LM11 – E-Commerce

The WWW has become a necessary foundation of business and now includes today’s pervasive use of Web 2.0 technologies, and Rich Internet Applications (RIA) built on emergent technologies (e.g. HTML5, AIML, Ajax, etc) with a focus on customer centered design, Virtual Customer Experience (VCE) management  and the recent emergence of mobile and ubiquitous computing.

Note, E-Commerce is inexorably related to Web Design and we have covered many topics central to E-Commerce in Web Design so please review previous content as necessary.

Lecture Capture

 

E-business Evolution

Electronic Data Interchange (EDI)

Conducting business over electronic channels has been a reality for decades, well before the World Wide Web came into existence.  XML has replaced proprietary/individual EDI formats facilitating significant commerce and communication between a much broader range of agents.

Content Provider: WWW Stage I

The earliest commercial Web sites were viewed as an effective way of providing information to customers, suppliers, and even employees (i.e. broadcast), however we are well aware of the dot.com crash and many Websites failed that did not provide significant usable value. Of course TV and Radio are broadcast but there is clear value to the content (i.e. shows, news, etc.) and consumers tolerate the commercials to get the content.

To this extent, recall every Website visit is a transaction even if a purchase is not involved as the customer is giving you their time. This is still useful today but requires optimization, understanding and application of LM 10 Web Design topics (SEO, landing page optimization, clear value statements, conspicuous privacy statement, inverted pyramid writing style, above the fold, navigation by recognition rather than recall, etc.).

From this point on we must understand marketing that seeks to identify the needs and expectations of consumers.

Transaction Forum: WWW Stage II

After a few years, many businesses started capitalizing upon the Web’s ability to interact with their customers.  

This 2-way communication requires a multi-tier (3-tier) architecture comprised of a DBMS core, middle tier business logic and a Web server (e.g. AMP stack). Implementation of the LAMP stack is one of the final project options. With respect to LM10 this requires further navigational enhancements of process funnels, navigation bread crumbs, autofill, etc.

Integration: WWW Stage III

Eventually, Web-based business operations were linked smoothly to legacy systems.  Businesses realized that e-business was in fact part of their business and required integration (see LM12 Information Systems Integration). Optimally this evolves into integrated Enterprise Systems.

Consider that Web transactions reveal much more than just the basic information of the order.  This could include when the order was placed and could be used to manage shipping staffing.  If the organization was able to get the customer to login via Facebook or some other social computing structure.  If this happens you have access to the customers social graph which is critically important for marketing and further understanding of your market population and their needs and expectations.

*Note integration requires standards as previously presented.

Catalyst for Industry Restructuring: Stage IV

By the new millennium it became clear that business over the Internet was transforming a number of industries.

E-channels

An e-channel is the chain of electronic relationships between companies and customers and between companies and their partners/resellers. This includes but supply chains and value chains.

E-channel Compression

E-channel compression means eliminating redundant components in the channel (cut out intermediaries).  For a very tenable example, consider today’s wedding photographer.  In the past,  prior to digital photography, the wedding photographer  would take pictures and drop the pictures off for developing.   In order to offer competitive pricing today’s wedding photographer can no longer do this and must take the pictures, perform any necessary processing,  create the photo albums and even host  or distribute the digital images electronically.

Other examples include the emergent stock trading apps where clients place their own orders.  To some extent we can even put Home Depot/Lowes in this category as with the proper instructions the home onwner can facilitate their own repairs and improvements.  Note we could also classify Home Depot’s online instructions as E-channel expansion.

Note cutting out intermediaries works in some areas but not in others. The loss of the knowledgable sales person has an obvious effect (see below) and we are now seeing the reintroduction of intermediaries in the distribution chain.  It appears that rational economic actors (individual users/consumers and RAT in economics terminology) cannot distill the information from many distribution sources and need intermediaries for information, product tailoring and transactions.

E-channel Expansion

E-Channel expansion is the addition of businesses to the value chain.   One of the best examples is CarFax.   Simply,  would you buy a used car without obtaining a CarFax?

For a more complete discourse see: The New E-Commerce Intermediaries from MIT Sloan.

E-Commerce Architecture Components

Security – Authentication is a security process whereby proof is obtained that the users are truly who they say they are (i.e., their identity is verified as authentic). Please review the security LM if necessary.

Encryption – Translation of data into a format that can only be read by the intended receiver.

Transactions – Includes sales and electronic payments however as previously presented, simply visiting a Website can be seen as a transaction.

Information Distribution and Access – includes search engines, marketing, etc.

Web Services – replaced EDI and facilitates E-channel compression/expansion and is a standardized way to encode information (XML based)

Personalization – Customer Service, Relationship Management

Policy – In response to emergent and evolving technology new policies are necessarily being developed.

Regulation – When it comes to regulation, two approaches are possible: self-regulation and imposed regulation.

Technical Standards – Standards are essential to e-commerce because they ensure seamless integration across the network on disparate platforms.

Web Services – The emergence and rapid evolution of these Web Services has radically changed the global economic climate by; (a) enhancing and shortening the physical and service global supply and value chains through Web Services, (b) providing the basis for  user generated collective intelligence repositories and knowledge bases, and (c) leveling the business playing field by providing ubiquitous access to information to anyone with Internet access.

