E-Commerce: Digital Markets, Digital Goods

E-Commerce Fundamentals

  • E-commerce involves digitally enabled commercial transactions.
  • It began in 1995, grew rapidly, and remains stable.
  • Current trends emphasize social, mobile, and location-based aspects, shifting from desktop to smartphone.

E-Commerce Models

  • Brick-and-mortar: Traditional offline businesses.
  • E-commerce: Businesses with some online activities.
  • Virtual company: Businesses operating solely online (e.g., Uber, Amazon, YouTube).

Key Differences of E-Commerce

  • Ubiquity: Access from anywhere.
  • Global reach: Transactions across borders.
  • Universal standards: Based on Internet standards like TCP/IP.
  • Richness: Supports various media (image, video, audio).
  • Information density: Increased price and cost transparency.
  • Personalization/customization: Tailored messages and recommendations.
  • Social technology: User-generated content and social networking.

Core Concepts

  • Reduced information asymmetry.
  • Lower menu, search, and transaction costs.
  • Dynamic pricing and price discrimination.
  • Disintermediation.

Digital Goods

  • Delivered over digital networks (e.g., audio, video, software).
  • Near-zero cost for additional units.
  • Low distribution costs.

Types of E-Commerce

  • B2C: Business-to-consumer (e.g., Barnes and Noble).
  • B2B/B2G: Business-to-business/government (e.g., General Electric, Sabic).
  • C2C: Consumer-to-consumer (e.g., Haraj, Gathern).
  • M-commerce: Mobile commerce, location-based services.

E-Commerce Business Models

  • Portal, E-tailer, Content provider, Transaction broker, Market creator, Service provider, Community provider.

E-Commerce Revenue Models

  • Advertising, Sales, Subscription, Free/Freemium, Transaction fee, Affiliate.

Social E-Commerce

  • Leverages social networks for marketing.
  • Uses crowdsourcing, influencer marketing, and user-generated content.
  • Includes social shopping sites like TikTok, YouTube, and Instagram Shopping.

Impact on B2B Transactions

  • Use of technologies like Electronic Data Interchange (EDI), private industrial networks, and net marketplaces.

Electronic Data Interchange (EDI)

  • Standard electronic format for replacing paper documents.
  • Used for transactions like RFIs, RFQs, RFPs, purchase orders, and invoices.

Private Industrial Networks

  • Secure websites linking firms to suppliers and partners.
  • Support supply chain management.

Net Marketplaces (e-hubs)

  • Digital marketplaces for multiple buyers and sellers.
  • Focus on direct or indirect goods and can be vertical or horizontal.

M-Commerce

  • Significant portion of e-commerce.
  • Popular among younger generations.
  • Utilizes geosocial, geo advertising, and geo information services.