

A dot-com requires totally a new style of management and a new style of teamwork. Its management should result in a relaxed and care free environment that leads to creativity. Management should not only encourage creativity but the experimentation is the only survival of a dot-com.

Now we have see that how a dot-com looks like and after these few steps that we have discussed above, we are ready to work on our e business a out of just our thinking process.


Deciding 4Ps for e commerce

When you are going to start your e commerce business. Than the primary decision making also includes the decision about the product, price, placing and promotion.

Product Decisions

To have a clearer understanding of the issues surrounding the impact of product characteristics on the successful use of the Internet, a discussion on product classifications is warranted. When looking at product classifications, marketers divide products and services based on the types of consumers that use them – consumer products and business to business products. The products are classified into convenience, shopping, specialty and unsought products. Convenience goods are those that are purchased frequently with little planning or shopping effort. They are usually at low prices and widely available. Shopping goods are those, which are, purchased less frequently, such as furniture and major appliances, and which are compared on the bases of suitability, quality, price and style. Specialty goods enjoy strong brand preference and loyalty. Consumers of these goods are willing to make a special purchase effort, do little brand comparisons and have low price sensitivity. Both producers and sellers of these products use carefully targeted promotion. Unsought products are consumer goods that the consumer either does not know about or knows about but does not normally think of buying; for example, Red Cross blood donations (Kotler, 1998).

Based on the above information, it is logical to infer that Internet commerce would be especially suited to the promotion of specialty goods, as they require a more targeted promotional effort. This notion is supported by Peterson et al. (1997), who state that the Internet seems to be especially suited to reach niche markets and sell products which are specialized or unique.

It is also possible to classify products and services as being either experience or search goods. Experience goods are those whose features can only be evaluated by trying or inspecting the product, while the features of search goods can be evaluated based on externally available information. Based on this classification, search goods can be objectively assessed based on the information available on the Internet and a transaction is more likely to take place (e.g. a music CD). However, in the case of an experience good, the information available might not be good enough for the customer to evaluate the product (e.g. a pair of shoes). In this sort of situation, Internet commerce is a poor substitute for more traditional retail channels. However, a customer might use a traditional channel to experience the product and revert back to an Internet-based transaction. It is also possible that a customer might use the Internet to acquire a frequently purchased experience.

Current Business Model Strategy

If you are already running a business, then the new strategy is definitely to be aligned with the old one. The already ready running business may be possibly running on the following strategy.

1- Cost Leadership

2- Enhancing services

Many companies are pursuing the same business strategies in the dot-com world. Merrill Lynch, Dell Computers, Sony are the example of it. I n the same way some companies are going to use Internet for the purpose of enhancing services and hence creating a differentiation strategy. American Air lines is selling plane tickets on line. Toyota is planning to sell cars with the help of Internet. Cellular phone companies are getting feedback about the best tone that there customer like on their mobile phone.

Creating a New Business

The benefits that buyers in electronic markets receive from lower prices and search costs are in many instances more than enough to offset the potential additional risk, distribution and market costs. This is apparent from the continued growth of the sports trading card e-market that was studied. Sellers benefit from potential new sources for revenue in the e-market. The impact of e-markets on other organizations that support commercial transactions is more mixed. They reduce the need for certain types of intermediaries, such as wholesalers and retail stores, while increasing consumer demand for new intermediaries, ISP’s, online better business bureaus, and so forth. They also have potential implications for state and federal government tax revenue collection.

Our overall there are economic incentives, both from reduction of costs and from creation of new revenue sources, for electronic markets. It is not just a fad that will go away. Electronic markets are a new institution of capitalism and they are useful because there are instances when they economize on transaction costs when compared with other available transaction governance mechanisms such as traditional markets.

Running totally a new Business Model

The second option is that you are going to start a totally new business on the Internet. It is starting from the scratch. It requires quite more decision making than adding a dot-com world into your previous business. The great example of this is Internet portals, yahoo.com etc. Selling music for listening on the Internet is quite a new idea that has gained momentum these days and its going to be quite a new business market that never existed before. The financial industry has also found quite new uses of Internet. They are using this medium for lots of service enhancement.

The caution point is to keep an eye on the cannibalization. Your new business strategy should not be a threat to your already currently running business.


Governing your dot-com Business

The next step is to decide that how you’re new business will be governed. The major categories of decisions that leads to governing your dot-com business includes following.

Ø Operational decisions that include production, marketing, human resources.

Ø Financial decisions that includes your investment logic, finding and resources.

Ø How you balance the trade off between your operational and financial decisions.


Allocating Resources

The next step is to allocate resources to your dot-com world. There are four different types of approaches that help you to allocate resources for your dot-com world.[5]

1. Placing strategic bets

2. Leveraging your alliances

3. Outsourcing your dot-com operations.

4. Operational maintenance

Distinctions
Approaches to deploy your dot-com resources
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Alliance Resources
Internal resources

Parity

Placing strategic bet means that company commits internal resources to differentiate its dot-com operations form those of competitors. These resources may be financial, technological or the human resources. Many companies have given their brains to the web startups, for example a former wal mart officer now controls the logistics of the amazom.com

You can also have differentiation and capabilities by alliances and partnerships in the dot-com world. Alliances are a rapid growing trend in the dot-com world. Micro soft never puts its hands on the hardware development. It makes software and then asks IBM and its other alliances to make hardware that will run the software of Microsoft in a better way.

Outsourcing is also a big tool for managing your resources. One can easily get web-hosting facility, back end processing and other related operational facilities from any of other e business that are in this field already. You can have a free domain name with the .com extension on the Internet by going to namedemo.com and hence you have saved $75 for your first year. If you are a new comer and is just posting your resume than this may be a significant amount for you. Some of the companies that are providing outsourcing facilities includes IBM, HP, oracle, Microsoft, EDS, And AT&T.

Operating Infrastructure

Finally we have to decide about our operational infrastructure. That is the technical requirements to say that we are wired and we are enabled. In the future your may not be wired and may be enabled as WAP is making its way to a whole New World of wireless communication.

Operational Decisions are based on the following building blocks.

Ø Attaining Superior Funciotanlity

Ø Offering personalize Interactions

Ø Streamlining transactions

Ø Ensuring Privacy

Ø Superior functionality results in the easy use of web site for the customer. It is done with the help of better quality images, sound effects and 3D options.

