E-commerce Lecture Slides.pdf

IMT 501
E-COMMERCE APPLICATIONS
3 UNITS
Instructor: Dr. M. B. Ribadu

Copyright © 2020, 2019, 2018 Pearson Education, Inc. All Rights Reserved
©Bowen Hui, Beyond the Cube Consulting Services Ltd.
4
Fifteenth Edition
E-Commerce 2019: Business, Technology, Society
4
Companion Website for
E-commerce 2019: Business. Technology.
Society, 15th edition

8
1. Understand why it is important to study e-commerce.
2. Define e-commerce, understand how e-commerce differs from e-
business, identify the primary technological building blocks
underlying e-commerce, and recognize major current themes in e-
commerce.
3. Identify and describe the unique features of e-commerce
technology and discuss their business significance.
4. Describe the major types of e-commerce.
5. Understand the evolution of e-commerce from its early years to
today.
6. Describe the major themes underlying the study of e-commerce.
7. Identify the major academic disciplines contributing to e-commerce.
Learning Objectives

The Virtual Enterprise
9
"
 Uber, the world’s largest taxi company, owns
no vehicles.
 Facebook, the world’s most popular media
owner, creates no content.
 Alibaba, the most valuable retailer, has no
inventory.
 Airbnb, the world’s largest accommodation
provider, owns no real estate.

The Uber-ization of Everything
• Have you used Uber or any other on-demand
service companies?
• What is the appeal of these companies for
users and providers?
• Are there any negative consequences to the
increased use of on-demand services like Uber
Facebook, Alibaba, and Airbnb?

E-commerce Trends 2019-20
• Continued expansion of mobile, social, and
local e-commerce
• Continued growth of cloud computing
• Explosive growth in Big Data
• Continued growth of user-generated content
on social networks, blogs, wikis
11

E-commerce: A Brief History
• 1995–2000: Innovation (Web 1.0…>)
– Key concepts developed
– Dot-coms + Heavy venture capital investment => The Crash
• 2001–2006: Consolidation (…>Web 2.0…>)
– Emphasis on business-driven approach
– Growth of search engine advertising
– Analytic technologies
• 2007–Present: Reinvention (…>Web 3.0)
– Transformation of marketing
– New models based on user-generated content, social networks, local
services => The Social Web
– Mobile platforms
– On-demand personal services business
12

13
Periods in the Development of E-commerce
Figure 1.10

What Is E-commerce?
• Use of Internet and Web to transact business
• More formally:
– Digitally enabled commercial transactions
between and among organizations and individuals
14

E-commerce vs. E-business
• E-business:
– Digital enabling of transactions and processes
within a firm, involving information systems
under firm’s control
– Does not include commercial transactions
involving an exchange of value across
organizational boundaries
15

E-Commerce and E-Business
16
is the commercial marketing, selling and
buying of products and services on the
Internet
is using electronic information to improve
performance, create value and enable
Internet Commerce
Electronic Business
Electronic Commerce
is the online exchange of information and
services utilizing network technologies
Web Commerce
new relationships between business and customers

Types of E-commerce*
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Social e-commerce
• Mobile e-commerce (M-commerce)
• Local e-commerce
*May be classified by technology or market relationship
17

SOURCES: Lori Lewis & Officially Chad via Visual Capitalist 18

19
The Growth of B2C E-commerce in the U.S.
Figure 1.5

20
The Growth of B2B E-commerce in the U.S.
Figure 1.7

The Mobile Platform
• Most recent development in Internet infrastructure
• Enables access to the Internet via wireless networks
or cell-phone service
• Mobile devices include
– Tablets
– Smartphones
– Ultra-lightweight laptops
21

22
The Growth of M-commerce in the U.S.
Figure 1.8

Markets
• Market = “place” to trade products and services
• Information asymmetry in practice
• Marketspace = online marketplace
– Extends beyond temporal and geographic boundaries
• Vision of a perfect market:
– Perfect information
– No participant with market power to set prices
– No barriers to entry or exit
– Equal access to production technology
23

Major Components in Marketspace
• Consumers: individuals and organizations
• Sellers: businesses that sell products/services online
• Products and services: physical or digital goods, information
• Infrastructure: technological foundations
• Front-end: seller’s site, electronic catalogs, shopping cart, search
engine, payment gateway
• Back-end: activities related to order aggregation and fulfillment,
inventory control, purchasing from suppliers, accounting, finance,
payment processing, packaging, delivery
• Intermediaries: third parties that operate between buyers and sellers
• Other business partners: e.g., stakeholders, firm with different skills
• Other support services: certification and ensure security to content
providers
24

Eight Unique Features of
E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology
25

26

27

New Considerations
• Lower transaction costs – less time/money to shop online
• Cognitive energy – higher or lower for EC?
• Reach
– Potential market is the entire online population
– Traditional commerce must tradeoff between reach and richness
– Broadcast model (e.g. newspapers)
– EC has potential to personalize marketing to broad audience (e.g. agents)
• Lower market entry costs = cost merchants must pay just to bring
goods to a market
• Lower search costs – easier to “window shop” and compare
• Increase in information density = total amount of quality info
available to all market participants
• Price discovery and price transparency
• Disintermediation = removing the “middle man”
28

Advantages of EC
• For sellers:
– Increase sales opportunities
– Operate 24/7 from virtual marketplace
– No geographic restriction
– Access to global markets
– Increased speed and accuracy of information exchange
– No barriers to entry
• For buyers:
– Wider choice selection
– Shop 24/7
– Instant access to detailed product information
– Easy to compare prices
– Quick delivery of digital products
29

Disadvantages of EC
• For sellers:
– Rapidly changing technology
– Insufficient telecommunications capacity
– Difficulty integrating business systems with e-business software
– Increased problems with security
– Global market issues: language, policies/legal issues, currency
– Increased competition
• For buyers:
– Concern over security
– Lack of trust with unfamiliar sellers
– Inability to touch/feel products
– Resistance to unfamiliar buying processes
30

Comparison with Traditional Commerce
• EC do at least the following electronically…
– Contact between consumer and seller
– Advertising
– Billing
31
EC TC
Standard goods
Detailed examination of goods not needed
e.g. steam iron
Non-standard goods
Items requiring personal fitting
e.g. sunglasses
Low value goods
Low risk to buy online
e.g. paperback books
Expensive goods
Detailed examination of goods desired
e.g. collectors’ items
Digital goods
Cheap storage and fast delivery
e.g. mp3
Perishable goods
Cannot be stored for long periods
e.g. vegetables
Simple services
Easy to complete transaction
e.g. airline reservation
Extremely low value goods
More cost to store and ship
e.g. dollar deals

Predictions for the Future
• Technology will propagate through all commercial activity
• Large, traditional companies will continue to play dominant
role, consolidating audiences
– Start-up ventures can still attract large audiences in non-dominated niche
arenas
• Integrated online/offline companies will experience more
growth than purely online companies
• Additional factors:
– Increased regulation and control
– Biometrics and wearable tech
– Sustainability (energy)
– Omnichannel Commerce
– M-Commerce
– AR & AI
• Sources:
– Future of Ecommerce: Predictions for 2020 and Beyond (WEB4PRO)
– Five Bold Predictions for the Future (3dcart)
32

Understanding E-Business: Organizing
Themes
• Business Foundation:
– Understanding the economic and business principals that
apply specifically to Internet-based e-businesses.
• Technical Foundation:
– Understanding the client/server computing architecture
model that makes the Web possible.
• Operational Foundation:
– Understanding the operational factors that need to be
considered in developing and managing a typical e-
business entity including financial, security, legal, and
ethical matters.
33

