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E-Commerce (B2C)

E-Commerce (B2C). Lin Zhao Joe Grana Zainal Arifin Jen McNamee Shannon Hantal. Table of Contents. 2. What is E-Commerce?.

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E-Commerce (B2C)

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  1. E-Commerce(B2C) Lin Zhao Joe Grana ZainalArifin Jen McNamee Shannon Hantal

  2. Table of Contents 2

  3. What is E-Commerce? • Technology –mediated exchanges between parties, individuals, and organizations as well as the electronically based intra or inter organizational activities that facilitate that exchanges. • A set of technologies, application, and business process that link business, consumers, and communities : • For buying, selling, and delivering products and services • For integrating and optimizing processes within and • between participant entities 3 • Jaworski , Rayport, Introduction to E-commerce, McGraw-Hiill Company, New York, NY 2004. • Helen Chiang, Introduction to B2C E-Commerce, Yale University, 2006.

  4. Why is E-commerce important to Managers? In spite of these difficulties, Dell’s direct model has translated surprisingly well to global market, and its overseas sales have matched the torrid growth rate of its US sales. Online sales are quite substantial in many market. In Japan, for instance, 80% of Dell’s sales are driven by the web and 40% of sales are actually online. Kevin Baker, Dell Online Japan. For Asia-pacific, about 50% of sales are web-enabled, comparable to the U.S. Because Dell has entered most of these market fairly recently, they have emphasized online sales where than phone sales. Jack Cantillon, Dell Online Asia Pacific. 4 Kenneth Kraemer, Jason Dedrick, Dell Computer; using e-Commerce to support The Virtual Company, University of California, Irvine, CA 2001.

  5. E-Commerce Subdivision • Consumer to Consumer (C2C) • Commerce between private individuals or consumers • Example: eBay • Business to Business (B2B) • Deals with relationships between and among businesses • Example: Dell, Cisco. • Business to Employee (B2E) • The requisitioning of supplies by employees for use in their jobs • commonly known as an “Intranet” • Mobile Commerce (M-commerce) • The buying and selling of goods and services through wireless technology, such as cellular telephones • Business to Consumer (B2C) • Commerce between companies and consumers • Example: Amazon.com, Drugstore.com. 5 • Zorayda Ruth Andam (2003),”e-Commerce and e-Business”, e-ASEAN Task Force & UNDP-APDIP, pp.9-13. • www.accountingsoftwareadvisor.com/ec/ectypes.htm, viewed Sept 11, 2008

  6. What is B2C? • B2C Commerce: Interactions relating to the purchase and sale of goods and services between a business and consumer—retail transactions. • “Novelty” is that retail transaction is done on the Internet, rather than a “brick and mortar” store location. 6 Helen Chiang, Introduction to B2C E-Commerce, Yale University, 2006

  7. Demographics

  8. “Internet” Top 20 Countries 8

  9. “Internet” Top 20 Countries China United States Indonesia 9

  10. ICT Profile * GeoHive; Global Statistic, 2009·04·05. ** World Bank, 2007. ** * United Nations Development Program (UNDP), 2002. **** Internet World Statictic, June 2008. ***** International Telecommunication Union, 2007. 10

  11. Demographic of Internet Users % % Use the internet % 1) www.pewinternet.org/trends/User_Demo_7.22.08.htm, viewed Sept 4, 2008 2) “Statistical Survey Report on the Internet Development in China Abridge Edition” (July 2008), CNNIC 3) Nufransa Wira Sakti, “E-commerce as The Tax Potential Revenue in Indonesia”, Waseda University, Japan 2008. 11

  12. Demographic of Internet Users United States China Indonesia Sample : 2,251 adults Sample : 16,000 persons Sample : 1,500 people % % Use the internet % 12

