1、 bcE-CommerceKnowledge SharingAugust 1999, Bain Beijing Office1e-commerce Internet Development E-Commerce Introduction Business Impact Impediments for E-Commerce Bain eConsulting ExperienceAgenda2e-commerceYears to Reach 50 Million Users:Radio=38TV=13Cable=10WWW=5User adoption of the World Wide Web
2、has dramatically outpaced the growth of other communications media, setting the stage for revolutionary changes.U.S. Internet Adoption3e-commerceYears to Reach 50 Million Users:Radio=38TV=13Cable=10WWW=5User adoption of the World Wide Web has dramatically outpaced the growth of other communications
3、media, setting the stage for revolutionary changes.U.S. Internet Adoption4e-commerceInternet User Growth *Rest of world includes all non-U.S. countries in 1996-97 and 1999-2003Source: Computer Industry Almanac; Internet Industry Almanac; Bain analysisOn-line usage is skyrocketing, with future growth
4、 being fueled by global penetration.PRELIMINARY U.S. Europe78M179M163M148M135M103M55M35MCAGR(1996-1998)(1999E-2003E)CAGR57%27%50%15% Asia Rest of World*WorldwideU.S.5e-commerceInternet PenetrationSource: Jupiters 1998 Online Shopping Report, Simbas Electronic Marketplace 2002, Forresters 1998 Teleco
5、m StrategiesInternet penetration in both consumer and business markets is significant. CAGR(1997-2002E)1%4%13%44%PRELIMINARYOnline as % of Computer Households:52%77%Shopping as % of Online Households:17%59%1,000 employees100-1,000 employees100 employeesPercent of U.S. Business (1998)ConsumerBusiness
6、6e-commerce Internet Development E-Commerce Introduction Business Impact Impediments for E-Commerce Bain eConsulting ExperienceAgenda7e-commerceIndustry Value ChainBusiness participation occurs in five distinct market segments.UserAccessInternetInfrastructureIntermediariesApplicationsEnablers Access
7、 devices Internet service providers Network access equipment Technology and software enablers Service enablers, e.g.:- professional services- data management- affiliate programs Support enablers, e.g.:- payment systems/transaction clearing- distribution- web services Portals Web agents (e.g., BOT) C
8、ommerce service providers Virtual trading communities Content Commerce Communication Community Hardware/transmission equipment Backbone transport8e-commerceIndustry Value ChainBusiness participation occurs in five distinct market segments.UserAccessInternetInfrastructureIntermediariesApplicationsEna
9、blers Access devices Internet service providers Network access equipment Technology and software enablers Service enablers, e.g.:- professional services- data management- affiliate programs Support enablers, e.g.:- payment systems/transaction clearing- distribution- web services Portals Web agents C
10、ommerce service providers Virtual trading communities Content Commerce Communication Community Hardware/transmission equipment Backbone transport Nortel Networks Dell 3Com American on lineCompany examples Nortel Networks Lucent CiscoCompany examples Microsoft IBM Oracle Yahoo American on line Amazon
11、 Dell9e-commerceIndustry Value ChainInternetInfrastructureUserAccessIntermediariesApplicationsEnablers Content Commerce Communication CommunityThis is E-Commerce!10e-commerceE-Commerce Growth By Segment(United States)Source: IDC; Jupiter; Forrester; Analyst Reports; Bain analysis; eMarketerPRELIMINA
12、RYHowever, the vast majority of growth will be drivenby applications. 11e-commerceSegment ComparisonInternet traffic drives the perception that E-Commerce is a consumer phenomenon, but the larger revenue opportunities lie in business to business commerce.Percent of TotalPercent of TotalCAGR(1998-03E
13、)97.7%49.6%Internet TrafficE-Commerce Revenue12e-commerceWeb Business ModelsTradingBuyingSellingUsing the New MediumCreating the New MediumContextConnectionContentCommunityCommerceWeb business models can be sorted according to the benefit they are delivering the user.UserBenefit:Current revenue sour
14、ces: Connection to the Internet Finding what you want on the web User fees Phone company kickbacks Hosting charges Advertising Hosting List rental Co-marketingCurrent Major Players: AOL UUNet Work Home AOL Yahoo Netscape Excite Informa-tion, entertain-ment, etc. Interaction with others sharing same