Interests from Diverse Fields
• Computer science
• Management science
• Information systems
• Economics
• Marketing
• Management
• Finance/accounting
• Sociology/psychology
• Law
34
Technical approaches
Behavioural approaches

E-Commerce Business Models and
Concepts
Business-to-Consumer (B2C)
Consumer-to-Consumer (C2C)

Business Plan and Business Model
• Business model = set of planned activities designed to result
in a profit in a marketplace
• Business plan = a document detailing firm’s business model
and financial viability
– Major pieces:
• Description of customers to be served and relationship with them
• Description of all products and services that will be offered
• Description of process required to produce and deliver them
• List of resources required, identification of their availability
• Description of supply chain: suppliers, other partners
• Description of revenue model, anticipated costs, finance sources,
estimated profitability (financial viability)
• E-commerce business model = a business model that aims to
use and leverage the unique qualities of the Internet and Web
3

Competition in the Internet Economy
• Has low barriers to entry
• Increasingly easier for countries, companies, individuals to
participate in Internet economy
• Very intense competition
• Online transactions make the following possible:
– Customers can readily find cheaper and better products
– Customers can compare prices easily, use of shopping search engine
– Product differentiation (e.g. reviews, recommendations, ratings)
– Personalization: tailor toward specific customer preferences
– Low/competitive prices
– Call centre customer support
– Reduced barriers to entry – no need for physical store or sales force
– Discover large number of profitable market niches
– Size, location, language may not be major factors
4

Non-Technical EC Trends
• Increased Internet usage and opportunities for buying
• Purchasing incentives
• Increased privacy and security interest
• More efficient information handling
• Innovative organizations
• Virtual communities
• Remote collaboration
• Online auctions
• Global firms and e-governance
What are some new business opportunities?
5

Technical EC Trends
• Decreased cost and greater availability of client computers
• Greater availability and functionality in servers
• Advances in network and wireless technologies
• Advances in EC software and services
• Advances in search engine technology
• Growth of peer-to-peer technology
• Advances in mobile and wearable devices
• Growth in AI and IoT
What are some new EC trends and challenges?
6

Impact of EC on Businesses
• New technologies offer companies unprecedented
opportunities to rethink business strategies, models,
processes, and relationships
• Special focus:
– Improve marketing of existing products
– Improve creation (manufacturing) of existing products
– Improve customer service
– Improve operations (e.g., efficiencies, satellite offices)
7

Key to a Successful EC Business Model
• Leverage unique qualities of the Web
• Provide value to customers
• Develop highly effective and efficient operations
• Avoid legal problems
• Produce profitable business results
• Scale as the firm size grows
8

Eight Key Elements of a Business Model
1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational development
8. Management team
10

11

1. Value Proposition
• How a company’s product and service fulfills customer needs
• Answer to “why choose you?”
• May differ for different market segments
• E.g. Amazon:
– Unparallel selection
– Convenience (24/7 shopping, cheap/free delivery)
– Competitive prices
12

2. Revenue Model
• How firm will earn revenue, produce profits, produce superior
return on invested capital
• Also called financial model
• Success of a firm: produce returns > alternative investments
13

Types of Revenue Models
• Advertising = provides forum for ads, receive fees from
advertisers
– E.g., Yahoo!.com
• Subscription = charges subscription fees for some/all of
company’s content/service offerings
– E.g., eHarmony.com
• Transaction fees = forum that enables/executes transaction
– E.g., eBay.com
• Sales = sells goods, information, or services
– E.g., Amazon.com, Gap.com
• Affiliate = steers business to an affiliate, receives referral fee
or % revenue from resulting sales
– E.g., MyPoints.com
14

3. Market Opportunity
• Identify firm’s intended marketspace
• Identify potential financial opportunities in that marketspace
• Usually divided into smaller market niches
• Realistic market opportunity is defined by revenue potential
in each market niches where you hope to compete
• E.g., software learning system to sell online
– Overall market: all those who participate in software training
– Smaller niches:
• Instructor-led training products
• Computer-based training
• Each can be subdivided as well
– Realistic market: not big companies or brand names, just to market
segment that “helps” (e.g. increase efficiency, decrease cost, better
quality)
17

4. Competitive Environment
• Must identify:
– Other competitors operating in same marketspace
– Presence of substitute products
– Potential new entrants to market
– Power of consumers/suppliers over your business
• Field survey example
• Sole supplier example
• Market analysis can help avoid:
– Market with many competitors may mean that market is saturated,
thus, difficult to generate profit
– Untapped market may mean that market was tried without success
18

5. Competitive Advantage
• Achieved when firm produces superior product or cheaper-
than-most product
• Asymmetry = when one participant has more resources
• First-mover advantage = competitive market advantage
results from being a first-mover in that market
• Complementary resources = resources/assets not directly
involved in production but crucial to success
– E.g., reputation, management
• Unfair competitive advantage = occurs when firm develops
advantage based on factor that other firms cannot purchase
– E.g., brands: built on loyalty, trust, reliability, which enables premium
charges on products
19

Ex. First Mover Advantage
20
• Blackberry was the first brand to
seamlessly integrate mobile
communication, internet capabilities
and corporate email into a
convenient hand held gadget.
• Blackberry's stranglehold on smart
phone market was strongly
challenged by Apple with its
introduction of iPhone in June 2007.
• Apple redefined the smartphone.
• Apple significantly improved the
convergence of a mobile phone, a
music player, an internet browser, a
digital camera, and an in-built GPS.
Furthermore, iPhone was efficiently
connected to iTunes, Apple's online
store to purchase music and movies.

6. Market Strategy
21
• “How do you plan to promote your products or
services to attract your target audience?”
– Details how a company intends to enter market and attract
customers
– Best business concepts will fail if not properly marketed to
potential customers

7. Organizational Development
• “What types of organizational structures within the
firm are necessary to carry out the business plan?”
• Organizational development
– Plan describing how company will organize required work
to be done
– Typically divided into functional departments
– Need efficient implementation of business plans and
strategies
– Important for growing company
22

8. Management Team
• “What kind of backgrounds should the company’s
leaders have?”
• A strong management team:
– Can make the business model work
– Can give credibility to outside investors
– Has market-specific knowledge
– Has experience in implementing business plans
23

Raising Capital
• Seed capital
• Traditional sources
– Incubators
– Commercial banks
– Angel investors
– Venture capital firms
– Strategic partners
• Crowdfunding
– JOBS Act
24
© 2016 Pearson Education, Inc. Publishing as Prentice Hall

Crowdfunding Takes Off
• What types of projects and companies might be able
to most successfully use crowdfunding?
• Are there any negative aspects to crowdfunding?
• What obstacles are presented in the use of
crowdfunding as a method to fund start-ups?
25
More than $15M raised from more than 80
countries. Despite being open for only 12 days,
the GoFundMe campaign for the victims of the
Humboldt Broncos bus crash raised $15.1
million, making it the crowd-sourcing site's
second-biggest ever, topped only by that of the
Time's Up Legal Defence Fund.

