E-Commerce

E-Commerce

What is E-Commerce?

E-Commerce-The use of the Internet and Web to transact business. Digitally enabled transactions include all transactions mediated by digital technology. Without exchange of values, no commerce occurs.

Why Study E-Commerce?

Prior to the development of e-commerce, the process of marketing and selling goods was a mass-marketing and sales force-driven process. Selling was conducted in well-insulated “channels.” Information about prices, costs, and fees could be hidden from the consumer, creating profitable “information asymmetries” for selling firm. Information asymmetry refers to any disparity ini relevant market information among parties in a transaction. It was so expensive to change national or regional prices in traditional retailing (what are called menu costs) that “one national price” was norm, and dynamic pricing to the marketplace-changing prices in real time-was unheard of.

Seven Unique Features of E-Commerce Technology

1. Ubiquity

E-Commerce is ubiquitous, meaning that is it available just about everywhere, at all times

2. Global Reach

E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost effectively than is true in traditional commerce.

3. Universal Standards

One strikingly unusual feature of e-commerce technologies is that the technical standards of the Internet, and therefore the technical standards for conducting e-commerce, are universal standards-they are shared by all nations around the world.

4. Richness

The richness of traditional markets make them a powerfull selling or commercial environtment.

5. Interactivity

E-commerce technologies are interactive, meaning they allow for two-way communication between merchant and consumer.

6. Information Density

The Internet and the Web vastly increase information density-the total amount and quality of information available to all market participants, consumers, and merchant alike. As a result, information becomes more plentiful, cheaper, and of higher quality.

7. Personalization/Customization

E-commerce technologies permit personalization: Merchant can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases.

Types of E-Commerce

B2C. The most commonly discussed type of e-commerce is Business-to-Consumer (B2C) e-commerce, in which online businesses attempt to reach individual consumers.

B2B. Business-to-Business (B2B) e-commerce, in which businesses focus on selling to other businesses.

Consumer-to-Consumer (C2C) e-commerce provides away for consumer to sell to each other, with the help of an online market maker such as the auction site eBay.

Peer-to-peer technology enables Internet users to share files and computer resources directly without having to go through a central Web server.

M-commerce. Mobile commerce, or M-commerce, refers to the use of wireless digital devices to enable transactions on the Web.

A successful business models effectively addresses eight key elements:

· Value proposition-how a company’s product or services fulfills the needs of customer.

· Revenue models-how the company plan to make money from its operations.

· Market opportunity-the revenue potential within a company’s intended marketspace.

· Competitive environment-the direct and indirect competitors doing business in the same marketspace

· Competitive advantage-the factors that differentiate the business from its competition.

· Market strategy-the plan a company develops that outlines how it will enter a market and attract customers.

· Organizational development- the process of defining all the functions within a business and the skills necessary to perform each job.

· Management team-the group of individuals retained to guide the company’s growth and expansion.

Decribe the major B2C business models.

· Portal-offers powerfull search tools plus an integrated package of content and services.

· E-tailer-online version of traditional retailer.

· Content provider-information and entertainment companies that provide digital content over the Web.

· Transaction broker-processes online sales transactions.

· Market creator-uses Internet technology to create markets that bring buyers and sellers together.

· Services provider-offers services online.

· Community provider- provides an online community of like-minded individuals for networking and information sharing.

Decribe the major B2B business models.

The major business models used to date in the B2B arena include:

· E-distributor-suplies products directly to individual businesses.

· E-procurement-single firms create digital marketplaces for direct inputs, usually for a vertical industry group.

· Industry consortia-industry-owned vertical industry group.

· Single-firm networks-company-owned private industrial networks to coordinate supply chains with a limited set of partners.

· Industry-wide networks- industry owned private industrial networks to set standars, coordinate supply and logistics for an industry.

Recognize business models in other emerging areas of e-commerce.

A variety of business models can be found in the consumer-to-consumer e-commerce, peer-to-peer e-commerce areas:

· C2C business models connect consumers with other consumers.

· P2P business models enable consumers to share files and services via the Web without

· M-commerce business models take traditional e-commerce models and leverage emerging wireless technologies to permit mobile access to the Web.

· E-commerce enablers’ business models focus on providing the infrastructure necessary for e-commerce companies to exist, grow, and posper.

Understand key business concepts and strategies applicable to e-commerce.

The Internet and the Web have had a major impact on the business environment in last decade, and has affected:

· Industry structure.

· Industry value chains.

· Firm value chains.

· Business strategy

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