BA 7042 e-BUSINESS MANAGEMENT

UNIT – I
e - Business : (Meaning)

eBusiness (e-Business), or Electronic Business, is the administration of conducting business via the
Internet. This would include the buying and selling of goods and services, along with providing technical
or customer support through the Internet. e-Business is a term often used in conjunction with e-
commerce, but includes services in addition to the sale of goods.

Introduction
E-Commerce

Electronic commerce (E-Commerce or EC) is an emerging concept that describes the process of
buying and selling or exchanging of products, services, and information via computer networks
including the Internet. It is the use of the Internet and the Web to transact business. Doing
business online, typically via the Web. It is also called "e-business," "e-tailing" and "I-
commerce." Although in most cases e-commerce and e-business are synonymous, e-commerce
implies that goods and services can be purchased online, whereas e-business might be used as
more of an umbrella term for a total presence on the Web, which would naturally include e-
commerce (shopping) component.

E-commerce may also refer to electronic data interchange (EDI), in which one company's
computer queries and transmits purchase orders to another company's computer.

E-Business

E-Business is a revolution that is transforming companies round the world, and it is impacting all
the industries. E-business is much more than online purchase and implementation of computer
applications by the IT departments; or putting up a company website.

E-business affects the whole business and the value chains in which it operates. It enables a
much more integrated level of collaboration between the different components of a value chain
than ever before. Adopting e-Business also allows companies to reduce costs and improve
customer response time. Organizations that transform their business practices stand to benefit
immensely from innumerable new possibilities brought about by technology.

Although it's early days for e-Business in India, we believe there are greater opportunities over
the long term for India and Indian businesses. There is urgent need to usher in farsighted policies
& practices to become a major economic force in the emerging world of E-Business.
E-business includes

E-business is not just about selling over the Internet. It's a 'catch-all' term for any business done
electronically. Amongst other things, it can include:

 Computers and computer networks, sometimes called IT (Information Technology) or

ICT (Information and Communication Technology)
 Communicating by email
 Running a website
 Using the Internet to market your business or service
 Using databases for contact management, stock control, or to communicate with
suppliers
 Using business software.

The difference between e-business and e-commerce

E-business and e-commerce are terms that are sometimes used interchangeably, and sometimes
they're used to differentiate one vendor's product from another. But the terms are different, and
that difference matters to today's companies.

In both cases, the e stands for "electronic networks" and describes the application of electronic
network technology - including Internet and electronic data interchange (EDI) - to improve and
change business processes.

E-commerce covers outward-facing processes that touch customers, suppliers and external
partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw
materials and supplies for production and procurement of indirect operating-expense items, such
as office supplies. It involves new business models and the potential to gain new revenue or lose
some existing revenue to new competitors.

It's ambitious but relatively easy to implement because it involves only three types of integration:
vertical integration of front-end Web site applications to existing transaction systems; cross-
business integration of a company with Web sites of customers, suppliers or intermediaries such
as Web-based marketplaces; and integration of technology with modestly redesigned processes
for order handling, purchasing or customer service.

E-business includes e-commerce but also covers internal processes such as production, inventory
management, product development, risk management, finance, knowledge management and
human resources. E-business strategy is more complex, more focused on internal processes, and
aimed at cost savings and improvements in efficiency, productivity and cost savings.

An e-business strategy is also more difficult to execute, with four directions of integration:
vertically, between Web front- and back-end systems; laterally, between a company and its
customers, business partners, suppliers or intermediaries; horizontally, among e-commerce,
enterprise resource planning (ERP), customer relationship management (CRM), knowledge
management and supply-chain management systems; and downward through the enterprise, for
integration of new technologies with radically redesigned business processes. But e-business has
a higher payoff in the form of more efficient processes, lower costs and potentially greater
profits.

E-commerce and e-business both address these processes, as well as a technology infrastructure
of databases, application servers, security tools, systems management and legacy systems. And
both involve the creation of new value chains between a company and its customers and
suppliers, as well as within the company itself.

All companies should have an e-commerce strategy. (Governments should have an e-public
service strategy.) Electronic networks in general and the Internet in particular are too important
for firms to ignore if they want to interact with customers, suppliers or distribution partners.

But some companies need to move beyond e-commerce and form e-business strategies -
especially large companies that already have links to EDI networks or have completed major
ERP implementations. These companies have already reaped some of the biggest benefits from
e-commerce strategies. They're also likely to experience organizational pain as conflicts develop
among their ERP, EDI, supply-chain management and e-commerce strategies. And last, they
have enough experience and knowledge in electronic-network technologies - and in process
redesign and integration - that they have a chance of being successful in an e-business strategy.

Still, the coordination and organizational obstacles to developing an e-business strategy are
formidable. It involves major and potentially disruptive organizational change. The risks of
failure and the consequences from limited success are higher in an e-business strategy than in an
e-commerce strategy. Being a leader in e-business can contribute to long-term success, but the
stresses and strains of business transformation can cause near-term damage.

A wise company may decide to consolidate its gains and complete the work involved in its
existing and largely separate e-commerce, ERP, CRM or supply-chain initiatives before making
the big leap to becoming an e-business. Jumping too soon can be as disastrous as moving too
late.

Economic forces:

Definition :
Factors such as level of employment, rate of inflation, rate of interest, demographic changes, and
fiscal and monetary policies, which determine the state of competitive environment in which a
firm operates. These forces affect the outcome of the firm's marketing activities, by determining
the volume and strength of demand for the its products.
Economic Forces Versus E-business

Economic forces are factors such as inflation, interest rates, labor and government monetary
policies that influence levels of production and demand for goods and services. These factors
dictate the availability and affordability of production resources, as well as the abilities of
consumers to afford your end products. E-commerce involves transacting business through the
use of automated information technology applications. The outcomes of e-commerce activities
are affected by economic forces, as was evidenced by the 2007-2009 global economic crisis.
According to the Census Bureau of the U.S. Department of Commerce, e-commerce declined by
5.5 percent in the fourth quarter of 2008 compared to the same period in 2007. This clearly
shows that economic factors affect e-commerce.

Levels of Inflation

Inflation is the sustained rise in the prices of products. Rising inflation affects the demand for e-
commerce goods or services because it reduces the number of items consumers can afford. This
affects your e-commerce business, particularly if you deal in nonessential or luxurious items.
Consumers actually restrict their spending to essential items during periods of high inflation.
Inflation also increases the costs of your inputs, such as electricity, Internet, online advertising
and computer maintenance. The adverse effects of high costs of operations, coupled with falling
demand for e-commerce products, reduce profits.

Related Reading: Factors That Affect Economic Development

Rates of Interest

Low interest rates encourage borrowing, while high interest rates discourage borrowing.
Prevalence of low interest rates boosts e-commerce business because it increases the amount of
money in circulation as a result of heightened lending and borrowing activities in the financial
sector. Consumers can spend more on your e-commerce products when they have more money at
their disposal. In contrast, high interest rates stifle money circulation and suppress demand for e-
commerce products. They also increase the financing costs of your business, especially if you
borrow loans with variable interest rates.

Trends of Employment

Trends of employment are important indicators of economic progress. Low unemployment rates
translate to growing demand for e-commerce products because more people earn income. High
unemployment rates signal worsening economic conditions, as no new jobs are created and many
people lose jobs. As a result, the demand for e-commerce products declines with increased rates
of unemployment and vice versa.

e-Business Benefits and Limitations:-

The Benefits of EC
Few innovations in human history encompass as many potential benefits as EC does. The
global nature of the technology, low cost, opportunity to reach hundreds of millions of
people (projected within 10 years), interactive nature, variety of possibilities, and
resourcefulness and rapid growth of the supporting infrastructures (especially the Web)
result in many potential benefits to organizations, individuals, and society. These benefits
are just starting to materialize, but they will increase significantly as EC expands.

Benefits to Organizations
The benefits to organizations are as follows:

Electronic commerce expands the marketplace to national and

international markets. With minimal capital outlay, a company can easily
and quickly locate more customers, the best suppliers, and the most
suitable business partners worldwide. For example, in 1997, Boeing
Corporation reported a savings of 20 percent after a request for a proposal
to manufacture a subsystem was posted on the Internet. A small vendor in
Hungary answered the request and won the electronic bid. Not only was the
subsystem cheaper, but it was delivered quickly.

Electronic commerce decreases the cost of creating, processing,

distributing, storing, and retrieving paper-based information. For example,
by introducing an electronic procurement system, companies can cut the
purchasing administrative costs by as much as 85 percent. Another example
is benefit payments. For the U.S. federal government, the cost of issuing a
paper check is 430. The cost of electronic payment is 20.

Ability for creating highly specialized businesses. For example, dog toys
which can be purchased only in pet shops or department and discounte
stores in the physical world, are sold now in a specialized www.dogtoys.com
(also see www.cattoys.com).

Electronic commerce allows reduced inventories and overhead by

facilitating “pull”-type supply chain management. In a pull-type system the
process starts from customer orders and uses just-in-time manufacturing.

The pull-type processing enables expensive customization of products and

services, which provides competitive advantage to its implementers. A
classic example is Dell Computer Corp., whose case will be described later.

Electronic commerce reduces the time between the outlay of capital and
the receipt of products and services.

Electronic commerce initiates business processes reengineering projects. By changing processes, productivity
of salespeople, knowledge workers, and administrators can increase by 100 percent or more.
· Electronic commerce lowers telecommunications cost-the Internet is much cheaper than VANs.

· Other benefits include improved image, improved customer service, newfound business partners, simplified
processes,compressed cycle and delivery time, increased productivity,eliminating paper, expediting access to
information, reduced transportation costs, and increased flexibility.

Benefits to Consumers

The benefits of EC to consumers are as follows:

· Electronic commerce enables customers to shop or do other transactions 24 hours a day, all
year round, from almost any location.

