Thursday, February 28, 2013

Week 1 - Let's Go E-business

Hello web surfers allow me to introduce myself, my name is Allstar a daring business student, looking to give you some dynamite keys that will give you a blueprint for making it in online business.

Over 12 weeks I will cover 12 areas of e-business from a university subject, 

giving you insight and understanding into the online world of business.

Many corporate giants will try and make you think you need their help to do business online but with technology being so accessible and the world being so much "smaller" these days, it's not too difficult to make a transactional website that is your very own E-shop, all you need is the right software and the know how.

Even if you can't be bothered making the website there are plenty of online providers for E-shop website creation, here is an example that charges a fee for a yearly subscription.

Before you attempt to create a E-shop you must first have an awareness of the risks involved with business on the internet, and an understanding of a few key E-business definitions that will help you define your business online.

Like any venture there are risks involved but the possibilities of online business are so much greater than that of traditional retail.

Q1. "four things that could go wrong with a transactional web site"

A. Lack of familiarity

Quote Luhmann "Familiarity is a precondition for trust... and trust is a prerequisite of social behavior, especially regarding important decisions". (David Gefen, 2000)

Customers want to feel secure when shopping online and will tend to look for associations they are familiar with, e.g. financial institutions MasterCard, Visa, Paypal, Diners club,

Postage companies, Fed Ex, Sprint (if buying physical products to be shipped)

Many people who shop regularly online tend to use online shop giants such as Amazon, Ebay and itunes, due to their large inventories and presence as market leaders.  

Failure to link your business to familiar/ widely recognized associations will affect your potential profits, because people will be unlikely to organize purchases through unrecognizable mediums.

B. Lack of exposure

Lack of exposure can ruin any business, how can you expect to make profit if there aren't enough people that know about your business?

Some companies spend millions on advertising and in getting a top place in a Google search.

However there are a number of effective channels for creating exposure that cost barely anything.
Social networking: websites like Facebook, Twitter, friendster and linkedIn and even blogs like this page are channels where you can create exposure for free.

C. Lack of Security

Encryption:  "the process of translating data into a secret code that can only be read by authorized users... 

Important data such as credit card details and bank records should always be stored in encrypted format to protect it from hackers". (Colin Potts, James Lawson, Therese Keane, Margaret Lawson, 2011)

HTTPS:  Short for HyperText Transfer Protocol Secure, the industry standard for websites that allow financial transactions.

It is the underlying protocol code that stops transactional information from being stolen.

SSL: Short for Secure Sockets Layer,
 the industry standard, security technology used for establishing an encrypted link between a web server and a browser. 

This link ensures that all data passed between the web server and browsers remain private and intact. 
"SSL is used by millions of websites in the protection of their online transactions with their customers".

To run an online business there must be security software in place, in order to prevent your customers from being targeted by hackers.


If you don't put security in place you could be taken to court for not taking "reasonable care" for what could be seen as "reasonably foreseeable" (customer's information being hacked due to no security software).

(Leone Green, 1961)

D. Lack of stock/product

Most of the time if there is little to offer there will be little customer interest.

Imagine yourself in your capital city, you walk into a cafe, walk in and see only two items on the menu, cappuccino and chocolate cake, you walk up to the counter and ask the worker, 

"Is this all there is to offer?" the worker sheepishly replies "yes but we have specially selected coffee beans and the best chocolate cake". 

Would you be likely to return to the cafe or recommend it to friends? 

Very unlikely why?

Because the general expectations of a Cafe in the 21st century is that they can offer different variants of coffee, and several types of snack.

These expectations can be seen in US market leader cafe Star Bucks
and UK leader Costa coffee 

However if you are going to sell a few products or only one you need to clearly promote this.

Doing so will allow you to make a positive impression to possible customers.
This shows you specialize in the product/s you are selling, here is a fine example

Q2. Fundamental concepts - " a definition for each"

A. What is E-commerce?

You have probably heard this word mentioned on television or thrown around by business students.

In a nutshell, Thuraisingham (2002), states

 "e-commerce (electronic commerce) involves carrying out commerce on the web, 

which includes buying and selling of products.

E-commerce can also be defined as the conduct of  financial transactions by electronic means , usually referred to  as shopping online.

B. What is E-business?

Thuraisingham (2002) states "the term e-business is about carrying out any business on the web and is broader than e-commerce".

 Q3.What is the difference between the buy side and sell side of E-Commerce?

A. Sell side

The sell side of e-commerce involves the catalogues and electronic storefronts that manages the purchase process, from the selection of items , through to the payment of  items.

B. Buy Side

The buy side of e-commerce serves as the side that gives a company/person the ability to enter and fulfill purchase orders.
 E-Commerce By S. Pankaj pg 35

Q4. Describe the different types of E-Business

A. business to business (B2B)
"Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable".

B. business to customer (B2C).
"Businesses selling to the general public typically through catalogs utilizing shopping cart software...B2C is really what the average Joe has in mind with regards to e-commerce as a whole".

C. Consumer to Business (C2B)
" A consumer posts his project with a set budget online and within hours companies review the consumer's requirements and bid on the project". 

"The consumer reviews the bids and selects the company that will complete the project. Elance empowers consumers around the world by providing the meeting ground and platform for such transactions".

