CP340 Quiz 1

E-Commerce

E-Commerce

• Use of the internet, web and mobile apps to transact business

• Digitally enabled commercial transactions among organzations and individuals

E-Business

Digital enabling of transactions and processes within a  firm that does not include commercial transactions that occur over an organzational boundary 

Ubiquity

• Available everywhere at all times

• Creating a marketspace that removes physical and time barriers and limitations

• Reduces transaction costs, costs of participating in the market, cognitive energy and mental effort

Global reach

Wider consumer base and can reach more customers

Universal Standards

Lowers the market entry cost and enables easy price discovery because everyone uses the same technology

Information Richness

• Higher amount of detail can be contained in a piece of textual, graphic, audio or video information

• Helps the consumer make informed decisions

Interactivity

• Dialog that occurs between a computer and a user

• Share opinions through chatbots, reviews, email

• Can be used to analyze user behaviour

Information Density

• Amount and quality of information available to consumers and merchants

  • Price transparency

  • Cost Transparency

  • Price Discrimination

Personalization and Customization

Create personalized experience by analyzing consumer behaviour

Social Technology

Interact using social media to create and share content on the web

The web 1.0

pages are static, no interaction with the pages

The Web 2.0

central location for storing data, user generated content and communication,  allows use to interact and have social communities

The web 3.0

decentralized data distributed across places that is not owned by one entity

Business to Consumer (B2C)

car company, hollister etc.

Business to Business (B2B)

consulting company

Consumer to Consumer (C2C)

Ebay, kjiiji

Social E Commerce

Facebook marketplace

Mobile Ecommerce

apps that can be installed on phones

Local E-Commerce

based on location

The Internet

worldwide network of computer networks built on certain standards

Services take place on the internet

The web

Most popular internet service that provides access to webpages

Mobile Network

• enables access to the internet via wireless networks or cell phone service

  • Pros of Apps: Offline access, accessibility, speed

  • Cons of Apps: storage and downloading the app

History of E-Commerce - 1995

First sales of banner advertisements on the web

History of E-Commerce

•  Invention

  • Limited bandwidth and media to accommodate complex products

  • Static Webpages - no interaction

  • Disintermediation- reduction of use of intermediaries within transactions

  • Friction Free Commerce - lowered search costs, price transparency, elimination of unfair competitive advantages 

    • Network profits - first mover advantages

History of E-Commerce 2001-2006

• Consolidation

  • Emphasis on business driven approach

  • Larger firms expand e-commerce presence

  • Start-up Financing shrinks up

  • More complex products and services are sold

  • Growth of search engine advertising

  • Features - email, display and search advertising, community feedback features

History of E-Commerce

• Reinvention

  • Rapid growth of online social network, mobile platforms, local commerce

  • Entertainment content develops as a source of revenue

  • Transformation of marketing: coordinated makreting on social platforms and analytic technologies

Assessing E-Commerce -

 

Many early visions were not fulfilled

• Friction free commerce not fully realized 

• Perfect Competition

• First Mover Advantages

Predictions for the Future of E-Commerce

• Tech will propagate through all commercial activity

• Large, traditional companies play the dominant role

• Integrated online/offline companies will experience more growth than just online companies

• Increased regulation and control

• Cost of energy

E-Commerce Organizing Theme - Technology

digital computing and communications technology is integral to e-commerce

E-Commerce Organizing themes - Business

 new technologies present businesses with new ways of organizing production and transacting business

E-Commerce Organizing themes - Society

e-commerce has raised issues of intellectual property, privacy and public welfare policy

Business Model

set of planned activities designed to result in profit within a marketplace

Business Plan

 describes a firms business model

E-Commerce Business Model

 leverages unqiue qualities of the internet and the web

Value Proposition

• How does the product or service fulfill customer needs?

• E-Commerce Specific value props:

  • Personalization/customization

  • Convenience

  • Price/No shipping cost

  • Quick Delivery

  • Unparalleled Selection

  • Product/service quality

Revenue Model

• How will the company earn money?