· Electronic commerce provides customers with more choices; they can select Electronic
commerce frequently provides customers with less expensive products and services by allowing
them to shop in many places and conduct quick comparisons.

· In some cases, especially with digitized products, EC allows quick delivery.

· Customers can receive relevant and detailed information in seconds, rather than days or weeks.

· Electronic commerce makes it possible to participate in virtual auctions.

· Electronic commerce allows customers to interact with other customers in electronic

communities and exchange ideas as well as compare experiences.

· Electronic commerce facilitates competition, which results in substantial discounts.

Benefits to Society

The benefits of EC to society are as follows:

· Electronic commerce enables more individuals to work at home and to do less traveling for
shopping, resulting in less traffic on the roads and lower air pollution.

· Electronic commerce allows some merchandise to be sold at lower prices, so less affluent
people can buy more and increase their standard of living.

· Electronic commerce enables people in Third World countries and rural areas to enjoy products
and services that otherwise are not available to them.

· This includes opportunities to learn professions and earn college degrees.

· Electronic commerce facilitates delivery of public services,such as health care, education, and
distribution of government social services at a reduced cost and/or improved quality. Health-care
services, for example, can reach patients in rural areas.

The Limitations of EC
The limitations of EC can be grouped into technical and
nontechnical categories.

Technical limitations of EC are as follows:

· There is a lack of system security, reliability, standards, and some communication protocols.

· There is insufficient telecommunication bandwidth.

· The software development tools are still evolving and changing rapidly.

· It is difficult to integrate the Internet and EC software with some existing applications and
databases.

· Vendors may need special Web servers and other infrastructures, in addition to the network
servers.

· Some EC software might not fit with some hardware, or may be incompatible with some
operating systems or other components.

As time passes, these limitations will lessen or be overcome;

appropriate planning can minimize their impact.

Nontechnical Limitations

Of the many nontechnical limitations that slow the spread of

EC, the following are the major ones.

· Cost and justification The cost of developing EC in-house can be very high, and mistakes due
to lack of experience may result in delays. There are many opportunities for outsourcing, but
where and how to do it is not a simple issue. Furthermore, to justify the system one must deal
with some intangible benefits (such as improved customer service and the value of
advertisement), which are difficult to quantify.

· Security and privacy These issues are especially important in the B2C area, especially security
issues which are perceived to be more serious than they really are when appropriate
encryption is used. Privacy measures are constantly improved. Yet, the customers perceive these
issues as very important, and, the EC industry has a very long and difficult task of convincing
customers that online transactions and privacy are, in fact, very secure.

· Lack of trust and user resistance Customers do not trust an unknown faceless seller (sometimes
they do not trust even known ones), paperless transactions, and electronic money. So switching
from physical to virtual stores may be difficult.
· Other limiting factors. Lack of touch and feel online. Some customers like to touch items such
as clothes and like to know exactly what they are buying.

· Many legal issues are as yet unresolved, and government regulations and standards are not
refined enough for many circumstances.

· Electronic commerce, as a discipline, is still evolving and changing rapidly. Many people are
looking for a stable area before they enter into it.

· There are not enough support services. For example, copyrightsss clearance centers for EC
transactions do not exist, and high-quality evaluators, or qualified EC tax experts, are
rare.

· In most applications there are not yet enough sellers and buyers for profitable EC operations.

· Electronic commerce could result in a breakdown of human relationships.

· Accessibility to the Internet is still expensive and/or inconvenient for many potential customers.
(With Web TV, cell telephone access, kiosks, and constant media attention,
the critical mass will eventually develop.)

e-Business model:-

The E-Business Model

What is a Business Model?

The e-Business model, like any business model, describes how a company functions; how it
provides a product or service, how it generates revenue, and how it will create and adapt to new
markets and technologies. It has four traditional components as shown in the figure, The e-
Business Model. These are the e-business concept, value proposition, sources of revenue, and the
required activities, resources, and capabilities. In a successful business, all of its business model
components work together in a cooperative and supportive fashion.
 e-Business Model

Although an e-Business is often thought of as e-Commerce, there are other types of online
activities that fall under the definition of e-Business that can benefit from this

E-Business Concept

The e-business concept describes the rationale of the business, its goals and vision, and products
or offerings from which it will earn revenue. A successful concept is based on a market analysis
that identifies customers likely to purchase the product and how much they are willing to pay for
it.

Goals and Objectives

The e-Business concept should be based, in part, on goals such as "become a major car seller,
bank, or other commercial enterprise", and "to become a competitor to some of the well-known
firms in each of these industries." Objectives are more specific and measurable, such as "capture
10% of the market", or "have $100 million in revenues in five years." Whether these goals and
objectives are realistic or not, and whether the company is prepared to achieve these goals is
addressed in the business plan process for startup firms and in the implementation plan for an
existing firm that is considering a significant change. In looking at the business model it is
sufficient to know what the goals and objectives are, and whether they are being pursued.

Corporate Strategies

Embedded in the e-Business concept are strategies that describe how the business concept will be
implemented. These are known as corporate strategies because they establish how the business
is intended to function. These strategies can be modified to improve the performance of the
business. Environmental strategies, discussed in a following section, describe how the company
will address external environmental factors, over which it has no control.

The E-Business Concept and Market Research

The selection and refinement of the business concept should be integrally tied into knowledge of
the market it serves. In performing market research care must be taken to account for the global
reach of the Internet for both customers and competitors. It is also important to remember that
markets shift, and can shift rapidly under certain conditions. But most important is to truly
understand what the market is, who comprises it, and what do they want.

The e-Business Concept

Products and Offerings

The Problem with WebVan

WebVan sold groceries online and delivered them to your door. It burned through
$800 million before declaring bankruptcy. The company apparently didn't
understand its goal or its market, and suffered from a faulty business concept.

Nearly every household in the country buys several hundred dollars worth of
groceries each month. WebVan marketed to the upper income families yet didn't try
to sell to all of the households that had difficulty getting to the grocery store. It
could have had a much wider appeal through advertising, and could have initiated
 programs with organizations helping shut-ins (e.g. to help fill in the order forms),
the disabled, and busy housewives with young children. These customers would
have found Web Van's prices lower, the quality of its food higher, and the level of
service higher than is found in other grocery stores. WebVan continued to market its
service to young professionals and never seemed to realize that it didn't matter who
bought the groceries they were selling and delivering!

Price

Pricing is an important part of the e-business concept and should be established on the basis of
market research. Price is often set with an eye on the competition and can have a direct effect on
market share. In traditional commerce in the U.S., the seller sets the price. Online pricing, on the
other hand, may include negotiation or auction pricing, where the interaction of sellers and
buyers can effect the price. Knowledge of competing prices is also readily available online, and
will keep downward pressure on prices.

When is it OK to increase prices? It depends on the business. If a company has high fixed to
variable costs, prices should be changed cautiously. If customers are "locked-in", and the product
or service is less sensitive to price, then prices may be changed, to a degree, with less risk. But
all changes should be checked beforehand with market research and financial analysis.

A potential problem for some products is that the market may change faster than the seller can
change the product or service. One way to survive in this environment is to sell at the minimum
price that allows a profit, avoid price changes and continuously upgrade the product. This
approach is often used in computer hardware and software sales. At the same time the seller
should invest in finding how to shorten the development cycle, and put in place a market
research program that will quickly identify trends and changes.

The steady development of a product has other advantages. It evens out the revenue stream rather
than having the "boom or bust" cycle of a single product. It also shows that the company is
steadily developing and upgrading products for the customers who should begin to buy into the
company's vision. And customers, analysts, and investors will develop confidence that the
company is going to be around for the long-term.

The price must also provide real value to the customer, that is the customer must be pleased with
the purchase of the product or service. In addition to price, the buyer may also be interested in
how the product can be of assistance to his company. In this case, comparisons of price and ROI
may be used to show that the offering adds more value than a competitor's. The price can also be
a basis for building long-term customer relations, which can lead to multiple sales. For example,
as retail customers become more comfortable shopping on a site, it should be easier to get them
to migrate to higher margin products.
Value Proposition

The value proposition describes the value that the company will provide to its customers and,
sometimes, to others as well. With a value proposition the company attempts to offer better value
than competitors so that the buyer will benefit most with this product.

A value proposition may include one or more of the following points:

 Reduced price
 Improved service or convenience such as the "1 click" checkout

 Speed of delivery and assistance

 Products that lead to increased efficiency and productivity

 Access to a large and available inventory that presents options for the buyer

Providing value in an e-business uses the same approach as providing value in any business,
although it may require different capabilities. But common to both are the customers who seek
out value in a business transaction. The value proposition helps focus the business on the well-
being of the customer, where it remains in successful companies.

Value Delivery through Integration of Activities

Integration of Organization or Enterprise Operations

The integration of systems inside and outside the organization can provide value for both
customers and the organization. One of the requirements for e-business is to link front-end with
back-end systems in order automate the online operations of the organization.

Front-end activities deal directly with the customer while back-end systems include all of the
internal support activities that do not deal directly with the customer. Some enterprises have
different geographic locations for front-end and back-end office activities and rely on the
integration of the associated computer and network systems for successful corporate operations.
Front-End & Back-End Operations

Examples of activities that require integrated systems are:

 Order placement through point-of-sales systems

 Customization of products based on user requirements

 Production tracking

 Customer order fulfillment

External Integration: The Supply Chain

Operations on the Web can also extend to cooperating firms such as partners in a supply chain,
also known as a "Value Web". The Value Web may include a wide range of participants as well as
the possible use of a digital exchange to procure or sell products. Many firms have participated
in a supply chain for years using Electronic Data Interchange (EDI) technology to buy and sell
components and products.