Ø Personalize transaction results into the site loyalty. MY yahoo is the best example of it. In Future one will have a totally customized web that will satisfy all the needs that one has without spamming and undesired data.

Ø The back end operations decisions also require simplicity and efficiency. Handling a terabyte or a penta-byte data is not an easy task but this data is the only asset of an e organization.

Ø Finally keeping privacy is one the most important and most difficult operational decision. Spamming, data theft, viruses, firewall, hacking, all aspects are to be properly handled and are needed to be operationalized.


Management and Team Aligning

A dot-com requires totally a new style of management and a new style of teamwork. Its management should result in a relaxed and care free environment that leads to creativity. Management should not only encourage creativity but the experimentation is the only survival of a dot-com.

Now we have see that how a dot-com looks like and after these few steps that we have discussed above, we are ready to work on our e business a out of just our thinking process.


Deciding 4Ps for e commerce

When you are going to start your e commerce business. Than the primary decision making also includes the decision about the product, price, placing and promotion.

Product Decisions

To have a clearer understanding of the issues surrounding the impact of product characteristics on the successful use of the Internet, a discussion on product classifications is warranted. When looking at product classifications, marketers divide products and services based on the types of consumers that use them – consumer products and business to business products. The products are classified into convenience, shopping, specialty and unsought products. Convenience goods are those that are purchased frequently with little planning or shopping effort. They are usually at low prices and widely available. Shopping goods are those, which are, purchased less frequently, such as furniture and major appliances, and which are compared on the bases of suitability, quality, price and style. Specialty goods enjoy strong brand preference and loyalty. Consumers of these goods are willing to make a special purchase effort, do little brand comparisons and have low price sensitivity. Both producers and sellers of these products use carefully targeted promotion. Unsought products are consumer goods that the consumer either does not know about or knows about but does not normally think of buying; for example, Red Cross blood donations (Kotler, 1998).

Based on the above information, it is logical to infer that Internet commerce would be especially suited to the promotion of specialty goods, as they require a more targeted promotional effort. This notion is supported by Peterson et al. (1997), who state that the Internet seems to be especially suited to reach niche markets and sell products which are specialized or unique.

It is also possible to classify products and services as being either experience or search goods. Experience goods are those whose features can only be evaluated by trying or inspecting the product, while the features of search goods can be evaluated based on externally available information. Based on this classification, search goods can be objectively assessed based on the information available on the Internet and a transaction is more likely to take place (e.g. a music CD). However, in the case of an experience good, the information available might not be good enough for the customer to evaluate the product (e.g. a pair of shoes). In this sort of situation, Internet commerce is a poor substitute for more traditional retail channels. However, a customer might use a traditional channel to experience the product and revert back to an Internet-based transaction. It is also possible that a customer might use the Internet to acquire a frequently purchased experience.

E- Product Development

Now first of all we are going to see that how we can decided that what will be our product that we are going to offer on the Internet. The product decisions for e commerce are similar to the product decisions taken for ordinary commerce. Still some major differences can also be seen.

The major product decisions include following.

1. What we can sell on the Internet and what can not be sold on the Internet.

2. Decision about major product or service category that you are entering to.

3. The product development phase with the decisions about the target market.

4. Informational product decisions are different than the tangible product development decisions. They are to be taken separately.

What we can sell on Internet [6]

We can sell everything that we want on the Internet. There are some products that are suitable t be sold on the Internet and some are not. These decisions are based on the following three factors.

(1) Cost and frequency of purchase;

(2) Value proposition; and

(3) Degree of differentiation.

Goods vary along the first dimension from low-cost, frequently purchased goods (e.g. consumable products such as milk) to high-cost, infrequently purchased goods (e.g. durable products such as stereo systems). In general, when purchase fulfillment requires physical delivery, the more frequent the purchase and the smaller the cost (e.g. milk), the less likely there is to be a good “fit” between a product or service and the Internet-based marketing.

Goods vary along the second dimension according to their value proposition, that is, if they are tangible and physical or intangible and service related. Internet-related marketing is particularly well suited to certain types of intangible or service-related goods (i.e. those based on digital assets). To the extent that the value proposition is intangible, the greater the frequency of purchase or use of a good, the greater the advantage of the Internet as a transaction and distribution medium.

The third dimension reflects the degree to which a product or service is differentiable. In particular, it reflects the extent to which a seller is able to create a sustainable competitive advantage through product and service differentiation. Internet-related marketing can result in extreme price competition when products or services are incapable of significant differentiation. However, when products or services are capable of significant differentiation, the Internet can serve as an effective segmentation mechanism for guiding buyers to their ideal product or service.


E-product development Process

One of the most successful product category that is being sold over the Internet is the intangible services and the informational products. It includes e mails, news, financial services, order bookings, etc.

For e commerce we have to modify our traditional product development process. There are two major product development approaches.[7]

Ø Traditional approach

Ø Flexible approach for product development

Well the Internet uses the flexible approach for the product development that is quite different than the traditional approach. Here we can see the difference between the both approaches.

The Traditional Approach

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Market introduction

Concept Freeze

Project Start

The Flexible Approach
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In the traditional product development process, initially the product is developed in the in the laboratory when the concept of the product is has been decided finally. Once the product concept is finalized than it is given to the R&D to shape that concept in the form of product and finally it is introduced in the market. But in the case of Internet world, we start product development along with its concept development. Our concept development phase overlaps the implementation phase here.

The flexible process is not essential for each of the company that is going on the Internet. But if the concept is quite new and innovative than it needs to be refined with the help of flexible product development process.

Development of Netscape browser is the best example of the flexible product development process. Netscape introduced its browser in the market by January 1996. Then it saw the response of the people and researched on the further technical possibilities. So it kept on developing its navigator. In the next nine months there were 7 updates in the market and that last update was very different than the first one while the new concepts were added in the browser.

The flexible product development requires a deep sensing of the market. It leads to know that what market needs and want. When u sense the market than you can finally go for the technical solutions of that product. Then these technical solutions are again tested in the market and hence the product development keeps on going. There is very less chance that a product is existing in the field of Internet and it is not being developed at that time. Through out the product life cycle and product is being developed in the Internet world.


