Learning Objectives
- Describe the concept of e-business and various e-business models
- Identify e-business models, enablers, and impacts
- Explain search engine optimization
- Discuss the main business-to-business (B2B) e-business enablers
- Identify the major trends related to e-business
Introduction to E-Business
What is e-business exactly? There are many definitions, but another way to look at it is as a digital market.
E-Business Terminology
| Term | Definition |
|---|---|
| Electronic funds transfer | Conducting financial transactions such as payments and remittances electronically |
| Electronic data interchange | Transferring documents between organizations electronically |
| Internet commerce | Conducting business using the Internet (for example, email, the Web, or file transfer) |
| Electronic commerce | Conducting business transactions with customers, suppliers, and externl partners utilizing the Internet, electronic data interchange, or private networks |
| Electronic government | Interacting or conducting transactions with government agencies electronically |
| Electronic business | Conducting electronic commerce as well as executing internal business processes that facilitate conducting business, such as production and inventory management, electronically |
Types of E-business
- Business-to-Consumer (B2C)
- Business-to-Business (B2B)
- Consumer-to-Consumer (C2C) – ebay
- Government-to-Constituent (G2C) – pay taxes online
E-Business Models
Another way to classify e-businesses is with respect to their business model.
What is a Business Model?
A business model represents the way the organization functions and creates value. In other words, it is how an organization makes money.
E-Business Models
- Online Retailing – offers product or services for sale. BestBuy.com; Staples.com
- Infomediary – offers specialized information to consumers. Travel: Kayak.com
- Content Providers – offers consumers content or relevant information and receiving money for ads or downloads. Tripadvisor.com
- Exchanges – offers a location for buyers and sellers to transact online. eBay.com, marketplace
- Online Community (Social Media) – offers individuals with similar interests and/or goals meeting place to interact with one another. Facebook.com
- E-business Infrastructure Provider – offers infrastructure hardware, software, or services to other organizations for e-business. PayPal.com, GoDaddy.com (domain and Web hosting)
E-Business Enablers
Technological Enablers
There are several technological requirements that must be met for consumers to successfully acquire goods or services online:
- An easy-to-navigate website or smartphone application
- Consumers have sufficient network bandwidth to access e-businesses’ content
- Interoperability - access with a wide variety of platform, PCs, Macs, Laptops, smartphones, etc.
Critical Mass
In e-business, attaining critical mass means that there are sufficient buyers to sustain the business of vendors and sufficient vendors to attract buyers to the Internet.
- Network effects or network economics
- Value in scarcity: a function of a good’s limited availability
- Value in plentitude: value of a network is function of number of connected nodes – more vendors there are on the Internet, the more interesting it is for you to shop online.
E-Business Impacts
Two specific terms used to refer to two of the impacts of e-business are channel compression and channel expansion.
Channel Compression – Channel compression is an impact on the downstream portion of the supply chain.
Channel compression refers to situations when the distribution chain is shortened by eliminating some or all of these intermediaries between the focal firm (product producer) and the end consumer.
Channel Expansion – Channel expansion offers the reverse impact.
Channel expansion is the addition of intermediaries in an industry whose purpose is to aggregate and provide information or brokering functionalities.
Kayak.com or online real estate website can reduce search costs and the information asymmetries
Design for E-Business
Many important design features that can make e-business website sucessful.
- security and privacy
- ease of use of the system
- the overall look
- nontechnological features: return policies, shipping policies, communication tools.
Business-to-Business (B2B)
Difference between B2C and B2B e-business
- The type of players involved
- The size of the market involved
- B2B involves two or more organizations
- B2B is often relationship based
B2B E-Business Enablers
B2B e-business involves the sharing of electronic documents, funds, and/or information between organizations for transactions to occur. There are many ways to implement this, which are summarized in the following table.
| Electronic data interchange (EDI) | Electronic exchange of information between two or more organizations using a standard format. |
| Supply chain management (SCM) | Allows organizations to manage the movement of materials or products from provision to production to consumption. SCM involves collaboration between partners both upstream and downstream from the focal organization. |
| E-marketplaces | Also known as an exchange. Allows vending companies and buying companies to “meet” electronically to conduct transactions. |
EDI – extensible markup language (XML) becomes a popular way of conducting B2B transactions.
Exchanges – An exchange allows vendors or sellers to meet electronically.
- Consortia: limited number of buyers or sellers are allowed to use a marketplace (private market).
- Neutral: large number of buyers and sellers exist.
- Seller-oriented (forward auction): many buyers bid on a seller’s products.
- Buyer-oriented (reverse auction): many sellers offer their products to a single buyer.
Failure factor: insufficient number of buyers and sellers.
Search Engine Optimization
Series of practices an organization can use to improve their visibility, or optimize, how their web pages or website show up on the search engine results pages.
- Not a one-time effort – search engines change their requirement often
- Include key words in prominent places – meta tags, headings
- Focus on intended audience – clearly define the keywords, what the targeted audience thinks when they search online
Types:
- Organic optimization – optimize keywords, improve ranking by in-links, inbound links etc.
- Sponsored links – pay for the placement
- Keyword bidding – another form of paying for a better ranking. Pay-per-click (PPC). The company that bids for the keywords and the company that bids the highest will show up higher in the results.