  13. Demographic of Internet Users Use of internet % % % 13

  14. Language, Globalization, Money

  15. What’s the problem? 15 PR Newswire, Black Enterprise

  16. Solutions 16 Business Wire, Black Enterprise

  17. Globalization 17 Black Enterprise , Journal of Global Information technology Management

  18. What are some of the issues? 18 Journal of Global Information technology Management

  19. Show Me the Money 19 The McKinsey Quarterly

  20. Online Revenue 20 National Tax Journal

  21. Ways to Make Money 21 The McKinsey Quarterly

  22. Case Study Country: Indonesia, China, U.S.

  23. E-Commerce in Indonesia : • IT Spending : Years 2005 = US$ 1,7 billion : • IT Hardware = US$ 1,353 million • Software = US$ 123 million • IT Services = US$ 254 million Years 2008 = US$ 2,8 billion • ICT/GDP = US$ 16.6 /Capita (2.2%) • Ecommerce is very low (0.10% of total spend) = US$ 2.11/Capita • E-business technology is only 9.8% of total spend 23 - IDC annual report, ITC trends in Asia Pacific - Indonesia (2008). - Media Indonesia, May 9, 2008.

  24. IT Spending in Indonesia • Hardware tends to • decrease but still • dominates • Services tend to • increase • Software is • stagnant due to • the high piracy of • software and • highly using local • software • The growth of • spending is 229% • (from 2001 to 2008) • with average • 33%/year 24 - IDC annual report, ITC trends in Asia Pacific - Indonesia (2008). - Media Indonesia, May 9, 2008.

  25. Internet Users in Indonesia The growth has increased sharply (about 49 times from 1998 to 2007) because of the increasing internet providers and the new supporting telecommunication networking i.e. 3G of cell phone. 25 http://www.apjii.or.id/dokumentasi/statistik.php?lang=ind

  26. Number of Internet Providers • The growth of ISP number is average 70% per year • The NAP and multimedia numbers are relatively constant due to lack of investment 26 http://www.apjii.or.id/dokumentasi/statistik.php?lang=ind

  27. E-Commerce Transaction By volume, revenue that comes from transaction is not adequate. Compared with total world transactions that are reaching USD 390 billion in 2000, e-commerce transactions in Indonesia are only USD 100 million or just 0.026%. But this number is predicted to jump drastically up to USD 1,200 million (Source: Forrester Research). 27 - Zuraida Boerhanuddin, Indonesia Satelite Corporation (PT. Indosat), E-Commerce in Indonesia, iNET Conference 2000 Japan.

  28. Top 5 Local Websites • detik.com - Digital Life (News) • detiksport.com - Sport News • detiknews.com - News & Entertainment • Kompas.com - News • Klikbca.com - Internet Banking 28 http://www.alexa.com/site/ds/top_500

  29. ICT Development of China: Timeline 29 Source: http://www.cnnic.net/html/Dir/2003/12/12/2000.htm

  30. ICT Development of China: Internet Users Size of Internet Users in China from 2000 to 2008 (ten thousand) Size of internet users in China surpassed that of U.S. in June 2008, ranked the 1st in the world. 30 Source: CNNIC, Statistical Survey Report on the Internet Development in China (January 2009)

  31. ICT Development of China: Internet Users Internet Penetration Rates of Selected Countries However, with large population base, the penetration rate of Internet only ranks the 87th in the world 31 Source: CNNIC, Statistical Survey Report on the Internet Development in China (January 2009)

  32. ICT Development of China: Internet Users 27.1% 60% 16% 15.4% 59.7% 11.8% 38.5% 48.2% Distribution of internet users is uneven, coastal provinces and major cities have much more internet users and internet resources Source: CNNIC, Statistical Survey Report on the Internet Development in China (January 2009)

  33. ICT Development in China: Internet Market The internet market have been growing at an annual rate higher than 20% from 2004 to 2008. By the end of 2008, The market size reaches 139 billion Yuan. (1 US$ = 6.8 Yuan) 33 Source: CCID Consulting, Jan. 2009

  34. E-Commerce in China E-Commerce started in China in 1998, and now it is a main force of the present internet market size 34 Source: CCID Consulting, Jan. 2009

  35. E-Commerce in China: General Scene 35 1) Tan & Ouyang: “Diffusion and Impacts of the Internet and E-commerce in China” (2004) 2) Source: CNNIC, Survey Report of Online Shopping in China (2008)