  • Advertising Revenue Model - facebook

  • Subscription Revenue model - spotify

  • Transaction Fee revenue model - credit cards, e-bay

  • Sales Revenue Model - Amazon, Retail stores

  • Affiliate Revenue Model - airlines, hotels, car rental

Market Opportunity

• Intended market space of the company

  • Marketspace: area of actual or potential commercial value in which he company intends to operate

  • Realistic Market Opportunity: defined by revenue potential in each market niche in which a company hopes to compete

    • Divided into smaller niches

Competitive Environment

• Who else occupies your intended marketspace?

  • Other companies selling the same product

  • New entrants, substitute products, power of consumers and suppliers

  • Direct and Indirect competitors

• Influenced by

  • Number and size of active competitors

  • Each competitors market share

  • Competitors profitability and pricing

Competitive Advantage

• Special Advantages of a firm: what makes a product superior?

  • Asymmetries exists when there is more reosurces or differential access between firms

  • Factors of production --> unfair competitive advantage

  • Leverage resources to move in other markets

  • Perfect markets - do not allow for competitive advantage (all frims have equal access to the factors of production)

Market Strategy

• How do you plan to promote products/services to attract the target audience?

  • How to enter the market and attract customers

  • Best concepts will fail without proper marketing

Organizational Development

• Types of organizational structures within the firm necessary to carry out the business plan

  • Divide into functional departments or organize around products

  • Hiring moves from generalists to specialists as company grows

Management Team

• What kinds of backgrounds should the company's leaders have?

  • Make business model work and experience implementing business plans

  • Give credibility to outside investors

  • Possess market specific knowledge

Seed Capital

personal funds used to start a business

Incubators

small amount of funding and services to start-ups

Angel Investors

wealthy investors who invest money in exchange for equity in the business

Venture Capital Firms

invest funds they manage for other investors

Crowd funding

using the internet to allow individuals to contribute to new ventures

B2C E-Tailer

• Online version of a traditional retailer

• Revenue Model = sales

• Virtual merchants, catalog merchants, manufacturer direct

• Bricks and clicks(physical storefront and online presence)

• Low barriers to entry 

B2C Community Provider

• Provide online environment where people with similar interests can transact, share content and communicate

• Revenue Models: typically hybrid --> combines advertising, subscription, sales, transaction fees etc.

B2C Content Provider

• Provides digital content on the web (news, music, videos etc.)

• Revenue Models: subscription, pay per download, advertising, affiliate referral

• Syndication: firm does not own the material they just distribute it

• Web Aggregators: aggregate info and add value to it (ex. Priceline, Travelocity)

B2C Portal

• Searching capability plus an integrated package of content and services

• Revenue Models: advertising, referral fees, transaction fees, subscriptions

• Horizontal/General: includes all internet users

• Vertical/Specialized: provides a directory of links to infomration related to a particular indusrty or subject matter

B2C Transaction Broker

• Process Online Transactions for consumers

• Value Prop: saving time and money by enabling online transactions

• Revenue Model: Transaction fees

• Used in financial services, travel and entertainment industry, job placement services

B2C Market Creator

• Create digital environments where buyers and sellers can meet and transact business

• Revenue Model: transaction fees, fees to merchants for access

B2C Service Provider

• Online Services

• Value Prop: valuable, convenient, time saving, low cost alternatives to traditional service providers

• Revenue Models: sales of services, subscription fees, advertising, sale of marketing data 

MRO

• maintenance, repair and operations

  • Supplies consumed in the production process which either do not become part of the end product or are not central to the firm's output

  • Ex: Cleaning supplies, industrial equipment, computers, fixtures

B2B E-Distributor

• Version of retail and wholesale store, MRO goods and indirect goods

• Owned by one comany seeking to serve many customers

  • Revenue Model: sales of goods

B2B E-Procurement

• Creates and sells access to digital markets where participants transact for indirect goods

• Revenue Model: service fees, supply chain management, fulfillment services

B2B Exchanges

• Independently owned vertical digital marketplace where hundreds of suppliers meet a small number of large commercial purchasers

