Lesson 4 -E-Commerce

eCommerce Overview

  • Definition:

    • E-commerce refers to the use of the internet and web to engage in business transactions.

    • It involves digitally enabled commercial transactions between organizations and individuals, encompassing buying/selling goods, transmission of funds or data.

    • Involves various technologies like computers, telephones, and electronic payment systems, facilitating transactions without physical documents.

Unique Features of eCommerce

Ubiquity

  • Definition: Available everywhere via devices like desktops and mobiles.

  • Effects:

    • Removes geographical and temporal limitations, creating a virtual marketplace.

    • Increases customer convenience and reduces shopping costs.

Global Reach

  • Definition: Technology transcends national borders.

  • Effects:

    • Enables commerce across cultural and national boundaries seamlessly.

    • Provides access to billions of consumers and millions of businesses globally.

Universal Standards

  • Definition: Single set of technology standards governs the internet.

  • Effects:

    • Facilitates communication between disparate computer systems.

    • Lowers market entry costs for businesses and search costs for consumers.

Richness

  • Definition: Allows for complex messaging including audio, video, and text.

  • Effects:

    • Enables rich media communication to large audiences.

    • Integrates diverse content into a cohesive marketing message.

Interactivity

  • Definition: Engages users through interaction.

  • Effects:

    • Creates personalized experiences tailored to individual users' preferences.

    • Empowers consumers as co-participants in commerce.

Personalization/Customization

  • Definition: Tailors messages and products to individual users.

  • Effects:

    • Facilitates sending personalized messages and creating customized products.

Social Technology

  • Definition: Encourages user-generated content and social networking.

  • Effects:

    • Fosters new business models supporting content creation and distribution.

Effects of the Internet on the Marketplace

  • Reduces information asymmetry, enhancing negotiation power.

  • Increases efficiency and flexibility through reduced/search and transaction costs, dynamic pricing, etc.

  • Promotes market segmentation and new opportunities for consumers and businesses.

Disintermediation

  • Definition: The removal of intermediaries in the distribution process.

  • Benefits: Lowers final costs for consumers by cutting out distribution layers.

Benefits of eCommerce

  • Availability 24/7.

  • Quick access to services and goods.

  • Wide variety of products available.

  • Eliminates physical storefront needs, increasing international reach.

Downsides of eCommerce

  • Potentially limited customer service.

  • Inability to physically inspect products before purchasing.

  • Shipping times can delay product access.

  • Privacy and security concerns.

eCommerce Technologies and Applications

  • Technologies:

    • Mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, EDI.

  • Applications:

    • Email, online catalogs, shopping carts, web services, etc.

Major Types of eCommerce

  • Business-to-Consumer (B2C): Direct sales to individual consumers.

  • Business-to-Business (B2B): Transactions between businesses.

  • Consumer-to-Consumer (C2C): Individuals selling to other consumers.

  • Mobile Commerce (m-commerce): Transactions conducted via mobile devices.

eCommerce Business Models

  • Portals: Online gateways for users.

  • E-tailers: Direct online retail of physical products.

  • Content Providers: Revenue from digital content delivery.

  • Transaction Brokers: Facilitators of online sales.

  • Market Creators: Digital venues for transactions.

  • Service Providers: Offer web applications and user content.

  • Community Providers: Platforms for like-minded individuals to connect.

eCommerce Revenue Models

  • Advertising Revenue Model: Revenue from ads shown to visitors.

  • Sales Revenue Model: Income from selling goods/services.

  • Subscription Revenue Model: Fees for ongoing access to content/services.

  • Free/Freemium Model: Basic services are free, premium features for a fee.

  • Transaction Fee Revenue Model: Fees for enabling transactions.

  • Affiliate Revenue Model: Earnings for directing traffic to platforms.

Electronic Data Interchange (EDI)

  • Facilitates B2B transactions through standards for electronic document exchange.

  • Streamlines invoice, order processing, and shipment notifications.

Private Industrial Network

  • Secure connections for large firms to suppliers and distributors.

  • Features include:

    • Sharing product designs, marketing strategies, and more.

Net Marketplaces (e-hubs)

  • Online platforms for numerous buyers and sellers.

  • Govern pricing through auctions, negotiations, or fixed prices.

  • Can focus on industry-specific goods or a range of products.

Exchanges

  • Third-party owned marketplaces linking suppliers and buyers.

  • Primarily serve vertical markets.

  • Experienced rapid growth and failures in early eCommerce years.

M-Commerce

  • Defined as buying/selling through mobile devices.

  • Fast-growing sector with significant annual growth rates.

  • Includes location-based services that enhance customer experience through geo-targeted offers.