Transcript The Internet in Business

The Internet in Business:
Corporations, Businesses, and
Entrepreneurs
Chapter 9
Objectives
• Discuss the pervasiveness and inevitability of
business on the Internet
• Explain how money factors, especially advertising,
affect the Web
• Describe the likely success factors for Web
entrepreneurs
• Differentiate between business-to-Consumer and
Business-to-Business sites
• Explain the importance of Internet transmission
speed for business sites
• Differentiate between intranets, extranets and virtual
private networks
Contents
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E-Commerce
Promoting a Web Site
Web-based Business
Internet Speed
Streaming
Sharing Files
Push Technology / Webcasting
Intranets
VPN
Consolidation of the Web
E-Commerce
Electronic Commerce
Buying and selling over the Internet
E-Commerce
Retail Sites
Retail becomes etail
E-Commerce
Retail Sites
Clothes
Out-of-print biography
Used car
Bargain airline tickets
Music CDs
Videos
Baby equipment
Jewelry
Sporting goods
Office supplies
Cosmetics
Flowers
Gifts
Groceries
What’s for Sale?
EVERYTHING!
Etail
Advantage to Consumer
• Any time
• No need to dress and
travel
• Saves time
• Provides simple means
to comparison-shop
• Anyplace
• Contributes to
competition
Etail
Savings to retail business
No physical store building
People time
The Commerce Site
• Lists and views of products and prices
• Content
– Product related
– Updated regularly
– Written to interest visitors in returning to site to
purchase in the future
Commerce vs. Content Sites
• Commerce adding content
• Content adding products and sales information
• Division is no longer clear
E-Commerce Acceptance
• Opposition to e-Commerce by in-person
sales representatives
• Strategy to merge Etail and Retail
– Web site prices may be higher
– Commission to sales representative on each
Internet transaction regardless of their
involvement with its origin
– Web site marketing followed by local store
purchase
E-Commerce Acceptance
Successful web site may alienate others
Promoting a Web Site
• Users must find their way to the site
• Advertising needed
– Traditional ads on web pages
– Portals
Portals
• Definition – entry point to the rest of the
Internet
• Presents content and links to variety of
topics
• Customize the content
– User provides personal data
– Portal provides related information and links
• Can become your home page
Portals
Earning Money
• Flat fee to be listed on portal based upon
number of visitors to the site
• Percentage of sale generated by a visitor who
traveled to the affiliate via the portal
Portals
Who Are They?
Yahoo!
MSN
Snap!
Excite
Netscape
Go Network
America
Online
Search engines that expanded their content
and retail connections
Advertising
• Pay a fee to the host site
• Disadvantage of online Ads
– Contain graphics and applets that load
slowly
– Ads load first
Advertising
Types of Online Ads
• Banner ads
– Clickable
– Users reluctant to click through
• Live banner
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Displays sales pitch
User does not need to leave current site
Work slowly
Expensive to develop
• Context-sensitive
– Ad is related to subject matter on web page
– Greater click through and conversion
Web-based Business
• Simple to start-up of new businesses
• Provides access to people and global
markets
• Minimum investment
– Server link
– Home page
• Competition
– Not a level playing field
– Large advertising budgets of large companies “get
the word out”
Web-based Business
• Make business
look large
• Many products
can be offered
since no
inventory
• No physical
space to
reflect size
Payments
• Finalize order by
– Phone
– Fax
– Call with credit card number
• Enter credit card number
• Security
– Communication between buyer and retailer is
encrypted
– Use SSL (Secure Sockets Layer) protocol and
generate the message “our secure server”
Taxes
American Federal Law
• Taxes due only on mail-orders within your
state
• Presence of etail is debatable
Taxes
Internet Tax Freedom Act – 1998
• Provisions
– No tax on Internet access charges
– No new tax on out-of-state businesses (insures that
presence is not redefined)
– Creates temporary commission to study Internet taxes
– Demand that foreign governments keep Internet free of
taxes and tariffs
• Free of taxes for three years
• Can impose same tax regulations as phone or mail
order
• Provisions extended through 2005
Success Factors
Making a Profit
• Self-help
• Content
– What you have to say
and offer
– Cannot be static