Successful Products

According to a survey held in Singapore, Following products are suited best for the sale on the Internet and there sales are comparatively much higher than the sales of other products on the Internet.[8]

These products include following main categories.

1- Flowers and Gifts

2- Paid Subscriptions

3- Financial Information

4- Online Video/ Music

5- Software

6- Consultancy Services

7- Loans and Insurance

Small firms should realize Internet commerce demands a holistic approach. Product characteristics alone cannot determine Internet commerce benefit. Small firms may need to seek advice from experienced marketers specializing in online marketing to determine a marketing strategy based on other factors in addition to product characteristics.[9]

Ø It has been a tenet of the online believer’s faith that the Internet allows small businesses the same access to markets as the giant multinational. Indeed, we have seen how larger businesses have focused more on internal communications and their existing supply chain than on promotion and selling.

Ø E-commerce has succeeded best where the products and services are technical and/or technological. More techies use the Internet so, it seems to us, they are more likely to use the medium to buy.

Ø The Internet is primarily an information source rather than a “virtual marketplace”. Despite the hype, most people use the Internet to find things out rather than to engage in transactions.

In general, consumers will have access to a wide array of new services via the Internet, some, of which we can't even conceive of now. On a less lofty level, almost everyone has something to sell, a service, a product or a skill, and through the Internet they now have a worldwide market free from the convention economics of mass distribution. Recreation:Customized entertainment taking advantage of the multi-media capabilities. Products and Services that will do extremely well In the Next Phase of the Development of the Internet as a Marketplace includes following.[10]

Shopping/mail order:

Consumers will be able to find the best prices, quality and products with advanced search tools. If you do not have a presence on the worldwide Web you will not be able to participate in this marketplace.


Business to Business Commerce:

The Internet greatly facilitates the process of looking for products and services; receiving information and evaluating the product; contracting; delivering; and post-delivery support of the product/service.

Education/Corporate Training:

Virtual seminars will become commonplace. Content providers will no longer be able to command thousands of dollars for training videotape, but can greatly increase profits with significantly increased volume and reduced marketing and distribution costs.

Travel:

You can visually experience many portions of the trip before committing to the purchase, expanding the travel market and reducing transaction costs.

Health Care

An area where people will pay for information.

Financial Services

Investing and managing your money will never be the same again.


Pricing Decisions

Price setting of the product or service totally depends on the product or service that you are going to perform on the Internet. People may think that you are giving your product for free but in fact you may be earning with advertising on Internet.

There is not much data available for the price decisions on the Internet. There are very different pricing strategies that are practiced on the Internet. But none of them can be taken for granted. Your price decisions also depend on the business strategy. If Company is doing business on the bases of cost leadership than Internet can help the company make its cost further decrease due to cheap communication facilities. Pricing decisions also depends upon the target market for which you are selling your product.

What is ever is the pricing strategy but he basic pricing decisions is your desired profit above the cost that you are going pay for your facility. People are buying some times those products from the Internet that may be available cheaper without the use of Internet but this ratio is very low.

You can charge premium by providing time Vs cost trade off to your

Customer and hence the customer is ready to pay you premium for this time saving. Pricing also depends upon the you total input cost for starting your business that includes your fixed cost that is also to be retrieved back. Pricing also depends upon the amount of creativity you are presenting with your product. If product is individualized and customized than traditional practice of charging more stays the same. But one thing is to be kept is mind that product life cycle is the e commerce world is very less than the product life cycle of traditional business world. So you have to recover all of the cost as early as possible. The moment you present your product on the net. That moment automatically gives birth to your competitors and different alternatives that will be on the net much earlier than you are expecting. So pricing decisions are to be taken very carefully. But it does not mean that you start a skimming strategy and keep very high strategy in the beginning. It is to be kept is mind that you have to promote and tell the people that you have got a product on the net and you are to attract them and low pricing or free product is also the part of it.

Payment Systems on the Internet

The payment mechanisms make the pricing P totally different than the traditional pricing decisions we take for our normal commerce. Here now I am going to discuss some of the payment procedures that are being used on the Internet.

It is to be kept in mind that security and safety are one of the most important aspects in e commerce. They are directly with the payment procedures and will be discussed after discussing these 4 Ps in e commerce.

There are different payment systems on the Internet. Some of them are following.[11]

1- Use of credit cards

2- Paying net cash

3- Point earning method

4- Digital coins method

5- Payment through e cash

6- Use of Millicent

Use of credit cards [12]

The credit card is one of the most widely payment procedure that is being used for Internet transactions. The credit card requires a further third party verification apart from the bank and the payee. It has also the disadvantage of credit card theft.

In Pakistan credit cards are in the primary phase. Although State Bank of Pakistan has allowed banks to open merchant account for this purpose but still no progress have been made so far. City bank and ANZ Grindlays are providing limited services in this field.

Digital Coins Payments

Due to the increasing importance of electronic commerce via the Internet the importance of digital money increases. Representing "real" money in an electronic world means that properties and functionalities like anonymity, authenticity, as well as availability of Pico-payments are considered. Like "real" money, digital coins have an inherent value.

Depending on the way digital money is implemented there exist different cryptographic methods and organizational precautions to avoid the usage of forged money. Basically, there are two different types of digital coin-based money:

Ø Using specific cryptographic method the anonymity of digital money may be achieved. Then, neither the financial institution nor the dealer may build up a connection between the customer and coins used by him. The financial institution only knows to which customer the coins are transferred initially

Ø Coins with customer identifying characteristics allow the financial institution to identify the customer and to follow up on payments where the coin has been used in.

Ø Also, the payment process may be classified into online and offline transactions.

Ø If an online payment takes place the coins will be checked immediately for authenticity. This implies that a digital coin is used only once. The financial institution needs to check the authenticity by using a list of all coins that have been issued or a list of all coins that have been sent in for credit.

Ø In case of offline payments the coins may be used more than once. To avoid double spending it is necessary to store information about the user or the users on the coin in order to be able to perform checks later. Anonymity may be guaranteed by so-called secret sharing. Then, the financial institution only gets information in case of double spending.


Payment through E-Cash [13]

E-Cash is anonymous digital money whose validity is checked online ...

The customer withdraws digital money from his equate-account using ...

