Transcript E-commerce
Introduction to the Internet Definitions internet,TCP/IP, protocol, packet switching, WWW, NAP, Information Superhighway, B2B, B2C, ASP The Internet The World Wide Web (WWW) Intranets and Extranets The New Economy Objectives 1. To describe major characteristics of the Internet 2. To describe the role of protocols for the Internet 3. To describe major characteristics of the World Wide Web 4. To describe major drivers of the Net/Web 5. To describe major models in the New Economy 6. To distinguish between Internet, intranet and extranet Objectives: Buyers, Sellers, and Electronic Markets 1. Be able to describe the major characteristics in the buyer, seller and electronic market models of Electronic Commerce 2. Discuss segmentation of electronic distribution channels 3. Discuss assumptions for electronic marketplace 4. Discuss the impact of e-commerce on intermediaries 5. Describe the new e-commerce intermediaries 6. Discuss the factors leading to the success of new intermediaries The Internet Today Metanetwork - network made up of interconnected networks Hard to shut down (because of interconnectivity) Connected around the world via special computers called routers and hubs Connected over a grid called the backbone Traffic funneled into backbone via network access points (NAPs) The Internet Today A network of networks Largest decentralized computer network in the world Phenomenal growth rate Internet protocol: TCP/IP (Transmission Control Protocol/Internet Protocol) Packet switching (hot potato routing) Peer-to-peer communications Traffic funneled into backbone via network access points (NAPs) TCP/IP Protocols Define how data is subdivided into packets Provide functionality for productive networking Packets: fundamental grouping of data for transmission on a digital network Internet Protocol (IP): address space for internetworks Transmission Control Protocol (TCP): packet size Internet - Early Days ARPANET (1969) - network connecting university, military and defense contractors; funded by Advanced Research Projects Agency of US Dept. of Defense DARPA Internetting project (1973) project to link networks Internet (1983) - original ARPANET split into MILNET (for military communications & CSNET (networking research) Internet History NSF backbone connects 6 sites by 56 KBPS data circuits (1987); 13 nodes with T1 connections (1.5 Mbps)(1988); T3 connections (45 MBPS) (1992) ARPANET decommissioned (1990) NSF gets out of backbone business (1993) and NAPs (private commercial backbone operators) directly connect to NSFNET at a series of single points (San Francisco, Chicago, Washington DC,Pennsauken) Internet Governance Not controlled by one body No Internet police to enforce standards Internet Society (ISOC) Professional society Voluntary organization Concerned with growth and evolution of worldwide Internet Has subgroups National Science Foundation (NSF) Policy NSF footed bill for US backbone Had Acceptable Usage Policy (AUP) Relaxed policy in 1991 New policies allow, “announcements of new products or services for use in research or instruction, but not advertising of any kind” Fantastic growth in commercial users and providers The Information Superhighway Also called the Net or the I-Way Phrase used by newbies and Gore High-speed global communications network Many-to-many vs. one-to-one communications Encompasses voice, data, telephony, cable television, satellite systems Internet: The Big Picture http://navigators.com/internet_architecture.html What is the Web? World Wide Web, the Web, WWW A way of looking at the Internet Adds hypertext capabilities (HTML) Incorporates multimedia - pictures, text, animation, sound Format that is easy to learn and use Accessed by browsers - Netscape, Mosaic, Explorer The WWW Today Most WWW servers and sites run by commercial providers Businesses charged for storage and throughput Governments subsidize the Web Very stable Number of web sites doubles every 53 days E-commerce on WWW is rapidly evolving Driving Forces for WWW/Net Change in NSF policies Convergence of communication-related industries Publishing Entertainment Computing Communications Digitalization: text, documents, graphics, video, audio Globalization Driving Forces (continued) Virtualization Increasing competition and cooperation Critical mass E-mail PC’s Falling cost and improved technology Computers Networking Products (Millions of Dollars) Product 1997 1999 863 2,234 654 2,810 298 1,143 158 504 149 413 92 245 Forrester Research, 1997 2001 3,760 7,443 2,678 1,084 802 514 Definitions Intranets - networks using TCP/IP exclusively within an organization; inaccessible to outsiders Extranets - A company’s interorganizational information unavailble to users of its