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E-Commerce Lecture Notes

Chapter 9: E-Commerce

Overview of E-Commerce

  • E-commerce Definition: The process of conducting business activities electronically over computer networks.

  • Impact of E-commerce: Transformed multiple areas of life and careers, fundamentally changing the way organizations interact.

  • Current Trends: Most organizations have established a presence on the Internet for business.

E-Commerce Categories

  • Categories of E-commerce:

    • Business-to-Business (B2B)

    • Business-to-Consumer (B2C)

    • Consumer-to-Consumer (C2C)

    • Mobile Commerce (m-commerce)

  • Benefits and Limitations:

    • Benefits of m-commerce: Smartphone Internet access.

    • Limitations of m-commerce: Small display space.

Business-to-Business (B2B)

  • Definition: B2B is a subset of e-commerce where all participants are organizations.

  • Purpose: Facilitates connections between business partners in a virtual supply chain to accelerate resupply times and minimize costs.

  • Usage: Organizations utilize both:

    • Buy-side E-commerce: Purchasing goods and services from suppliers.

    • Sell-side E-commerce: Selling products to customers.

Business-to-Consumer (B2C)

  • Definition: In B2C e-commerce, customers transact directly with an organization.

  • Advantages:

    • Elimination of middlemen for producers and providers of consumer products.

    • Growth due to factors like cheaper goods and easier online personalization of products.

    • Utilization of social media networks for product promotion and customer outreach.

Consumer-to-Consumer (C2C)

  • Definition: Involves electronic transactions between consumers, facilitated by third-party platforms.

  • Popular Platforms: Examples include eBay, eBid, Etsy, Fiverr, Kijiji, Facebook Marketplace, Taobao.

  • Cautions: Participants must abide by various legal jurisdictions to avoid violations.

Comparison of E-Commerce Models

  • Factors:

    • B2B:

    • Days to months for sales processes.

    • Typically higher value sales (thousands/millions).

    • Many decision-makers involved.

    • Complex negotiation processes.

    • B2C:

    • Days to weeks for sales processes.

    • Lower value sales (tens to hundreds of dollars).

    • Typically one or two decision-makers.

    • Simpler transaction processes.

    • C2C:

    • Hours to days for sales processes.

    • Lower value sales (tens of dollars).

    • Driven by individual consumer needs.

    • Minimal negotiation.

E-Government

  • Definition: Utilization of information and communications technology to facilitate governmental functions.

  • Objectives:

    • Simplification of information sharing.

    • Acceleration of previously paper-based processes.

    • Enhancement of relationships between citizens and government.

  • Forms of E-Government:

    • Government-to-Consumer (G2C)

    • Government-to-Business (G2B)

    • Government-to-Government (G2G)

Mobile Commerce (m-commerce)

  • Strategy Shifts: Although concepts remain consistent, tactics must adapt to mobile environments.

  • Characteristics: Mobile commerce (m-commerce) is defined as using wireless devices (like smartphones and tablets) for conducting transactions.

Key Statistics on Mobile Commerce

  • Market Impact:

    • 72.9% of global e-commerce sales were from mobile devices in 2021, anticipated to reach $4.5 trillion by 2025.

    • By 2024, 44% of U.S. e-commerce sales expected to originate from mobile devices.

    • 79% of smartphone users made at least one purchase on their devices in 2023.

    • 85% of consumers show a preference for mobile apps over websites for shopping.

    • Mobile conversion rates average 1.5%, compared to 3.5% on desktop.

    • Social media, especially platforms like Instagram and TikTok, drives m-commerce growth.

    • 50% of mobile transactions in 2023 utilized digital wallets (e.g., Apple Pay).

Multi-Stage Model for E-Commerce

  • Stages in Sales Life Cycle:

    • Search and identification

    • Selection and negotiation

    • Electronic purchase of products and services

    • Delivery of products and services

    • After-sales service

Challenges of E-Commerce

  • Privacy Concerns: Approximately one-third of adult Internet users abstain from online shopping due to privacy issues.

  • Trust Issues: Online marketers must design specific strategies to build trust on their websites.

  • Global Challenges: Include cultural differences, language barriers, timing issues, infrastructure variances, currency exchange rates, and legal constraints.

Strategies for Successful E-Commerce

  • Website Characteristics:

    • User-friendly design

    • Ability to fulfill company goals

    • Security and safety measures

    • Cost-effectiveness regarding setup and maintenance

Components of Effective E-Commerce

  • Key Decisions: Choosing the specific e-commerce model to implement is a fundamental challenge.

  • Three Essential Components:

    • Community: Engaging audience.

    • Content: Valuable and relevant information.

    • Commerce: The buying and selling activities.

Website Development for E-Commerce

  • Task Identification: Define objectives for the website.

  • User Experience: Create an attractive and navigable site that meets user needs.

  • Adaptability: Continuously refine and improve the website based on feedback and analytics.

Website Hosting Considerations

  • Web Page Setup: Quick establishment of an e-commerce website with minimal upfront costs through hosting companies.

  • Storefront Broker: Acts as an intermediary between individual websites and various online merchants with retail expertise.

Driving Traffic to the Website

  • Domain Name: Register a memorable and relevant domain name.

  • Search Engine Optimization: Make the site search-engine friendly.

  • Resources and Analytics: Utilize website traffic analysis tools and engage in regular content updates.

  • Paid Advertisement: Consider using paid inclusions to boost visibility in search engine results.

Website Personalization Techniques

  • Definition of Personalization: Tailoring website content to meet the specific needs of individual consumers.

  • Types:

    • Implicit Personalization: Data gathered from a user's online session.

    • Explicit Personalization: Data provided directly by the user.

  • Consequences of Poor Performance: Inefficient websites lead to consumer abandonment due to slow response times and poor customer support.

Infrastructure to Support E-Commerce

  • Web Server Capacity: Critical factors include server software, transaction volume, and scalability.

  • Scalability: Successful e-commerce solutions must be able to expand according to unexpected traffic increases.

  • Hosting Decisions: Choosing between self-hosting or using a third-party web service provider.

Web Server Software Functions

  • Core Services:

    • Security and identification protocols.

    • Retrieving and serving web pages.

    • Website tracking and data collection.

    • Development support for websites.

E-Commerce Software Needs

  • Essential Tasks:

    • Catalog management

    • Product configuration functionalities

    • Shopping cart services

    • E-commerce transaction processing systems

    • Web traffic data analysis capabilities

Electronic Payment Systems

  • Authentication Technologies: Used to verify user identities when accessing platforms.

  • Digital Certificate: Acts as verification of sender identity in communications (e.g. emails and websites).

    • Certificate Authority (CA): A trusted organization that issues digital certificates.

  • Security Measures for Credit Cards:

    • Address Verification System (AVS): Confirms address consistency.

    • Card Verification Number (CVN): A security check linked to additional digits on the card's back.

Advanced Electronic Payment Systems

  • Transport Layer Security (TLS): A protocol ensuring secure privacy in Internet communications.

  • Electronic Cash: Denotes computerized money utilized in e-commerce.

  • Card Utilization: Many consumers prefer credit, charge, and debit cards for online transactions.