e-commerce: the revolution is just beginning. topic objectives at the end of this topic, you should...
TRANSCRIPT
E-Commerce:The Revolution is Just
Beginning
Topic Objectives
At the end of this topic, you should be able to do the following:
Define e-commerce and describe how it differs from e-business
Describe the unique features of e-commerce technology and how they are relevant to business
Describe the major types of e-commerce and explain how they differ from each other
What is E-Commerce Definition of E-Commerce
The use of the Internet and the Web to carry out business transactions digitally
Key words“digitally enabled transactions”
• Business transactions carried out digitally“commercial transactions”
• Involve the exchange of value (such as money) across organizational boundaries in return for products and/or services
• Note: without exchange of value, commerce do not occur
What is E-Business E-Business
Digitally enablement of transactions and processes within a firm, involving information systems under the control of the firm
E-business turns into e-commerce when an exchange of value occurs
Example:• Online inventory management system
Key word “within a firm”• Does not involve commercial transactions outside
businesses or consumers
Pure verses Partial EC
Degree of digitizationDimension Digital Physical
Product sold Software, music, electronic Magazine
Books, flowers
Delivery Process
Through the internet Courier, postal, truck
Agent Non-significant physical presence, location
Brick and mortar, physical retail outlet
Choi, et al., 1997
Paradigm Shift Traditional brick and mortar
Mass-marketing Sales force driven process Customers as passive targets of advertisement
campaigns and branding blitz Customers trapped by social and geographical
boundaries Businesses create profits through information
asymmetry• information asymmetry occurs when the seller has
more relevant market information than the buyer in a transaction. This will allow the seller to take advantage of the buyer.
Unique Features of E-Commerce The seven unique features of e-
commerce technology Ubiquity (ubiquitous) Global reach Universal standards Richness Interactivity Information density Personalization / customization
Unique Features of E-Commerce Ubiquity
Commerce is available just about everywhere, at all times
It liberates the market from being restricted to a physical space (e.g. m-commerce)
Marketspace (instead of marketplace)• Reduces limitations of temporal (time) and geographical
locations (place) Reduces transaction costs
• Examples of transaction costs are telephone calls, filling up forms, filing, searching for information, recording relevant information of transactions
Reduces cognitive energy (mental effort) to transact
Unique Features of E-Commerce Global reach
Permits commercial transactions to cross cultural and national boundaries far more convenient and cost effectively than in the past
Increases the potential market size Reach
• A measure of the number of users or potential customers an e-business can obtain
Television and newspapers can reach a specific region, and at best one whole country
Unique Features of E-Commerce Universal standards
Strength of e-commerce technologies is that it employ universal standards
• Easily and readily adopted by most countries in the world
Not true with telephones, radio and television
• Television signals, for example, are different between some countries
Unique Features of E-Commerce
Richness Richness refers to the complexity and content
of a message Traditional markets
• Provide personal, face-to-face services using aural and visual cues
Challenge of e-commerce is to find ways to overcome lack of richness when communicating with customers
• The Web, multimedia technology and interactive nature of web sites have improved the richness of communication in business transactions
• What it lacks in richness is compensated with reach
Unique Features of E-Commerce Interactivity
Technology allows for two-way communication between seller and consumer
Television, radio and newspaper do not offer interactivity like the Web
Unique Features of E-Commerce Information density
Reduce cost of• Information collection, storage, processing and
communications Increases the currency, accuracy and timeliness of
information Prices and costs become more transparent
Price transparency refers to the ability of customers to find out the variety of prices in the market
Cost transparency refers to the ability of customers to find out the cost sellers pay for products
Unique Features of E-Commerce
Information density The more sellers know about customers, the
better able for them to implement price discrimination
Price discrimination takes place when a seller sells products or services at different prices to different buyers (depending on the buyers’ willingness to pay)
Unique Features of E-Commerce Personalization
Target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases
Customization Design and produce the delivered
products or services based on the buyer’s preferences or prior behaviour
Types of E-Commerce
Type Name Description
B-2-C Business to Consumers
Online businesses selling to individual consumers
B-2-B Business to Business Online businesses selling to other businesses
C-2-C Consumer-to-consumer Consumers selling to other consumers
P-2-P Peer-to-peer Use of peer to peer technology, which enables Internet users to share files
M-Commerce Mobile commerce Use of wireless digital devices to enable transactions on the Web
Comparing E-Commerce I and II
E-Commerce I (1995-2000)
E-Commerce II(2000 onwards)
Technology driven Business driven
Revenue growth emphasis Earnings and profits emphasis
Venture capital financing Traditional financing
Ungoverned Stronger regulation and governance
Entrepreneurial Large traditional firms
Disintermediation Strengthening intermediaries
Perfect markets Imperfect markets, brands, network effects
Pure online strategies Mixed “click and bricks” strategies
First movers strategies Strategic follower strength