E-Business Infrastructure Technologies, Models And Strategies

Introduction to E-commerce Business Models

WEEK 3 E-Portfolio:  E-commerce Business Models and Concepts

Electronics Commerce or E-Commerce is a method of advanced business that focuses on the needs of organizations, customers and vendors in order to decrease the expenses and improve the quality and features of the goods and services at the same time improving the delivery speed (Wirtz et al. 2016). There are eight key components that make up a business model. They are as follows:

Value Proposition: This proposition points out the definition of services and products offered by the business and exactly what makes it different from the rest. It also conveys the reason why one should choose their products and services over the others.

Revenue Model: This model states the process by which the business will make money. This is the most important element because generating revenue is the main objective of any business.

Market Opportunity: This refers to the available financial opportunities that a firm gets in the market space. It is the potential revenue opportunity of a firm.

Competitive Environment: This is the surrounding environment in which the market operates. A company must know about its competitors in details.

Competitive Advantage: In order to succeed in a competitive environment, a company possesses its own special feature which is distinct from the competitors. The competitive advantage can be either lost price or product or the high quality of the product.

Market Strategy: A company must have a plan for entering the new market. These plans are known as market strategy.

Organizational Development: This explains the types of organizational structures that the business need to deploy in order to ensure that it runs smoothly and successfully. 

Management Team: A company must have a strong management team exhibiting experience and skills for attracting investors and customers.

There are different types of E-commerce business models. There is no single way to categorize these models. The different ecommerce models are B2B, B2C, C2C, C2B, B2G, G2B and G2C models.

The B2C business sells their products and services directly to the customers through their ecommerce website. There are major B2C business models (Habtay 2012). They are:

Portal: Portals act like gateways. They provide a package which is integrated with services and content.

Content provider: These are the types of websites where information related to various fields is available like entertainment, newspapers and online study materials.

E-Tailer: Electronic tailers are same like traditional retailers. Customers can do online shopping here.

Service Provider: These are websites where the companies sell services rather than products.

Types of E-Commerce Business Models

Market Creator: These are websites which creates a market space where sellers and buyers can interact with one another.

Transaction Broker: These are job placement services, financial services that allow consumers to carry out online transactions by charging a transaction fees.

Community Provider: These are websites that enables individuals sharing common interest to come along together.

B2B business model allows a business to sell its products to another business via third person. There are sub categories of this model like E- distributor, exchange, e- procurement, industry consortium and private industrial network (Gummesson 2014). Each of the models has its own features and revenue model.

The use of internet benefits the ecommerce business by reducing its information cost and transaction costs. Internet leads to higher efficiency of the operations, reducing the cost which adds value for the customers. The value chain of Ecommerce Company includes primary activities like logistics and secondary activities like financing. The business strategy to earn profit by an ecommerce firm includes product differentiation, cost competition. The technologies used by ecommerce firms are disruptive technologies and sustaining technology.

WEEK 4 E-Portfolio: Building an E-commerce Mobile Sites, Web sites and Apps

In order to make an E-commerce business one must design and find out few things like the mission statement, business model, revenue model, target audience and market place. Then a SWOT analysis needs to be carried out. In SWOT analysis the strengths, weaknesses, threats and opportunities are identified before starting a business (Goodrich 2015). After that a business plan or presence map needs to be made. All these steps if carried out systematically will generate a profitable business.

A systematic approach is followed in order to develop an E-commerce website.

Firstly, the objectives must be clear.

Secondly, the right technology must be selected.

Thirdly, important decisions need to be taken regarding human resources, financial resources, hardware, software and the design of the site.

Software or System Development Life Cycle is a process or conceptual model in project management that helps a software organization in designing, developing and testing software. SDLC methods have several models like waterfall model, spiral model and rapid application model (Alshamrani and Bahattab 2015). Organizations select a particular model based on their preference. The stages in the SDLC process are as follows:

System Analysis or the planning stage: The objectives of the website are identified followed by defining the functionalities that are required to run the website.

