Lecture No. 05 12.09.2018

Lecture No.
05
12.09.2018
Zaigham Abbas, xaigham.mgmt@gmail.com

 Virtual Merchant:
• Online version of retail store, where customers
can shop at any hour of the day or night without
leaving their home or office.
 Bricks And Mortar:

• Refers to a physical presence of an organization
or business in a building or other structure.
• Also refers to a company that possesses or leases:

 Retail Shop, Factory Production Facilities , Warehouses
for its operations
 Bricks And Clicks:
• Company integrates both offline (bricks) and

Online (clicks) presence.
• Online distribution channel for a company that
also has physical stores.
 Manufacturer - Direct:
• Manufacturer uses online channel to sell direct
to consumer/customer.

 Barriers to Entry:
• The total cost of entering a new market place.
• Total cost entering into e-tail market are low.
 Key-To-Success:
• E-tailers with no prior brand name or
experience become vulnerable their
survivor/existence in market .
• Niche strategy, clearly identifying their target
market and its needs, keeping expenses low,
selection broad and inventory controlled are key
to success.
 Create an online environment where people with similar
interests where people with similar interest can:-
• Transact (Buy and Sell Goods)
• Share Interests
• Photos and Videos
• Communicate with Like-Minded people receive interest –related
information.
 The basic value proposition of community providers is
to create:
• Fast, convenient and one-stop site where users can
focus on their:-
 most important concerns , Interests and Share the
experience with friends and learn more about their own
interest.
 Breadth and dept of knowledge offered is an important
factor.
 Community members frequently request:-

• Knowledge, Guidance and Advice.
 For the newer community social networks, the most important

ingredients of success appear to ease and flexibility of use and a
strong customer value proposition.

 Distribute information content, such as digital video, music,
photos, text and artwork.
 Any e-commerce start-up that intends to make money by
providing content is likely to face difficulties unless it has a
unique information source that others cannot access.
 Syndication:
• Major variation of the standard content provider model.
• Aggregator:
 Collect information from a wide variety of sources and then add value to that
information through post-aggregation services, another variation.

 Offers users powerful search tools as well as an
integrated package of content and services all in on
place.
 Portals do not sell anything directly - they present
themselves unbiased.
 Vertical portal (vortals):
• Attempts to provide similar services as horizontal portals, but are
focused around a particular subject matter or market segment.
• Focuses primarily on offering search services.

 Consumers normally handled in person:-
• By Phone, By Mail or handled in-person.
 The largest industries using this model :-

• Financial Services
• Travel Services
• Job Placement Services
 Fears of privacy invasion and the loss of control over personal

financial information also contribute to market resistance.
 Value Proposition are “Money Saving and Time”
 Provide timely information and opinions.
 Build a digital environment in which buyers and
sellers can meet, display and search for products
and services and establish prices.
 On-Demand-Services (Sharing Economy Companies)

• Developed online platforms that allows people to sell
services.

 Market Creators make money by either:-
• Charging a percentage of every transaction made
• Charging merchants for access to the market.
 Transaction Brokers Vs. Market Creators

• Transaction Brokers acting as agents in larger market to carry out the
transaction for their customers.
• Buyers and sellers are their own agents. i.e. ebay, olx, uber, careem etc.

 Companies that make money by selling users a
service rather than a product.
• E.g. medical bill management, financial and pension planning, travel
recommendation.
 Much like retailers who trade products for cash,

service providers trade:
• Knowledge , Expertise and Capabilities For Revenue.
 Some Services cannot be provided online. However, online

arrangements can be made for these services.
 The basic value proposition of service providers
is that they offer consumers:-

• Valuable , Convenient , Time Saving and Low-Cost alternatives to
traditional service providers - - - - OR - - - -
• provide services that are truly unique.
 Building confidence and trust is critical for services
providers just as it is for retail product merchants.

IN WHICH BUSINESSES SELL TO
OTHER BUSINESS AND MORE THAN 10
TIMES THE SIZE OF B2C ECOMMERCE.

 Companies that supply products and services directly to
individual businesses are e-distributors.
 Owned by one company seeking to serve many
customers and supplies products and services directly to
individual businesses.
 More products and services a company makes available
on its site, the more attractive that site to potential
customers.
 One-stop shopping is always preferable.
 Create and sell access to digital markets.
 Provide products/Services to other companies.
 B2B Service Provider:
• Make money through transaction fee.
• B2B requisitioning , ordering and purchasing of goods and service over the
internet.
• Fees based on the number of workstations using services or annual licensing

fee.
 They offer purchasing firms a sophisticated set of sourcing

and supply chain management tools that permit firms to
reduce supply chain costs. Zaigham Abbas, xaigham.mgmt@gmail.com
 In the Software World,
• Software as a Service (SaaS)
• Platform as a Service (PaaS)
• Both of above services offer firms much lower costs of software by achieving
scale economics because fixed-cost production systems can be operated

at full capacity with no idle time.
 e-procurement value chain consists of indent management, e-

informing, e-Tendring, e-Auctioning, vendor mange, catalogue
management, purchase order integration, order status, e-
invoicing e-payment and contract management.
 An independent digital marketplace where
hundreds of suppliers meet a smaller number of
very large commercial purchasers.
• Vertical industry such as steel, polymers or aluminum
• Focus on the exchange of direct input to production an short term contracts
or spot purchasing.
 Exchanges can also lower product costs and inventory

carrying costs.
• The ease, speed and volume of transactions are value proposition.

