Transcript The Internet in Business

Chapter 9
The Internet in BusinessCorporations, Businesses, and Entrepreneurs
E-COMMERCE
Electronic
Commerce
 Buying and selling
over the Internet
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E-COMMERCE
RETAIL SITES
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Retail becomes etail
E-Commerce
Retail Sites
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Clothes
 Jewelry
Out-of-print biography
 Sporting goods
Used car
 Office supplies
Bargain airline tickets
 Cosmetics
Music CDs
 Flowers
Videos
 Gifts
Baby equipment
 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
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ETAIL
SAVINGS TO RETAIL BUSINESS
No physical store
building
 People time
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THE COMMERCE SITE
Lists and views of
products and prices
 Content
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 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
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E-Commerce Acceptance
Opposition to e-Commerce by in-person sales
representatives
 Strategy to merge Etail and Retail
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 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
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Successful web site may alienate others
PROMOTING A WEB SITE
Users must find
their way to the site
 Advertising needed
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 Traditional
web pages
 Portals
ads on
Portals
Definition – entry point to the rest of the
Internet
 Presents content and links to variety of topics
 Customize the content
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 User
provides personal data
 Portal provides related information and links
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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
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Portals
Who Are They?
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Yahoo!
MSN
Snap!
Excite
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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
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 Contain
graphics and applets that load slowly
 Ads load first
Advertising
Types of Online Ads
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Banner ads
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Live banner
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Clickable
Users reluctant to click through
Displays sales pitch
User does not need to leave current site
Work slowly
Expensive to develop
Context-sensitive
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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
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 Server
link
 Home page
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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
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Payments
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Finalize order by
Phone
 Fax
 Call with credit card number
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Enter credit card number
 Security
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Communication between buyer and retailer is
encrypted
 Use SSL (Secure Sockets Layer) protocol and generate
the message “our secure server”
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Taxes
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American Federal Law
Taxes due only on mail-orders within your state
 Presence of etail is debatable
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Taxes
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Internet Tax Freedom Act – 1998
Provisions
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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
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Content
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What you have to say
and offer
Cannot be static
News about product,
scores, contest, searches
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Uniqueness
Not offered elsewhere
Difficult to obtain
Self-help
Search for product
Order product
Check the status of an
order
Track a delivery
Community
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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
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 $38
billion in 1998
 Over $800 billion by 2005
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Global trend – more than ½ online sales will be
outside US by 2004
B2B
Business-to-Business
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Activity of one business providing another with materials
and supplies
Advantages to buyers
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Problems
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Reduced costs of procurement
Consider a larger number of suppliers
Security
Antitrust concerns
Growing
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$92 billion in 1998
$2 trillion in 2004
INTERNET SPEED
TRAFFIC
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Not planned for current
use
Victim of its own success
Original Internet
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Low-speed
Text-based
Limited sites
Today’s Internet
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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
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Internet Speed
Solutions
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Increase bandwidth
Satellite
 ISDN
 DSL
 Cable modem
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Increase backbone capacity
Backbone – communication lines across geographical
areas
 Advances in technology
 Investment in new facilities
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Change Internet access fees
Streaming
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Hear and see digitized content as it is downloaded
Audio
 Video
 Animation
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Uses substantial bandwidth
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Quality of content
 Speed
of connection
 Internet traffic
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Performance will improve as bandwidth improves
Content is displayed using Plug-ins
STREAMING
REALPLAYER
Free download from
RealNetworks
 Broadcast.com
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 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
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Sharing Files
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Broadcast
 Send
one copy of the file to every computer on the
network
 Wasteful – some users do not need the file
 Compromises security
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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
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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
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Push Technology
Good or Bad?
Time-saver for user; no browsing required
 Uses precious bandwidth to send graphics and
advertising
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Intranets
Internal network
 Private to a certain company
 Easy and fast to setup
 Inexpensive
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INTRANET
SETTING IT UP
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Same components as
needed for Internet
Computers for access
 Server
 TCP/IP
 Software including a
browser
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Intranet
Web Pages for Employee Use
Personnel data
 Internal job posting
 Corporate policy information
 Available training courses
 Cafeteria menu
 Notices from management
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Intranet, Internet, Extranet
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Internet
 Public
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Intranet
 Private
 Can
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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
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 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
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VPN
Technology
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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)
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Encryption
Packets are encrypted before encapsulation
 Authentication software used
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Consolidation of the Web
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Consolidation brings efficiency and uniformity
 Occurring
quickly
 Large scale
1999 AOL purchased Netscape
 Conglomerates “moving in” will control the
majority of what we see
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Objectives
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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