E-commerce Overview of Electronic Commerce
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E-commerce
Overview of Electronic Commerce
Learning Objec-ves
1. Define electronic commerce (EC) and describe its various categories.
2. Describe and discuss the content and framework of EC.
3. Describe the major types of EC transac-ons. 4. Discuss e-‐commerce 2.0. 5. Describe social commerce and social
software.
Learning Objec-ves
6. Understand the elements of the digital world. 7. Describe the drivers of EC as they relate to
business pressures and organizational responses.
8. Describe some EC business models. 9. Describe the benefits of EC to organizations,
consumers, and society. 10. List and describe the major limitations of EC.
E-commerce Trends 2011-2012
n Social networking con-nues to grow
n Expansion of social e-‐commerce plaIorm
n Mobile compu-ng begins to rival PC
n Localiza-on of e-‐commerce (Groupon)
n Explosive growth in online video viewing
n Con-nued privacy and security concerns
The First 30 Seconds
n First 16 years of e-‐commerce v Just the beginning v Rapid growth and change
n Technologies con-nue to evolve at exponen-al rates v Disrup-ve business change v New opportuni-es
What is E-commerce?
n Use of Internet and Web to transact business
n The process of buying, selling, or exchanging products, services, or informa-on via computer networks
n More formally: v Digitally enabled commercial transac-ons between and among organiza-ons and individuals
E-commerce vs. E-business
n E-‐business: v A broader defini-on of EC that includes not just the buying and selling of goods and services, but also servicing customers, collabora-ng with business partners, and conduc-ng electronic transac-ons within an organiza-on
v Digital enablement of transac-ons and processes within a firm, involving informa-on systems under firm’s control
v Does not include commercial transac-ons involving an exchange of value across organiza-onal boundaries
Why Study E-commerce?
n E-‐commerce technology is different, more powerful than previous technologies
n E-‐commerce bringing fundamental changes to commerce
n Tradi-onal commerce: v Passive consumer v Sales-‐force driven v Fixed prices v Informa-on asymmetry
Pure versus Partial EC
n EC can take several forms depending on the degree of digi-za-on
1. the product (service) sold 2. the process (e.g., ordering, payment, fulfillment) 3. the delivery method
n brick-‐and-‐mortar (old economy) organiza-ons Old-‐economy organiza-ons (corpora-ons) that perform their primary business off-‐line, selling physical products by means of physical agents
n virtual (pure-‐play) organiza-ons Organiza-ons that conduct their business ac-vi-es solely online
n click-‐and-‐mortar (click-‐and-‐brick) organiza-ons Organiza-ons that conduct some e-‐commerce ac-vi-es, usually as an addi-onal marke-ng channel
Electronic Commerce: Definitions and Concepts
n electronic market (e-‐marketplace) An online marketplace where buyers and sellers meet to exchange goods, services, money, or informa-on
n interorganiza3onal informa3on systems (IOSs) Communica-ons systems that allow rou-ne transac-on processing and informa-on flow between two or more organiza-ons
n intraorganiza3onal informa3on systems Communica-on systems that enable e-‐commerce ac-vi-es to go on within individual organiza-ons
Unique Features of E-commerce Technology
1. Ubiquity 2. Global reach 3. Universal standards 4. Informa-on richness 5. Interac-vity 6. Informa-on density 7. Personaliza-on/customiza-on 8. Social technology
The EC Framework, Classification, and Content
n intranet An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols
n extranet A network that uses the Internet to link mul-ple intranets
Types of E-commerce
n Classified by market rela-onship v Business-‐to-‐Consumer (B2C)
v E-‐commerce model in which businesses sell to individual shoppers v Business-‐to-‐Business (B2B)
v E-‐commerce model in which all of the par-cipants are businesses or other organiza-ons
v Consumer-‐to-‐Consumer (C2C)
v E-‐commerce model in which individuals use the Internet to sell products or services to organiza-ons or individuals who seek sellers to bid on products or services they need
n Classified by technology used v Peer-‐to-‐Peer (P2P) v Mobile commerce (M-‐commerce)
Other Types
n loca3on-‐based commerce (l-‐commerce) * targeted to individuals in specific loca-ons, at specific -mes
n intrabusiness EC * internal organiza-onal ac-vi-es
n business-‐to-‐employees (B2E) * organiza-on delivers services, informa-on, or products to its individual employees
n collabora3ve commerce (c-‐commerce) * individuals or groups communicate or collaborate online
n e-‐learning * The online delivery of informa-on for purposes of training or educa-on
n e-‐government * a government en-ty buys or provides goods, services, or informa-on from or to
businesses or individual ci-zens n Exchange
* A public electronic market with many buyers and sellers
• The Future of EC – Web 2.0 The second-generation of Internet-based services that let people collaborate and share information online in perceived new ways—such as social networking sites, wikis, communication tools, and folksonomies
The Internet
n Worldwide network of computer networks built on common standards
n Created in late 1960s
n Services include the Web, e-‐mail, file transfers, etc.