intranet or to the wider internet community Value-added networks (VANs)- non-internet network maintained privately Virtual private networks (VPNs) -corporate networks run over the Internet to replace leased phone lines between offices Intranet Features Easy navigation Accessible to most computing platforms Can integrate into distributed computing systems Scaleable (start small and grow) Extensible to many media types Can be tied to legacy systems Event driven vs. calendar driven Great for B2E Value of E-Commerce “The value of e-commerce transactions while still small relative to the size of the economy continues to grow at a remarkable rate. More significant than the dollar amount of these transactions are the new business processes and models that e-commerce enables.” Alan Greenspan Internet Economy Small but growing at a phenomenal rate The total US Internet economy more than doubled between 1996 and 1997 ---$15.5B to $38.8B Revenues grew 68% last year: $507B (up $200B from last year) USA Today10/27/99 Jobs grew from 1.6 million to 2.3 million in 1999 Business to Business (B2B) e-commerce -largest share of the Internet economy Internet economy is going through stages Stage 1 (1995-1999): B2C Websites $180- $300 billion Business evolution on Internet (Kosiur) Publishing Interactivity Transactions Fulfillment settlement workflow Survey Results: Very Important for Ideal Site Feature Ideal Own Secure 78% 50% Fast 50% 26% Easy to navigate 60% 22% Service-oriented 42% 18% Integrated 28% 17% Interactive 17% 8% Localized (to languages) 16% 10% Personalized 14% 8% Agenda'99 Stage 2 (now): Business Transformation - B2B $1.8 to $3.2 Trillion in 2003 Focus on improving core activities Dynamic pages Gateways to legacy systems IBM Procurement example maverick buyers vs. economies of scale 30 days to 1 day for generating PO tell valued suppliers about out-of-line pricing Total savings (1999): $6 billion Stage 3 (2000-2005): Industry Restructuring Empowers users and providers New intermediaries New players Some disintermediation Inter and intranet mergers Focus on transforming and leveraging Steps in Buyer/Seller Models SELLERS Distribution PRESALE BUYERS Search/Ask for product Promotion Discover product Display Compare products Pricing policy Negotiate terms Steps in Buyer/Seller Models SELLERS BUYERS Receive order Place order SALE Authorize payment Receive acknowlgmt Schedule order Compare products Build or retrieve from inventory Ship product Receive product POST Receive payment SALE Support products Market research Request support Give feedback Electronic Marketplace Assumptions There are many buyers and sellers none of the buyers or sellers represents a significant fraction of total demand or supply The goods or service to be transacted is homogenous or standardized doesn’t have standardized or idiosyncratic features Buyers and sellers are well-informed about quality and price Virtual Marketplace Principles Intermediaries can reduce uncertainty of transaction Order-of Magnitude factor helps shift paradigms Markets will do business with other markets Virtual marketplace may disrupt/destroy old value chains and enable new forms of value Value chains will be extended to explore B2B relationship/process changes Electronic Marketplace: Implications? Customer-centered Pricing Fraud Quality Intermediaries Impact of E-Commerce on Intermediaries? Will middlemen be disintermediated in ecommerce environments? New IntermediariesMarket Makers Market makers (brokers) -bring buyers and sellers together ONSALE eBay priceline Dangers of online auctions poor quality overpaying nondelivery New Intermediaries Buyer and Seller Agents Seller agents - make markets more accessible to providers Firefly (customer profiles) Buyer agents - perform search and evaluation tasks on goods and services for purchasers (more examples of these agents) Amazon.com Auto-By-Tel New Intermediaries Context Providers - help buyers and sellers by simplifying the virtual terrain ISPs - America Online Portals- Yahoo!, Excite Online communities - GeoCities Payment enablers -handle purchase transactions and their related funds transfers, as well as risk management CyberCash Verisign New Intermediaries Fulfillment specialists Fulfillment specialists - handles the transfer and storage of goods and coordinate allied information, such as the management of shipping logistics Fed Ex UPS E-commerce has helped their business Disintermediation Enables more efficient and effective interaction between companies and their end customers Also called compression May create problems between established distributors and online distribution channels Disintermediation may be a threat to some enterprises, but it creates opportunities for others