Web Portal – A portal is a gateway (possibly authenticted) and a Web Portal includes a gateway to a Web page or group of pages which bring tailored/personalized information together from diverse sources in a uniform way.

Intranet – computer network that facilitates sharing of information, operational systems, or computing services within an organization.

Extranet – allows controlled access from outside of an organization’s intranet and support B2C and B2B business.

Other critical aspects of E-commerce and E-marketing 

Knowledgeable Sales Staff – Anecdotally, I have maintained the failure of many early Web-based e-commerce (one-directional broadcast advertising) could also be attributed to the loss of the knowledgeable salesperson from the value chain. (Recall Economics and “Rational Actions of Consumers”).  I believe most consumers would not purchase expensive items without the assistance of knowledgeable experts and sales staff.  This loss of face to face communication in early B2C e-commerce was difficult to resolve electronically as the shortcomings of Computer Mediated Communications is well documented.

Advertising and Marketing – The WWW has facilitated sales and marketing without the traditional expense of print and television advertising.  This of course is simply the tip of the ice berg as we have recently witnessed a remarkable acceleration in the emergence and convergence of technologies and business processes facilitated by the Internet, WWW and Web services. These emergent digital communications technologies are capable of providing a standardized, platform independent, accessible and converged global communications architecture and infrastructure facilitating information interchange between all stakeholders across social, cultural and geographic boundaries.

Customer Empowerment – While the impact of the Internet on producers, supply and value chains is well documented, I suggest consumers have also been empowered with new dynamic capabilities through the Internet allowing them to integrate internal and external competencies and quickly calculate Lauterborn’s (1990) four Cs: (a) customer solution, (b) customer cost, (c) convenience, and (d) communication.    Consider that consumers can now quickly access and assess comparative products, their price, their comprehensive and individual component specifications from manufacturer’s sites throughout the value chain, professional product reviews (e.g. Consumer Reports, CNet.com), user reviews and perspectives from Wiki’s, Blogs and user groups, and even the items resale value on EBay enabling them to quickly compute customer value and determine their commitment. If consumers do not reach commitment or become dissatisfied, comparable alternatives are merely one mouse click away.

Business Impact – It is now accepted that our present marketplace is increasingly complex and dynamic characterized by rapid change and decreasing capacity necessitating adept Change Management (CM) to remain competitive.  Robbins and Judge (2007) state the 2 goals of effective change management are:

(a) improve an organization’s agility necessary to adapt to dynamic environmental changes and

(b) change and enhance employee behavior. 

As detailed in previous course work, the ability to strategically adapt to dynamic environmental conditions requires organic organizational structures and the complimentary expertise of a diverse participatory workforce.  Citing the inherent multi-dimensional individual level differences of a diverse workforce further influenced by organizational culture, structural differences and unpredictable environmental pressures, I assert that change is inevitable and the only manageable response to customer centered Web design is to employ a multidisciplinary approach drawing on the best practices of strategic brand management, holistic marketing, integrated marketing communications, organization theory, information systems theory, sociology and psychology.

The convergence of Marketing, OB and IS

Strategic Brand Management and Holistic Marketing focus on creating value and meeting the needs of the consumer.  It has been shown that strategic brand management is a critical component for sustained organizational fiscal stability.  The holistic marketing oriented approach has also been empirically proven to provide superior performance and achieves this performance by iteratively using market research, business analytics and increased communications to:

(a) efficiently and effectively identify current and future customer needs,

(b) drive product design and distribution,

(c) segment and target customers in the marketplace,

(d) provide superior quality, value and services to customers, and

(d) promote sustained two-way between all constituencies.

Further support for this approach can be deduced as both best practices OB and IS Joint Application Development (JAD) and IS Rapid Application Development (RAD) emphasize iterative design and repetitive, consistent and congruent communications between all constituencies.

What this all means – it has been shown that an organizational Website is critical to communication and consumer understanding of business processes and capabilities and according to Forrester research, Web problems are business problems.  Web Designers must be cautioned against Web design from a single perspective (e.g. designers creating a flashy artistic site that downloads slowly or a technical site that users cannot navigate).  This advice well supported by research as Hubspan Inc. (2008) identified that most organization’s e-Business components are designed and developed by their respective IT departments rather than employing a holistic or organizationally integrated approach.

Furthermore, I suggest that the customer’s view of organizations has shifted and become more transparent as a result of the emergent Internet and WWW.  In the not so distant past, I assert customers clearly identified and differentiated between magazine advertisements, in store sales and follow-up customer service through other communications modalities (e.g. phone calls and letters).  I believe these processes have converged from the consumer’s perspective.  I suggest a consumer browsing an organization’s Web site, subsequently making an online purchase and following up by providing a product review on the manufacture’s site does not cognitively think about interfacing with the organization’s advertising, sales and customer service as they simply consider it doing business with the company.

With this basis, optimization of these Web processes requires:

(a) recurrent integrated communication between all constituencies,

(b) assessment from OB, marketing and IS perspectives, and

(c) evaluation of Web  and consumer use cases to identify, automate and streamline the business process approval, decision and transaction checkpoints necessary to effectively achieve accessible transparent Web-based communications and e-commerce.

 

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