Electronic Data Interchange (EDI)

Most large manufacturers, such as those in the automobile industry, have used EDI
to engage in electronic purchasing and selling with supply chain partners and
various buyers since the early 1970s. The number of firms using EDI has been in
decline since 1997, when about 100,000 firms used EDI propriety software and a
 private network known as a value-added network (VAN) to buy and sell
approximately $500 billion in goods. This networking system is too expensive for
many small and medium-sized enterprises, although some are forced to use it in
order to remain a supplier to a particular company.

Some firms using EDI are moving to the Internet to reduce the communications costs
associated with VANs, but many are maintaining the status quo because the firms in
their supply chain may not be ready to make the move. On the other hand, some
smaller firms are utilizing the Internet and XML to achieve EDI on the Web. A large
company like Sears, with thousands of suppliers, is able to continue working with
large suppliers on a traditional EDI system, while moving smaller suppliers to a Web-
based EDI system. The supplier systems are integrated with Sears's back-end
systems in order to shave weeks off of the purchasing cycle.

Successful supply chains are vital for manufacturing operations since the timeliness, cost and
success of the final product may depend on a component part made by a single supplier. The
competence of suppliers may now be demonstrated through the ISO 9000 qualification process,
which is critical when using suppliers from foreign countries or when the final products are
exported.

Supply Chain Integration

When the supply chain transactions of the partners can be automated and integrated over the Web
into the back-end systems of each other, then the resources of all the chain partners can be
planned and managed for an efficient operation. An emerging approach to automate transactions
with partners is to link systems through the corporate portal, which greatly reduces the
integration requirements. Portal software now has potential connections, or hooks, where the
systems of different enterprises can be linked to securely transfer data.

In addition to good technology, it takes a strategy, time, resources and, most importantly, trust
between partners, for the supply chain to function successfully.

Structural Concepts to Deliver Value

The effective delivery of value to a customer, requires that a company organize its structure and
functions according to the type of product or offering delivered. The value chain, as popularized
by Michael Porter 1, describes a linear set of steps, which could be activities or business
processes such as design, production and sales, whereby a manufacturing company delivers
value. This value chain delivery model strives for overall efficiency and cost reduction by
increasing the efficiency and reducing the cost of each business process. Each step is
independent and separable, and can be outsourced, or contracted out to another company. The
value chain becomes a supply chain when a company uses the inputs and activities of other
companies in its manufacturing process.

However, the value chain doesn't appear to describe how many service-oriented businesses
operate. Stabell and Fjeldstad, Timmers, and Afuah and Tucci, have developed additional
concepts of "value shop" and "value network", following the work of Thompson to address other
types of businesses.2

The value shop describes a service operation, such as a consulting, law or accounting firm, that
focuses on customer needs rather than on the production process of the value chain. It may also
describe a department, such as customer service, within a larger organization. For example a
manufacturing company, a value chain operation, could have within it a department that operates
as a value shop.

The e-business set up as a value shop works directly with the customer to provide a necessary,
often unique, solution. The value shop is geared to solve specific client problems rather than to
make a common solution more efficient. Some value shops, such as large consulting companies,
will attempt to duplicate solutions among clients by introducing jargon to describe steps in an
approach, and by attempting to fit the client's problem to the approach, rather than focusing on
the client's problem.

The value network is a type of e-business where networked users negotiate a transaction on a
web site. The value network hosts online auctions, brokering, market making, intermediation, or
other types of transactions.

The value network depends on growth in order to attract more users. When the number of users
on a value network increases, the network becomes more valuable to each participant since it
increasingly becomes the site where desirable transactions will take place. Ultimately the
strategy of network dominance results in large companies like eBay, since in theory it drives all
of the users to be on one network. However, for various reasons described in a following section,
this limit is never reached, and competitors do emerge, even for a company like eBay.
Sources of Revenue

Depending on the business model, several revenue sources may be available to an e-business.
Many online businesses will have a three or four of these sources. A mix of revenue sources is
often referred to as a revenue model but may be mistakenly called a business model. Some of
these sources of revenue are:

 Advertising
 Affiliation

 Agent commissions

 Licensing

 Sales commissions

 Sales profits

 Sponsorship

 Subscription

 Syndication

 Use Fees

For large public-private or government projects revenue sources might also include:

 Bonds, usually for large capital expenditures

 Taxes, primarily income, property and sales taxes

 Use fees and tolls

With small fast-growing companies such as e-Business startups, investors often track expected
revenues and revenue growth and may make changes to increase revenue. However, after the
Dot-Com boom ended, more traditional measures such as cash flow and earnings have came
back into favor as means of evaluation.

Activities, Resources and Capabilities

The activities, resources and capabilities of a business are sometimes known as its requirements.
In order to perform the activities required to carry out the mission of the business, certain
resources are needed; for example, employees with certain skills, or capabilities, are needed to
perform activities correctly and efficiently. Also, inventions, processes and other intellectual
property may add to the individual knowledge of an employee to develop a competence in the
performance of the required activities.
Activities

Activities are specific business processes or groups of processes such as design, production and
sales that implement the business concept. The operational business model identifies the costs
and outputs of each activity.

Activities drive the need for resources. Existing activities should be carefully scrutinized in order
to conserve resources and reduce costs. Activities left over from previous initiatives, but not
currently necessary should be curtailed. This may sound elementary but businesses start many
activities over time, especially if its business concept changes. But one doesn't often hear of a
large business curtailing its activities in order to focus on its current mission.

Also, proposed activities should be carefully reviewed before a commitment is made to develop
them. Not only should they be aligned with the goals of the organization and contribute to
offerings in demand in the market, but the required resources and capabilities should be
considered. The implementation of some activities, such as production or manufacturing, have
high costs that must be incurred before a product can be sold and revenues begin to flow.

E-Business Processes

Beware: Some fundamental e-business activities may infringe on patents. Business processes, or
the "method of doing business" may be patented, so that a business model may unwittingly
include the development or use of intellectual property owned by another party. Patents have
been freely awarded for even the most straight forward business processes.3

 Some examples are:

 Amazon.com has a patent for "one click" purchasing technology and its "Affiliates" program.

 CyberGold has a patent for pay-per-view ads where the customer enjoys an incentive for clicking
on them

 Netincentives has a patent for online incentives programs, possibly in conflict with CyberGold's

 Netword LLC has a patent for a Web navigation based on keywords rather than URLs

 Open Market has a patent on electronic shopping carts, on paying with credit cards using the
secure socket layer encryption and on secure credit card transactions. However, there are now
several types of shopping carts.

 Priceline.com was issued a patent for its reverse auction method, that is, "name your price"
auction.

 Sightsound.com has a patent for selling digital content (e.g. downloading films) on the Web.

 CI Software has a patent for EDI on the Internet

One of the most widely renowned patent infringement cases was Amazon.com's patent for "one
click" technology for purchasing items, which was at the center of its dispute with Barnes and
Noble. One-click shopping allows the prospective buyer to bypass the use of a "shopping cart",
which is cumbersome for many users.

Amazon.com also has a patent for its "Affiliates" program, which allows the company to market
the products of other companies in return for a commission. This business process has been used
freely by traditional businesses since the beginning of recorded history and the fact that this
process has been patented is very controversial. Also controversial is Priceline.com's patent for a
reverse auction method, which it uses to sell airline tickets.

In effect, a few companies have patented Internet business models, which are being used by
many other companies. If these patents can be easily licensed at reasonable rates then there won't
be a problem in the future development of e-business. But if not, the resulting chaos will inhibit
the growth of the online business world.

Resources

In order to perform activities an organization requires human, tangible, intangible and supporting
resources. Human resources, in particular the skills and knowledge of employees are important,
as are the programs (e.g. incentives, training) and institutions that support them. Of related
importance is the "corporate culture" that shapes how employees work together and which may
also be instrumental in determining how a company works with its partners, or whether a merger
between two companies can be successful.

Tangible, or physical and financial, resources include facilities, equipment, and cash reserves.
Intangible resources include intellectual property, business processes that can be patented,
brands, customer profiles and personalization data in databases, and customized software.
Supporting systems include organizational structure, information systems or communications
processes that may have little value as stand-alone resources.

Capacity

The total resources of the organization represent its capacity. When resources are underutilized,
the company has resources that aren't used, or idle capacity. Idle capacity in manufacturing tends
to be measured in terms of additional output that could be produced. In service organizations the
measure for idle capacity is usually a number of employees. Resource capacity can also be
measured in job-hours, machine-hours, sales per employee, or square feet. Often these are
compared with industry standards to assess the efficiency of the organization.

Resources may also misallocated. Processes may be successively introduced over time that result
in an overall inefficiency. This may be a significant potential problem in e-Business since
activities are accumulated based on market demand and there are few if any other companies
available for a comparison.

Capacity also represents a constraint to growth. Demand for product or services may exceed
capacity and managers may take a variety of steps to temporarily resolve the problem: overtime
for existing employees, additional shifts to increase the utilization of equipment, contracting to
outside entities, even competitors! For example, a software company may outsource code
writing, which is standard fare - almost a routine activity, in order to increase its design capacity.
Of importance here is to be able to distinguish between real growth in demand versus periodic
spikes in activity, which frequently occur in some industries such as printing. Real growth would
merit the expansion of capacity. However, this should take place only after careful analyses of
the current and future market, relevant technologies, and resource and financial requirements.
And it should be executed based on an implementation plan.

Capabilities, Competencies and Competitive Advantage

In order for the business to be successful, workers with certain skills, or capabilities, must be
available. This is important for two reasons. First wages are usually the highest expense of a
business, as much as 70% of the budget of an organization with low capital requirements (e.g. an
accounting, or legal firm). Second, capable workers may not always be available, which may
lead to the issue of outsourcing, as discussed in a following section.