Figure: Payment process with e cash [14] 

clip_image009

 

Digital coins may be used only once. E-Cash may be considered to be a currency of its own. Financial institutions have to use special accounts. They also guarantee conversion into "real" money. As a consequence central banks like the Bundes bank or the Federal Reserve Bank have difficulties in controlling money supply (financial institutions may create additional money and thereby increase the amount of money supplied; this is well-known in the case of so-called check book or deposit money

E-Cash security is achieved by using an asymmetric cryptographic algorithm. Account access may be protected additionally by using personal passwords. The storage of a coin's serial numbers does prevent double spending. There may be a problem with scalability, however. The costs of checking for authenticity of coins are relatively high because the check has to be done online. This means that the suitability for micro- and Pico-payments has to be evaluated carefully. Each person who has an ECash-account may accept ECash coins. The blinding method, as was already indicated, guarantees anonymity.

 

Payment through Netcash

The nutcase method is developed at the University of Southern California. One important goal of this project is the use of already existing accounting systems and procedures in financial institutions. This reduces initial investment costs. In contrast to ECash, this method is based on a decentralized approach. Consequently, problems associated with a large number of coins and participants may be solved more easily. Therefore, reduced anonymity is accepted and the cooperation of all participating financial institutions is required.

The system is based on independent` distributed currency servers. Currency servers are locations to exchange anonymous into non-anonymous money. Each currency server possesses an account on an accounting server. The currency server does clearing. It is necessary that the integrity of the servers is certified and that currency servers accept coins from other currency servers. Netcash-coins have a face value and a serial number. Also, the address of the issuing server and an expiry date is stored.

Figure: Payment process using Netcash [15] 

clip_image011

Figure shows the payment process using Netcash. The customer gets Netcash-coins from a currency server. These coins are encoded with a publicly and send to the dealer. Anonymity of the customer may be guaranteed by using a new session key for each message. The dealer transfers the coins received immediately to his currency server. From the currency server he either receives new coins or the corresponding value will be credited to his account. The currency server does final clearing.

The serial numbers of all coins that are not send back and are not yet expired are stored on the currency server in order to avoid double spending. This means reduced anonymity. Exchanging the coins at another server may increase anonymity. Security is reached by means of a hybrid cryptographic algorithm. Like ECash we have a method that requires a lot of communication. The usage for micro-payments, however, should be more efficient. Each person may accept Netcash-coins because the system allows free exchange of coins.

 

Payment through Millicent

The Millicent method is developed by Digital Equipment Corporation (DEC) to manage small and smallest payments (e.g. payment for getting information from the Internet about news and stock quotations or payment for small programs like Java-applets)

clip_image013
The customer buys broker scrip with a defined value by using his credit card or by debiting a suitable bank or broker account. Such scrip is like a telephone card. At the time of purchase the customer exchanges parts of the scrip into a dealer's scrip. This scrip is then send to the dealer. The dealer collects all Scripps and exchanges them into "real" money.  Figure shows the payment prosecuting Millicent.

Figure: Payment process using Millicent [16]

To guarantee the security of this method one-way-hash-functions that may be evaluated quickly are used. Furthermore, the costs of illegally decoding scrip (this means finding the inverse of the hash-function used) are much higher than the scrip's value. A large number of transactions are possible at low costs compared to the other two methods discussed. In principle, each person may be registered at a broker and may then accept digital payments. There is no anonymity but there is the possibility to buy Scripps from different brokers. Then, no comprehensive user profile may be built.


Logistics Decisions For E commerce

The logistic section is given a bit less importance in the field of Internet, but it is one of the most important aspect that one company should look into. With Internet it does not mean that we so not need a proper full-equipped logistics department.

The increasing popularity of the Internet has generated significant interest in the development of electronic retail commerce. The Internet has the potential to evolve into an interconnected marketplace, facilitating the exchange of a wide variety of products and services. The development of this electronic marketplace implies that there will be significant changes in the economics of marketing channels and the organizational structure of distribution, which will lead to a redefinition of industry value systems. When a company starts an e- commerce business than it is involved in two types of main logistics.

1- Distribution of Intangible Products

2- Distribution of Tangible Products

Distribution of Intangible products

The Intangible section on the Internet includes following.

Ø When the company is in the business of informational products.

Ø When the company has some business that does not includes any physical asset.

Many companies have been using the Internet for the transmission of data. The major financial institutions in the world use the Internet extensively for exchanging information and files. Publishers are using the Internet to receive manuscripts, and transmit files for printing over the Internet. Books are written and collaboratively edited using the Internet (Fraase 1994).

Research and scientific organizations and educational institutions, the original inhabitants of the Internet, are using the Internet to transmit large quantities of data as well, but corporate users now transfer the largest portion of data (Ellsworth and Ellsworth 1994).

Logistics of Tangible Products

When you are selling some tangible product on the Internet then the task of managing logistics becomes much more difficult then it is taken. Selling a physical product on the Internet requires a complete logistics department at the back end .It requires organized form of order processing. It requires much more mount of inventory management and warehousing.

The importance of logistics can be valued from the fact that today amazon.com has so big warehouse at its back end that are equal to a big wal mart. It requires same amount of management and expertise as it is required to run a sears store or ant big retail store in the your country. It requires same amount of warehousing and logistics as we have amount of inventory processing for PACE in Lahore.


Cybermediaries in E-commerce

"Cybermediaries, " are organizations that perform the mediating tasks in the world of electronic commerce.

 

The intermediaries in an e-commerce world that bridge the gap between the both ends are called cybermerdiaries. It is generally a notion that as the Internet grows and e-commerce takes on its momentum, it will result into the elimination of the middleman from the distributions system. Well this is not the case. Still there is much more types of intermediaries (called Cybermediaries[17] in this case) are emerging.

 

The advent of nearly ubiquitous information infrastructures has led many to predict that one effect of electronic markets will be the bypassing of intermediaries in electronic markets. The ability of electronic networks to reduce transaction costs is the theoretical cause of this supposed trend.

Functions of Electronic Middleman

There are new functions that are performed by an electronic intermediary. They are not just sorting and assorting goods and services as in the case of traditional marketing. They are performing Following Functions.


