E-Business and E-Commerce

E-Commerce

  • Definition: E-commerce (electronic commerce) is the buying, selling, transferring, or exchanging of products, services, or information through computer networks, including the internet.

  • Key Features:

    • Expands the reach for companies.

    • Low-cost platform enabling smaller companies and individuals to compete with larger organizations.

  • Impact on Retail:

    • Questions whether e-commerce has negatively affected traditional retail.

    • Statistics: In 2022, total U.S. retail sales were $7.24 trillion, with e-commerce accounting for approximately $1.3 trillion (18%).

Top Worldwide E-Commerce Companies

  • Top Companies Ranking:

    1. Amazon:

    • Revenue: $1,973 Billion

    • Market Cap: Estimated $574.78 billion in U.S. retail sales in 2023

    • Founded: 1995 by Jeff Bezos (originally called Cadabra, Inc.)

    1. JD.com:

    • Revenue: $149.32 Billion

    • Market Cap: $109.62 Billion

    • Country: China

    • Founded: 1998

    1. Alibaba:

    • Revenue: $109.48 Billion

    • Market Cap: $330.67 Billion

    • Country: China

    • Founded: 1999

  • Several other renowned global e-commerce companies include Meituan, eBay, Wayfair, and Shopify with respective revenues and market caps.

E-Commerce Evolution

  • Milestones in E-Commerce:

    • 1990: Boston Computer Exchange becomes the first e-commerce company.

    • 1995: Pizza Hut offers online ordering; Amazon and eBay launch.

    • 2000: Introduction of PayPal.

    • 2007-2010: Launches of Netflix streaming and Uber services.

E-Business

  • Definition: E-business encompasses a broader spectrum of electronic transactions including servicing customers, collaboration with business partners, and internal operations.

  • Physical vs. Virtual Businesses:

    • Brick-and-mortar organizations: Operate strictly in physical space without an e-commerce site (e.g., physical mall stores).

    • Partial EC (Clicks-and-Mortar): Combination of physical and e-commerce operations (e.g., Target, Walmart).

    • Virtual (Pureplay): Entirely online businesses working with digital products and services (e.g., Spotify).

Types of E-Commerce

  1. Business-to-Consumer (B2C): Organizations sell to individual consumers.

  2. Business-to-Business (B2B): Transactions are between organizations.

  3. Consumer-to-Consumer (C2C): Individuals selling to other individuals (e.g., eBay, Facebook Marketplace).

Electronic Payment Mechanisms

  • Electronic payment methods include:

    • Electronic credit cards

    • Digital wallets and mobile payment services (e.g., PayPal, Zelle, Venmo).

FinTech

  • Definition: Financial technologies utilize tech to provide financial services and aim to compete with traditional banks and financial institutions.

  • Top FinTech Companies: Include Greenlight, Robinhood, Affirm, and more.

Issues in E-Commerce

  • Channel Conflict: Conflicts arise when companies sell directly online, potentially undermining traditional retail partners.

  • Order Fulfillment: Challenges related to logistics such as stock management and timely product delivery.

  • Personalized Pricing: The use of big data and customer information to set variable prices aiming at profit maximization.

    • Example: Airlines charging frequent flyers different prices.

Ethical/Legal Issues in E-Business

  • Considerations include privacy concerns, security of online transactions, tracking user data, and the implications of internet access inequity.

Social Computing

  • Definition: Integration of social behavior with information systems to enhance collaborative and communicative values.

  • Web 2.0 Impact: The shift introduces user-generated content and changes interaction models between businesses and consumers, emphasizing platforms like TikTok and Reddit.

Supply Chain Management

  • Definition: The management of the flow of materials and information from suppliers to end customers.

  • Key Segments: Upstream (sourcing), Internal (manufacturing), Downstream (distribution).

  • Challenges: Forecasting demand, managing inventory, and mitigating the bullwhip effect.

  • Technologies Supporting SCM: Include Electronic Data Interchange (EDI), Extranets, and Corporate Portals.

Customer Relationship Management (CRM)

  • Definition: Strategies focused on improving customer experiences and fostering long-term relationships.

  • CRM Functions: Include acquiring new customers, retaining existing ones, and enhancing overall satisfaction through streamlined processes.