When activities, or sets of activities, are performed extremely well and are, in fact, among the
best in the industry, then these are known as competencies. Competencies result from workers
with distinctive capabilities; skills and processes that efficiently utilize resources, and
combinations of activities that add significantly to the value of the output. Competencies become
organizational strengths and an important component of the business model.

Sometimes competencies will allow a firm to lead an industry in providing value to customers.
When other companies can't easily duplicate these competencies, the firm is said to have a
competitive advantage. For example, a low cost manufacturing process may enable a company to
sell products at a very low price and still make a profit - a situation that can't be matched by
competitors.

Competencies may also point to possible future directions for the firm. When the business model
fails due to factors beyond its control, such as a shift in the market, then a new business concept
may be based on the competencies of the firm. Firms with leading edge programming staffs, for
example, can often shift to another type of software application without too much difficulty. An
e-tail operation such as Amazon can easily add new product groups to its Web site due to its
industry-leading competencies in online transactions, customer tracking, order
fulfillment/shipping, and customer service.

E-Business Environment and Strategies

The rate of change in e-business presents an enormous challenge to managers. Business on the
Internet is just beginning, and is evolving through a process of trial and error. Management
flexibility is a key for survival and success in e-business.

The environment of any organization consists of all of the factors that are beyond its control, but
influence it in one way or another. Examples of these factors are shown in the figure, E-Business
Environment and Strategies. To counter the potential adverse affects of these factors, the e-
business can respond with strategies. An external strategy is an approach to deal with factors in
the external business environment such as competitors, markets, and technological
developments, that are beyond the company's direct control. This is different from a corporate
strategy, which addresses factors under the company's control such as the approach to marketing,
sales, and pricing. Other components of the business model such as the value proposition and
sources of revenue may also include strategies.

The E-Business Environment and Strategies

External strategies may be driven by components of the business model, such as finding workers
with certain capabilities to staff activities. If the required work force is not available locally, the
business concept may have to change, and workers brought in, or the work outsourced. Even
though strategies may be implicit in the business model, such as hire workers at the industry
wage, it is important to recognize them explicitly because they may have to change as the
business environment changes.

The Competitive Environment and Strategies

The competitive environment, sometimes known as the industry environment, results from
relationships with other firms. These relationships are with suppliers, customers, producers of
substitute products, potential new entrants, competitors, "complementors", and strategic partners,
which are described by Porter.4

When suppliers are limited, they may keep prices high and reduce the profit of a firm that buys
from them. A strategy for the buyer is to find new suppliers, or producers of substitute products.
On the other hand, if there are only a few buyers, they can keep prices low, but a strategy for the
seller is to find more customers to compete for products in order to raise prices, or to find a more
profitable of their industrial capacity. Therefore the Internet serves to increase the knowledge of
prices, find producers of substitute inputs, and subsequently cause downward pressure on prices.
Potential new entrants to a market may also disrupt prices. Either they enter the market with low
prices to gain market share, or they cause the existing firm to lower its prices in order to create a
entry barrier to the new firm. Competitors may also cause prices to drop through price wars, but
can also contribute to stability in the marketplace. Finally, complementors, firms that make
products that need the firm's product to add value (e.g. software developers for particular PC
operating systems), as well as strategic partners can create demand for the firm's products. In
each case the Internet may be used to the advantage or disadvantage of the e-business. The point
is that an e-business must have an Internet strategy to be successful.

First Mover Advantage

A strategy that has been used by some dot-com companies is the first mover advantage, that is, to
be the first to serve a new online market. The common wisdom is that the first business into an
unserved or underserved market captures the largest share of the market and is in a better
position to survive and might even increase its market share in an economic downturn that
causes competitors to go out of business.

Second Mover Advantage

In some traditional sectors, such as real estate development, being a first mover is often shunned
as too risky, and the second mover advantage is sought. Second movers learn from the mistakes
of first movers and may take advantage of the investments made by first movers by buying them
at discounted prices. This strategy may be appropriate in the early years of an e-business where
the risk is high and managers are responding quickly to a changing environment.

Increasing Value Through Network Dominance

Another strategy, mentioned earlier, involves one situation where being a first mover is very
important. Metcalfe's Law states that the value of the network to each user increases as more
users are added to the network. Therefore, one of the competing networks becomes dominant as
most of the buyers and sellers shift to it. Competing with a company that has achieved network
dominance is very difficult and expensive.

The best example of network dominance is the online auction, where eBay dominates the market.
The auction site that starts first in a particular market and attracts the most attention and
customers, is probably the most valuable to the occasional user who wants to buy or sell
something. Only larger online companies with high traffic volumes, such as Amazon, Google,
and Yahoo, can begin to compete on a "head-to-head" basis with eBay. However, smaller online
auctions have opened in niche markets, where they may provide specialized knowledge and
services.

Maintain and Improve Competencies

One obvious strategy is to develop the capabilities, and to build and maintain competencies in
order to keep an advantage over other firms. To do this, one must understand market conditions
and the firm's strengths and weaknesses.
Other strategies to maintain competencies include:

 Block: The "block" strategy makes it difficult for other companies to copy business processes and
intellectual property. Blocks can be achieved by limiting knowledge transfer about critical
features or by reducing or indicating a reduction in prices.
 Run: The "run" strategy means the business innovates faster than potential competitors. To pull
it off the company needs competencies in critical areas.

 Strategic Alliance: The e-business works with other firms that are not usually direct competitors.
For small e-businesses, alliances may be essential since every facet of growth can be facilitated
through association with a well-known and capable partner. Strategic alliances can solve
immediate problems of developing capabilities in distribution, shipping, and billing, and will
allow the company to be "up and running" very quickly. However, the small company should be
concerned about losing its autonomy and intellectual property to its larger partner.

The Technology Environment and Strategies

Technology plays an important role in e-business and must be tracked closely. It can shift very
quickly and greatly disrupt an unprepared company.

Disruptive Technologies

When a new technology creates a different approach to performing a task that is less costly, more
efficient, or otherwise relatively advantageous and displaces existing technology, it is known as a
disruptive technology. These technical disruptions can cause businesses to fail, particularly in
those organizations unprepared to change their business model.

Examples of disruptive technologies are:

 Alternative Energy Generation at low cost

 Artificial Intelligence including Autonomous Systems

 Emergent Computing: Biocomputing, DNA Computing, Optical Computing, Molecular or

Chemical Computing, and Quantum Computing

 Global e-Commerce with the Electronic Product Code (EPC) and RFID

 Grid Computing, including Bioinformatics Grids and Economic Development Grids

 Human-Machine Interaction: Intelligent Collaboration, Intelligent Design, and Intelligent Training

Systems

 Nanotechnology

 Open Courseware

 Open Design & Problem Solving

 Parallel Computing
  Knowledge Representation and the Semantic Web

 Superconductivity

 Voice, Sight and Haptic (i.e. touch) Response Systems

 Wireless Internet

When high-speed optical networking was developed, many of the existing networking companies
were slow to recognize its potential or miscalculated the time required to deploy the technology.
As a result, new firms began meet the demand for glass fiber and switching components, and
competed successfully with communications manufacturing companies that didn't change.

Technology Strategies

Every e-business concept based on a technology break-through runs the risk of being replaced by
a company with a newer technology. Therefore, a strategy to maintain technological leadership,
or to have access to the leading applicable technologies, is essential for the long-term survival of
a technology-based e-business.

A technical innovation strategy can be as simple as outsourcing the technical side of an e-

business rather than trying to maintain the competency in-house. If it is large enough, a firm can
develop new technologies. But for most firms, an R&D program is too expensive. One option is
to partner with an organization known for developing new technologies, so that they become
available as they are developed. Co-developing and licensing technologies are also options. The
use of a strategic alliance can serve as a technology strategy, as well as a competitive strategy.

To avoid falling victim to a new technology, a firm must try to keep abreast of technological
developments that may affect its industry. Any company that is technology-dependent must have
someone in-house who is knowledgeable about the latest technical developments. But more
importantly, the company must be willing to take action when it appears that a major advance in
technology poses a threat.

The General Environment and Strategies

The general environment contains those factors that face most businesses: laws and regulations,
the economic climate, and worker availability.

Laws and Regulations

New laws and regulations may have unexpected effects on e-business, especially in the areas of
privacy, patents and other intellectual property. E-Business leaders should understand regulations
and the rational for local taxes, including how tax revenues are spent. Unfair tax breaks should
not be expected by an e-business; neither should businesses expect to compete unfairly with
other businesses.
Economic Climate

Sound financial strategies will help maintain cash flow and solvency during an economic
downturn. Many small businesses simply run out of money before products begin to generate
revenues. E-business should use the conservative accounting practices preferred by most
investors.

Worker Availability

The availability of qualified employees is one of the biggest problems for an e-business
attempting to grow from a startup into a small or medium sized enterprise. Although technical
workers became available in the economic downturn after the Dot-Com crash, the availability of
foreign workers decreased significantly after the terrorist attack of September 11, 2001. Larger
technical companies, who had augmented their work force through hires of foreign workers prior
to "9/11" now feel that must outsource large numbers of jobs abroad in order to find the talent
needed to stay competitive. Whether outsourcing will be proven as a successful strategy over
time remains to be seen. Certainly it will work in some situations, but it is unlikely to work in all
situations.

Strategies for the local work force include obtaining and keeping qualified employees with
programs such as training, child care, and employee services. Training programs are also
necessary for all employees to develop skills in new technologies.

DESIGNING DEVELOPING AND MANAGEING e-BUSINESS:-

1. Determine Your Website’s Chief Purpose

When you begin a website, you must have your main purpose clearly in mind. I say this because
it’s easy to have conflicting purposes.

 If you’re a website design firm, you may want to show off your high tech goodies with
your client’s site as the showpiece.
 If you’re an employee stuck with this task, you may want to look good for your bosses
and not do anything for which you can be blamed — you’ve got to protect your backside.
 If you’re a volunteer, you may just want an excuse to tinker and be praised for it.
 If you’re a business owner, you probably care about the bottom line. You’re wondering,
How much this will cost? and Will it be worth it in the long run?