Search and Evaluation

A consumer choosing a specialty store over a department store implicitly chooses between two alternative search and evaluation criteria. In either case the consumer is delegating some of the product search process to the retail intermediary. Intermediaries also provide quality control and product evaluation. Importantly, this may not mean providing a high level of quality, but rather providing an appropriate level and definition of quality. Thus, the quality of the goods expected at a flea market, a discount store, and a specialty-clothing boutique is significantly different. Specialized intermediaries, such as Consumer Reports and Better Business Bureau can also provide product evaluations. However, retail intermediaries design the type of the search and evaluation services that will be offered to consumers by choosing the product mix and focus.

Needs Assessment and Product Matching.

In many cases it is not reasonable to assume that individual consumers possess the knowledge needed to assess their needs reliably and identify the products which will efficiently meet those needs. Therefore, intermediaries can provide a valuable service by helping customers determine their needs. For example, many hardware stores explicitly present themselves as providers of "helpful hardware people" who help customers determine which products they need. By providing information, not just about the product, but also about the usefulness of the product, and even explicit expert assistance for identifying consumers' needs, intermediaries provide consumers with needs assessment and product matching services.


Customer Risk Management [18]

Consumers do not always have perfect information, and hence they may purchase products that do not meet their needs. Consequently, in any retail transaction the consumer faces a certain amount of risk. This risk may be the result of either consumer need uncertainty, communication failure regarding the characteristics of the product, or the intentional or accidental failure of the producer to provide an adequate product. Another service that many intermediaries provide is related to the management of this risk. By providing consumers with the option to return faulty products or providing additional warranties, intermediaries reduce the consumers' exposure to the risk associated with producer error. If the consumer has the option to return products for any reason, the intermediary further reduces the customer's exposure to the risk associated with customer failure to assess needs accurately and match them to the characteristics of the product. Thus, by choosing an intermediary that provides these services, customers are implicitly purchasing insurance from the intermediary.

 

Product Distribution

Many intermediaries play an important role in the production, packaging, and distribution of goods. Distribution is a critical factor in determining the value of many consumer goods. For example, the value of a gallon of gasoline one hundred miles from a consumer's home and the value of a gallon of gasoline one mile from the consumer's home are significantly different, primarily because of the distribution services provided. Distribution service firms, such as Federal Express, are a prime example of how information technology has begun to make it economical to provide services independently that historically have been provided by integrated retail intermediaries.

 

Product Information Dissemination [19]

One class of producer services provided by intermediaries relates to informing consumers about the existence and characteristics of products. Producers rely on a variety of intermediaries, including traditional retail stores, catalog and mail-order houses, advertising agencies, and media outlets to inform consumers. In some cases, such as traditional retail intermediaries, these information services are tightly tied to other services, such as distribution, and in other cases independent intermediaries may provide the information services and distribution.

Purchase Influence

Ultimately producers are not interested only in providing information for consumers; they are interested in selling products. Thus, in addition to information services, producers also value services related to influencing consumer purchase choices. There are many ways that intermediaries can influence consumers' purchasing behavior. Product placement by intermediaries can influence product choice, as can explicit advice from sales agents. Commission compensation schemes, shelf space payments, and special discounts are all ways that producers purchase influence services from intermediaries.

 

Provision of Customer Information

In addition to information and influence services, intermediaries also provide valuable information about customers. Increased use of IT in the retail industry has contributed to an increase in the importance of retailers and credit companies as sources of consumer information. Producers to evaluate new products and plan production of existing products use this information, which is also collected by specialized intermediaries, such as market research firms. Even in cases where producers do not receive explicit consumer information, retail intermediaries implicitly provide information-processing services by aggregating demand information from a variety of local markets.

 

Producer Risk Management

Like consumers, producers face risks when engaging in commercial transactions. Intermediaries provide services that enable producers to manage their exposure to such risks as consumer fraud and theft. This risk, which has received a great deal of attention in recent discussions of Internet commerce, is a problem that traditionally has been managed by retail and credit intermediaries. In the past, these intermediaries have provided systems and policies for limiting this risk. When it could not be eliminated, it was the intermediaries that managed direct exposure to that risk.


Integration of Consumer and Producer Needs

Intermediaries must deal with problems that arise when consumer needs conflict with the needs of producers. In a competitive environment a successful integrated intermediary must provide a bundle of services that balances the needs of consumers and producers and is acceptable to both. For example, a producer may wish to inform consumers about the existence of a good while consumers would rather it were filtered out as part of the product search and evaluation process.


Types of Cybermediaries [20]

Directories

Directory service intermediaries help consumers find producers by categorizing Web sites and providing structured menus to facilitate navigation. At present these are usually free services to consumers, but in the future may extract fees. There are three types of directory services.

 

1-General directories (e.g. Yahoo and EINet Galaxy) provide a general index of a large variety of different sites. There is typically some scheme for organizing (and choosing) the sites that will be included. These site often support browsing as well as keyword searches of the index.

 

2-Commercial directories (e.g., The All-Internet Shopping Directory) focus on providing indices of commercial sites on the Web. These sites do not provide infrastructure or development services for producers, but simply acts as a directory of externally existing commercial sites. Commercial directories may also provide information about a specific commercial area; often listing firms that do not even have Web sites (e.g. The Embroidery Directory). These intermediaries are equivalent to publishers of paper-based industry guides.

 

3-specialized directories

For Example Jeff Frohwein's ISDN Technical Page) are topic oriented, often even as simple as a single page created by an individual interested in a topic. These pages may play a role in supporting commercial exchanges by providing a consumer with technical and evaluative information about a good or a particular producer, in additional to simple search support.

Search Services

In contrast to the directories, search sites (e.g. Lycos and Infoseek) provide users with the capabilities for conducting keyword searches of extensive databases of Web sites/pages. Typically, search sites do not allow browsing of the database directly, and they are rarely topic specific. Because there is an attempt at completeness they may allow individuals to explicitly add entries to the database.

Malls.

The term virtual mall or Internet mall is often used to refer to any site that have more than two commercial sites linked to it. Hence, many of the commercial directories described above are actually called "malls". However, Here it is to be distinguished between a directory service, which indexes external commercial sites, from an intermediary, that, like traditional physical malls, provides infrastructure for the producer/retailer in return for a fee (perhaps rent or percentage of sales). Often these malls have a geographic focus (e.g., The Aloha Mall or The Alaskan Mall). They may target a particular type of producer/retailer (e.g., The Asian American Mall). Or they may be composed of variety of "stores", selling a variety of products (e.g., The Pinnacle Mall or Cyber superstores). Malls often will provide links to stores other than the stores that are explicitly part of the mall. However, a key difference between a mall and a directory is the source of their income. A mall derives its income from its "renters;" a directory does not have renters and so will typically have some type of advertising for sale.

