E-BUSINESS SYSTEM DEVELOPMENT PROJECT

E-Business System Development Project



E-Business System Development Project

Task 1: Business Requirements Analysis

The Internet has dramatically reduced buyer search costs by providing easy information retrieval . On the other hand researchers have found significant price variation on the Internet even for identical commodities such as books and CDs, to name a few  and . This variation and the large number of vendors have made it difficult for a user to find the best price for an item or items. In response, a number of comparison-shopping search engines, widely known as “shopbots”, have become popular (e.g., mySimon.com, Froogle.com, and PriceGrabber.com). At these websites a shopper can enter the product name and specification, and the shopbot will search a large number of vendors and return the prices offered by retailers, as well as other information such as shipping cost and availability. Since the first shopbot, BargainFinder, launched in 1995, a large number of shopbots have emerged and are increasingly being used by online shoppers. Shopbots are claimed to be able to collect, process, and present product related information at little cost, and therefore greatly affect the efficiency and behavior of markets .

Most current shopbots are geared towards one-product-at-a-time search. We refer to a “product” as something that can be purchased separately from any other item (see Section 2.1). Thus, using these shopbots, a shopper who wants to find the best price for a group (bundle) of products would have to initiate a search for each individual item and then combine the results on her own. A few shopbots do allow a shopper to compare shopping for multiple items as a whole by displaying the total purchasing price of these items from a single vendor and/or from multiple vendors (e.g., PriceGrabber.com's “Shopping List” feature, BooksPrice.com's multiple book price comparison). However, none of these shopbots can incorporate the variety of bundling and pricing alternatives that are frequently offered by online retailers .

To illustrate the disadvantage of using one-product-at-a-time shopbots to purchase a bundle, consider Fig. 1. The lowest individual prices obtained from the shopbot MySimon.com for Apple iPod ($244), and the software packages McAfee VirusScan 8.0 ($32), Roxio Easy CD and DVD Creator ($43.44), and Quicken 2004 Basic ($26.31) are listed. Best Buy, on the other hand, offers a bundle promotion where a consumer who purchases Apple iPod for $249.99 would then qualify to purchase any three software packages for a total of $49.98. While the offer by Best Buy is not the cheapest for any individual product, it is a cheaper option for a consumer interested in purchasing Apple iPod, along with two or more of the listed software packages. In this situation, the shopbotfails to provide the best possible purchase plan for the consumers.

Fig. 1. Comparison between shopbot results and bundle promotion. 

The use of bundle pricing and promotions has been a common marketing practice for a long time. Recently, They have been used extensively and more frequently in online retailing to boost sales since the menu cost of a digital storefront is much lower than that of its bricks-and-mortar counterpart. Another reason for increased use of bundle pricing and promotions could be that retailers are trying to avoid direct price competition pressure caused ...