Categorizing EC Business Models
• Major categories:
– B2C – business-to-consumer
– B2B – business-to-business (extends to “organizations”
such as government)
– C2C – customer-to-customer
– Mobile e-commerce (M-commerce)
– Social e-commerce
– Local e-commerce
26

Business-to-Consumer (B2C)
28

B2C Business Models
• E-tailer
• Community provider (social network)
• Content provider
• Portal
• Transaction broker
• Market creator
• Service provider
| Copyright © 2013 Pearson Education, Inc.
29

30
B2C Business Models

E-tailer
• Online retail store
• Some are port of existing physical stores
• Revenue model is based on product sales
• Large potential market: retail market and Internet users
• Extremely competitive sector because low barriers to entry
• Barriers to entry = total cost of entering new marketplace
• Challenge is to differentiate one’s business from existing
stores/websites
• If try to reach every online user – likely deplete resources quickly
• Key
– Focus on niche market and target audience
– Keep expenses low
– Keep selection broad
– Good inventory control
31

Types of E-tailers
• Virtual merchant = e-tailer with no physical store
• Brick-and-clicks = e-tailer with physical store
• Catalog merchant = online version of direct mail catalog
• Manufacturer-direct = manufacturer uses online channel to
sell directly to customers
• Match companies to business models:
– Walmart/ Ikea
– Dell
– Amazon
– Lands’ End (no physical store in Winnipeg)
32

Types of E-tailers
– Walmart/ Ikea Bricks-and-clicks
– Dell
– Amazon
33

Types of E-tailers
– Dell Manufacturer-direct
– Amazon
34

Types of E-tailers
– Amazon Virtual Merchant
35

Types of E-tailers
– Amazon Virtual Merchant
– Lands’ End (no physical store in Winnipeg) Catalog merchant
36

Community Provider
• Sites that create digital online environment where people
with similar interests can:
– Transact
– Share interests, photos, videos, anecdotes
– Communicate with like-minded people
– Receive interest-related information
• No limitation of geography and time
• Value proposition: create fast, convenient, one-step site
where users can focus on their most important things
• Typically hybrid revenue models
• Provide ideal marketing and ad territories
37

Example Community Provider
38

Content Provider
• Distributes digital information content over the Web
– E.g., news, media, music, art, etc.
• Intellectual property = all forms of human expression that can
be put into tangible medium (such as CDs or on the Web)
• Revenue model: subscription fee or transaction fee
• Key is to own content (e.g., own copyright)
• Syndication = distribute content produced by others
• Web aggregator = syndication plus some added value to
content
– E.g., summary statistics or additional analysis
39

40
Battle of the Titans: Music in the Cloud

Portal
• Offer powerful Web search tools, integrated package of content and
services all in one place
• Used to be viewed as “gateway” to the Internet
• Do not sell anything directly to users
• Service via ads, referral fees, premium services
• Horizontal portal = portal that includes everyone in marketspace
• Vertical portal = similar to horizontal portals in services, but
focused on particular subject matter or market segment
– Also called vortal
– Visitors to specialized niche vortals spend more money than average Yahoo
visitor
– If attract enough market segment, advertisers are willing to pay premium
to reach target audience
• Search = portals focused on search engine services
41

42
Example Portal

43
Example Vortal - LinkedIn

B2C Models: Transaction Broker
• Process online transactions for consumers
– Primary value proposition—saving time and money
• Revenue model:
– Transaction fees
• Industries using this model:
– Financial services
– Travel services
– Job placement services
| Copyright © 2013 Pearson Education, Inc.
44

45
Example Transaction Broker

Market Creator
• Builds digital environment where buyers and sellers can:
– Meet
– Display products
– Search for products
– Establish price for products
• E.g., eBay
• Has no inventory or production costs
46

47
Example Market Creator

Service Provider
• Offers online services
• E.g. photo sharing, maps, email, calendar, financial planning,
advice (medical), appointment scheduling
• Various revenue models: fees, subscriptions, ads, collecting
personal information and then selling it
• Some mix services and products
• Value proposition: convenience, time savings, low-cost,
valuable alternatives to traditional services
• Convenience – important factor for time-starved people
– A key predictor to online buying behaviour
• Critical to build confidence and trust
48

49
Example Service Provider

50

• A way for consumers to sell to each other, via online business
51

Business Strategy for E-Commerce (EC)

Business Strategy for EC
• Set of plans for achieving superior long-term returns on
capital invested in business
• Plan for making profit in competitive environment over time
• Fundamental questions:
– What is the long-term direction of the organization?
– What is the overall plan for deploying the organization’s resources?
– What trade-offs are necessary?
– What is the unique positioning in comparison to the competitors?
• Find position in marketspace that best fits firm’s skills
• Four phases:
– Strategy initiation
– Strategy formulation
– Strategy implementation
– Strategy assessment
3

Strategy Initiation
• Business prepares info on its vision, mission, purpose,
contribution that EC would make
• Exercises:
– Industry analysis
• What is the industry? Who are the customers? What are the current
practices of buying/selling? Who are the major competitors? What are
the major opportunities and risks in this industry?
– Company analysis and core competencies
• What is the current business strategy, customers, partners,
performance? What are the strengths/weaknesses in business
processes, people, information flows, technology support?
– Forecasts (business, technological, political, economic)
– Competitor analysis (direct, indirect, and potential competitors)
4

Strategy Formulation
• Development of strategies to exploit opportunities and
manage threats in light of corporate strengths and
weaknesses
• “What we do”
• Exercises:
– Identify business opportunities and possibly new revenue models
– Cost/benefits analysis for each opportunity
– Risk analysis for each opportunity
– Business plan (to ensure approach is realistic)
5

Strategy Implementation
• Detailed short-term action plans
• “How we do it”
• Project planning
– Define project or series of projects to implement strategy
– Need project plan for each project: objectives, schedule
• Resource allocation
– Allocation of human, financial, technological, time, and managerial
resources
• Project execution
– Staff hires, equipment purchases, software licenses, etc.
6

Strategy Assessment
• Continual assessment of progress toward strategic goals
• May lead to corrective actions or strategy reformulation
• Metrics = measurable standard to compare actual
performance
• Examples:
– % reduction in selling costs
– % reduction in warehouse space
– % reduction in obsolete stock write-offs
– Reduction in average days to delivery
– Rate of addition of new customers
– Reduction in cost of email compared to surface mail
– Response rate to email compared to surface mail
7

Developing a Strategy for a
Business Plan
8

The roadmap for a business strategy implementation addresses nine interrelated issues
What are the customer segment(s) to target and what is our value
proposition to each segment?
What is the vision for our company?
Vision
1
Objectives What are the objectives of our business strategy?
2
Value creation What value do we want to offer through our business strategy?
3
Target segment(s)
4
What organisational model should we apply?
Organisational model
7
External partners Should we implement our e-business strategy alone or with external
partners?
6
Strategy alignment How is our e-commerce strategy aligned with our business strategy?
Revenue and cost model What is our cost and revenue model?
8
Privacy, ethical and legal
issues
What kind of privacy concerns, ethical and legal issues
do we need to consider?
5
9
Developing a Competitive Business Strategy
9

Developing a Strategic Plan
• Use a short planning horizon-2 yrs or less
• Be informal, use shirtsleeve approach
• Encourage participation of others
• Do not begin with setting objectives
• Maintain flexibility-conditions change too fast
• Focus on strategic thinking, not planning
• Planning will be an ongoing process
10

The Strategic Management Process
• Develop a clear vision-translate into mission
• Assess companies’ strengths and weaknesses
• Scan the environment-opportunities and threats
• Identify key factors for success
• Analyze competition
• Formulate strategic options and select
• Translate strategic plans into goals, objectives, and
action plans
• Create company goals and objectives
• Establish controls
11

Vision Statement
The result of an entrepreneur’s dream of something
that does not exist yet and the ability to paint a
compelling picture of that dream for everyone else to
see
• Provides direction
• Determines decisions
• Motivates people
12

Mission Statement
What business are we in?
• What are we in business to accomplish?
• How are we going to accomplish that purpose?
• What principles and beliefs form the foundation of
the way we do business?
13

SWOT Analysis
• Technique for analyzing and evaluating business opportunities
14
Strengths
•What does the company do well?
•Is the company strong in its market?
•Does the company have a strong sense of
purpose and the culture to support that
purpose?
Weaknesses
•What does the company do poorly?
•What problems could be avoided?
•Does the company have serious financial
liabilities?
Opportunities
•Are industry trends moving upward?
•Do new markets exist for the company’s
products/services?
•Are there new technologies that the
company can exploit?
Threats
•What are the competitors doing well?
•What obstacles does the company face?
•Are there troubling changes in the
company’s business environment
(technologies, laws, regulations)?