Publishers

Publisher Web sites is "traffic generators" that offers content of interest to consumers (e.g. Information Week or Wired Magazine). They may appear more or less to be online newspapers or magazines. Currently the largest traffic generators are the directories and search sites described above. The high traffic generators that are content providers are often pre existing publishers. Publishers become intermediaries when they offer links to producers through advertising or product listings related to their content. An example of a primarily electronic content provider with very strategically placed ads is GNN. They may only charge flat fees for advertising, or may extract a transaction fee for sales.

Virtual Resellers

The malls described above provide cyber-infrastructure, but they do not own inventory or sell products directly. In contrast, virtual resellers do. These are intermediaries that exist to sell to consumers. Often these resellers are product-focused (e.g., The Christmas ShopInternational Shopping Club, and America's Shirt and Tie). They are able to obtain products directly from manufacturers, who may hesitate to go directly to consumers for fear of alienating retailers upon which they depend. It thus represents a good of example of where the NII permits lower priced goods to be offered to consumers, but through efficient intermediaries rather than producer-to-consumer direct links.

Web Site Evaluators

Consumers may be directed to a producer's site via a new type of site that offers some form of evaluation, which may help to reduce some of the risk to consumers (e.g., Point Communications (Top 5% of the Web) and GNN). Sometimes the evaluations are based on frequency of access, while other times they are an explicit review of the sites. They may extract value by charging a fee to producers to be evaluated, or may charge consumers for their service. Also some of the directories and search sites described above are beginning to provide evaluations of sites.

Auditors

Auditors are not direct intermediaries, but serve the same functions as audience measurement services in traditional media. We mention them only to point out that Internet commerce requires many of the same supplementary services that facilitate traditional commercial activity. Advertisers require information on the usage rates associated with Web advertising vehicles, as well as credible information on audience characteristics. Nielsen, a firm that dominates audience measurement services in other media, is quickly moving to capture a preeminent position in Web measurement as well through their Nielsen Interactive Services subsidiary. Another player is The Internet Audit Bureau.

Forums, Fan Clubs, and User Groups

Sites such as these are also not necessarily direct intermediaries, but can play a large role in facilitating customer-producer feedback and supporting market research. The best examples of these groups are product-related discussion groups and lists. They may be created specifically to connect the producer with consumers (as is the case for many of the user forums on the commercial on-line services) or they may be created by users to communicate with each other (as is the case for most of the discussion lists and newsgroups on the Internet).

Financial Intermediaries

Any form of electronic commerce will require some means of making or authorizing payments from buyer to seller. Payment systems will take many forms including credit authorization by major credit card companies such as Visa or MasterCard, electronic equivalents to writing checks (Checkfree), paying in cash (Digicash), and sending secure electronic mail authorizing a payment (First Virtual). In an electronic commerce environment, these financial intermediaries may extract per transaction fees in order to absorb some of the risk associated with money flows.

Spot Market Makers and Barter Networks

Given the speed, with which electronic networks can inform buyers about products for sale, as well as those with goods to sell about buyers looking for particular products, it is likely that spot markets will emerge. When people exchange one good or service for another, instead of paying with money, it is a barter network. A new set of intermediaries, similar to auction houses, flea market owners, and commodities exchanges may arise to capitalize on this network opportunity. Some thriving examples of where the network helps create a spot market are the news groups that act as markets for various products. Often, on college campuses or local Freenets there are local market groups. There are also specialized groups (computer equipment, trading cards, etc.), and those that deal with used goods. In addition to the newsgroup-based facilities there are also many Web based services, including Barter Net and netTrader .


Intelligent Agents

Intelligent agents are often discussed as the answer to user problems with navigation in the chaos of the Internet. Agents are software programs that begin with some preliminary search criteria from users, but that also learn from past user behavior to help optimize searches. They may appear as a new intermediary service that buyers "hire" when in need of a particular good or service. One intelligent agent site known as BargainFinderhas been created by Andersen Consulting for research purposes, although it is not yet particularly powerful, and is actually more of a focused search tool.

In addition to providing services for consumers, intermediaries also provide a variety of services for producers. In choosing marketing channels, producers choose the bundle of services provided by the intermediaries involved. Several functions of intermediaries purchased by producers are briefly highlighted below.


Promotion Decisions for E-commerce

Perhaps promotion is the most beneficial part of marketing with the introduction of e-commerce. A Company that uses Internet can have much wider, cheaper and effective promotion than a company that is not in the e-commerce field. There are many new ways of promoting your business and promoting your product with the advent of Internet. Here are some of the promotional tools and strategies that are being used in the world of e-commerce.

Promotional Tools

There are many tools that are being used on the Internet for promotional purposes. Here is the list of some of them. Every day there is a new way coming that becomes a new promotional tool in the world of e-commerce. So it is very difficult to find all of them and list them all. Here are few of them that are being used excessively and effectively.

Ø An online classified ad is a very effective tool for your e-business promotion. You can run an ad on those sites that have much high customer terrific than yours and hence they can come to your site as they see your add.

Ø Affiliate/reseller/associate programs are also very effective in your web site promotion. You can become an affiliate to some well run business on the Internet and then have an easy takeoff. It is an easy startup for the new web based businesses.

Ø Newsgroup promotions are one of direct way of reaching to the customers. Your news groups continuously deliver information about your web site and about your business that results into attracting customers to your web site.

Ø Promotions through discussion lists and newsletters are one of the most widely used methods of your business promotion. Newsletters sent to e-mail of the individualize can be customized for each individual and is an easy way of reading as customer can know about you any time he likes.

Ø Autoresponders are also being used to respond to the needs of customers. When some one clicks any of your web site add or banner. Auto responder can keep that person on track by responding automatically on that adds by opening a new add of your web site for him.

Ø Bulletin boards are used where a group of people having common ideas and common problems can exchange views and post them for further discussion and further reading. Here you can cater to those bulletin boards that come to your target market.