Dear friends, recognize your own needs — they’re legitimate. But to build an effective website,
you’ve got to look at the business’s or organization’s needs and make those primary. From the
organization’s perspective, what must this website do in order to be successful?

Let’s look at some common website purposes. Put an X next to all that apply.
  Build your brand. Create an online brochure that will help potential clients, customers,
and partners learn about your company and look at it in a favorable light. You’re trying to
enhance your brand or organization image. I’ve heard people disparage this kind of
website as “brochure-ware.” But this is very legitimate for some kinds of companies,
especially local businesses or organizations that aren’t trying to conduct national or
international commerce. You want people to know who you are, what you do, where to
find you, and how to contact you.

 Provide product information to drive local sales of your products and services at dealer
locations. Auto sites are a good example. Many manufacturers don’t sell on their sites,
but point people to retailers who carry their products.

 Sell advertising. A few sites are designed to sell advertising — Yahoo!, Google, and other
portal sites are examples. But these days, there’s far too much advertising space and not
nearly enough money to fill it all. Internet advertising is improving, but is still
underpriced. You may be able to sell a little advertising if you’re a portal site for an
industry, or perhaps put some Google AdSense ads on your site. But these aren’t big
moneymakers. Look at advertising sales as a hopeful bonus, not as a sure thing.

 Sell products or services directly over the Internet. You want to conduct e-commerce and
sell to a national or international market. You’ll have some kind of ordering system for
one or more products, or perhaps an extensive online catalog. You may offer an online
service that can be delivered over the Internet or that can be initiated online.

 Earn affiliate commissions for sales and leads generated through links on your website.
Savvy marketers are building microsites designed to generate search engine traffic for a
particular hot product or service. When a visitor clicks on one of their links, he is referred
to an e-commerce site, and, if a sale results, the affiliate gets a commission. Perhaps a
form on your site generates leads or subscriptions for another company. Provide customer
service and support. Websites are a great place for troubleshooting guides, FAQs
(Frequently Asked Questions), technical information, etc. You can generate Return
Merchandise Authorization (RMA) labels. You can provide multiple ways for your
customers to contact you (see under Point #9 below).

 Save money by means of online efficiencies. Companies have used the Internet to save
billions of dollars. Taking orders online with real-time credit card authorization saves
paying call center operators and cuts entry errors. Online catalogs save lots in paper,
printing, and distribution costs. Online FAQs and knowledge bases cut the number of
customer service personnel you need. And I’m just scratching the surface here.

What’s the design decision here? To be clear and focused about your site’s objectives and
purposes.
2. Decide Whether to Outsource or Do It Yourself

After clarifying your purposes, you need to decide whether to outsource the design of your
website or to do it yourself. Let me tell you my bias. For nearly all businesses and larger non-
profits I recommend outsourcing initial website design, but be very sure that you bring site
maintenance back in-house. (See Point #12 below.)

Website design done right is complex and requires a number of different skill sets that aren’t
commonly found in any one person, especially someone that doesn’t do this for a living. Some of
these skills include:

 HTML savvy. Good web design software can help. But the kind of HTML code produced
by many WYSIWYG (“what you see is what you get”) programs can be difficult and
hard to maintain. Fine-tuning your design requires you to get into the raw HTML code.

 Graphic design, color experience and good artistic taste. No software package bestows
artistic taste on its user, but good taste is indispensable for an attractive site. Of course,
graphic software expertise is required to produce attractive and clean photos and site
graphics, optimized to the smallest possible file size for quick loading.
 Website navigation design and implementation. Helping visitors get where they need to
go quickly and efficiently is difficult, especially on sites over 20 webpages or so. Good
navigation design comes from experience, not from good software.

 CGI and database programming. Even smaller sites use a “contact us” form and often a
site search program that require CGI program installation and configuration. Larger sites
may need to be integrated with an online database, which is no job for the faint of heart.

 JavaScript and Flash programming. Functional websites are dramatically helped by Flash
and JavaScript features such as animation, drop-down navigation menus, and small
windows that open to answer a hyperlinked question. Automatic pop-up windows that
encourage e-zine subscriptions can be effective, but can be annoying if you don’t make
them to turn off after one pop — and these days are increasingly blocked by pop-up
blockers.

 Marketing and business experience. An outside company doesn’t really understand your
business like you do. Make sure you communicate exactly what you need to achieve. The
best website design firms understand how to build Web marketing into the site design to
make it search engine friendly, to make the sales pages really sell, etc.

What does outsourcing cost? For a simple five or six page website, expect to pay $750 to $1,500.
For a more complex site you may pay $3,000 to $10,000 and up. For database-driven sites you’ll
need custom programming. Of course, sites designed for high traffic or for Internet-focused
companies can cost much more.

If you have no money, it is possible to teach yourself website design. I did. Arm yourself by
reading some website design books first and expect to make some mistakes. A couple of great
beginners’ books are Learning Web Design: A Beginner’s Guide to (X)HTML, Style Sheets, Web
Graphics, by Jennifer Niederst (Third edition; O’Reilly, 2007, ISBN 0596527527, paperback,
480 pages) and Web Design All-in-One for Dummies by Sue Jenkins (For Dummies, 2009, ISBN
047041796X, paperback, 656 pages). I find myself constantly referring to Web Design in a
Nutshell: A Desktop Quick Reference, by Jennifer Niederst (O’Reilly, 2006, ISBN 0596009879,
paperback, 826 pages). It’s full of the nuts and bolts of website construction for more
experienced developers who maintain and improve websites. You can also find lots of online
help at WebReference.com, WebMonkey.com, and Builder.com. You’ll need some good web
design software such as Microsoft FrontPage or Macromedia Dreamweaver. Don’t just forge
ahead, though. Read and understand the design concepts first, then proceed step by step.

Another approach is to hire a website design firm to design the website templates, navigation
system, CGI and JavaScript programming, and perhaps do usability testing. They would set up
the basic structure, and you could build it out using their template and design. If you do
outsource, be sure to conduct a “due diligence” investigation of the design firm by talking to
previous clients, looking at their work, etc. Make sure they spell out in writing exactly what they
agree to do for how much money, and provide a firm deadline by which their work will be
completed. Partial payments should be made as specific milestones are reached and approved.

I strongly recommend that you build your website using a Content Management System (CMS),
rather than from single webpages uploaded and linked together. You can find such systems
available from many popular hosting services. One I’ve used successfully is CMS Builder from
InteractiveTools.com. It’s not for the newbie, but if you’re having your site built for you, ask
your designer to build your site on using this program. It’s very flexible! The big advantages of a
CMS system are: (1) You can make changes yourself, without HTML expertise or contacting
your web designer. (2) Your website is infinitely expandable as your business grows. Your
designer sets up the basic templates; then you take it from there. What’s the design decision
here? To decide whether to outsource none, part, or all of your website project.

3. Divide Your Website into Logical Sections

My first website had 100+ pages and I made the mistake of dumping all the webpages into a
single directory. What a mess! I learned quickly that you need to organize your site both logically
and with multiple directories, one for each section. Here’s a typical small-site structure:
This site layout isn’t meant to be prescriptive, but only suggestive. Get a blank piece of paper
and begin to lay out what your site will look like, with similar functions grouped together.

Don’t be afraid to create multiple subdirectories to keep your site organized. When you’re setting
up newsletter archives, for example, create a directory for each year of issues so a single
directory doesn’t get too cluttered. Remember, you’re not designing for just the present moment,
but for the growth your site may undergo over the next two or three years.

I set up my file structure with a /syspix subdirectory that contains the system graphics which
appear on nearly every page of the site. I also use an /images subdirectory under each major
section of the website to contain the graphics used in that particular section. You may know
where everything goes right now, but what happens when you try to make sense of it a year or
two from now? Organize!

Your home page should provide a statement of exactly what your company or organization does.
Preparing a Unique Selling Proposition (USP) for your company is a great way to begin. I’m
amazed at how many websites don’t really tell me what they do. I have to nose around trying to
figure it out. That’s stupid! State precisely what you do, and then provide links to the rest of your
site so your visitor can learn more.

My site structure diagram includes product pages, landing pages, and an ordering system. More
on those in Point #10 below. The focused content and reciprocal linking pages are designed to
boost your search engine ranking, and are described in Point #8 below.
In your “About the Company” section be sure to tell your organization’s story. Big companies
spend millions to build confidence through brand name familiarity. Small businesses tell their
story, often illustrated with photos, to help visitors understand and trust them. If you have a
passion about what you do, tell your visitors about it in this section! Here’s where a local
business or organization will include a map and driving directions to help people find it. I’ll talk
about the importance of the “Contact Us” form in Point #9 below.

What’s the design decision here? To structure your site and break up your webpages into logical
directories and subdirectories to avoid confusion later.

4. Develop a Site Navigation System

Now that you’ve laid out your website, you can see how important a good navigation system is.
One of the chief complaints that visitors have is that they can’t find the content they’re looking
for. The larger your site, the more important redundant navigation systems are — more systems
than you think you might need. Here are some of the basic systems and a few you might not have
thought of:

 Left-side menu lists the various sections of your site, and perhaps some of the
subsections, too.

 Tabs near the top of the webpage help the visitor quickly see the most important sections
of your site. This facilitates browsing.

 Search the site or the product database. Larger sites need a search feature so visitors don’t
get lost.

 10 most common gifts, etc.

 View today’s specials or recent news releases.

 Bottom links provide hypertext links to all the sectional pages.

 Site map shows the structure and has links to every page (or sectional page).

