bakos-02/98 electronic commerce on the internet

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15.561A: Information Systems:From Technology Infrastructureto the Networked Corporation

15.566: Information Technology as anIntegrating Force in Manufacturing

Yannis BakosE53-329Tel. (617) 253-7097; Fax (617) 258-7579Email: [email protected]: http://web.mit.edu/bakos

Class #14: THE INTERNETAND ELECTRONICCOMMERCE #2Spring 1998Sloan School of ManagementMassachusetts Institute of Technology

Spring 1998, Class #14

Bakos-02/98

Copyright © 1998 b y Yannis Bako s

Electronic Commerce on theInternet

■ The First Wave of Web Use: Information Exchange– Publishing, customer feedback

■ The Current Wave: Transactions– Product Delivery– Create a Marketplace– New types of Intermediaries

■ Emerging Waves:– Business Information Sharing & Partnerships– Customization & Communities of Interest

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Publishing (Both Internally andExternally)

■ Product Brochures

■ Catalogs

■ Technical Specs

■ News/ResearchDocuments

■ FAQ’S

■ Software Demos

■ Annual Reports

■ Press Releases

■ Telephone Directories

■ Schedules

■ Price Lists

■ Order Status

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Examples of Web Publishing

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More Examples of Web Publishing

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Internet Present: Product deliveryExample: Grocery Shopping

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Internet Present: Product deliveryExample: Electronic Newspapers

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Internet Present: An EmergingElectronic Marketplace

■ The Internet Is Becoming a Place Where Buyersand Sellers Meet to Exchange Information,Goods, Services, and Money—That Is, AMarketplace

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Internet Present: the Glue forElectronic Integration

■ Link the value chains of a customer and asupplier

■ Main benefits– reduced costs (e.g., lower inventories)– increased speed and accuracy– integration of the value chains

■ EDI has been around for a long time, but theInternet will dramatically lower the cost of entry

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GIVE YOUR CUSTOMERS ACCESS TOYOUR SYSTEMS

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source: P. Gudonis, BBN Planet

Provide Access to CorporateDatabases Internally and Externally

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81.70%

63% 60.90% 60.00%

PurchaseOrders

Transfer ofPayments

Sales/usagedata

Invoices

% of those respondents whoconduct e-commerce with suppliers

Business processes handledin e-commerce systems

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GE’s TRANSACTION PROCESSINGNETWORK (TPN)

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The Internet Future: CollaborativeFiltering and Communities of Interest

■ Create a community of interest

■ Each user specifies preferences– Active (explicit) ratings– Passive (implicit) ratings

■ Correlate rating information across users– Create individualized, “virtual” shopping agent

■ Find and Recommend products– Before you even ask!


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Community ofInterest A

New User?

??

Recommendations

Firefly Network becomes a market intermediary andcaptures marketing data

Communityof Interest B

Community ofInterest C

Firefly Network

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EXPLICIT RATINGS

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The Internet Future: Customization

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CUSTOMIZE!!!


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CUSTOMIZATION: Amazon.comPersonal Notification Service

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2001: A CYBERSPACE ODYSSEY?

Good to see you again Dave.Since you were here last:

■ I have an update for your software

■ It’s time for some fashionable new shirts

■And some matching ties

■ I’ve selected a humorous video for tonight

■And found a nice young lady to chat with

■We received your last payment .

Thank you so much!


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CONCLUSIONS

■ From Mass Marketing to Individual Tailoring– Create more value

– Dampen price competition

■ Business-to-Business– A big win (and where most of the action is)

– Beyond cost reduction: redefine relationships

■ Publishing, Transactions & Customization– Communities of Interest

– Individualized collaborative filtering