Ø Ranking at the top of search engines is a very effective way to promote yourself in the wired world of business and you can increase your web terrific many times in just weeks by listing your web site for some mostly used search engines.

Ø Sales strategies as they are being used in traditional and non-electronic businesses are also very effective in the electronic world. Sales strategy is your basic strategy that is going to be used in every aspect of web promotion.

Ø Banner ads (tips and tricks) that includes banner exchange programs is like barter trade that helps both the web sites to promote them selves quickly.


Use of Search Engines for Promotion

Search Engines are index web pages based on content. Each engine works differently. They base the search results on Meta Tags, page content, title, or a combination of these.

A lot of a web site's traffic is generated by search engines and directories, 
so it's obvious that web masters will do anything to ensure their site is listed at the top. There are different search engines, and here are brief details of their types.

1- Directories categorize the WWW based on input submitted by a human being, an example is Yahoo. When someone searches for a keyword, this is referenced against a database of sites that contain a title and description for a particular site.

2- A search engine to index the web uses spiders. They all capture specific information about a page. Some capture the title and the first 1,000 characters of content. Some capture the title and "description" Meta Tag. Some look only for the "keyword" Meta tags. Some use a combination of all of these.

Promoting Your E-Business Presence

In The Internet Business Book, Ellsworth and Ellsworth (1994) present the four models for creating a business presence on the Internet that are most common. As companies become familiar with the Internet, they may expand beyond these four basic models, and allocate more resources to market on the Internet.

Billboard Model [21]

The Billboard model is concerned with the posting of information for others to read and take action on. These are visible, without being too obtrusive. The object is to place a small bit of your information in view without coming on too strong. Usually these notices are for telling others where more complete information is available. The Billboard approach works best for those just starting to use the Internet for business. It is a relatively low-cost strategy that can place your business information in the hands of Internet users. This approach is suitable for those with businesses that are traditionally outside of the Internet, and does not involve offering actual products or services over the network. People usually put notices in the following places:

Ø plan.txt, .plan, or .profile files

Ø Signature blocks

Ø E-mail headers or footers

Yellow Pages Approach [22]

The Yellow Pages approach is concerned with providing directory information similar to the telephone yellow pages. Essentially, you create a menu, with each item on the menu pointing toward other sources and providing small bits of information. By providing directory information and a useful service, businesses are "giving back to the Net." This is a middle ground approach. The Yellow Pages approach requires heavier investments of time and money, but it creates a higher profile for the business. This requires some Internet experience, and is for products and services that are ready for Internet promotion, and those with steady Internet access. Common Yellow Pages models are:

Ø Gopher servers

Ø BBSs

Ø Usenet News

Ø World Wide Web Pages

Ø WAIS

Brochure Approach [23]

The Brochure approach features the provision of information sheets, brochures, and other informational items. The emphasis here is on the information itself, with only a small amount of promotional material. This is similar to the Yellow Pages approach, but with the added requirement that you maintain a good-sized inventory of useful information pieces. Some of the vehicles for brochures include:

Ø FTP archives

Ø Gopher servers

Ø BBSs

Ø Usenet News

Ø WAIS

Ø World Wide Web Pages

Ø E-mail, particularly automated reply

Virtual storefront Approach

The Virtual Storefront is a full information service designed to include the marketing of your services and products, and in some cases, to allow online purchasing, customer support, and more. The Virtual Storefront should be approached cautiously. It requires a fairly heavy investment of time and effort. A Storefront can be extremely costly if a business maintains its own dedicated line and site, but it can also be maintained on a rental basis with a full-service Internet provider. The Storefront is particularly suited to businesses that are information-based. It combines some of the activities from all of the other models, but in a more coordinated approach.

Ø Created on Gopher or the World Wide Web, using your own or rented "space" from an Internet provider

Ø Supported by e-mail, FTP, Usenet News, and other tools already mentioned.


Developing an e-commerce website

Till now we have discussed many aspects that are not very technical in the nature, but this part of my thesis deals with a brief over look on how practically we can make an e commerce web site. Here is a checklist of some steps while we develop our own web site.

Ø First of all we make an over all plan that what our web site should consist of. It includes following things.

1. What are your web site contents and what is the volume of those contents

2. What is over all theme in which you are going to run your aver all Web site

3. What is your target market and who will be visiting your web site.

Ø What will be the major functions that will be performed by your web site. By major functions of a web site, I mean following

1. Is your web site is static information dissemination based that is updated periodically. For example you can have different carpet designs on your web site. And customer can mail you about his order. All the rest transaction is done manually with out Internet.

2. Is your web site is interactive in nature that allows customer to find his customized information by interacting with him. These sites are based on active server pages and are continuously updated with each person who is accessing it. These web sites are also taking your customer data in different form, processing them at the back and then contact the customer again.

3. Finally a full fledge e-commerce site includes all transaction based mechanism in it. A person can place order, can pay on the net and receive its good and service on the net. Delivery is physical only if the product is tangible.

Ø The next step is to find that what amount of expertise you need to develop your web site. How much time is required. How many different technical personals are required for building the web site. From where you are going to hire them.

Ø Next step is decided about the software’s that will be used to develop front end and the back end of your web site.

Ø Then we move on to development of web pages and your database. Development of Your Home page is altogether a different task as it is face of your web site.

Ø Next step is to use ODBC (Object Database Connectivity) for interconnecting your database and your web pages.

Ø Then we move on to selecting your domain name also called your web site name and getting your domain name registered.

Ø Setting your hardware and assigning duties to your staff is the next step as your web site is uploaded.

Ø Testing your web site for debugging and load balancing is a move ahead.

Ø At the same time, getting your merchant account and making it operational is one of the most difficult and important tasks for an e -commerce web site.

Ø Then we move on to developing different safety measure that results into your merchant account safety, customer's credit card safety, hacking etc.

Ø Finally we re check all the system and remove all the weaknesses from our web site.

The above mentioned checklist is not exhaustive, there are many steps that are in between and are left behind. There a number of things those are to be done and are not listed and are a very important part of your web site development.

Software Decisions

Deciding about software that will be used to make your web site is Primary importance. Following type of software is to be used.

