for this paper it is critical to follow the instructions and properly elaborate on all the points
requested most importantly to support your proposal with documentary evidence and research.
IS AMERICAN ONLINE INCHING (AOL) TOWARRD BECOMING AN INTERNET BANK?
In March 2004, America Online (AOL) launched a streamlined new service for online bill payment. No,
it doesn�t yet provide the capability to pay online bills directly through AOL, but it does seem to be a
step by AOL toward making that reality.
The service-called AOL Bill pay-is free to all AOL members and is provided through an alliance with
Yodlee.com, Inc. (www.yodlee.com) , a company that provides a variety of online personal financial
services. After AOL members sign up for the service, they will receive summaries of their online bills
via AOL e-mail messages. The messages will include links directly to the business e-commerce
websites where members can make their payments.
A nice feature of AOL bill pay is that it creates a single portal (the AOL account) with only one user ID
and one password. Once inside his or her AOL account, an AOL member does not have to enter a
new ID and password at any of the e-commerce websites.
AOL members can configure AOL bill pay to provide alerts in several different forms (Multichannel
Electronic Commerce Decisions 2
service delivery); e-mail, instant messaging, or a text-based message to cell phone. The system can
trigger an alert that is more of a warning message when for example, an AOL member bank account
balance drops below a certain limit or a credit card transaction exceeds a prespecified amount. It is
AOL�s hope that its members will see these types of alerts and warnings as a value-added service.
AOL Bill Pay connects directly to 2,500 web sites that offer bill paying over the internet. If a certain
AOL member makes payments over the internet. If a certain AOL member makes payments to a web
site not on AOL Bill Pay�s list, AOL can easily add the website to the list.
Assignment questions
Write a 2 page minimum word document responding to this below;
The above case study implies that AOL is “inching” toward becoming an Internet bank. Based on your
reading of the articles in the resources below, “The Impact of E-commerce Announcements on the
Market Value of Firms” and “E-commerce Processes: A Study of Criticality,” what recommendations
would you make to AOL management? What processes (and outcomes) would you advise them to
expect?
� Then, consider the case of a small office supply company whose customers are local businesses.
The company doesn’t have a big budget for IT, but does have a big need to be able to manage
materials, delivery schedules, and build customer loyalty. Based upon your readings this week, would
you recommend a B2B model of electronic commerce or instead extend the business by offering a
B2C model? What critical factors would come into play in making this decision? Be sure to support
your proposal with documentary evidence and research.
Resources.
Articles
� Cullen, A. J. (2007). A model of B2B e-commerce, based on connectivity and purpose.
Electronic Commerce Decisions 3
International Journal of Operations & Production Management, 27(2). Retrieved from ABI/INFORM
global database.
AOL is largely dependent on business to consumer model and studies show that the
model’s cumulative return from investing in e-commerce is higher than for a business-to-
business model (Subramani & Walden, 2001). It is thus very pertinent that AOL ensures
high-level efficiency of its e-banking system to maximize its performance. AOL requires
extensive advertising of its e-commerce services and increase consumer turnover for its
services (Subramani & Walden, 2001). It is also important that AOL invest in service
differentiation as a way of influencing prices and beating competitive forces that result from
multiple companies offering similar digital services.
As a company in the process of developing an internet banking facility, AOL must
expect to have strict revenue and expenditure controls through a financial control process. An
e-commerce facility employs the use of decentralized order fulfillment of its financial
services as well as call center operations and it is imperative that its monitors its payments
and credit card clearance through a single financial system (Duffy & Dale, 2002). IT or web
changes is another vital process that AOL must anticipate. It involves adjusting e-commerce
plat forms promptly responding to threats and opportunities that arise in the business
environment.
Electronic Commerce Decisions 4
Prompt response ensures that customers remain satisfied with the e-commerce service
and reduce the threat of a mass move to competitors that may have better e-commerce
services and response to IT malfunctions (Duffy & Dale, 2002). AOL must also use a call
center process to support its e-banking facility. The company may outsource of establish its
own call center with round the clock operation and competence on the overall business
scenario. It is also very important for the company to ensure a 24-hour sound operation of its
website as customers may access it at any time (Duffy & Dale, 2002).
The small supply company that relies on a business-to-business model already
requires expanding its model to incorporate a business to consumer model. Studies have
shown that integration of e-commerce on attract higher revenues in business to consumer
than business-to-business models. In this case, it is important for the company to explore the
different types of B2B e-commerce models that would be easily integrated with interact
directly with both businesses and consumers (Cullen & Webster, 2007).
It is necessary for the company to clearly understand how different B2B models such
as individual trading, collaboration, marketplace, proprietary sales, private exchange
aggregation, intranet, and restricted bid may affect its business performance. The different
models present different connections serving different purposes to a supplier such as the
potential to make large volume sales to an aggregate composed of buyer groups, or making
small volume sales to unlimited individual buyers as provided by the individual trading
model (Cullen & Webster, 2007). The individual trading model such as website presents the
best avenue to tap into both B2B and B2C market for the small supply company.
It is also very important to factor in how to the small supply company intends to
manage its relationships with its customers as part of its loyalty management. A customer
relationship management system (CRM) is a crucial aspect of an e-commerce venture. It
helps the business to analyze customer data and customize marketing initiatives to customers
Electronic Commerce Decisions 5
buying habits and preferences. It is essential for the company to focus more intently on
valuable customers as a way of improving business performance (Schoder & Madeja, 2004).
A CRM is necessary in allowing the company to effectively target its marketing practices to
its existing customers and retain them in the long run (Chimote & Srivastava, 2011). It is
because it is easier to sell to existing than to new customers.
References
Chimote, N. K., & Srivastava, A. (2011). A Study of the Effectiveness of Relationship
Marketing Practices with Existsing Customers in Banaking Industry. Romanian
Journal of Marketing, 6(4), 42-48.
Cullen, A., & Webster, M. (2007). A Model of B2B E-commerce Based on Connectivity and
Purpose. International Journal of Operations & Production Management, 27(2), 205-
226.
Duffy, G., & Dale, B. (2002). E-Commerce Processes: A Study of Criticality. Industrial
Management+ Data Systems, 102(8/9), 432-441.
Schoder, D., & Madeja, N. (2004). Is Customer relationship Management A Success Factor
in Electronic Commerce? Journal of Electronic Commerce Research, 5(1), 38-53.
Subramani, M., & Walden, E. (2001). The Impact of E-commerce Annnouncements on the
Market Value of Firms. Information Systems Research, 12(2), 135-154.