Analyze the Competition
• Competitive intelligence
• Competitor analysis
• Competitive profile matrix
• Knowledge management-the practice of gathering,
organizing, and disseminating the collective wisdom
and experience of a company’s employees for the
purpose of strengthening competitive position
15

Key Success Factors (KSF’s)
• The factors that determine a company’s ability to
compete successfully in an industry
• Build a Successful Marketing Plan - 15 Key Business
Success Factors
16

Formulate Strategic Options/
Select Strategies
Strategy-a roadmap of the actions an entrepreneur
draws up to fulfill a company’s mission, goals, and
objectives
• Cost leadership
• Differentiation
• Focus on Market Niche
17

• Cost leadership - a strategy in which a company strives to
be the lowest-cost producer relative to its competitors in the
industry
• Differentiation - a strategy in which a company seeks to
build customer loyalty by positioning its goods and services in
a unique or different fashion
• Focus on Market Niche - strategy in which a company
selects one or more market segments, identifies customers’
needs, wants, and interests, and approaches them with a
good or service designed to excel in meeting those needs,
wants and interests
Formulate Strategic Options/
Select Strategies
18

Create Company
Goals and Objectives
• Goals - the broad, long-range attributes a business seeks to
accomplish, tend to be general and sometimes abstract
• Objectives - more specific targets of performance,
commonly addressing areas such as profitability, productivity,
growth, and other key aspects of business
19

Create Company
20

Create Company
• Most goals define positive outcomes that you want your
business to achieve, but sometimes you also want to set goals
to avoid pitfalls and to eliminate a few weaknesses. To help
develop goals that cover all the bases, use the acronym ACES
as you tick through the following key questions:
• Achieve: What do you want to attain in the future?
• Conserve: What do you want to hang on to?
• Eliminate: What do you want to get rid of?
• Steer clear: What do you want to avoid?
21

Create Company
22

Create Company
23

S.M.A.R.T Objectives
S.M.A.R.T. Objectives: is an effective method of measuring performance of the business model to
the plan. To qualify as S.M.A.R.T., an objective must be:
• SPECIFIC. Specific goals let people know exactly what's expected of them with no room for
misinterpretation. Specific goals should be able to answer the following:
• Who is responsible?
• When must this be done?
• What is to be accomplished?
• Which requirements/constraints are involved?
• Where is this to be completed?
• Why is this important or beneficial?
• MEASURABLE. When setting goals, you must also set specific criteria for measuring progress against those
goals. This gives your employees a way to stay on track, aim for target dates, and reach milestones that
will serve as ongoing motivation.
• ATTAINABLE. Setting overly lofty goals that are truly unattainable serve to demotivate-rather than
motivate-your employees. By setting ambitious, yet realistic, goals, you will inspire your employees to fully
leverage their talents and all available opportunities in order to achieve them.
• RELEVANT. Employees must be able to see how a specific goal is relevant to them and the work they
perform every day. Plus by keeping goals relevant, you will help employees better understand their
connection to your company's objectives and the strategic importance of their individual goals.
• TIMELY. To be most effective, goals must be structured around a specific timeframe to provide a sense of
urgency. This serves to motivate individuals to begin working on their goals as soon as possible.
24

Figure 3-2
This figure provides
examples of systems for
both primary and support
activities of a firm and of
its value partners that
would add a margin of
value to a firm’s products
or services.
The Value Chain Model
Developing a Competitive E-Commerce Strategy
25

Functional areas within an organization that process inputs and produce
outputs. These activities may vary widely based on the unique
requirements of a company’s industry
Primary Activities include:
• Inbound Logistics – receiving and stocking raw materials, parts,
products
• Operations/Manufacturing – processing orders and raw materials
into finished product
• Outbound Logistics – distribution of the finished product to
customers
• Marketing and Sales – creating demand for the product (pre-sales
activities)
• Customer Service – providing support for the product or customer
(post-sales activities)
Developing a Competitive E-Commerce Strategy
26

The Business Value Chain - Support Activities
Support activities are business activities that enable Primary Activities.
These activities can be unique by industry but are generally more typical
across industries.
Support Activities include:
• Infrastructure – hardware and software that must be implemented to
support applications for primary activities
• Human Resources – employee management activities: hiring,
interview scheduling, and benefits management
• Technology Development – the design and development of
applications that support the organization
• Procurement – purchase of goods or services that are required as
inputs to primary activities
27

Traditional vs. Strategy Support Process
Example AVIS RENTA CAR
Using handheld technology combined with a reengineered business process to
create a competitive advantage
28

Impact of the Web: Disintermediation
Manufacturer
or
Service
Provider
Intermediary
(Middleman)
Customer
(Consumer
or
Business)
Disintermediation
• Removal of the intermediary (middleman) in a sale.
• Companies can sell directly to customers (retail or wholesale)
without assistance using the Internet
Sell Direct = Disintermediation
Example
• Airlines selling directly to flyers without a travel agent or customer
service representative
29

The typical
distribution
channel has several
intermediary
layers, each of
which adds to the
final cost of a
product, such as a
sweater. Removing
layers lowers the
final cost to the
consumer.
The Benefits of Disintermediation to the Consumer
Impact of the Web: Disintermediation
30

Electronic Commerce Business Strategies
Business Strategies come in one of the following three types. All
require a sound business model to be successful (see next)
31

Brick-and-Mortar & Click-and-Mortar
Strategies
Brick-and-Mortar
• Operate a firm solely in traditional physical markets
• Approach business activities traditionally by operating
physical locations (e.g. stores, offices, manufacturing
plants)
Click-and-Mortar
• Operate a firm in physical locations and has added an EC
component to their business
• Requires maximization of business opportunities in both the
physical and virtual environments
• This strategy requires a significant investment in systems and
space
32

Click-Only Strategy
• Business transactions are only conducted virtually
• Can require significant expertise and investment in
technology and systems staff
• There are many different revenue models
33

Strategy and Competitive Advantage
How to get Competitive Advantage *MC
• Having the best-made product on the market
• Delivering superior customer service
• Achieving lower cost than rivals
• Having proprietary manufacturing technology
• Having shorter lead-times in developing and testing new products
• Having a well-known brand name and reputation
• Giving customers more value for their money
Achieving Strategy
Providing support in a way that enables the firm to gain or sustain
competitive advantage over rivals
34

35

• Use the value chain to:
– Plan for a better way of meeting customer demands.
– Identifying processes that add value.
– Identifying processes that reduce value.
36

How does a business optimize
its value process?
37

Differentiator – adding
value to the process
38

Value Chain Integration
Manufacturer
Suppliers Distributor Retailer Consumer
From vertical integration ...
… to internet-driven Virtual Enterprise
Virtual Mfgr.
Internet
Internet
Internet
Internet
Suppliers Logistics Partner
Consumer
Mfg. Partner
39

