B2C & B2B

Amazon.com

July 16, 1995Jeff Bezos (1964)AMZN, 63 5/8 (8-3-00), P/E = 0.00!! For the nine months  ended 9/30/99,

revenues rose from $357M to $963.8M.

Net loss totalled $396.8M, up from $78.1M Market Cap (8-3-00): 21.3 billion!!

How?

Sell Anything More customers, lower prices Easy to find what you want Reviews (customers’,

professionals’) Membership Club 1-Click

Amazon.comJanuary 2000 Projected net loss: US$ 350 million 750,000 sq ft warehouse at Coffeyville,

Kansas: 10% used; 90% for expansion 3 million sq. ft. total warehouse space at a cost

of US$ 200 million around U.S. low- or no-sales-tax states (not traditional warehouses)

Sales could crest US$1 billion (4-1999):Customer accounts increased by more than 2.2

million during the first quarter to a total of 8.4 million, and repeat customers made up more than 66 percent of orders during the quarter.

Warehouses(Jan. 2000)

Seattle: 93,000 Fernley, Nev: 332,650 Grand Forks, N.D.: 130,000 Coffeyville, Kans.: 750,000 New Castle, Del.: 202,000 Campbellsville, Ky.: 770,000 McDonough, Ga.: 800,000

The Anatomy of an Order Computer assigns a warehouse where your order will

be processed At the warehouse, a worker will pickup your order at

bins (where red lights are on) Into a crate your order goes riding on miles of conveyor

belts; bar codes will be scanned to maintain status Order is checked at a central point, slide down a chute

into a box, coded Personally gift wrapped if needed Boxed, taped, weighted & labelled (then goes to either

USPS or UPS with large facilities nearby; 200,000 pieces a day at McDonough plant)

Door bellTime (Asia), January 3, 2000

Competitors?

Acquired Exchange.com, which operates rare-book site www.bilbiofind.com and rare-music site www.musicfile.com, and also acquired Alexa.com and Accept.com.

Minority stakes in Drugstore.com, Pets.com, HomeGrocer.com, Gear.com & Della.com (not necessary survivors)

Wal-Mart (article)

Business Perspectives Direct Marketing versus Indirect

Marketing– I make I sell vs I make someone sells

Full Cybermarketing versus Partial Cybermarketing– Amazon.com vs Barnes & Noble

Electronic Distributor versus Electronic Broker– Delivery vs Matching

Business Perspectives Electronic Store versus Electronic Shopping

Mall Generalized versus Specialized

e-Malls/Stores Proactive versus Reactive towards

Cybermarketing– Dell is proactive: using the new channel to contact

customers

Global versus Regional Marketing Sales versus Customer Service

Four System Architechure (Hsu)

Document Connectivity– HTML, …

Applications Connectivity– CGI, Javascript, …

Database Connectivity– ODBC/JDBC, databases

Enterprise Connectivity– Java, CORBA

Five Elements of an EC System(Hsu)

Web ServerApplications ServerDatabase Server Internal Networking Internet Connection

B2C e-tailers(Tresse, chapter4)

Benefits Ability to reach a global market (marketspace:

critical mass maybe reached quickly) Reduced marketing and selling expenses

(update is easy; no re-printing) Increased efficiency of operation (specialized

personnel) Ability to target consumers more precisely Ability to convey more accurate product and

availability information

B2C e-tailers Attracts: advertising, e-coupons, sales,

promotions, frequent buyer programs, one-to-one marketing (individualized product announments)

Interact: content development and interactivity

Act: – Order processing (one-click ordering) – shopping

cart, order validation and modifications, discounts, cross-selling (this with that), taxes (not applicable), shipping & handling charges, records and receipts

Continued

Act (cont’d)– Payment: Cash, credit/debit cards, check,

e-wallets?, currencies?– Fulfillment: how? Logistics?

React: customer service – self help, discussion group, track and trace, multiple-language support.

B2B EC actual business transactions and connection

of organizations types: selling/buying between business -

company sites target other business partners types: portal sites but for businesses;

cybercash, security system integration,… B2BEC - US$43 billion in 1998; expect to hit

US$1.3 trillion by the end of 2003

B2B Models Supplier-oriented MarketplaceSupplier-oriented Marketplace: consumers

and businesses alike use the same site to complete transactions– www.cisco.com, www.dell.com,

www.ibm.com Buyer-oriented Marketplace Buyer-oriented Marketplace : Suppliers come

to the site to post bids– Tpn.geis.com

Intermediary-oriented Marketplace– Www.procure.net?

Traditional Businesses Intel/Motorola/Sun/IBM

Ftp, http, smtp, mime, Java, CGI, HTML, Javascript, …

Internet

ee-Consumers

Consumers

Internet

ee-Store

…

Selling-Chain Management CRMCRM

Enterprise Resource Planning (ERP)/IT

e-Procurement Supply Chain Management

Elements of ERP(p 169)

Sales, Distribution (Order Entry) Human Resources Accounting and Financials Integrated Logistics Production Planning Customer/Employee

Enterprise Resource Planning (ERP) To improve customer order processing To consolidate and unify business functions

such as manufacturing, finance, distribution/logistics, and human resources

To integrate disparate technologies, along with the processes they support, into a common denominator of overall functionality

To create a new foundation on which next-generation applications can be developed

E-Commerce

Example: e-Procurement(chapter nine of A)

A typical procurement process: Identify sellers/vendors Make a request Receive approval Fill up a Purchase Order Wait for Business/Procurement Office to interface

with supplier Wait for the delivery of products Receiving report to Business/Procurement Office

e-Procurement Solutions

http://www.buyingchain.com/buying_chain/default.asp

http://www.walker.com/products_services/eprocurement/

Benefits of e-Procurement

Efficiency: “lower procurement costs, faster cycle times, reduced maverick or unauthorized buying, more highly organized information, and tighter integration of the procurement function with key back-office systems” (p234)

Effective: “increased control over the supply chain, proactive management of key procurement data, and higher-quality purchasing decisions within organizations”

Other e-Procurement Solutions

Buy-side: linking the buying party with suppliers and back-office systems– Fire up browser and login– Browser products catalog– Select Products and obtain quotes– Create On-line PO– Get On-line Approval– Send PO to Supplier for fulfillment– Start order tracking and ready for receipt

CU Business Office

Browser

Quote1 Quote2 Quote3

Quote1 Quote2 Quote3

Approve and Generate P.O.

Other e-Procurement Solutions

Sell-side: Vertical product trading community

www.chemdex.com www.sciquest.com