15、interest Easier access to things people want to buy Access to buyers and easier selling relations Marketplace to buy and sell with other visitors Advertising User fees Advertising Sales Buying advantage Commis-sions AOL OneSource CNN BBC AOL Yahoo Chemdex VerticalNet A Cisco Dell Schwab Travelcity G
16、E TPN P eBay A Phone Market Free-13e-commerce Internet Development E-Commerce Introduction Business Impact Impediments for E-Commerce Bain eConsulting ExperienceAgenda14e-commerceThe Internet is a major discontinuity that will redefine the strategic landscape in every industry. Product customization
17、/quality Geographic proximity Mechanical innovation Transportation infrastructure Scale economies Mass marketing Ubiquitous reach to all stakeholders Dramatically lower cost interactions Complete, symmetric, “free” information Well ordered, multi-tiered distribution Efficient, optimized physical tou
18、ch relationships Truly unique user experience- deeper customer relationships- broader reach Complete restructuring of industry supply chains Lower cost and enhanced productivityCraft Based EconomyIndustrial RevolutionMass ProductionInternet / Information RevolutionSuppliersDIstrIbutorsManufacturingR
19、esellersCustomers Internet ImpactInternet Revolution15e-commerceInternet ImpactImpact OverviewThese result in dramatic changes across company relationships with customers, suppliers, employees and other stakeholders.Customer Relationship ManagementSupply Chain IntegrationInternal Business Management
20、16e-commerceImpact OverviewCustomer Relationship Management EvolutionDescription:Example: Multi-tiered distribution model Mass marketing Limited inventory Few value-added servicesTraditional ModelProducer “Bricks and mortar” bookstoreDistributorRetailerConsumerE-Commerce Model Streamlined distributi
21、on model Targeted marketing Scale inventory and selection Robust range of value-added services AProducerProducerProducerCommunityRetailerValue-Added ServicesConsumerE-Tailer17e-commerceCustomer Relationship Management Evolution(Benefits of E-Commerce Model)A is a compelling example of an E-Commerce
22、customer relationship model. Efficient purchase process- quick log-in- search by title, subject, author- read reviews, recommendations- one-click ordering- receive books by mail Superior selection and availability Adjacent product offerings- e.g., music, video, others Value-added services- reviews-
23、proactive, tailored recommendationsBenefits to CustomersBenefits to Firm Substantially lower costs- infrastructure- inventory- personnel Deep customer relationship- one-to-one marketing- potential for higher loyalty- purchases across other product lines- more frequent purchases Broader customer base
24、- geographic reach- expanded pool of profitable customers18e-commerceSource: Fortune Magazine; Bain Estimates; Jupiter Communications 1998Revenue growth of new entrants like Amazon is fueled by offering greater selection and a superior shopping experience.Product SelectionImpact Overview Revenue Enh
25、ancementCustomer Interaction CostSearch Process: Information desk lines Immediate Books sorted by section Books sorted by title, subject, author, keyword, proactive suggestion Scanning Querying19e-commerceImpact OverviewCost Reduction* Assumes 15% inventory carrying costs* Assumes fully loaded emplo
26、yee cost of $30KSource: OneSource, Business Week, Hummer Winblad, OnesourceOnline retailers have a substantial cost advantage over traditional retailers.7.8%Estimated Savings:Lower infrastructure costs(Rental Expense/Sales)Percentage of Revenue5.4%*Better inventory management(Days Inventory)Days Inv
27、entory20e-commerceImpact OverviewSupply Chain Integration EvolutionDescription: Multiple buyer-seller interfaces in bidding process Individual company scale in buying/selling Catalog-based selection and purchasing- outdated inventory listings- manual processTraditional ModelExamples: Traditional ind
28、ustrial modelSupplierSupplierSupplierBuyerBuyerBuyer Single bidding interface Scale benefits shared across participants Virtual marketplace connecting suppliers and customers Up-to-date online inventory listings Online order-taking process TPN (GE) ChemdexE-Commerce ModelSupplierSupplierSupplierBuye
29、rBuyerBuyerVirtual Community/Industry Consortium21e-commerceImpact OverviewSupply Chain Integration Evolution(Chemdex Example)Chemdex is a powerful example of an E-Commerce customer relationship model. Lower costs- marketing 8leverage marketing through Chemdex presence- distribution8catalogs- overal