System Designing: The logical designing like drawing the data flow diagrams is done in this stage. Physical designing includes specifying the physical components like hardware and software required.

Value Proposition and Revenue Model

Building: There are two options here like building own website or outsourcing it. The website can be built in-house by skilled employees or it can be outsourced.

Testing: The software is tested before implementation. There are several methods of testing the software like unit testing, system, acceptance testing and split testing.

Deployment and maintenance: After testing, the software is implemented followed by maintenance.

Website or search engine optimization is a procedure of designing a website so that it ranks well in the search engines. The factors that are important in search engine optimization are HTML, image optimization, bandwidth, edge caching and optimal resource utilization.

There are two types of architectures that a website can have.

Two-tier architecture consists of a database and a web server.

Multi-tier architecture consists of a backend, legacy database and a web application server.

Web application server is an intermediate platform between the business application and web servers. E-commerce merchants provide server software packages. Small firms can use such software to build customized sites (Castellani et al. 2017). There are other tools for optimizing a website like buy ads, links and contents.

A successful website must have certain features like providing easily understandable information, high functionality, simple graphics, ease of purchase and alternative navigation facilities. Tools like PHP and JavaScript are used for designing interactive content. The site must be clear about its privacy policy and rules of accessibility.

Mobile websites are of many types like native app, responsive web design, hybrid app and mobile web app.

In order to develop a mobile website, a company must identify its objectives, information requirement and functionality. Some open source tools for designing a mobile website at a low cost are MoSync and PhoneGap. A successful mobile website will be user friendly, smust have high security and there must be regular updates.

WEEK 5 E-Portfolio: E-commerce Security and Payment Systems

Recent surveys suggest that the average cost of cybercrimes per year is estimated to be around 15 million dollars per year. In order to achieve high degree security, new technologies must be installed, organizational policies must be revised and made stricter and government laws must be obeyed. The security perspectives of the customers and merchants are different from one another. Clients, communication channels and servers are points of vulnerability which face security threats.

Some of the common threats (Jouini, Rabai and Aissa 2014) of security are:

Malware: These are malicious codes. Examples of malwares are worms, viruses and Trojan horses.

Market Opportunity and Competitive Advantage

Unwanted programs: like adware, browser parasites and spyware.

Phishing: It is a practice of sending fraudulent mails and getting access to sensitive information from the users like email scams.

Hacking: It is a process by which a computer expert identifies the weakness of a system and takes its advantage by accessing it.

Cyber vandalism: It is a process by which online contents are edited or destroyed in an illegal manner.

Spoofing: It is a practice where the sender disguises their identity to gain sensitive information from the receiver.

Insider Attack: When an authorized person of an organization exploits the sensitive information of the organization then such kind of attack is called insider attack.

Smishing: It is a trick where the user is convinced to download a Trojan horse, virus or other types of malware.

Internet communication can be protected from any kinds of security threat by the process of encryption. Encryption converts a plain text into cipher text (Stallings and Tahiliani 2014). This provides message integrity, confidentiality, non repudiation and authentication.

Symmetric Key Cryptography: This is a type of cryptography where same key is used by the sender and receiver for encrypting and decrypting the message.

Asymmetric Key Cryptography: This is also called public key cryptography. Two digital keys are used. The sender uses the public key for encryption and the receiver uses the private key for decrypting the message.

Digital Signature: It is a digital code that is attached with the message for verifying the identity of the sender.

Digital Envelope: This is a method where symmetric key cryptography is used for the purpose of encryption and public key cryptography is used for the purpose of encrypting the key symmetric key. This method overcomes the weaknesses of public and symmetric key cryptography.

Communication channels can be protected by virtual private network (VPN), secure socket layer and transport layer security.

Networks can be protected through firewalls, proxy server, and intrusion detection and prevention systems. Proxy servers are responsible for handling messages that are received and sent over the internet. Firewalls are software or hardware that prevent any kinds of unauthorized access to the internal network.

Clients and servers can be protected by installing antivirus software and upgrading it on a regular basis.