 Vertical marketplaces that serve specific
industries i.e.: automobile, aerospace, chemical,
floral or logging industries.
 Industry consortia have tended to be more
successful than independent exchange in part
because they are sponsored by powerful, deep
pocketed industry player.
 Vertical Marketplace:
• Supply a smaller number of companies with products and services of
specific interest to their industry.
 Horizontal Marketplace:
• Supply companies in different industries with particular type of products
and services. e.g.: marketing-related, financial or computing services.

 owned by single large purchasing firm
 Trusted long-term suppliers of direct inputs.
 These networks typically evolve out of a firm’s
own enterprise resource planning (ERP) system
 Include key suppliers in the firms own business
decision making.

A). Business Strategy
B). Business Structure
C). Business Process

 Internet is an open standard systems available to all
players.
 This fact inherently makes it easy for new competitors to
enter the market place and offer substitute products or
channel of delivery.
 The Internet tends to intensify competition because
information available become available to everyone.
 Internet Shifts Power to:-
• Buyers who can quickly discover the lowest-cost provider.
• On the other hand, the internet presents many new opportunities for
creating value.
 Nature of Players in an industry and their
relative bargaining power.
 Industry Structure Analysis:
• An effort to understand and describe the nature of competition in
an industry.
 An Industry’s structure is characterized by

five forces:
• i). Rivalry Among Existing Competitors.
• ii). The threat of substitute products.
• iii). Barriers to entry into the industry.
• iv). Bargaining power of supplier
 helps understand the impact of
e-commerce technology on the overall
business environment in an industry.
 Value Chain Analysis can help identify
more precisely just how e-commerce may
change business operations at the industry
level.
 set of activities performed in an industry
or in a firm that transform raw inputs into
final products and services.
 each of activities adds economic value to
the final product

 e-commerce offers each of the key players in an
industry value chain new opportunities to
maximize their position by lowering cost and / or
raising prices.
Reduces the costs they pay for goods by developing
internet-based B2B exchanges with their suppliers
Manufacturer
Can develop direct relationship with their customer
bypassing the costs of distributors and retailers.
Distributors Can develop highly efficient inventory management
systems to reduce their cost.
Retailers Can develop highly efficient customer relationship
management systems to strengthen their service to
customers.

 Value chain can be used to analyze a single firm’s
operational efficiency.
 In addition:-
• firms develop support activities that coordinate the
production process and contribute to overall operational
efficiency.

 Rely on the value chains of their partners
• Suppliers, Distributors and Delivery Firms.
 E-Commerce creates new opportunity for firms to cooperate

and create a value web.
 Value web is a networked business ecosystem that uses
ecommerce technology to coordinate the value chains of
business partners within an industry.

Lecture No. 05 12.09.2018

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Lecture No.

Zaigham Abbas, xaigham.mgmt@gmail.com

 Bricks And Mortar:

• Also refers to a company that possesses or leases:

• Company integrates both offline (bricks) and

Zaigham Abbas, xaigham.mgmt@gmail.com

 Community members frequently request:-

 For the newer community social networks, the most important

Zaigham Abbas, xaigham.mgmt@gmail.com

Zaigham Abbas, xaigham.mgmt@gmail.com

focused around a particular subject matter or market segment.

• Focuses primarily on offering search services.

 The largest industries using this model :-

• Job Placement Services

 Fears of privacy invasion and the loss of control over personal

sellers can meet, display and search for products

and services and establish prices.

 On-Demand-Services (Sharing Economy Companies)

Zaigham Abbas, xaigham.mgmt@gmail.com

• Charging merchants for access to the market.

 Transaction Brokers Vs. Market Creators

transaction for their customers.

Zaigham Abbas, xaigham.mgmt@gmail.com

 Much like retailers who trade products for cash,

 Some Services cannot be provided online. However, online

is that they offer consumers:-

traditional service providers - - - - OR - - - -

• provide services that are truly unique.

 Building confidence and trust is critical for services

providers just as it is for retail product merchants.

Zaigham Abbas, xaigham.mgmt@gmail.com

Zaigham Abbas, xaigham.mgmt@gmail.com

• Fees based on the number of workstations using services or annual licensing

 They offer purchasing firms a sophisticated set of sourcing

• Platform as a Service (PaaS)

scale economics because fixed-cost production systems can be operated

 e-procurement value chain consists of indent management, e-

• Focus on the exchange of direct input to production an short term contracts

 Exchanges can also lower product costs and inventory

Zaigham Abbas, xaigham.mgmt@gmail.com

specific interest to their industry.

and services. e.g.: marketing-related, financial or computing services.

Zaigham Abbas, xaigham.mgmt@gmail.com

 Trusted long-term suppliers of direct inputs.

 These networks typically evolve out of a firm’s

own enterprise resource planning (ERP) system

 Include key suppliers in the firms own business

Zaigham Abbas, xaigham.mgmt@gmail.com

Zaigham Abbas, xaigham.mgmt@gmail.com

 An Industry’s structure is characterized by

Zaigham Abbas, xaigham.mgmt@gmail.com

Zaigham Abbas, xaigham.mgmt@gmail.com

Zaigham Abbas, xaigham.mgmt@gmail.com

 E-Commerce creates new opportunity for firms to cooperate

Zaigham Abbas, xaigham.mgmt@gmail.com

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