30、l cost reduced by 15% of revenue Increased sales- decrease buyer transaction costs will increase demandBenefits to SuppliersBenefits to Customers Increased convenience due to online product inventory- more accurate (updated daily)- consolidated (130 suppliers participating)- space-saving (frees up s
31、helf space in customers offices)- comprehensive (five times more products than biggest paper catalog) Lower costs- more efficient ordering/purchasing process8transaction cost reduced from $100 to $10 or $2022e-commerceImpact OverviewSupply Chain Integration Evolution(Company Extranets)Description: M
32、ulti-tiered distribution model Multiple purchase order triggers Block ordering (manual) Limited data sharingTraditional ModelSupplierSupplierSupplierProducerExample: Traditional Food ManufacturerDistributor/ WholesalerRetailerConsumerPurchaseP.O.P.O.P.O.P.O.P.O.E-Commerce Model Integrated purchasing
33、/Production Model Single purchase order trigger Automatic just-in-time ordering Detailed Data SharingSupplierSupplierSupplier Dreyers Grand Ice CreamProducerRetailerConsumer23e-commerceImpact OverviewInternal Business Management EvolutionDescription: Hierarchical, functionally-oriented communication
34、- barriers to sharing information cross-functionally- slow to share information vertically Multiple systems throughout organization- redundant- incompatible Linear cross-functional work processes- serially processed- multiple handoffs- iterativeTraditional ModelE-Commerce Model Fully-networked, flat
35、 information exchange Fully compatible information systems Universal access to information Collaborative work environment24e-commerce Internet Development E-Commerce Introduction Business Impact Impediments for E-Commerce Bain eConsulting ExperienceAgenda25e-commerceStrategicOperationalOrganizationa
36、lThere are a number of potential impediments to successfully implementing an Internet strategy that need to be aggressively managed.Key Success FactorsImpediments Integration of physical and electronic business processes Integration of legacy systems with new online systems Access to and management
37、of required technology Consistent operational excellence Right organizational structure to optimize business in physical and electronic world- integrated organization may slow E-Commerce development- separate E-Commerce organization may not leverage core assets effectively Traditional business model
38、 metrics may be inadequate/inappropriate Building capability to develop and retain required E-Commerce skills Channel conflict Brand management in multiple mediums- ability to deliver consistent value proposition Product pricing strategy- customization options- bundling Ability to create / sustain d
39、ifferentiation online Ability to develop required strategic relationships Winning against new breed competitors26e-commerceKey Success FactorsImperativesOur experience highlights the following characteristics of winning companies: Take action early- set direction- launch experiments Establish framew
40、ork within which decisions can be taken Organize for success- recruit talent- secure funding Form partnerships- critically assess capability gaps27e-commerce Internet Development E-Commerce Introduction Business Impact Impediments for E-Commerce Bain eConsulting ExperienceAgenda28e-commerce Industry
41、 ExperienceBain has worked with companies across Internet market segments in a variety of industries.Access= Bain ExperienceInfrastructureEnablersIntermediariesApplicationsHigh TechTelecommunicationsRetailFinancial ServicesConsumer ProductsIndustrial ProductsMediaLogisticsManufacturingIndustries:Ven
42、ture CapitalInternet Market Segment:29e-commerceBain E-Commerce Clients AOL Arrow Electronics Beedo AB DACOM Datacast DEX Fiat Great Universal Stores Hewlett Packard Lattice Metacreations Microfocus Citibank Commonwealth Bank Dell Fleming Gruppo Finivest Groupe Bull Hewlett Packard Rosewood Capital
43、UPS American Express Leo Burnett Cable & Wireless Disney Equant Estee Lauder Ford Gap Hilton Nordstrom Unilever Virgin Vodafone/Airtouch NikeRecent ClientsCurrent ClientsRecent Client Discussions Motorola Nortel Optus Private Equity Practice Silicon Graphics Tandy Telecom Italia US West VIP Calling Visteon30e-commerce
