Customers With E Business example essay topic

Benefits of e Business The benefits of using the Internet based technologies can be simply summarized into three terms: 1. Expand markets to increase revenues 2. Reduce costs and 3. Strengthen customer relationships. Early entrants in the e Business fray will have "first mover" advantages that late entrants will find almost impossible to overcome. Expand Market Coverage Conventional markets have limits in terms of space and time.

E Business eliminates these limitations of geography and time zones. The whole world is the available market, 24 hours a day. Internet access is now available, wherever work is conducted, at a desk or off-site. Worldwide business professionals, buyers, and decision-makers have access to the Internet, spanning all time zones. This market is now available 24 hours a day, 7 days a week, 365 days in a year, to a supplier. The buyer conducts business "where" and "when" they want to without traditional limitations.

So, with e Business a firm creates a global, "365 x 24 x 7" availability to its customers. This does create problems in "channel conflict" which need to be anticipated, and resolved. Members of current distribution methods have been known to oppose e Business implementations, even within their own organizations. E Business is seen as a threat and this channel conflict can torpedo the most brilliant implementation.

Additionally, an e Business firm can offer complimentary and supplementary products, and add-on promotions as buyers make selections. A sophisticated site like Amazon. com suggests companion or add-on books or CDs to those selected to purchase. This leads to a larger volume of ordering, creating a higher revenue stream at a marginally low cost per transaction. Moreover, e Business makes previously uneconomical markets attractive. The unattractiveness of markets is because of their inability to deliver acceptable margins to the supplier. The low cost of gaining and fulfilling customers with e Business expands the volume of customers who can deliver acceptable margins.

This increases the size of the available market by turning marginal segments into profitable ones. This ability to turn frogs into princes is powered by e Business's low variable costs for addressing marginal segments. Additionally, the power of the add-on products can also be sold into these previously unprofitable segments, turning them into substantially profitable ones. Further, market pull is created by presence on the Internet. There is a distinct trend for buyers and professionals to go to the Internet for many steps of the purchase cycle. The Internet is used to find and qualify suppliers, try out products, and directly purchase products.

Major organizational buyers have shown a strong shift toward Web-based procurement. Purchasing Magazine in their July 1998 issue had current statistics on purchasing managers usage of the Net (Figure 1). Figure 1 Reduce Costs The major cost-reduction benefit is the promise of changing the distribution of products and services to customers. Products requiring little or no experience in the buying cycle can be purchased by the customer on the Internet and delivered directly without intermediaries. The elimination of various layers of distribution is the major cost reduction benefit to the market.

The outcome of the battle between Amazon. com and the "brick & mortar" booksellers was a forgone conclusion- Barnes & Noble and other booksellers had to get on the bandwagon- to a web-based selling model- to compete. Similarly, online trading firm's (like E Trade's) challenge to traditional brokerage firms has evoked responses from DJ, Merrill Lynch and others that mimic the "lowest-cost-distribution" model of e Business. In Business-to-Business environments, Web-based purchasing systems have the unique ability to reduce waste in the purchasing process, and thereby improving customers' overall profitability and competitiveness. The National Association of Purchasing Management outlines the following benefits: Reduction in process variations Reductions in costs and errors through end-to-end process integration Vendor sourcing strategy support Improvements in process capability Procurement paradigm shift from passive to active Elimination of unwanted paper trail Improved access to information in an easy, reliable and timely manner Reduction in costs and cycle times associated with high-volume, low-dollar MRO (maintenance, repair, operations) transactions Of these, MRO spending is estimated to be about $250 to $400 Billion in the US. This accounts for more than half of a company's expenditures. Moreover, this activity costs about $100 or more per transaction- often more than the cost of the purchased goods.

These MRO transactions have human and paper intervention leading to substantial errors and delays. E Business provides an economic alternative in situations where purchase transaction volumes are large and the information exchange is minimal. Almost all MRO transactions are formal communications and acknowledgements like purchase orders, change orders, invoices, shipping instructions, and bills of lading. All of these can be eliminated with an Internet based procurement system, at low transaction costs. E Business also contributes to reducing costs by delivering a unique combination of delegation of the purchase transaction while maintaining central control and audits. Decentralization in paper based systems also meant loss of control over the purchasing parameters like who can buy, where and when can they be buy, what, and how much can they buy.

This has two major benefits: 1. It effectively distributes the procurement activity to where the decision is made and 2. It reduces purchasing of unauthorized products from unqualified suppliers. This combination provides the procurement function ample opportunity to focus on more value-added activities, such as strategic buying and relationship management. Additionally, intervention by a person in the information flow into or out of an organization has the potential to add some impediments like 1) delays, and 2) errors. The combination of these two impediments is deadly in the creation of waste- reducing cost effectiveness.

On the other hand, people can also add dramatic value to the process of delivering products and services to customers. Therefore, it is imperative that all transactions be reviewed to see if value is added at every step, without errors and delays. Automation of low or no value-add transactions can increase the speed and accuracy with which a firm can respond to its customers or vendors or within its own organization. Strengthen Customer Relationships very simply, the purpose of a business is to find and keep customers.