D.  Consumer to Consumer (C2C)
"There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. eBay's auction service is a great example of where person-to-person transactions take place everyday".

Q5. Which digital technology has the highest penetration rate?


The mobile phone industry is undoubtedly one of the most prominent examples of  a technology-based industry, that has evolved , at an impressive speed, 

showing both rapid transitions in product features and manufacture competition dynamics.

 Since its inception the global mobile phone industry has steadily increased in market penetration annually. 

 Over the last two decades, there has been a rapid evolution of the mobile phone.

 First introduced in the 1980's as a analogue handheld  device for business users, 

by 2009 the mobile had evolved to the point where it could be defined as a "multi-functional
device", with a 61.1 % penetration rate globally.
Evolution of firms 2010 - Giachetti, Claudio ; Marchi, Gianluca

Q6.  Four drivers to the adoption of sell-side e-commerce by business.

A.  Stock/inventory supply chain
With a e-shop stock does not need to be inventoried, or doesn't need to be inventoried until orders (demand) come through.

 In marketing we call this concept the "just in time inventory system", a system that was developed by Japan's car industry.

Inventory costs are kept low by ordering  small quantities of stock often.

In the business dictionary it is defined as a 
 "demand driven inventory system in which materials, parts, sub-assemblies, and support items are delivered just when needed,  neither sooner nor later.
Its objectives is to eliminate product inventories from the supply chain"

Generally speaking physical stores need a reasonable inventory to operate, 
e-shops don't.

With a e-shop money and time is saved by not having to organize and store stock .

B. Intangible Advantages
Renowned Australian share-market teacher Alan Hull shares in his book "active investing" the intangible advantages of e-commerce.

Hull states that a successful E-store has the following: 

i.  no physical infrastructure - any physical means of production or security for business

ii. few staff and/or overheads - no manual processing needed, no store lease or storage housing costs

iii. people can visit from anywhere in the world - anyone that has access to the internet can visit the store.

However Hull claims that these advantages can only be full exploited if you sell e-products,
examples being:
  • Information
  • Music
  • Software
  • Gambling 
 This is because e-products can be transferred over the internet, tangible products cannot be transmitted over the internet.
To sell tangible products online you still need physical infrastructure, manual processing, and staff.

Thus an online business that sells tangible products is at a disadvantage because it is still made of 'bricks and mortar'. (c) Alan Hull 2009

C. You can work from home and choose your own hours

Mike Simpson and Anthony J. Docherty, (2004)  found that  e-commerce had social benefits for SMEs (Small to medium enterprise) owners
 in the UK who previously owned a physical store.

The study found they were able to reduce their working hours while increasing sales.

This diagram shows the duties involved in running  an e-shop 


Alexander Ny├čen,Shmuel Tyszberowicz, Thomas Weiler (2005) pg.3

Updating your e-shop website regularly is important to keeping cash-flow,  visitors should be encouraged to visit the e-shop regularly to take advantage of regularly updated special offers.

D. "You are your own Boss" - (Alan Hull 2009)

You are the manager of your own created  business there is no person looking over your shoulder giving you demands or orders, you set your own goals and benchmarks. (c) Alan Hull 2009

Q7. Four barriers to adoption of sell-side e-commerce by business

A. Lack of Information technology - knowledge
 Those with little to none I.T (information technology) education find the prospect of setting up an online store an arduous task, which is simply beyond them.

 Little knowledge of using I.T is a barrier to entrepreneurs in entering e-commerce, as is the same for customers.

Ziqi Liao and Michael Tow Cheung  (2001) did a study on Singaporean's willingness  to use  internet based commerce
 and found that "individuals without knowledge or experience of the internet may harbor a latent willingness to e-shop on it".

B. Lack of funds for start up costs

As with any business you need to be able to pay for start up costs.

If your not paying for  software or  training to make your own e-shop then you will be paying a provider to help you establish an e-shop, here is an example of a provider that makes it easy to create one

C. Big Business competition

It can be tough starting out in e-commerce with a small enterprise, 

Mike Simpson and Anthony J. Docherty, (2004) claim that  SME's (small to medium enterprises) find it difficult to compete in the global e-commerce market due to their limited resources.

D. Lack of confidence in credibility

It is not just a lack of security that can affect customer confidence.

Customers can also find a lack of confidence in the general credibility of online vendors. 
S.M. Furnell, T. Karweni, (1999)

Q8. How might a restaurant benefit from an online presence?



A. Employment

A restaurant website can be an effective medium for promoting listed job opportunities. 
ML Kasavana (2001)

B. Increased interaction with the customer

Restaurant managers can turn unsatisfied customers into loyal ones by successfully responding to comments made in an electronic discussion forum . Ioannis S. Pantelidis (2010)

Q9. Given examples of digital information

  • Digital camera
  • Mobile phone
  • Internet
  • Television
  • Fax machine  

For information to be transferred and saved digitally through such technology mediums,
 means that an action is performed electronically through one and zeros in binary code, as a program which is executed by a 'computer'.

Q10. What is the semantic web? Are we there yet?

The inventor of the term  Tim Berners-lee defines "semantic web" as ' an extension of the current web in which information is given in well defined meaning, better enabling computers and people to work in cooperation.  

Introduction to the Semantic Web and Semantic Web Services - pg.8
 By Liyang Yu  click here to read his book

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