Developing a Business Plan

• Main purposes:
• Define business objectives
• Set realistic goals and measurable milestones
• Planning: Determine the steps needed to accomplish goals
• Remember: This is an E-Commerce business model that follows similar
key components as a business plan.
• The E-Commerce model deliverable can be used as input to business plan
once complete.
Types of Business Plans
3
External Reader Internal Reader
Existing Business Loan or Investment Strategic Plan
Start-Up Loan Proposal Operational Start-up
Model
Target Reader
Stage of
Development
Course project’s focus

Generic Table of Contents
• Cover Page
• Table of contents
• Executive summary
• Company description
• Products and services
• Marketing Plan
• Management and Organization
• Financial Plan
• Appendices
4

Templates
• Many available online
• Several software/services for writing business plans
• Project:
– Shorter than business plan
– Has web/operations component emphasis
– See project page
5

6

7
Break out
different
offerings

Keep Product Offerings Simple!
• Please minimize the number of offerings
– More planning
– More analysis
– More writing
• E.g., a wide selection of teas means a large number of
offerings
– Consider grouping them into categories (By price? By ingredient? By
origin?)
– Same with offering a wide selection of games
8

9
• Example of cash flow

10
• Another example of sales forecast

One Sales Forecast Per Offering
• E.g., business offers product and service package
– Two+ offerings
– One sales forecast for product
– One sales forecast for service package
– One sales forecast for each combination of product/service package
• Be sure to consider seasonal demands (if appropriate)
11

Pricing
• Balance between a competitive price and a reasonable profit
• Set price by:
– Examining costs to produce the product/service
– Plus threshold comparable to customer benefits (break even analysis)
• Compare your prices to market price of similar
product/service
• If your price is higher, explain:
– Why would your customer be willing to pay more?
– E.g., quality of service, bonus package, etc.
12

Break Even Analysis
• Determines amount of sales volume needed to start making
profit
• Formula: Fixed Costs
Revenue – Variable Costs
• Variable Costs = expenses that vary as a function of
production volumes
– Unit pricing
– E.g., materials, labour, production utilities
• Fixed Costs = production expenses that remain constant
– Volume pricing (by year)
– E.g., salaries, rent, insurance
13

Break Even Example
• Fixed costs for producing 100,000 items is $30,000 a year
• Variable costs are $7.00 per item
– Materials $2.20 per item
– Labour $4.00 per item
– Overhead $0.80 per item
• Choose unit price at: $12.00 per item
Fixed Costs $30,000
Revenue – Variable Costs ($12.00 – $7.00)
• Therefore, 6000 items need to be sold to start making profit
14
= 6000 items
=

Pricing Strategy: Cost-Plus Pricing
• Set price at production cost + profit margin
• Will make profit as long as sales volumes and costs are
calculated accurately
• E.g.,:
– Variable costs: $20 raw materials and production costs
– Fixed costs: $30 per item at current sales volume
– Total cost so far: $50 per item
– Markup of 20% per item (add $10 extra)
– Final price is $60 per item
15

Pricing Strategy: Target Return Pricing
• Set price to achieve target return on investment
• Assume goal is to recoup $10,000 of investments in first year
• Expected sales volume: 1,000 items in the first year
• Therefore, you need to make $10,000 profit on 1,000 units
– This means: $10 profit per item
– Markup your price enough to match this level
16

Pricing Strategy: Value-Based Pricing
• Price product based on value created for customer
• Usually most profitable pricing method, but difficult to
achieve
• Follows a “pay for performance” model
• Charge clients a portion of expense savings due to the use of
your product/service
• E.g., use of your product results in $1000 per year savings,
charging $200 per year would still be reasonable
17

Pricing Strategy: Psychological Pricing
• Consider customer’s perception of your price
• Positioning
– Come across as “low-cost leader”, signal high quality, etc.
• Popular price points
– Depends on products
– E.g., meals for $5, gifts “$20 and under”
• Fair pricing
– Purely subjective concept of “fair”
– Concept may change over time for the same product
– Requires market research
18

E-Commerce Proposal Project
• Proposal Requirements (5%)
– Identify the type of e-business and describe the product or service offering.
• Explain why your product or service provides value.
– Identify: your target market, at least one existing competitor.
• Explain the competitive advantage you have over your competitors.
– Assess company’s strengths and weaknesses and provide a brief summary of
your business model SWOT analysis
– Formulate strategic options and select (Cost Leadership | Differentiation |
Focus).
• Translate strategic option into your E-Commerce product offering.
• Project report (20%)
– More details than presentation
– Incorporate feedback from presentation
– References needed
19

Starting a Business

Steps to Starting a Business
• Good business idea
• Develop business plan
• Decide on a business name
• Determine form of business ownership
• Establish your business team
• Register your business, business number, license/permits
• Register for taxes with CRA – can do later
• Buy business insurance – depends on business
• Finance your business
• Execute business plan
21

Best Online Business Opportunities
• Most Popular Online
Service-Based Businesses
• Most Profitable People
Based Businesses
• Top Online Business Ideas
• Post by Karyn Corrigan, April 10, 2019,
The Ultimate List of The Most Popular
Online Business Ideas, Oberlo
22
• Nerdalize - Green Computer Server
• The Prado Museum - 3D Replica
• Glia - B2C matching
• The Amazon Dash Button - home shopping
• Yellow Backie - “Uber” bike ride service
• Knocki - Smart communication in home
• Heijmans One - affordable housing units
• E-Nable - Robotic hand retailer
• LucidPipe - Renewable energy service
• UAViators - Humanitarian UAV network
• Kinneir Dufort - 3-D printed pancakes
• TOP 20 SUSTAINABLE BUSINESS IDEAS FOR
2020
• Facts and figures according to Springwise, 2016

Best Business Opportunities in 2018
23

Good Business Names
• A distinctive element:
– Word or phrase that clearly distinguishes your name from every other
name in your field of competition
– E.g., your own name or word/phrase that you have coined or invented
• A descriptive character:
– Word or phrase describes to the nature of your work, the services you
offer or the products that you sell
– E.g., “consulting services”, “wholesale suppliers”, “trucking company”
• The legal element:
– Each province requires that each for profit corporation include as part of
its name one of the following legal elements:
• Limited or Ltd.
• Corporation or Corp.
• Incorporated or Inc.
– All Provinces will also allow, under certain circumstances, the word
"Canada" as the legal element.
24

Good Domain Names
• Key attributes:
1. Short
2. Memorable
3. Related to your core business or business name
4. Hard to misspell
• Additional considerations
– Avoid punctuation (hyphens “-”, underscores ”_”)
– Avoid numbers
– .com, .net, .org, .ca, … ? Depends on:
• Name availability, appeal to local community, internationalization,
personal preference
25

Types of Ownership
• Sole proprietorship
– Owned by one person
– Operated personally by owner
• Partnership
– Owned by two or more people
– Run business and share profits together
– Partnership Agreement – decision-making procedures, sharing of profits
and losses, dispute resolution mechanism
• Corporation
– Separate legal entity
– Continuance depends on filing annual returns and reports
– Can be owned by one person (shareholders)
– Usually operated by employees, not shareholders
– Shareholder’s Agreement – recommended when more than one owner
• Others: Co-operative, franchise
26

Differences in Taxation
– Income/losses are claimed on owner’s personal tax returns
– Allows business deductions
• Partnership
– Partnership Agreement can allocate any ratios of profits/losses among the
partners
– If no agreement: equal allocation
– Business deductions are claimed on partners’ personal tax returns
• Corporation
– Corporation pays taxes based on corporate earnings after deductions
– Money taken out of company (dividends, wages, etc.) by shareholders is
claimed on shareholders’ personal tax returns
– Tax advantages include Small Business Tax rate on the first $500K for
qualifying companies
27