  36. E-Commerce in China : Market Segmentation Shares of B2C and C2C market have been increasing slowly, B2B is still the dominant power in the E-Commerce market. In 2008, the total trading volume of China’s E-Commerce market reached $353 billion 36 Source: CCID Consulting (Jan. 2009)

  37. B2C Market: Major Players www.dangdang.com www.amazon.cn www.360buy.com www.redbaby.com.cn 37 Source: CNNIC, Survey Report of Online Shopping in China (2008)

  38. B2C Market Division Dangdang.com & amazon.cn make up more than 50% of the B2C market Competition is scattered, no website has supreme competitive advantage Internet users prefer professional websites with good reputation 38 Source: CNNIC, Survey Report of Online Shopping in China (2008)

  39. Current recession having only slight impact on industry. Industry slow down due to: Declining disposable income Declining consumer confidence Most affected e-commerce retail: Travel & Electronic online retailers. Positive U.S. consumers will look to internet to find better deals Not one stop shop – consumer can research many suppliers Virtually zero-cost to consumer E-commerce in the U.S. 39 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  40. U.S. Historical Data 40 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  41. U.S Revenue & Growth 2005 through forecasted 2009 41 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  42. U.S. E-commerce Industry • Manufacturing • 31.2% total online sales • Transportation Equipment • Beverage & Tobacco Products • Chemical Products • Petroleum & Coal Products • Food Products • Computer/Electronic Product • Wholesale Trade • 20.6% total online sales • Drugs • Vehicles & Auto Equipment • Commercial Eqt./Supplies • Grocery Products • Retail • 2.7% total online sales 42 U.S. Census Bureau, E-commerce 2006, May 16, 2008

  43. Growth Computer Hardware 18% Largest Dell, Apple & HP Clothing 14.2% Has increased from 13.9% in 2005 & 13.3% in 2003 Electronics 7.9% in 2003 to 9.1% in 2009 Travel in anticipated to continue to grow as consumers find cheaper deals online. Decline Food/beer/wine 2.5% in 2005 to 2.1 by 2009 Music/video 4.1% in 2003 to 3.6 by 2009 U.S. B2C Segmentation Forecasted 2009 43 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  44. Household consumers & individuals Affected by disposable income, market sentiment, internet savvy Users: educated, understanding of comps, relatively high income $75M & up reported 57% users of e-commerce (National Retail Federation) largest segment they used - travel Non-Users: lower income, low confidence, limited resources U.S. Market Segmentation 44 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  45. Not as important for online retailers. Only consideration is shipping (distance travel, time, channels). Online retailers still place operations in proximity to suppliers, warehouses – effort to reduce costs. Geographic Distribution 45 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  46. Purchases 60% Retailers COGS, from suppliers, usually wide array of products G&A, Operating Costs, Overhead low – no physical store Wages low, no need for salespeople Capital is needed to keep websites updated and upgrading software Cost Breakdown 46 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  47. Amazon 2008 Revenue $19,170MM. eBay 2008 Revenue $8,541MM Dell 2008 Revenue $61,133MM Major U.S. Players 47 IBISWorld Industry Report, March 20, 2009, eCommerce in the U.S.

  48. Case Study Industry: Online Banking & Tourism

  49. Top 10 Online Banking Video: How do you feel about online banking? Sample size unknown. Information as of July 2005. Source: WatchfireGómezPro

  50. Case Study : U.S. E-commerce Banking • 1/3 of U.S. citizens use online banking(Gonsalves) • 71 million U.S. adults use online banking(Gartner Consulting) • 1st Bank to show online account balances – Presidential Savings Bank – Bethesda, Maryland • Types of e-commerce banking • Internet Banking • Use of computer to access online bank website • Mobile Banking • Use of phone (or other handheld device) which has access to mobile bank website • Phone Banking • Use of telephone, conduct banking through touch-tone service • ATM Banking • Use of free-standing bank ATM’s 50 Gonsalves, Antone, One Third of Americans Regularly Bank Online, InformationWeek, 02/19/2008. & Gartner Consulting

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