E Business has the ability to deliver benefits that can address both aspects of this statement- to find and retain customers, by delivering better purchase experiences to the buyer. Buyers are migrating to Internet buying in situations when it's faster, better, and cheaper than traditional methods. This migration is driven to a large part by experiences that are, in their turn, powered by the nature of the goods. Faster: e Business assures faster delivery of products and services by speeding up order fulfillment, and delivering into just-in-time upstream processes, particularly in Business-to-Business environments. Also, e Business's integration into legacy inventory systems helps to speed up product delivery cycles and information. Better: This aspect of the customer experience is imbedded in the improved accuracy of information.

Paper and client-server based systems with their "version control" limitations created problems that set limits to their efficiency. The "write-once, read-many" environment of e Business assures that internal and external audiences see and work with the same up-to-date, accurate data. Accurate pricing, delivery, and product information goes a long way in enriching the customer's buying experience. Additionally, where little customer-vendor interaction is required, e Business creates an opportunity for virtual self-service counters. Moreover, e Business has at its disposal multi-media technology to create attractive, expressive, presentations that are "magnets" and create "stickiness" to the vendor's site. Additionally, the ability of technology to allow customers to segment themselves, create opportunities for custom multi-media based interactions- for each individual customer, rather than a mass in a segment!

The ability to tailor presentations to a "segment of one" is that of an electronic salesman making a personal call on a customer. Besides optimizing communications, the self-customizing capability can be extended to each individual's or firm's buying habits, preferences, invoicing terms, order fulfillment quantities and other informational issues of interest to both the vendor and the customer. The ability to capture data at every stage of a transaction creates a wealth of information to better understand customers' buying, usage, and reordering patterns and preferences. Moreover, the Internet enables the creation of a loyal community built around the firm's products and services. This virtual community is critical to customer retention in an environment of low switching costs! Cheaper: The Internet is a great equalizer; it turns every vendor into an equal in a competitive bid.

A consequence of e Business enabled market expansion, is that the customer now has more choice in suppliers. The customer has more alternate vendors, and lower prices are anticipated in all e Business driven markets. web e-Tailing E-tailing is the process of developing and managing online storefronts whereby individual consumers can shop for goods and services. The focus of e-tailing is on consumer shopping, not business-to-business commerce. The intent of e-tailing is to provide a customer value proposition that is different from real space stores. That value proposition often includes cheaper prices, increased flexibility, convenience and consumer empowerment of the shopping process. e-Relationships E-relationships are relationships with Internet customers that are highly automated and result in extensive customer profiles that can be leveraged into one-to-one marketing programs.

E-relationships are "managed" using a Customer Relationship Management (CRM) software whereby the complete history of a company's dealings and communications with a customer are maintained. Any employee within an organization can access and add information to the customer's profile, whether they are in marketing, sales, finance, customer service, fulfillment, R&D or any other department that may interact with customers. Using e-relationship strategies, customer profiles are used to develop customized content, products and marketing strategies. e-Merchandising E-merchandising is the process of using customer profiles and database "data-mining" techniques to implement permission marketing and cross-selling. E-merchandising is often used as a sales promotion technique to obtain additional or incremental sales while a customer is visiting a web site. This is done by customizing the visitors web pages to promote products or offer additional options that may interest them. e-Payments E-payments are online financial transactions whereby monetary value is exchanged.

Today, most consumer online e-payments are credit-card based and consist of using SSL (Secure Socket Layer) encryption to send credit card information to a merchant. The merchant in turn sends the credit card number and other customer information to a credit-card clearing house for verification and authorization. Many new forms of e-payment are currently in development including e-cash, e-cheques and e-coupons. e-Procurement E-procurement is the process of applying Internet technologies to help manage a company's supply chain. The essential Internet tool to accomplish this is an extranet, which is usually a password protected secure network behind the company's firewall.

The extranet might allow access to certain areas of the corporate intranet as well as special areas designed for a companies suppliers and distributors. E-procurement technologies, in addition to standard web-based communications, often provide a web interface to a company's Enterprise Resource Planning (ERP) type software. Market growth for e-procurement will likely expand rapidly to small- and mid-size companies once EDI-type functionality (Electronic Data Interchange) is standardized for the Internet. e-Services E-services are consulting or partnership services that enable or facilitate Internet-based business processes, often with an emphasis on managing transactions. E-services are either front-office oriented with a focus on consumers and clients, or back-office oriented with a focus on procurement and logistics. Providers of e-services can include management consultants, systems integrators and software developers, as well as e-business virtual networks and online financial operators. e-Government E-government is bringing government services to the people via the Internet. The primary purpose of e-government is to provide citizen-oriented Internet activities to expand the reach and richness of government services.

The penultimate e-government service is online balloting during elections, though this service is some years a way. E-government ought to reduce the cost of government operations for the simple reason that government services are often monopolistic. As a result government agencies can (in theory) quickly achieve economies of scale with an assured market demand. In addition to being distributors of services (and occasionally products) governments act as producers. Acting as producers, government agencies need to procure raw materials, components, sub-assemblies, services and MRO purchases. Therefore, e-government is also oriented on improving supply-chain management using Internet technologies. web.