Differences in Liability
– Owners are personally liable for debts
– Personal assets can be at risk
• Partnership
– Partners have unlimited personal liability of all the partners
– Partners are personally liable for debts
– Debt can be collected from one or more of the partners (doesn’t have to
be equally shared)
– Partners can be held liable for acts done by one of the partners
– Can create limited partnership
• Corporation
– Liability is limited to assets of the company
– Shareholders are not personally liable unless allowed by law
– Some circumstances may hold directors responsible
28

Differences in Duration
– Ends with the death of incapacity of the owner
– Cannot be inherited
• Partnership
– Ends with death, incapacity, withdrawal, or bankruptcy of any partner,
unless otherwise agreed to in Partnership Agreement
• Corporation
– Survives the death, incapacity, withdrawal of any shareholder or
director
– Survival depends on filing annual returns and fulfillment of the
provincial Company Act
29

Strategic Alliances
• Maintaining a network
– Financial advisor – cash flow, profit/loss analysis, forecasts
– Legal advisor – policies, intellectual property/patents, copyrights
– Business advisor – management, branding, development directional
– Business partners – collaborations
– Technical advisor – new tools, R&D resources
• Advantages
– Lead into new markets and reach new customers
– Gain access to each other’s resources
– Leveraging each other’s resources
– Add credibility to your business
30

Additional Business Team
• Lawyer
• Accountant
• Banker
• Suppliers
• Employees
31

• Lawyer
– Business financing arrangements
– Supplier contracts
– Patents, trademarks, brand identification
– Tax planning
– Real estate agreements
– Business forms
– Debt collection procedures
• Accountant
• Banker
• Suppliers
• Employees
32

• Lawyer
• Accountant
– Type of accounting/bookkeeping software and payroll system
– Loan structures that reap tax benefits
– Equipment financing issues
– Business plan development
– Insurance
– Tax planning and estimating
– Accounting rule changes
– Revenue and expense forecasting, trend analysis
– Auditing
• Banker
• Suppliers
• Employees
33

• Lawyer
• Accountant
• Banker
– Start-up loans
– Real estate financing
– Capital equipment financing
– Line-of-credit
– Short and long term working capital loans
– Business accounts for checking and payroll
– Merchant services
– Cash management services
• Suppliers
• Employees
34

• Lawyer
• Accountant
• Banker
• Suppliers
– Discount pricing
– Pricing controls
– Inventory management
– Credit accounts
• Employees
35

• Lawyer
• Accountant
• Banker
• Suppliers
• Employees
– Personality, attitude, lifestyle match
– Job responsibilities and skills set
– Education required and past experience
– Physical demands of job
– Specialized job needs
36

Business Registration
• General process
– Conduct business name search
– Fill out appropriate business registration form
– Pay fee
– Companies Office: http://www.companiesoffice.gov.mb.ca/
• Sole proprietorship and partnership
– Can operate under name of owner(s) or under a trade name
• Corporation
– More involved, more documentation, higher pay
• Name should be unique, distinctive, descriptive of company
• Legal designations must be included in the name
– Ltd
– Inc
37

Initial Funding
38
• Self, friends, family
• Angel investors = wealthy individuals who contribute personal funds
and possibly expertise at earliest stages
• Incubator = usually non-profit; supports promising businesses in
early stages, primarily offers support services such as office space,
accounting, group purchasing schemes, reception, coaching, IT
consulting
• Crowdfunding = Crowdfunding is the practice of funding a project or
venture by raising monetary contributions from a large number of
people, typically via the internet.
– Crowdfunding is a form of alternative finance, which has emerged outside
of the traditional financial system.
– The crowdfunding model is fueled by three types of actors: the project
initiator who proposes the idea and/or project to be funded; individuals or
groups who support the idea; and a moderating organization (the
"platform") that brings the parties together to launch the idea.[3]
– In 2015, the crowdfunding industry grew to be over US$34 billion
worldwide.

Crowdfunding Models
39

Later-Stage Funding
40
• Venture Capitalists (secondary financing) = individual or
group of individuals that offer money in exchange for equity in
the business
• Expect some management control and profit within 3-5 years
• Eventually go public at stock exchange
• A larger partner e.g., Yahoo, Microsoft, Google

Networking Essentials
• Be genuine and humble
– Don’t fake interest
– You will always meet someone smarter than you
• Be open-minded
– Don’t automatically doubt other’s ideas
– Learn from other’s experiences
• Learn to communicate effectively
– Don’t ramble on and on …
– Prepare a 2-minute “elevator” talk
– Be constructive, not judgmental (or too opinionated)
• Learn to listen actively
– Focus on the speaker
– Be engaged
• Maintain contact over time
– Sell yourself as a resource for others
– Always follow through with what you say you’d do
– Check up on them once in awhile
42

Things to think about…
• How is “success” measured?
• What do these companies have in common?
– Target market?
– Technology used?
– What need do the products satisfy?
– …
• How to reach 2M members?
• How to get competitor’s attention?
43

Resources
• Government sites – federal and provincial
• Government grants – start-up funding, growing your business,
international collaborations
• Banks and Government programs – loans
• Special interest groups – visible minorities, regional, industry-
specific
49

© 2014 Pearson Education, Inc. Publishing as Prentice Hall 2
• Develop clear understanding of your business objectives
– What information needs to be conveyed?
– Who are your clients?
– Who are your sponsors/stakeholders?
– Who needs to use the site?
– How will these users use the site?
• Knowing how to choose right technologies to achieve
objectives
– In-house development, open-source, commercial
– Outsourcing considerations
– E-Commerce technology architecture including hardware, software,
database options
Building an E-commerce Site:
A Systematic Approach

Imagine Your E-commerce Presence
• What’s the idea?
– Vision
– Mission statement
– Target audience
– Intended market space
– Strategic analysis
– Internet marketing matrix
– Development timeline and preliminary budget
3

Imagine Your E-commerce Presence (cont.)
• Where’s the money?
– Business model(s):
• Portal, e-tailer, content provider, transaction broker, market
creator, service provider, community provider
– Revenue model(s):
• Advertising, subscriptions, transaction fees, sales, and affiliate
revenue
4

• Who and where is the target audience?
– Describing your audience
• Demographics
– Age, gender, income, location
• Behavior patterns (lifestyle)
• Consumption patterns (purchasing habits)
• Digital usage patterns
• Content creation patterns (blogs, Facebook)
• Buyer personas
5

• Characterize the marketplace
– Demographics
– Size, growth, changes
– Structure
• Competitors
• Suppliers
• Substitute products
• Where is the content coming from?
– Static or dynamic?
6

• Know your business—SWOT analysis
• Develop an e-commerce presence map
• Develop a timeline: Milestones
• How much will this cost?
– Simple Web sites: up to $5000
– Small Web start-up: $25,000 to $50,000
– Large corporate site: $100,000+ to millions
7

SWOT Analysis
• Figure 4.1, page 189
8

E-commerce Presence Map
• Figure 4.2, page 190

10

Design Considerations
• Key players – who’s involved?
– Owner
– Employees (Hierarchical? Management?)
– Suppliers
– Stakeholders
• High-level processes – how do the key players interact? What
kind of information is exchanged between the key players?
• Functionality and applications – what kinds of features are
made available by your site, and how are they organized into
applications?
• Expected traffic – site/page traffic, seasonal deadlines?

Budget Planning
Operational costs are
generally budgeted
between 20% - 25%
of the entire project.

