electronic commerce
Dr.Emi
task-1.docxTask-2 – Case Study
· develop an understanding of domain knowledge about a range of issues relating to electronic commerce
· analyse and advise stakeholders about technical requirements for specific business contexts
· demonstrate the capacity to communicate clearly with stakeholders a range of options that should be considered by a business in an online environment and the ability to apply appropriate structure and referencing formats
· identify and explain the impact of historical and emerging trends relating to the internet, including how it works..
In this report of 3000 – 4000 words you are required to draw upon the work you have covered up to and including Module 11 as the base knowledge for your report. In addition, you are required to search at least 6 academically sound sources for ideas that add depth to your report. (Please note: sites such as Wikipedia, enotes, etc. are not academically sound sources).
Your report must be written in your own words. Ideas obtained from sources must be included in your discussion by expressing the idea in your words and citing the source using the Harvard Referencing style. Direct quotes of more than five (5) words will not be considered a demonstration of your knowledge and will be assessed accordingly.
Assessment Task
TARDIS Travel currently has branches in 50 cities around the country from which they organize all aspects of their clients’ travel arrangements. TARDIS Travel’s marketing research team has established that the majority of its customers are between the ages of 18 and 45 and are regular uses of the Web. In recent times, the business has received feedback from many of them that they enjoy the convenience of online purchasing and would appreciate TARDIS Travel having an online presence.
TARDIS Travel latest market and financial reports have indicated that turnover is down and that it is losing market share. Further investigation show that this is primarily because of its lack of an online presence in an increasingly dynamic, highly competitive and online business environment. The business now recognises that it must go online if it wishes to regain its market share and to continue to be competitive into the future.
Your consulting company, Yana Consulting, has been contracted by TARDIS Travel to investigate its business practices and the current practices of the online travel industry and to recommendations how TARDIS Travel might best make a successful transition into this environment.
You are required to:
1. Investigate online business models to identify a suitable model for TARDIS Travel.
· Its Board of Directors will want to know why you recommend the chosen model, so ensure that you discuss the appropriateness, advantages and challenges of your recommended Revenue Model for this organization.
2. Identify and discuss a suitable marketing and promotion strategy and discuss the benefits and challenges of your recommended strategy for TARDIS Travel.
· Any successful marketing and promotion strategy would need to consider the competitive environment of the travel industry.
3. Develop a wireframe (using the tools provided on the Study Desk) of the proposed website with at least three pages that shows how it will present to potential customers.
· Both desktop computer and mobile devices should be considered.
4. Describe and discuss the implications of the legal and ethics issues that might arise in conducting this business online.
5. Explain the technology infrastructure, including the hardware requirements, which would be required.
6. Identify and explain the purpose and function of the type of software that would be suitable for TARDIS Travel.
7. Identify the advantages and challenges of taking this organisation online.
8. Based upon the outcomes of the above investigation make clear recommendations for this online initiative.
1988 Palmer.C Using IT for competitive advantage at Thomson Holidays, Long range Planning Vol 21 No.6 p26-29, Institute of Strategic Studies Journal,London- Pergamon Press [now Elsevier.B.V.] December 1988.
Ceruzzi, Paul E. (2000). A History of Modern Computing. Cambridge, Mass.: MIT Press.
ampbell-Kelly, Martin; Aspray, William (1996). Computer: A History of the Information Machine. New York: Basic Books.
The content model: based on advertising The content sites work economically like mainstream network television in the United States, free content to users paid for by advertisements that users put up with. This is also a lot like the classic newspaper and magazine business, content paid for mainly by advertisers, with the exception that most magazines and newspapers sell for a small price while getting most of their revenue from advertisers. The “business model” isn’t really new, just the fact that it is offered over the Internet.
Consider Yahoo! And competing Internet portals, newspaper and magazine sites, entertainment sites, and other types of sites that are free to browsers and make money by charging advertisers or sponsors for banner advertising and sponsorships. These are content sites that depend on Internet advertising for their revenue.
Read more: http://articles.bplans.com/website-business-models/#ixzz3GTob0PCn
Five Business Models of eCommerce |
Five different ways websites can generate revenue.
"There's no such thing as a free lunch!" While this simple economic aphorism seems to have been forgotten in the world of cyberspace, it holds true as much today as it ever has. First lets establish the fact that no site is free - every web site costs money. The web site is stored on a computer, uses web server software, accesses telecommunication resources, and must be maintained. Someone must pay for the computers, software, telecommunication charges, and time. The omnipresent cost either comes from your pocket or some benevolent benefactor. These online transactions are made possible with the ecommerce solution the business is using.
The cost and potential revenue constitutes a business model. Therefore, even the "free" sites have a business model. A public site offered by a library, school, or university has a business model. Free email service has a business model. Free home pages fit into a business model. Every site in the entire world wide web has a business model. There are different business models underlying each website.
In actuality, five distinct eCommerce business models form the basic structure for the wide variety of websites today. The five categories are called vanity, billboard, advertising, subscriptions, and storefront sites. [Editor's Note: Mr. Samuelsen considers affiliate programs to be a variant on the storefront model.] While not all drive revenue directly, they all incur costs. In addition, many sites combine several of the five identified business models. Each of the five models have unique characteristics which make it different from the other types. Therefore, it is important to understand their differences.