• Revenue Models: transactions, commission fees

• Creates powerful competition between suppliers

• Tends to force suppliers into a powerful price competition - number of exchanges drops

B2B Industry Consortia

• Industry owned digital marketplace open to select suppliers

• More successful than exchanges

  • Sponsored by powerful industry players

  • Strengthen traditional purchasing behaviour

• Revenue Model: transaction, commission fees

B2B Private Industrial Networks

• Digital network used to coordinate among firms engaged in business together

• Owned by a large network firm (ex. Walmart)

• Cost absorbed by network owner and recovered through production and distribution efficiencies

How E-Commerce Influences Business

• Rivalry among existing competitors

• Barriers to entry

• Threat of new substitute products

• Strength of suppliers

• Bargaining power of buyers

Industry Value Chains

• Set of activities performed by suppliers manufacturers, transporters, distributors and retailers that turn raw inputs into final products and services

• Leads to greater operational efficiencies, lowering costs and prices while adding value for customers

• Internet reduces the cost of information and other transactional costs

Firm Value Chains

• Actvities that a firm engages in o create final products from raw inputs

• Each step adds value

• Internet increases operational efficiency and enables production differentiation and coordination of steps in the chain

Firm Value web

• Networked business ecosystem

• Uses internet technology to coordinate the value chains of business partners

• Coordinates a firms suppliers with its own production needs (internet based supply chain management system)

Business Startegy

• Plan for achieving superior long term returns on capital invested - profit

  • Product/service differentiation

  • Cost Competition

  • Scope

  • Focus

  • Customer Intimacy - service supplier or retailer gets close with customers

Woo Commerce

• Plug in that must be installed on the word press host

  • Turns any word press website into a fully functional online store with inventory management, coupons and product page features

Woo Commerce - Pros

• Plug in is free to download

• Connects to all major payment gateways

• Only ahve to add content when using a  woo commerce theme

• Extension library provides even more features

Woo Commerce - cons

• Extra Expenses - hosting, more extensions, domain name

• Several moving parts with activities such as SEO security, hosting and caching

Shopify

• Several ways to sell products online

• Simple to use for beginners

Shopify - Pros

• Quick and easy to get started even without technical knowledge

• Highly Compatible with social media

• Modify the look of your store with free and paid themes 

Shopify - Cons

• Paid service

• Cannot host it on your own server

• Can only point a domain name to your shopify store with secure hosting but not on your own

  • No full control

Web Hosting

a service that makes your website available to users - viewed by anyone on the internet at any time

Basic Web hosting services

24/7 support, 24/7 FTP access, email accounts, online control panel, traffic statistics, database management system

Shared Hosting

• Clients share the web space on the server

• Each user ahs a limit on services such as disk space, monthly traffic, email accounts, FTP accounts etc.

Shared Hosting - Pros

• Low in price

• Suitable for small businesses with average online traffic

• Saves time - web host takes care of maintenance

Shared Hosting - cons

• Limited resources - Bandwidth, Disk space

Virtual Private Server

• Servers are partitioned into server virtual machines

• Provides power and functionality of high end server but at a cheaper price

Virtual Private Server - pros

• Better resoruces than shared hosting

• Full root access to users where users can install custom applications and scripts to run websites (not possible in shared environment)

• More secure and reliable

• Suitable for medium sized websites

Virtual Private Server - cons

• Limited RAM, CPU and Server disk space

• Difficult to manage virtual server during large or unexpected traffic

Dedicated Server

• Your own server not shared with anyone

• Full control over the server, operating system and server

Dedicated Server - pros

• Suitable for websites with large traffic

• User has full control over the resources of the server

• More privacy

Dedicated Server - cons

Very expensive

Cloud Hosting

Scalable platform that allows you to use multiple cloud servers

Cloud Hosting - pros

• Suitable for websites with fluctuating traffic

• High uptime and availability

• Flexibility and scalability

• Performance

• Security

Cloud Hosting - cons

• Cost - hidden charges

• Can be complex