n Can measure growth by looking at number of Internet hosts with domain names
The Web
n Most popular Internet service n Developed in early 1990s n Provides access to Web pages
v HTML documents that may include text, graphics, anima-ons, music, videos
n Web content has grown exponen-ally v Google indexes between 75 – 100 billion pages
Origins & Growth of E-commerce
n Precursors: v Baxter Healthcare v Electronic Data Interchange (EDI)
n 1995: Beginning of e-‐commerce v First sales of banner adver-sements
n E-‐commerce fastest growing form of commerce in United States
Technology and E-commerce in Perspective
n The Internet and Web: Just two of a long list of technologies that have greatly changed commerce v Automobiles
v Radio
n E-‐commerce growth will eventually cap as it confronts its own fundamental limita-ons.
Potential Limitations on the Growth of B2C E-commerce
n Expensive technology n Sophis-cated skill set n Persistent cultural agrac-on of physical markets and tradi-onal shopping experiences
n Persistent global inequality limi-ng access to telephones and computers
n Satura-on and ceiling effects
E-commerce: A Brief History
n 1995-‐2000: Innova-on v Key concepts developed v Dot-‐coms; heavy venture capital investment
n 2001-‐2006: Consolida-on v Emphasis on business-‐driven approach
n 2006-‐Present: Reinven-on v Extension of technologies v New models based on user-‐generated content, social networks, services
EC Business Models
n business model A method of doing business by which a company can generate revenue to sustain itself
EC Business Models
n Six elements of a business model include descrip-ons of: 1. Customers to be served and the company’s rela-onships with these
customers including customers’ value proposi2on 2. All products and services the business will offer 3. The business process required to make and deliver the products and
services 4. The resources required and the iden-fica-on of which ones are
available, which will be developed in house, and which will need to be acquired
5. The organiza-on’s supply chain, including suppliers and other business partners
6. The revenues expected (revenue model), an-cipated costs, sources of financing, and es-mated profitability (financial viability)
EC Business Models
n revenue model Descrip-on of how the company or an EC project will earn revenue
n The major revenue models are: * Sales * Transac-on fees * Subscrip-on fees * Adver-sing fees * Affiliate fees * Other revenue sources
n value proposi3on The benefits a company can derive from using EC
EC Business Models
• Online direct marke-ng • Electronic tendering systems. • Name your own price • Find the best price • Affiliate marke-ng • Viral marke-ng • Group purchasing • Online auc-ons • Product and service
customiza-on • Electronic marketplaces and
exchanges
• Informa-on brokers (informediaries)
• Bartering • Deep discoun-ng • Membership • Value-‐chain integrators • Value-‐chain service providers • Supply chain improvers • Social networks, communi-es,
and blogging • Direct sale by manufacturers • Nego-a-on
Typical EC Business Models
EC Business Models
n tendering (bidding) system Model in which a buyer requests would-‐be sellers to submit bids; the lowest bidder wins
n name-‐your-‐own-‐price model Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price
EC Business Models
n affiliate marke3ng An arrangement whereby a marke-ng partner (a business, an organiza-on, or even an individual) refers consumers to the selling company’s Web site
n viral marke3ng Word-‐of-‐mouth marke-ng in which customers promote a product or service to friends or other people
EC Business Models
n SMEs Small-‐to-‐medium enterprises
n group purchasing Quan-ty (aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased
EC Business Models
n e-‐co-‐ops Another name for online group purchasing organiza-ons
n customiza3on Crea-on of a product or service according to the buyer’s specifica-ons
Social and Business Networks
n social networks Web sites that connect people with specified interests by providing free services such as photo presenta-on, e-‐mail, blogging, etc.
n Business-‐oriented networks are social networks whose primary objec-ve is to facilitate business
The Digital Enterprise
n corporate portal A major gateway through which employees, business partners, and the public can enter a corporate Web site
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