Vanity: Many web sites are started as vanity sites. These sites are often created by individuals as an outlet of self expression, to share a hobby, promote a cause, or find others with similar interests. These sites are created with no intentions of deriving revenue and no illusions of grandeur. It could be as simple as a one page family site or a complex forum on a specific topic. The costs are borne either by the individual or by some altruistic enterprise such as universities, libraries, communities, associations, and even businesses. Nevertheless, the costs are real of these "free" sites.
Billboard: Billboard sites (also called brochure or information sites) are designed to derive economic benefit through indirect means from either referred sales, reduced cost, or both. Revenue comes from creating awareness of its products or services via the web, with the actual purchase transaction occurring off-line. Just like a billboard on a highway, success is measured on viewership as net citizens "surf" by and are influenced to purchase product. Most corporate sites today put up these electronic brochures to provide information about their products, employment information, or public information. Economic benefit is created through the indirect purchase of goods or services from existing physical outlets and cost savings through the elimination of infrastructure or inefficiency. Finally, some businesses feel this is the best way to avoid channel conflict'a potential pricing disparity between different supply chains.
Advertising: Network television, radio, and many periodicals follow the advertising model. All programming and content is funded by advertising dollars, with consumer viewership measuring value. Agencies conduct sophisticated surveys to measure the value and establish the pricing. For eCommerce, advertising can be in the form of banners, sponsorships, ezine ads, and other promotion methods.
This is a much-ballyhooed but still largely unproven model on the web. While there are a few sites that are entirely supported by advertising dollars, the lack of web-savvy viewership statistics hinder the mass adoption by advertisers. As the knowledge of consumer behavior is further understood, experts will prepare purchase pattern analyses providing advertisers with empirical data to support their promotion campaigns.
Subscriptions: In other media, the subscription models are well established'accepted by subscribers and nurtured by publishers. On the web, subscriptions are not yet widely accepted by consumers. Of those that are accepted, the subscription model caters to sites targeted to particular niches of individuals who have specific needs. These sites are often specialized with expert content and timely information. The subscriptions fund the development and maintenance of the site.
Subscriptions can be paid on a weekly, monthly, or annual basis. Payment through a credit card account is a common payment scheme for subscription sites because of the ability to periodically process the purchase transaction electronically.
Storefront: To some people, a products-offered site is narrowly defined as a "true" eCommerce site. A website that offers products for sale is the electronic version of a catalog. These virtual storefronts are built to describe the offering with pictures and words, offer promotions, provide a "shopping cart," and complete the purchase transaction. Once the product is purchased, the cyber enterprise arranges for product fulfillment including shipping and handling. The fulfillment is sometimes completed by the website enterprise or directly from the manufacturer in a drop shipping arrangement. Some manufacturers are now passing up the intermediary wholesalers and retailers by offering their products directly to consumers. This collapsing of the supply chain is called disintermediation.
Although the vast majority of these sites offer tangible products, they can work for service products too. The primary characteristic of these types of sites is the ability to make a one time purchase with no future obligations.
While it is impossible to predict the future in this fast moving media, it is obvious that all five business models will remain viable for the near term. Each model will continue to mature both in its acceptance and sophistication. Consumers will increasingly look to the web for physical commerce alternatives because of the limitlessness of the media both in terms of geography and shopping hours. For net entrepreneurs, each model should be examined carefully to understand which model provides the maximum benefit. With the understanding of the business models, financial projections can be easily created and business plans finalized. With the business plan in hand, you will realize even in cyberspace, there is no such thing as a free lunch.
Robert Samuelsen operates eVine Online , which he describes as "The web's first family communication center featuring calendars, photo albums, discussion groups, address books, and more--all in a password protected family environment."
usiness Model Failure
It is also useful for entrepreneurs to understand what business models are not working well, or are less attractive, so they can avoid those.
After my exposure to literally several hundreds of startups, I have begun to realize that one of the most common causes of failure in the startup world is that entrepreneurs are too optimistic about how easy it will be to acquire customers. They assume that because they will build an interesting web site, product, or service, that customers will beat a path to their door. That may happen with the first few customers, but after that, it rapidly becomes an expensive task to attract and win customers, and in many cases the cost of acquiring the customer (CAC) is actually higher than the lifetime value of that customer (LTV).
The observation that you have to be able to acquire your customers for less money than they will generate in value of the lifetime of your relationship with them is stunningly obvious. Yet despite that, I see the vast majority of entrepreneurs failing to pay adequate attention to figuring out a realistic cost of customer acquisition. A very large number of the business plans that I see as a venture capitalist have no thought given to this critical number, and as I work through the topic with the entrepreneur, they often begin to realize that their business model may not work because CAC will be greater than LTV.
Also if you would like to have a capital efficient business, I believe you will find that it is important to recover the cost of acquiring your customers in under 12 months. Wireless carriers and banks break this rule, but they have the luxury of access to cheap capital.
This topic is discussed in more detail in this section: Why
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