A security policy can be developed for protecting an E-commerce site (Gotoltc.edu 2017). Certain steps are followed for achieving it. Initially risk assessment is carried out, and then a security policy is developed. After that implementation plan is made followed by creating a security organization. The last step is performing security audit. A well planned security policy will be able to protect an E-commerce website from threats.

Organizational Development and Management Team

WEEK 6 E-Portfolio: E-commerce Marketing and Advertising Concepts

Consumer is a person who buys services and products for personal purpose. Understanding the behavior of the consumer plays an important role in drawing a marketing strategy (Solomon 2014). Certain psychological, cultural and social factors play a major role in the behavior of the consumers. A consumer takes decision in a sequential manner. The steps are as follows:

Recognizing the needs

Information collection

Evaluating the alternatives

Selecting the feasible alternative and purchasing

Behavior of the consumer post purchase

Consumer buying decision is influenced by promotional materials, advertisements and messages. Consumers pay selective attention to the advertisements based on their interest. Then they interpret the advertisements based on their perception. Consumers tend to buy something that is most attractive to them. Online customers initially recognize their needs and then compare the items online to find the best one. Sale service, quality of product helps the customers to take proper decision. Online catalogues, search engines and websites play a major role in marketing and providing sufficient information about the product. 75 per cent of the internet users are involved in online shopping.

Internet marketing is able to reach a wide range of audience across the world as it is more communal and participatory as compared to traditional marketing.  The E-commerce marketing plan can be multi-channel like website, mobile marketing and social marketing. Websites help to create an identity for a brand and it helps to educate the customers (Mathews 2016). Online advertising is the fastest and most effective form of advertising. Some of the online advertising tools are email marketing, lead generation and display ad marketing.

Display ad marketing use video ads, banner ads and sponsorships. E-mail marketing is used by sending mails directly to the potential customers. Lead generation marketing uses tools for finding out potential leads and converting them into consumers. Social marketing like blog and game marketing are gaining enormous importance. Mobile marketing and app marketing are also very effective (Armstrong et al. 2015). These are few of the effective marketing plans that can be carried out for an ecommerce business.

Local marketing is a strategy where putting up local ads in the geographical area of the consumers helps to grow the business. Multiple channel marketing strategy is used by most of the businesses in order to succeed. Other marketing strategies include pricing strategies, customer retention strategies and long tail marketing.

Customer retention strategies involve one-to-one marketing and personalization. Customizing the product based on the customer’s choice help to retain more customers by creating customer loyalty. A flexible pricing strategy increases the loyalty. Long tail marketing is a process where the products with little or no demand are advertised for sale.

E-Commerce in B2B Business Model

Online marketing involves several steps and procedures. It involves concept like data warehousing and mining. Data warehouse is stores customer information for detailed analysis. Data mining is a technique to find similar customer patterns and behavior. Automated marketing system and CRM systems are also used in case of online marketing. The online advertisement method is more expensive but at the same time it produces an increased level of sales.  

WEEK 7 E-Portfolio: Social, Mobile and Local Marketing

Social marketing aims in giving importance to the customers. It allows the consumers to participate in conversations and engage them so that they become fans. The brand gets strengthened due to the increase in online conversations. It does not only focus in delivering the business message to the consumers (French and Gordon 2015). The process of social marketing includes acquiring fans, engaging the fans in conversation and increasing the number of fans. All these will lead to the strengthening of brand.

Facebook marketing is extremely effective. Facebook enables maximum users to connect among each other. The several tools of marketing here are like button, mobile advertisements, news feed ads and pages. Marketing on Facebook is very simple. It starts with creating a brand page and creating a community of users, encouraging the users to like, comment and share about the brand.

Twitter marketing involves interaction with consumers in real-time. Marketing tools over here are promoted tweets, messages, and retweets, video and mobile ads. Marketing on Twitter is done by following others who are relevant to the content of the business and generating leads.