Example Design Scenarios
• Sell text books using online catalog
– Categories of books?
– Pricing options?
– Multiple sellers and buyer interaction?
• Service that connects tutors and students
– How is a match initiated?
– Student-to-student or tutor-to-tutor interaction?
– Recommendation or rating system?
• Distributor of dog products to pet stores
– Types of products?
– Storage and delivery options?
– Local, regional, national, global distribution?
– Support for expansion to individual customers?

Pieces of the Site-Building Puzzle
• Main areas where you will need to make decisions:

The Systems Development Life Cycle (SDLC)
• Methodology for understanding business objectives
of a system and designing an appropriate solution
• Five major steps:
– Systems analysis/planning
– Systems design
– Building the system
– Testing
– Implementation

Web Site Systems Development Life Cycle (SDLC)
• Figure 4.5

System Analysis/Planning
• Business objectives:
– List of capabilities you want your site to have
• System functionalities:
– List of information system capabilities needed to achieve
business objectives
• Information requirements:
– Information elements that system must produce in order
to achieve business objectives

18
• Table 4.2

Essential Applications and Functions
• Digital catalog – display goods using text, graphics
• Product database – product description, stock number, inventory level
• Customer on-site tracking – site log per customer visit, personalization,
common customer paths and destinations
• Shopping cart/payment system – ordering system, secure credit card
clearing, other payment options
• Customer database – customer name, address, phone, email
• Sales database – customer ID, product purchased, date, payment,
shipment, fulfillment
• Ad server – tracks site behaviour, prospective customers
• Site tracking and reporting system – monitors unique visitors, page visits,
products purchased
• Inventory management system – manages product inventory levels,
supplier ID and contact, order quantity data by product

Additional Application Examples
• Invoice system – internal accounting
• Security – user authentication, secure protocols, encryption
• Customer relationship management – customer feedback,
reminder system, case management
• Supply chain and inventory management – supply and
demand analysis, inventory forecasting
• Human resource management – time logs, workload analysis,
scheduling, resource allocation
• Financial planning system – basic accounting, cash flow
analysis, forecasting

Systems Design: Logical and Physical
• System design specification:
– Description of main components of a system and their
relationship to one another
• Two components of system design:
– Logical design = description of flow of information and
major processes and relationships involved
• E.g., major system components and data flow
– Physical design = mapping of logical design to physical
components
• E.g. actual servers to purchase

Logical Design for a Simple Web Site
• Figure 4.6 (a), Page 197

Physical Design for a Simple Web Site
• Figure 4.6 (b), Page 197

Build/Host Your Own vs. Outsourcing
• Outsourcing: Hiring vendors to provide services involved in
building site
• Build own vs. outsourcing:
– Build your own requires team with diverse skill set; choice of software
tools; both risks and possible benefits
• Host own vs. outsourcing
– Hosting: Hosting company responsible for ensuring site is accessible
24/7, for monthly fee
– Co-location: Firm purchases or leases Web server (with control over
its operation), but server is located at vendor’s facility

Choices in Building and Hosting
Figure 4.7 Page 198

Building Own vs. Outsourcing
• Build from scratch
– Long development time (requires skilled staff)
– Risk of reinventing the wheel
– Highly customized solution possible
• Use pre-built packages + customize
– Easy to start
– Could get costly to change/upgrade/maintain
– Limited in functionality and design
• Outsourcing + design requirements/input
– Need to be clear on what you want
– Don’t have to think about design and technical details
– Costs may involve development costs, management costs, ongoing
support costs, your input time

Testing, Implementation, and Maintenance
• Testing
– Unit testing
– System testing
– Acceptance testing
• Implementation and maintenance:
– Maintenance is ongoing
– Maintenance costs: Similar to development costs
– Benchmarking

Personalization Tools
• Personalization
– Ability to treat people based on personal qualities and
prior history with site
• Customization
– Ability to change the product to better fit the needs of the
customer
• Cookies
– Primary method to achieve personalization

The Information Policy Set
• Privacy policy
– Set of public statements declaring how site will treat
customers’ personal information that is gathered by site
• Accessibility rules
– Set of design objectives that ensure disabled users can
affectively access site

Designing Your E-Commerce Solution
• Unified Modeling Language (UML)

Tools for Building Your Design
• Content Management Systems (CMS)

Content Management Systems (CMS)
• CMS = content management system
• Software to create content of websites on-the-fly by users
• No programming knowledge required by users
• No need to download editing software
• Allows multiple users to contribute to the site
• Independence from webmaster
• Fast prototyping – put up framework and plug in content later

How CMS Works
• Additional functionality available via plugins
(requires more technical knowledge)
• Plugin = self-contained software component that can be
added to create larger, integrated application
• Design follows the same template format as rest of site
• Separation of content from functionality and design
• Can function as intranet management system
(non-website)

Example Features
• Text, graphics, menus, links, etc.
• User accounts and access control levels
• Variety of professional design templates available
• Plugins:
– Gallery/album
– Scheduling tool (calendar, appointment requests)
– Feedback/contact forms
– Shopping cart
– Credit card authentication
• Web statistics (http://www.google.com/analytics/index.html)
• Standards compliant (http://validator.w3.org/)

CMS Example – Word Press

Exercises
• Purpose:
– Getting used to vague specifications
– Multiple implementations to satisfy the same business objective
• Constraints:
– 2-3Teams
– 15 minutes of discussion and decision making
– Everyone focus on one of the previous scenarios
• Outcomes:
– 5 minute presentation and rough e-commerce presence map
– Identification of major system functional requirements and application
components
– Description of one user interaction scenario

E-Commerce Site Design
Human-Computer Interaction (HCI)
2

Human-Computer Interaction (HCI)
• A subfield of Computer Science that studies the design and
interaction issues between systems and users
• Main focus:
– New interfaces
– Interaction techniques with new hardware
– Design principles
• E.g., provide user with visual (and audio) feedback
• E.g., let user maintain control
• E.g., “recognition” rather than “recall”
– Comparison of new techniques
– System evaluation methodologies
3

Usability
• A quality of the system based on user feedback on how easy
the system is to use
• Aspects of users’ opinions:
– Subjective
– Formed early, based on “first impressions”
– Context specific – based on tasks, context of use
– Relative to existing trends and standards
• Importance of usability:
– Support users in carrying out tasks (productivity)
– Improve user satisfaction of the system
– Increase user acceptance and loyalty
4

User Centered Design (HCI)
User Experience (UX)
5

User Centered Design
• User experience design is the process of enhancing user
satisfaction with a product by improving the usability, accessibility,
and pleasure provided in the interaction with the product.
• User experience design encompasses traditional human–computer
interaction (HCI) design, and extends it by addressing all aspects of
a product or service as perceived by users. (Source)
• Donald A. Norman coined the term user experience when he was
Vice President of the Advanced Technology Group at Apple in the
mid-1990s.
• “I invented the term because I thought human interface and
usability were too narrow. I wanted to cover all aspects of the
person’s experience with the system including industrial design,
graphics, the interface, the physical interaction, and the manual.”
– Donald A. Norman (Source)
6

User Centered Design
• Easy to learn
• Easy to use
– Minimal information/cognitive load
– Minimal navigation/simple site structure
• User control
– Adaptive – changes on user behalf based on observed behaviour
– Adaptable – lets user make changes
• Efficient/increase productivity
• Consistent with standards/trends
– Affordance = quality of object that allows users to perceive certain
actions are possible
– Predictable – same every time
7