Except for the very smallest five- or six-page sites, I encourage you to implement two or more of
these systems. Over-kill, that’s the ticket. What may be obvious to you and your designer after
looking at the site for weeks may not be obvious at all to your visitor. Each separate navigation
system gives her another opportunity to find what she’s looking for.

If you’re a do-it-yourselfer, consider using a free search engine such as Google Custom Search.

Some websites are “button happy.” They have graphic buttons down the left side of the page and
across the top. They may look nice, but there’s a big cost in download time. There’s a strong
trend on high traffic sites toward text menus made with HTML characters, not GIF images. Look
at a text menu you admire and study the HTML by viewing the source. Text is good; buttons are
bad — especially when overdone. Got it?

Finally, I’d like to say a word about “frames,” a kind of HTML menu that lists page names in a
window on the left side that scrolls up and down independently of the content window on the
right. Website designers used to love them, until they discovered that they cripple a website’s
marketing potential. Insist that your site developer not use frames! More on this in Point #7
below. Instead of using frames, set up your navigation system with Server Side Includes (SSIs),
described in Point #6 below. If you have a complex site, I recommend that you employ a
professional website designer to set up your navigation system — even if you do all the rest.
Leverage professional experience to help your customers find what they’re looking for.

What’s the design decision here? To make clear, redundant navigation a priority — for your
customers’ sake.

5. Give Your Website an Attractive ‘Look and Feel’

Why should a website look good? Why should it look professional? Because like the sign
hanging over a store in the strip mall, your website reflects upon you and your business. If the
sign’s lettering looks crude and homemade, people won’t say, “The thrifty shopkeeper is trying
to save money by making his own sign.” They’ll say, “How tacky! If this is how the sign looks,
then the products and services can’t be of very high quality either!”

You owe it to yourself to make your website look top-notch. To succeed, you’ll need some
artistic flair, or perhaps you should hire a graphic designer’s talents for the basic design and site
graphics.

I could take you to many websites, but you can do that yourself. Become a student of how to
create a simple, clean business look. It takes a lot of skill to design a site this well and with this
kind of restraint.

Let me tell you a secret. Some graphic designers like to build sites with lots of graphics. They
have fast LAN or DSL connections and have no idea how long their sites take to download on a
56K modem. Try to keep your homepage to 60K maximum, counting the file sizes of all the
graphics and the HTML. (It’s a hard, but an important exercise.) Resist a designer’s yen to show
off his skills. Quick loading — that’s important.

There’s no way I can educate you on complementary colors, warm and cold colors, heavy and
light colors, etc. But bear in mind that everything you do has some effect on your visitor’s
perceptions of your company, her state of mind, and her emotional response.

One of your best website investments will be in a few excellent, royalty-free stock photos. Well-
composed photos add a touch of class to your webpages. They provide a visual center of interest
in an otherwise plain webpage. They add spice and color. You don’t want just dull pictures of
business people in suits. To create a sense of energy and maximum effort, you might use a theme
of photos from competitive sports, for example. Use your imagination. I subscribe to
ClipArt.com and have access to hundreds of thousands of photos (some great, many good). I can
use anything I can download for $14.95 a week. Such a deal!

What’s the design decision here? To develop a quality, professional appearance for the website
that represents your organization.

6. Build Basic Webpage Templates

Commercial websites are built from templates. You or your designer will create a template that
constructs each part of a typical webpage, with a “hole” in the center for the unique page content.
This takes many hours to build from scratch, but it’s worth it. Now you can create page after
page from the template. For each webpage you’ll insert a page title, meta tag content (see Point
#7 below), a headline, and the text content, each in its appropriate spot. Have fun!

But let me take this a step further. Take a look at the

sample webpage from my site. I’ve simplified it here, but
the article content is surrounded by four sections, each of
which is shown when a web browser comes to the web
page:

 top.ssi — inserts the masthead graphic, a banner ad,

and some of the “tabs” navigation system at the top
of the page. This is a separate file, called “top.ssi”
that is inserted at the top.

 menu.ssi — inserts the complex left-side menu plus

a database search feature.

 bottom.ssi — inserts a subscription form for my

newsletter, plus more navigation links, copyright
and trademark information.

 right.ssi — inserts cover shots of my books, plus

links to purchase my e-books and affiliate links to
products and services in the field of web marketing
and e-commerce.

Each of these files is called a Server Side Include (SSI) file. On the webpage a single line of code
calls one of these files and places it where it belongs on the page. Here’s what it the code looks
like:

<!–#include virtual=”/ssi/top.ssi”–>

The beauty of this kind of modular system is that a site built with SSIs can be modified or
completely altered by just changing one of the SSI files and uploading it to the server. Now all
the webpages in the entire system reflect the change. When I discovered how to do this it cut my
maintenance time dramatically. Yes, it takes a learning curve to make it work, but it’s well worth
the time you spend!

It is possible, of course, to use a template for your pages that doesn’t employ SSIs. But if you
anticipate a site that could grow to more that 8 to 10 pages, you’re much better off building your
site with SSIs. If your designer doesn’t know how to use SSIs, find another designer.

Modern websites control the font sizes and colors using Cascading Style Sheets (CSS). When
you change the font size on a single master CSS file, it changes the fonts and colors in all your
webpages. Cool! Make sure your website designer builds webpages using a single CSS file, since
it saves maintenance costs in the long run.

The design decisions that you need to consider here are many, since they involve every detail of
the look and feel of your basic template. Hopefully, you’ll decide to employ both Server Side
Includes (SSIs) and Cascading Style Sheets (CSS) that make your entire site easy to modify and
maintain. Also consider features available with XHTML.

7. Construct Your Site to Be Search Engine Friendly

With a little practice, anyone can build a webpage. But a webpage that search engines love to
visit and index — vital if you expect your site to get traffic — that’s another story. So many,
many business websites don’t have a clue how to do this. Let me mention two important aspects
of building a search engine friendly site:

A. Make Each Webpage a Search Engine Siren

In Greek mythology, as you know, partly human female creatures called Sirens lured mariners
with their singing. Your webpages ought to entice search engine spiders or robots to index your
site. Each webpage you construct needs to contain the following elements. Note the careful
placement of keywords, the search words people would use to find this particular webpage.

 Title — provocative and descriptive, containing the most important keywords from that
webpage, no more than 80 characters. This is what shows up hyperlinked in search
engine results, so make people want to click on it.

 Meta tags — The description meta tag should include one or two sentences (up to about
250 characters) describing the contents of this particular webpage. Work into the sentence
the most important keywords and key phrases that occur on this page. Some search
engines will display your description. I still include a meta keywords tag, since Yahoo
currently uses it for indexing, though Google doesn’t.

 Headlines — H1, H2, H3 in HTML parlance. Your headline and subheadings should
include your important keyword at least once.

 Body text — The first paragraph of the content of your webpage article or text should
contain the main keywords for that page.
  Hyperlink text and filenames — Search engines believe that the words contained in
hyperlinks on your web page are important, and thus rank them higher. If the filenames
contained in the hyperlink URLs contain important keywords (such as widget.html for
the filename of your widget order page), so much the better.

Don’t emphasize the same keywords on every page. Let the actual content on that page dictate
what keywords should stand out. Your goal is not to trick the search engines in some kind of bait-
and-switch scam, but to help the search engines recognize and index appropriately the actual
content of your webpages. Construct every webpage with search engines in mind, and it’ll help
your rankings. Of course, search engine rankings are heavily influenced by incoming links to
your site, but constructing your webpages with an eye to search engines is very important, too.

B. Search Engine Savvy Navigation Systems

Navigation systems are built to help actual humans find their way around your website. But these
navigation systems had better be designed carefully or the search engines will throw up their
hands in disgust, with the result that actual humans will never get to your website. Search
engines need a chain of hypertext links — starting at your homepage — that will take them, page
by page, to every webpage in your entire site. But let me explain two common navigation design
problems that can disrupt search engine indexing of your site:

 Frames (mentioned in Point #4 above) produce a navigation system where the menu on
the left scrolls independently of the page content on the right. Unfortunately, frames can
wreak havoc with search engines. (a) Unless you are careful to include <NOFRAMES>
tags, search engines may not be able to find the content pages. (b) Even if search engines
do find your content pages, these pages can show up in response to a search engine query
all by themselves, without the navigation system and links necessary for a visitor to find
the rest of your website. Don’t use frames. If your current site has frames, make plans to
rebuild the site without them. A menu constructed from SSIs (mentioned in Point #6
above) is just as easy to maintain — even easier, once you learn how to do it.

 JavaScript and Flash are programming languages that can make very classy, animated
menu systems. For example, a menu item might have a drop-down sub-menu that will
wow your visitors (you hope). The problem is that if JavaScript and Flash systems
replace plain hyperlinks, the search engine may not be able to find the underlying pages.
Most search engines have posters on their walls saying, “I don’t do Flash.” Stubborn
creatures, these search engines. One solution: retain your fancy menus, but include
hypertext links at the bottom of the page to your sectional pages, with links on your
sectional pages to all the subpages in that section. You can also submit a site map
webpage to the search engines that contains a link to every page on your site.

What are the design decisions regarding search engines? A commitment to design (a) each web
page and (b) the site navigation system with search engines in mind. This is a marketing, not a
techie priority, so you may have to insist that your website designers work with search engines
on their minds.
8. Write and Fine-tune Focused Content Pages

If you’ve ever been in charge of building your company’s website from scratch, you’ve learned
that one of the most time-consuming tasks is to write the copy or words that appear on the
website. It’s plain old hard work. It’s easier to build the second or third version of your website,
since the writing is already done.

Or is it?

One of the keys to generating search engine traffic is to get your site into the top 5 or 10
positions on the search engines for the keywords and key phrases that matter to your business.
It’s often hard to get your home page to score high for specific keywords or key phrases, since it
is the most general entrance to your entire website content. Your best strategy is to write a series
of focused content pages, each of which features a particular topic and keyword or key phrase.
These pages aren’t general, but very specific.