– News about product,
scores, contest, searches
• Uniqueness
– Not offered elsewhere
– Difficult to obtain
– Search for product
– Order product
– Check the status of an
order
– Track a delivery
• Community
– Provide sense of
community
– Sharing between visitors
– Prizes
Repeat business needed
B2C
Business-to-Consumer
• Activity between business and individual
• User makes purchase based upon personal
decisions
• Growing
– $38 billion in 1998
– Over $800 billion by 2005
• Global trend – more than ½ online sales will
be outside US by 2004
B2B
Business-to-Business
• Activity of one business providing another with
materials and supplies
• Advantages to buyers
– Reduced costs of procurement
– Consider a larger number of suppliers
• Problems
– Security
– Antitrust concerns
• Growing
– $92 billion in 1998
– $2 trillion in 2004
Internet Speed
Traffic
• Not planned for current use
• Victim of its own success
• Original Internet
– Low-speed
– Text-based
– Limited sites
• Today’s Internet
– Million of users
– Downloading high-volume multimedia data
– Causes slow transmission speed
Internet Speed
Impacts Business
• Large companies use T1 and T3 lines and
have servers capable of thousands of
concurrent visitors
• Smaller business connect via ISP or pay a
company with high-speed connections to host
their site
Internet Speed
Solutions
• Increase bandwidth
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Satellite
ISDN
DSL
Cable modem
• Increase backbone capacity
– Backbone – communication lines across geographical areas
– Advances in technology
– Investment in new facilities
• Change Internet access fees
Streaming
• Hear and see digitized content as it is
downloaded
– Audio
– Video
– Animation
• Uses substantial bandwidth
– Quality of content
• Speed of connection
• Internet traffic
– Performance will improve as bandwidth improves
• Content is displayed using Plug-ins
Streaming
RealPlayer
• Free download from
RealNetworks
• Broadcast.com
– Live radio
– Canned television
shows
Sharing Files
Unicasting
• Send multiple computers copies of files
individually
• Wastes bandwidth as you are sending the
same file over and over
Sharing Files
• Broadcast
– Send one copy of the file to every
computer on the network
– Wasteful – some users do not need the file
– Compromises security
• Multicasting
– Send one copy of the file and it is directed
only to the appropriate recipients
Push Technology
Webcasting
• Software that send (pushes) information from
the Internet to a user’s PC
• Makes business active participants in
providing information to users
Push Technology
How it Works
• User provides consent by downloading and
installing free push software
• User selects channels to receive
• User sets update schedule
• Push software goes to the Internet on
schedule and downloads updated information
for the channels
Push Technology
Good or Bad?
• Time-saver for user; no browsing required
• Uses precious bandwidth to send graphics
and advertising
Intranets
• Internal network
• Private to a certain company
• Easy and fast to setup
• Inexpensive
Intranet
Setting it Up
Same components as needed for Internet
Computers for access
Server
TCP/IP
Software including a browser
Intranet
Web Pages for Employee Use
• Personnel data
• Internal job posting
• Corporate policy information
• Available training courses
• Cafeteria menu
• Notices from management
Intranet, Internet, Extranet
• Internet
– Public
• Intranet
– Private
– Can be linked to Internet
• Extranet
– Provide access to Intranet to selected customer
and suppliers
– Replacing EDI
VPN
Virtual Private Networks
• Use public Internet as a channel for private
data communication
• Use the Internet to access the company
network rather than private lines
– Sharing public lines
– Lower cost
VPN
Benefits
• Lower operating costs
• Simplifies communications
• No 800 lines and long distance charges
• Reduces in-house management
responsibilities
• Communication needs handled by ISP
VPN
Technology
• Tunneling / encapsulation
– Transfer of data between two similar networks
over an intermediate network
– Point-to-Point Tunneling Protocol (PPTP) –
proposed protocol for tunneling
– Encloses packet of one protocol (PPTP) inside
packet using different protocol (TCP/IP)
• Encryption
– Packets are encrypted before encapsulation
– Authentication software used
Consolidation of the Web
• Consolidation brings efficiency and uniformity
– Occurring quickly
– Large scale
• 1999 AOL purchased Netscape
• Conglomerates “moving in” will control the
majority of what we see