Pinterest marketing involves sharing of images, ideas and thoughts in the website. It allows users to share images and promote a brand rather than messaging. The marketing tools in Twitter are promoted pins, brand pages, retail brand pins, display ads and buyable pins. Pinterest marketing starts with creating brand pages, utilizing product pins and integrating it with Twitter and Facebook. Other social media networks like Instagram and LinkedIn are also used for the purpose of marketing and creating a brand image.

Mobile marketing is a type of marketing where promotional activities and advertisements are designed for the purpose of delivering it on mobile phones and other wireless devices. The mobile applications display advertisements of various brands and businesses (Ström, Vendel and Bredican 2014). This is the most popular format of mobile marketing. The types of marketing tools are search ads, video, messages and display ads. The contents are interactive in nature which is extremely effective in promoting a brand.

Use of Internet and Technologies in E-commerce

Local marketing is location based marketing where the messages are sent to users based on their location. It provides services like personal navigation and friend, family tracker. Consumers tend to respond to local ads effectively. Locations can be found out by using Wi-Fi locations and GPS signals (Strout and Strout 2017). The growth of location based marketing is very high. It expected to grow three times in the next five to six years. The local marketing tools include Facebook, Google Maps, Android OS and Google Places. There are two types of local marketing techniques:

Geo-aware techniques: in this technique the location of the users is identifies first and then an ad is targeted based on the location.

Proximity: this technique identifies a perimeter surrounding a location and targets ad based on the perimeter.

The marketers find local mobiles to be extremely attractive because the cell phone users are active in nature as compared to the desktop users. 80 per cent of the mobile phone users search for local products through their phones rather visiting any store. Social, mobile and local marketing play an effective role in promoting a brand.

WEEK 8 E-Portfolio: Online Retail and Services

Online or electronic retailing means selling of products and services over the internet via any E-commerce website. The choice of goods increases with online retailing. Big data analysis is done in order to do predictive marketing. Online retailing integrates the online and offline retailing features (Laudon and Traver 2013).The retail industry is divided into seven segments like clothing, electronics and durable goods. Customers are able to find and compare several goods and choose the best among the alternatives. Online retailing saves the cost of the consumers. The online retail sector is only 6 per cent of the retail industry but it is growing at a faster rate. The revenues of the retail industry have increased due to online retailing. The online business firms have two approaches to analyze the business:

Strategic analysis: Analyses the industry as well as the firm. Strategic factors for the industry include value chain, power of suppliers, and power of customers and barriers to entry. Strategic factors for the firms include technology, synergies, firm value chain and social challenges.

Financial analysis: Analyses the performance of the firm on a financial ground. The factors of analysis are revenues, net margin, operating expenses, cost of sales, gross margin and earnings before interest and tax.

Building an E-commerce Website

There are few E-tailing or online retailing business models like virtual merchant, catalog merchant, Omni-channel and manufacturer direct. Big data analytics play a major role in online retailing.

Service industry is an expanding and largest part of the economy. This sector focuses on providing services to households, institutions and business firms. The major groups in the service industries are insurance, finance, travel, educational services, professional services and health services. Business services like marketing, advertising and consulting consist of a major part of the service industry. There are two categories of service industries like hands-on service and transaction brokers. Service industries provide customization and have intense knowledge.

Financial services like online banking allows financial transaction over the internet. Net banking allows checking balances and paying bills. Consumers have a greater preference for multiple channel financial services (Chorafas and Steinmann 2016). Financial advisors and mortgage vendors are also available online. Although most of the insurances are not purchased online but there are few that are purchased online.

Other services are also provided online. Real estate services are available online but they have not been so successful. Travel services which are provided online have become one of the major successful online businesses. Consumers find it inexpensive and easy to find details about the places to travel by using the online services. Suppliers are also able to target customers in an effective way through ecommerce websites (Xiang, Magnini and Fesenmaier 2015). Recruitment services that are provided online have also become very popular in the present times. It is a time saving as well as money saving procedure for the employers and job hunters. Online food delivery services are also generating a lot of revenue in the service industry.

Online retail and other services have provided several advantages like easy access to market, potential for market expansion, reduced cost and rapid growth potential.

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