Once you’ve written your first draft, test the webpage against search engine optimization
software tools that study keyword density and many other features. They’ll help you tweak your
webpage wording, title, meta tags, headlines, alt tags, etc., so that the page has a better chance of
ranking high on the search engines.

For competitive words, you can’t rank high on Google and other search engines without lots of
incoming links, so work on linking strategies, too, such as reciprocal linking with
complementary sites. Nevertheless, these focused content pages should be an integral part of
your website strategy to boost rankings.

The design decisions? A functional website must generate traffic, so you must intentionally
include focused-content webpages in your site to pull that traffic to you.

9. Incorporate Customer Communication Systems

Websites are two-way, interactive communication systems. You communicate your company’s
marketing message to potential customers and make it easy for them to reciprocate by
communicating with you. The better the communication, the more trust increases, and customers
feel comfortable to do business with you.

Of course, on your contact page, include full contact information — name, address, phone
number, etc. I’m amazed at the number of sites that don’t include any contact information, but
still expect people to do business with them. Full contact information builds trust — even if your
customers never need to use it.

One key communication tool is the “Contact Us” response form. Such a form includes fields that
ask for your visitor’s name, contact information, and his question or comment. When the form is
submitted, it sends an immediate e-mail to you as well as an e-mail assuring your customer that
you’ll be reading the message and responding soon. And you need to keep your word. Respond
to your customers’ e-mail promptly!
The poor man’s response method is a mailto link (such as username@domain.com) that allows
the customer to use his own e-mail program to send you an e-mail message. The problem with
this approach is that you often don’t get vital contact information from the customer, such as his
phone number. With e-mail that comes from a form, you can easily filter it via the subject line
into the appropriate folder for immediate viewing. E-mail that comes through a general e-mail
address, on the other hand, easily becomes confused with spam and could be overlooked.

However, there are other ways you can make it easy for customers to communicate with you.
These include

 Instant text chat systems such as LivePerson (www.liveperson.com).

 Instant Messaging (IM) systems are in widespread use by your customers. Why not list
all your usernames and numbers on your site for quick response to customer questions?

One excellent way to save time for yourself and your customers is to develop a Frequently Asked
Questions (FAQ) page. It’ll cut down on your customers’ need to contact you.

Excellent customer service is the basis of any successful business — on or off the Internet.

The design decision here is to incorporate multiple ways for your customer to contact you.

10. Create and Test Effective Sales Pages

Every business site — and many organization sites — has a Most Wanted Response (MWR).
Your Most Wanted Response is probably one of the chief purposes you listed under Point #1
(above). For many business sites, the purpose is (1) to sell a product, (2) to have the visitor go
through an affiliate link to buy a product on another site, or (3) to generate contact information
for a future lead or follow-up. For organizations, success may be measured in memberships or
subscriptions. Whatever your MWR, you must work to optimize responses.

Good sales pages result in a high ratio of sales to visitors — called the “conversion rate.” A good
site might have a conversion rate of 3% to 5%, some higher and many lower. Over the past few
years, marketers have developed the art of increasing the conversion rate. This is especially
important when you are purchasing Pay Per Click (PPC) ads to drive traffic to your site. Your
profit is closely related to (a) the cost of the click and (b) the conversion rate of the “landing
page,” that is, the sales page to which you direct interested shoppers.

To scientifically and systematically increase your conversion rate to the maximum, you must
carefully track sales percentages for each product your sell. Then make incremental changes to
the landing page or the order system and see if the conversion rate rises or falls. Over a period of
careful study and change, you’ll maximize your sales. A useful free testing tool is Google
Website Optimizer (www.google.com/websiteoptimizer).

Here again are the steps you’ll go through:

 1. Set up an ordering system (ecommerce capability)
2. Create a landing page
3. Boost sales on your landing page by testing

What’s the design decision here? To commit yourself to seriously working to increase the
response rate.

11. Conduct Usability Trials and Incorporate Changes

We’ve almost finished our survey of 12 Website Design Decisions. But before you quit, you need
to test your site thoroughly. All newly constructed websites contain unseen glitches — especially
those created by inexperienced developers.

Here’s how to conduct your first few usability trials. Ask to meet with a friend who is an Internet
novice. Seat him in front of a computer, stand near him, and direct him to your site. Tell him that
you’d like him to talk out loud to you about what he is thinking and the questions that occur to
him as he pokes around your site. Explain to him that you won’t be able to answer any questions
at this time, but you want to hear them just the same. Now watch and take copious notes.
Observe what confuses him. See where he gets hung up. Listen to his questions.

After 10 or 15 minutes of this humbling exercise, you’ll detect plenty of small changes to make.
You’ll also learn how effective your navigation system is. If you have built your site with SSIs,
as recommend in Point #6 above, navigation system changes will require you to modify only one
or two of the boilerplate SSI files. Upload the changes and the whole site will be easier to
navigate.

To discover 85% of the usability problems on your site, repeat the usability exercise a total of
five times, each time, of course, with a different person who can look at your site through
completely new eyes. For more information on website usability, consult Dr. Jakob Nielsen’s
UseIt.com site (www.useit.com) and subscribe to his free AlertBox e-zine.

What’s the design decision here? Submit your site to simple usability testing with five subjects.
Your site will be much better as a result.

12. Plan to Maintain Your Site for the Long Haul

Building a site for the first time is exciting. Maintaining it for the next two or three years can be
extremely frustrating unless you’ve set it up with maintenance in mind. By maintenance I mean:

 Changing the content of existing information, such as upcoming events, new industry
directions, new personnel, etc. Life isn’t static. Websites shouldn’t be either.
 Adding new webpages, such as archiving copies of your newsletters, adding new
products and services.
 Changing the content of your home page so your site looks active and up-to-date.
I strongly recommend that someone in your own organization learns how to make the everyday
website changes that an active organization requires. Community colleges and adult education
curricula often offer training in webpage design and HTML. A person in your business can also
learn a great deal by studying the books recommended in Point #2 above. Perhaps the most
important thing you can do to make maintenance easy is to have your website designer build the
site with a Content Management System (CMS) mentioned in Step #2 above.

Yes, you want to have a website designer available to back you up on occasions when the change
needed is beyond your person’s abilities. But webpage maintenance is something you definitely
want to keep in-house, like word-processing and desktop publishing. Learn how! Otherwise,
changes aren’t likely to happen in a timely manner and you may put off requesting changes that
should take place immediately.

What’s the design decision? Make sure that you plan for site maintenance rather than let it fall
through the cracks.

That’s it — the 12 crucial design decisions. Of course, there’s much more to a website than what
I’ve mentioned. But this will get you started in the right direction and get you asking the right
questions.

The Next Step: Marketing Your Site

A website without marketing is like a candy shop on a dead-end street. You’ve got to let them
know you’re there. Your website designer will probably submit your home page to the search
engines, but that’s only scratching the surface.

WEB 2.0 AND SOCIAL NETWORKING:-

Web 2.0

Web describes World Wide Web sites that emphasize user-generated content, usability,
and interoperability. The term was popularized by Tim O'Reilly and Dale Dougherty at the
O'Reilly Media Web 2.0 Conference in late 2004, though it was first coined by Darcy DiNucci in
1999. Although Web 2.0 suggests a new version of the World Wide Web, it does not refer to an
update to any technical specification, but rather to cumulative changes in the way Web pages are
made and used.

A Web 2.0 site may allow users to interact and collaborate with each other in a social media
dialogue as creators of user-generated content in a virtual community, in contrast to Web sites
where people are limited to the passive viewing of content. Examples of Web 2.0 include social
networking sites, blogs, wikis, folksonomies, video sharing sites, hosted services, Web
applications, and mashups.

The key features of Web 2.0 include:

 1. Folksonomy - free classification of information; allows users to collectively classify and find
information (e.g. tagging)
2. Rich User Experience - dynamic content; responsive to user input

3. User Participation - information flows two ways between site owner and site user by means of
evaluation, review, and commenting. Site users add content for others to see

4. Software as a service - Web 2.0 sites developed APIs to allow automated usage, such as by an
app or mashup

5. Mass Participation - Universal web access leads to differentiation of concerns from the
traditional internet user base

In 2005, Tim O'Reilly and Dale Dougherty held a brainstorming session to elucidate
characteristics and components of the Web 1.0 -> 2.0 transition and what changed: Their list
included both technical aspects and specific web sites/services, many of which have since gone
defunct.

Social networking service:-

A social networking service (also social networking site or SNS) is a platform to build social
networks or social relations among people who share similar interests, activities, backgrounds or
real-life connections. A social network service consists of a representation of each user (often a
profile), his or her social links, and a variety of additional services. Social network sites are web-
based services that allow individuals to create a public profile, create a list of users with whom to
share connections, and view and cross the connections within the system. Most social network
services are web-based and provide means for users to interact over the Internet, such as e-mail
and instant messaging. Social network sites are varied and they incorporate new information and
communication tools such as mobile connectivity, photo/video/sharing and blogging. Online
community services are sometimes considered a social network service, though in a broader
sense, social network service usually means an individual-centered service whereas online
community services are group-centered. Social networking sites allow users to share ideas,
pictures, posts, activities, events, and interests with people in their network.

The main types of social networking services are those that contain category places (such as
former school year or classmates), means to connect with friends (usually with self-description
pages), and a recommendation system linked to trust. Popular methods now combine many of
these, with American-based services such as Face book, Google+, LinkedIn, Instagram, Reddit,
Pinterest, Vine, Tumblr, and Twitter widely used worldwide; Nexopia in Canada;Badoo.

There have been attempts to standardize these services to avoid the need to duplicate entries of
friends and interests. A study reveals that India has recorded world's largest growth in terms of
social media users in 2013. A 2013 survey found that 73% of U.S adults use social networking
sites.

