Omis 3500-1 ch. 10

E-Commerce

Digitally enabled commercial transactions between and among organizations and individuals. Like the use of the internet and the web, mobile apps, and browsers running on mobile devices to transact business .

when E-Commerce begun?

1995

What is an example AI and E-commerce?

eBay’s shop the Look replies on GenAI to provide users with a curated selection of outfits based on shopping histories

Ubiquity

Market space is virtual

Transaction cost reduced

Global reach

Transactions cross cultural and national boundaries

Universal Standards

Technical standards of the internet.

It can greatly lower market entry costs

What is the Market entry costs?

The costs merchant must pay simply to bring their goods to market

What are the unique features of E-Commerce?

Ubiquity, Global Reach, Universal standards, Richness, interactivity, information density, personalization/customization, social technology

Richness

Refers to the complexity and content of a message

Interactivity

Devices allow for two way communication between merchant and consumer and peer-to-peer communication among individuals

Information Density

Total amount and quality of information available to all market participants, consumers, and merchants alike

Price Transparency

The ease with which consumers can find out the variety of prices in a market

Cost transparency

The ability of consumers to discover the actual costs that merchants pay for products

Price discrimination

Selling the same goods, or nearly the same goods to different targeted groups at different prices

Personalization

When merchants target their marketing messages to specific individuals by adjusting the message to a person’s clickstream behavior, name, interests, and past purchases

Customization

Changing the delivered product or service based on a user’s preferences or prior behavior

Social Technology

Promotes user content generation and social networking

Internet and digital markets have changed the way companies conduct business…

Information asymmetry reduced, menu costs, search and transaction costs reduced, dynamic pricing enabled, switching costs may be increased or decreased, and disintermediation

Digital markets are flexible efficient, and operate with..

Reduced search and transaction costs and lower menu costs

Lower menu costs consist of…

Merchants’ cost of changing prices, greater price discrimination, and the ability to change prices dynamically based on market conditions

Dynamic pricing

Price of a product or service varies depending on the demand characteristics of the costumers or the supple situation of the seller

Disintermediation

The removal of organizations or business process layers responsible for intermediary steps in a value chain is called.

Digital goods

Delivered over digital network, cost of producing first unit is almost entire cost of product, cost of delivery over the internet very low, marketing costs remain the same; pricing highly variable, industries with digital goods undergoing revolutionary changes

(publishers, record labels, ect.)

What are the three major types of E-commerce and e-commerce business models?

Business to consumer e commerce (B2C)

Business to businesses e commerce (B2B)

Consumer to consumer e commerce (C2C)

B2C example

Walmart, Amazon, Apple Music

B2B example

Grainger

C2C

eBay, Craigslist

E-Commerce Revenue Models

A firm’s revenue model describes how the firm will earn revenues, generates profits, and produce a return on investment.

What are some E-Commerce Revenue Models?

Advertising revenue model, sales revenue model, and subscription revenue model, free/freemium revenue model, transaction fee revenue, model, affiliate revenue model

Advertising revenue model

Based on generating revenue from online advertising

Sales revenue models

Based on generating revenue from the sale of goods, content, and/or services to customers

Subscription revenue models

Based on generating revenue from subscription fees charged for access to some or all of a company’s content and services

Free/Freemium revenue model

Basic services or content for free but generated revenue from a premium charged for advanced or special features

Transaction fee revenue model

Based on generating revenue from fees for enabling or executing transactions

Affiliate Revenue model

A business steers customers to an “Affiliate” which then pays the company a referral fee or percentage of the revenue from any resulting sales