1. Simple web page Development requires Microsoft Front page, Macro Media Dream Weaver etc.

2. Use of Macromedia products that include Flash for including animations in your web site.

3. Use of Different Image editors like Ulead image editor, Corel Draw, etc for enhancing your web site out look by adding different kinds of images

4. Use of different sound processing and sound editing software’s for adding different kinds of sounds in your web site.

5. Use of Oracle and MS Access for developing your database at the back end of your web site.

For all of these purposes different program languages are to be used in order to make a difference in your web site that includes JAVA, C++, Oracle and Visual Basic etc.

clip_image016

Major databases Used

 

Major Software’s Used

Ø MS FrontPage

Ø Macromedia Dreamweaver

Ø Macromedia Fireworks

Ø Macromedia Flash

Ø Macromedia Director

Ø Ulead Image Editor

Ø Corel Draw

Ø Macromedia Shockwave

Strategies for an E-commerce Site

Building Competitive Advantage

Now we have made a web site and we are doing business on the Internet. It is just beginning of the problems. Because you will find a competitor emerging every day in your e world. So the main task is to say that how our web site will survive in this electronic world. Our web site has to do something different that is not provided by the other web sites. It is the same traditional concept of building competitive advantage for your web site. There are many ways and many strategies that help you to differentiate your web site from others. Here are some strategies and some small tricks by which one build competitive advantage for his web site to be competitive in the wired world.

Competing on Reach, Richness & Affiliation

On the Internet the old ideas of competitive advantages of cost of quality are changing. Now if a company have to compete on the Internet. It can build its competitive advantage on following three bases.[24]

1-Competing on Reach.

Its all about access and connection. Reach means that to how many customers a business can contact and how many products it can offer. The more customers a business can grab on the Internet. More competitive the business is.

For example the largest bookstore in US offers about 200000 books. But amazon.com alone offers more than 4.5 million books. So there is a big difference between the reach of traditional and electronic business.

Previously a business reach was limited to some location but now the reach has no boundaries. Previously the large business had more reach than the small ones. But now on the Internet

2-Competing on Richness [25]

The second competitive advantage a business on Internet can have is on the basis of richness. Richness is the depth and detail of the information that a business can give to customers on the Internet. The more information you provide on the Internet. The better you are on the wires.

A business can be providing richness in the following fields.

Rich Customer Information

Previously retailers were the big source of collecting information about the customer. Now a company can directly now about its customers and can collect information about them. The better a company uses this information. The more competitive it becomes.

CDNOW.Com is best example of it. Here the Detailed information about the music liking and disliking of the customer is collected and then the same type of CDs are offered to him for sale.

Rich Product Information

The manufacturer has the best competitive advantage on the Internet on this base. They know maximum about their products. For example SONY knows best about its products. So this can be a competitive base for it while doing business on the Internet. It is more effective when the products are more complex and more technical.

Competing on the basis of Brands [26]

There are two types of brands.

1. Brands on the basis of beliefs e.g. SONY

2. Brands on the basis of experience e.g. Barbie

The products that have brands on the basis on experience will have more competitive advantage on Internet than the products that have brands on the basis of beliefs.

3- Competing on the Basis of Affiliation

The third base of competitive advantage on the Internet is affiliation. Affiliation means that whose interest a business represents on the Internet. A business can affiliate it self to consumer or to supplier. There will be a trade of between the both that whether a business should earn from the supplier side or the business should earn from the buyer side.

For example the amazon.com have to decide that if it does not show the ad of a new book. Will it hurt its own sales or the sales of the company that published the book.

Shaping your Strategy

At end the type of business will determine that what competitive base it should adopt. For example the product manufacturer should compete on the basis of richness. The retailers should build their strategy on the basis of consumer affiliation while the navigators should build their competitive edge on the basis of fast richness and close affiliation to the customer.[27]

Strategy for a Pure Navigator [28]

Ø Never take your Business Definition for granted. You must compete with other navigators on richness and reach domain whose boundaries are constantly moving.

Ø Recognize that close affiliation with consumer is a major competitive advantage. It is part of web directory. Do not compromise on consumer interests over your short-term gain.

Ø Build richness very fast. It the most probable area where the new comer will attack.


Strategy for electronic Retailer

Ø Define your business in tern of consumer search domain, not in a physical category.

Ø Be very exclusive with the product suppliers. The sacrifice of reach and consumer affiliation is likely to cost you more in competitive advantage than the gain in margin is worth.

Ø Beware of category killer physical retailers, they often have better consumer information and better logistics. They’re only handicap on inability to think differently that they could change.

Strategy for Product Manufacturer [29]

Ø Adding richness especially product specific richness is the most powerful way to compete. Concentrate on enhancing brand as experience.

Ø Mentally deconstruct your own business. Look at its informational components. Develop independent strategies for them. Take an organization that takes those strategies seriously.

Ø Reach is a two edged sword for manufacturer. It might enable you to escape stranglehold of your retailer . But it exposes you to new navigators whose potential reach ma is far more than you reach.

Ø Look seriously towards the alliances in order to have more reach and affiliation. Alliances are the most effective in the e world to run your business.

Types of web Sites

Now we are going to discuss the major types of web sites that a company should make in order to have a competitive advantage. There are two major paths in order to build a web site.

1. The first path is to move from information to transaction. In beginning your web site just provides information then you start doing transactions at the later stage. This type is adopted by the MNCs or companies who are already doing business and are very my much in known. They get promoted with information very easily. 3M is the best suited example who started giving information about all of its products over the Internet and keeps on telling of its new innovative products on the Internet. Now it has also selling its products on the Internet.


Evolutionary Path of a Web site [30]

INFORMATION TO TRANSACTION MODEL

MNCs

 

 

clip_image017

 

The second type of web site moves from transaction to information phase. It is inverse of the first web site type. This type of web site is suited for Internet start-ups. Firm that are starting their business on the Internet should first start transacting and then should promote their name and information about their site at the late stage when their product is already in the market. CD Now is the best example of this. Nullsoft is also a good example of people who started giving music to people over the Internet and now they are promoting that who was the company that made this business software.

Sir,

Tariq Malik

i need Help for the Proposal for Project on the TOPIC:

Financial Statement Analysis of Two Listed Companies...

OR

do u ve any better idea or Topic for    [(COM619  BS Commerce]

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