Mobile commerce (M-commerce):-

The phrase mobile commerce was originally coined in 1997 by Kevin Duffey at the launch of
the Global Mobile Commerce Forum, to mean "the delivery of electronic commerce capabilities
directly into the consumer’s hand, anywhere, via wireless technology." Many choose to think of
Mobile Commerce as meaning "a retail outlet in your customer’s pocket."

Mobile commerce is worth US$230 billion, with Asia representing almost half of the market, and
has been forecast to reach US$700 billion in 2017. According to BI Intelligence in January 2013,
29% of mobile users have now made a purchase with their phones. Walmart estimated that 40%
of all visits to their internet shopping site in December 2012 was from a mobile device. Bank of
America predicts $67.1 billion in purchases will be made from mobile devices by European and
U.S. shoppers in 2015. Mobile retailers in UK alone are expected to increase revenues up to 31%
in FY 2013–14.

Products and services available

Mobile money transfer

In Kenya money transfer is mainly done through the use of mobile phones. This was an initiative
of a multimillion shillings company in Kenya named Safaricom. Currently, the companies
involved are Safaricom and Airtel. Mobile money transfer services in Kenya are now provided
by the two companies under the names M-PESA and Airtel Money respectively.

Mobile ATM

With the introduction of mobile money services for the unbanked, operators are now looking for
efficient ways to roll out and manage distribution networks that can support cash-in and cash-out.
Unlike traditional ATM, sicap Mobile ATM have been specially engineered to connect to mobile
money platforms and provide bank grade ATM quality. In Hungary, Vodafone allows cash or
bank card payments of monthly phone bills. The Hungarian market is one where direct debits are
not standard practice, so the facility eases the burden of queuing for the postpaid half of
Vodafone’s subscriber base in Hungary.

Mobile ticketing

Tickets can be sent to mobile phones using a variety of technologies. Users are then able to use
their tickets immediately, by presenting their mobile phone at the ticket check as a digital
boarding pass. Most number of users are now moving towards this technology. Best example
would be IRCTC where ticket comes as SMS to users.

Mobile vouchers, coupons and loyalty cards

Mobile ticketing technology can also be used for the distribution of vouchers, coupons, and
loyalty cards. These items are represented by a virtual token that is sent to the mobile phone. A
customer presenting a mobile phone with one of these tokens at the point of sale receives the
same benefits as if they had the traditional token. Stores may send coupons to customers using
location-based services to determine when the customer is nearby.
Content purchase and delivery

Currently, mobile content purchase and delivery mainly consists of the sale of ring-tones,
wallpapers, and games for mobile phones. The convergence of mobile phones, portable audio
players, and video players into a single device is increasing the purchase and delivery of full-
length music tracks and video. The download speeds available with 4G networks make it
possible to buy a movie on a mobile device in a couple of seconds.[11]

Location-based services

The location of the mobile phone user is an important piece of information used during mobile
commerce or m-commerce transactions. Knowing the location of the user allows for location-
based services such as:

 Local discount offers

 Local weather

 Tracking and monitoring of people

Information services

A wide variety of information services can be delivered to mobile phone users in much the same
way as it is delivered to PCs. These services include:

 News
 Stock quotes

 Sports scores

 Financial records

 Traffic reporting

 Emergency Alerts

Customized traffic information, based on a user's actual travel patterns, can be sent to a mobile
device. This customized data is more useful than a generic traffic-report broadcast, but was
impractical before the invention of modern mobile devices due to the bandwidth requirements.

Mobile Banking

Banks and other financial institutions use mobile commerce to allow their customers to access
account information and make transactions, such as purchasing stocks, remitting money. This
service is often referred to as Mobile Banking, or M-Banking.
Mobile brokerage

Stock market services offered via mobile devices have also become more popular and are known
as Mobile Brokerage. They allow the subscriber to react to market developments in a timely
fashion and irrespective of their physical location.

Auctions

Over the past three years mobile reverse auction solutions have grown in popularity.Unlike
traditional auctions, the reverse auction (or low-bid auction) bills the consumer's phone each time
they place a bid. Many mobile SMS commerce solutions rely on a one-time purchase or one-time
subscription; however, reverse auctions offer a high return for the mobile vendor as they require
the consumer to make multiple transactions over a long period of time.

Mobile browsing

Using a mobile browser—a World Wide Web browser on a mobile device—customers can shop
online without having to be at their personal computer. Many mobile marketing apps with geo-
location capability are now delivering user-specific marketing messages to the right person at the
right time.

Mobile purchase

Catalog merchants can accept orders from customers electronically, via the customer's mobile
device. In some cases, the merchant may even deliver the catalog electronically, rather than
mailing a paper catalog to the customer. Consumers making mobile purchases can also receive
value-add upselling services and offers. Some merchants provide mobile web sites that are
customized for the smaller screen and limited user interface of a mobile device.

In-application mobile phone payments

Payments can be made directly inside of an application running on a popular smartphone

operating system, such as Google Android. Analyst firm Gartner expects in-application
purchases to drive 41 percent of app store (also referred to as mobile software distribution
platforms) revenue in 2016. In-app purchases can be used to buy virtual goods, new and other
mobile content and is ultimately billed by mobile carriers rather than the app stores themselves.
[13]
Ericsson’s IPX mobile commerce system is used by 120 mobile carriers to offer payment
options such as try-before-you-buy, rentals and subscriptions.

Mobile marketing and advertising

In the context of mobile commerce, mobile marketing refers to marketing sent to mobile
devices. Companies have reported that they see better response from mobile marketing
campaigns than from traditional campaigns. The primary reason for this is the instant nature of
customer decision-making that mobile apps and websites enable. The consumer can receive a
marketing message or discount coupon and, within a few seconds, make a decision to buy and go
on to complete the sale - without disrupting their current real-world activity.
For example, a busy mom tending to her household chores with a baby in her arm could receive
a marketing message on her mobile about baby products from a local store. She can and within a
few clicks, place an order for her supplies without having to plan ahead for it. No more need to
reach for her purse and hunt for credit cards, no need to log into her laptop and try to recall the
web address of the store she visited last week, and surely no need to find a babysitter to cover for
her while she runs to the local store.

Research demonstrates that consumers of mobile and wireline markets represent two distinct
groups who are driven by different values and behaviors, and who exhibit dissimilar
psychographic and demographic profiles.[15] What aspects truly distinguish between a traditional
online shopper from home and a mobile on-the-go shopper? Research shows that how
individuals relate to four situational dimensions- place, time, social context and control
determine to what extent they are ubiquitous or situated as consumers. [16] These factors are
important in triggering m-commerce from e-commerce. As a result, successful mobile commerce
requires the development of marketing campaigns targeted to these particular dimensions and
according user segments.

Influence on youth markets

Mobile media is a rapidly changing field. New technologies, such as WiMax, act to accelerate
innovation in mobile commerce. Early pioneers in mobile advertising include Vodafone, Orange,
and SK Telecom.

Mobile devices are heavily used in South Korea to conduct mobile commerce. Mobile companies
in South Korea believed that mobile technology would become synonymous with youth life
style, based on their experience with previous generations of South Koreans. "Profitability for
device vendors and carriers hinges on high-end mobile devices and the accompanying killer
applications," said Gibran Burchett.

Payment methods

Consumers can use many forms of payment in mobile commerce, including:

 Premium-rate telephone numbers', which apply charges to the consumer's long-distance bill
 Mobile-Operator Billing allows charges to be added to the consumer's mobile telephone bill,
including deductions to pre-paid calling plans

 Credit cards and debit cards

o Some providers allow credit cards to be stored in a phone's SIM card or secure element

o Some providers are starting to use host card emulation, or HCE (e.g. Google Wallet and
Softcard)

o Some providers store credit card or debit card information in the cloud; usually in
tokenized. With tokenization, payment verification, authentication, and authorization are
still required, but payment card numbers don't need to be stored, entered, or transmitted
from the mobile device (e.g. Bookit iSMS)
  Micropayment services

 Stored-value cards, often used with mobile-device application stores or music stores (e.g. iTunes)

Social commerce:-

Social commerce is a subset of electronic commerce that involves social media, online
media that supports social interaction, and user contributions to assist online buying and selling
of products and services.

More succinctly, social commerce is the use of social network(s) in the context of e-commerce
transactions.

The term social commerce was introduced by Yahoo! in November 2005 which describes a set of
online collaborative shopping tools such as shared pick lists, user ratings and other user-
generated content-sharing of online product information and advice.

The concept of social commerce was developed by David Beisel to denote user-generated
advertorial content on e-commerce sites, and by Steve Rubel to include collaborative e-
commerce tools that enable shoppers "to get advice from trusted individuals, find goods and
services and then purchase them". The social networks that spread this advice have been found to
increase the customer's trust in one retailer over another.

Social commerce aims to assist companies in achieving the following purposes. Firstly, social
commerce helps companies engage customers with their brands according to the customers’
social behaviors. Secondly, it provides an incentive for customers to return to their website.
Thirdly, it provides customers with a platform to talk about their brand on their website.
Fourthly, it provides all the information customers need to research, compare, and ultimately
choose you over your competitor, thus purchasing from you and not others.

Today, the range of social commerce has been expanded to include social media tools and
content used in the context of e-commerce, especially in the fashion industry. Examples of social
commerce include customer ratings and reviews, user recommendations and referrals, social
shopping tools (sharing the act of shopping online), forums and communities, social media
optimization, social applications and social advertising. Technologies such as Augmented Reality
have also been integrated with social commerce, allowing shoppers to visualize apparel items on
themselves and solicit feedback through social media tools.

Some academics have sought to distinguish "social commerce" from "social shopping", with the
former being referred to as collaborative networks of online vendors; the latter, the collaborative
activity of online shoppers.s