8
User Centered Design (cont.)

User Centered Design (cont.)
• Accessibility = provides equal access and equal opportunity to
everyone
– Technological gap
– User skills (e.g., disabilities)
• Error prevention
– Tolerates variety of user actions
– Instructions and error feedback are clear
• Help documentation
– Easy to find
– Always available
9

User Centered Design Process
1) The PROBLEM – There is a reason for a grandfather to say “Necessity is
the mother of invention.” Something causes us so much trouble that we
cannot stand it. So, we make tests, talk to people, conduct desk research,
trying to understand in many different ways the reasons behind the
problem and start to…
2) DESIGN a solution. This is the time when we come up with how the
solution should work and what it should do. When we know enough, we
build the prototype and…
3) TEST it with a few people who have a similar problem. If we are lucky, not
all of the design should end up as trash, so we improve the prototype…
4) BUILD it and…
5) LAUNCH our solution and make it available to people who have the
problem. After some time we…
6) LEARN if our solution was useful or not.
10

11
User Centered Design Process

Lean UX Design Process
1) Understand the PROBLEM,
2) DESIGN the solution,
3) TEST the solution,
4) LEARN if the solution will be
useful for the users. If yes,
proceed to point 5, if not, go
back to point 2.
5) BUILD the solution,
6) LAUNCH it.
12

Lean UX Design Components
• Presentation
– Language and content: jargon,
specialized terminology
– Spacing, colors
– Images, links, dynamic content
– Information load
• Navigation
– Where am I?
– Where have I been?
– Where can I go?
• Functionality
– Clearly labeled
– Accommodates novices + experts
13
• Identity (website only; analogous for software)
– Digestable in 5 seconds
– Clear purpose
– Contact
– Credentials

In Practice …
• Lean UX Design – focus on solving the problem
– UX Case Study: Process of Information Architecture by Soojin Sielle Kim
• Budget constraints
– Usability design not often highly prioritized
• Summary:
– Keep the design simple
– Make sure the functionality works
– Check all the data is recorded as expected
– Must do (at least minimal) usability testing on new users
14

Effects of UX and Web 3.0
“Web 3.0 is all about personalization and
the Semantic Web while integrating real-
time data through different platforms.”
Hassan Bawab, CEO Magic Logix
15
Semantic technology will create a
meaningful format around human
interaction online and human interests.
This format will enable better online matchmaking and content distribution
in addition to better control of online privacy through smarter distribution.
Watch “A Day Made of Glass” and take a
look at Corning’s vision for the future with
specialty glass at the heart of it.
Consider how Corning is leveraging Lean
UX and the Web 3.0 as part of its future
product offerings.

Examples of UX Web Design
16

V-Commerce
17
• Fall 2018, Shopify™ officially
launched a new technology that
they coined as "video commerce".
The technology is called Inviid, it's
an eCommerce application that
allows online shoppers to buy
products they see in videos, right on
the screen, without ever leaving the
viewing experience.
• It's a groundbreaking technology
that was developed by Bold
Commerce™.

Table 4.11, Page 222
E-Commerce Site Design

Presentation Checklist
• The most important elements of the site are clearly visible
• What you sell is easy to determine
• Information is easy to find
• Presentation of information does not seem overwhelming
• Major headings are clear and descriptive
• Styles and colors are simple and consistent
• Company and site owner are easy to identify
• Methods for technical support is easy to determine
• Site layout looks good on different browsers
• URLs are meaningful and user-friendly
• HTML page titles are descriptive
19

Navigation Checklist
• Navigation is clear and consistent throughout the site
• The back button always goes back to the previous page
• References (text labels) are consistent
• Number of buttons and links is reasonable
• Unnecessary links and scrolling are minimized
• Links are consistent and easy to identify
• Site search is easy to access and use
• Site search results are easy to interpret
• Company logo is linked to homepage
20

Functionality Checklist
• Pages load quickly on typical Internet setup
• Each page can be bookmarked individually
• Site functionality works the same on different browsers
• Alternate text tags are provided for images and dynamic
content
• Dynamic content is used sparingly
• Site displays informative error pages
• Transactions are logged accurately
• Data is stored securely
21

Table 4.10, Page 221
Unpopular E-Commerce Web Site Features

Developing a Mobile Web Site and Building
Mobile Applications
• Three types of m-commerce software
– Mobile Web site
• Responsive Web design
– Mobile Web app
– Native app
• Planning and building mobile presence
– Use systems analysis/design to identify unique
and specific business objectives
23

• Table 4.13, Page 231
Developing a Mobile Web Site

Developing a Mobile Web Presence
• Design considerations
– Platform constraints: Smartphone/tablet
– Mobile UX Design: Key Principles by Nick Babich
• Performance and cost
– Mobile Web site:
• Least expensive
– Mobile app:
• Can utilize browser API (Application Program Interface)
– Native app:
• Most expensive; requires more programming
25

Developing a Mobile Web Presence
• What are the key differences between user experience on a
Web site and on a mobile device?
• Why would a mobile Web site or app from the same merchant
need different content or functionality?
• In which cases would a merchant want to develop a mobile
app over a mobile Web site?
26

Importance of Early User Feedback
• Iterative prototyping
– Minimize resources spent in the “wrong” direction
• Check conformance with users
– Design of the overall system
– Standards and consistency with existing systems
– Expectations of how users use your system
• Requirements modification
– Change requests to clients when necessary
• Compare alternative designs
• Measure system performance
• Predict usability of final system before deployment
27

Evaluating Usability
• User studies (controlled labs/“clinics” vs. field data)
• Gather feedback explicitly or implicitly
• Common metrics:
– Task completion rates
– Frequency of “interested” functionality used
– Frequency of “Help” used
– Error rate
• Task is done incorrectly
• Task is done sub-optimally
– Subjective satisfaction ratings
• Odd-point scale: most commonly known the Likert scale
• Even-point scale: forces users to choose
– Open-ended subjective feedback (opinion mining)
28

Evaluating Usability
29
Questions Opinion Mining Might Ask
• Is this product review positive or negative?
• Is this customer email satisfied or
dissatisfied?
• Based on a sample of tweets, how are
people responding to this ad
campaign/product release/news item?

Common Types of Evaluation Methods
• Passive observations and monitoring real use (mostly qualitative)
– Field studies (use logs)
– Controlled lab setting (use videos, logs, notes)
• Collecting user’s opinions (mostly qualitative)
– Focus groups
– Structured interviews
– Surveys (ranking, scales, open-ended)
– Feedback forms
• Experiments and benchmarking (very quantitative)
– Pilot studies (preliminary assessment)
– Controlled lab studies (compares small samples)
30

• Client/server architecture
• Two-tier vs. three-tier architecture
• Four-tier architecture
• Web server software/ Site management tools
• E-Commerce merchant server platform
• Hardware platform
• E-Commerce site tools/ Personalization tools
• Mobile Commerce (M-Commerce) architecture
• Cloud Computing
E-Commerce Design Architecture – Part 1

Client/Server Architecture
• Model of computing where roles and responsibilities are distributed
between servers and clients
Two-Tier Architecture
(1) Client (2) Server + Database
Three-Tier Architecture
(1) Client
(2) Server
(3) Database

Client/ Server Architecture
• Front-end (client) systems are those processes
with which a user interfaces, and over which a
customer can exert some control.
• For an eBusiness, front-end systems are the Web
site processes that customers use to view
information and purchase products and services.

E-commerce Lecture Slides.pdf

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à E-commerce Lecture Slides.pdf

Similaire à E-commerce Lecture Slides.pdf (20)

Dernier

Dernier (20)

E-commerce Lecture Slides.pdf