|
|
|
|
|
E-business Advantage
|
|
|
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, "365x24x7" 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.
|
|
|
|
Still Can't Find What Your Looking For? Then Try a Essay Search!
|
