e-com

Chapter 1
Overview of Electronic Commerce
Learning Objectives
Define electronic commerce (EC) and describe its various categories.
Describe and discuss the content and framework of EC.
Describe the major types of EC transactions.
Describe the digital revolution as a driver of EC.
Describe the business environment as a driver of EC.
Learning Objectives
Describe some EC business models.
Describe the benefits of EC to organizations, consumers, and society.
Describe the limitations of EC.
Describe the contribution of EC to organizations responding to environmental pressures.
Describe online social and business networks.
Electronic Commerce: Definitions and Concepts
electronic commerce (EC)
The process of
buying, selling, or exchanging
products, services, or information
via computer networks

Electronic Commerce: Definitions and Concepts
The Internet has emerged as a major, perhaps eventually the major, worldwide distribution channel for goods, services, managerial and professional jobs
This is profoundly changing economics, markets and industry structure, products and services and their flow, consumer segmentation, consumer values, consumer behavior, jobs, and labor markets
The impact may be even greater on societies and politics, and on the way we see the world and ourselves in it
Electronic Commerce: Definitions and Concepts
EC can be defined from these perspectives:
Business process
Service
Learning
Collaboration
Community

Electronic Commerce: Definitions and Concepts
e-business
A broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization
Electronic Commerce: Definitions and Concepts
Pure versus Partial EC
EC can take several forms depending on the degree of digitization
the product (service) sold
the process (e.g., ordering, payment, fulfillment)
the delivery method
Electronic Commerce: Definitions and Concepts
Electronic Commerce: Definitions and Concepts
brick-and-mortar (old economy) organizations
Old-economy organizations (corporations) that perform their primary business off-line, selling physical products by means of physical agents
virtual (pure-play) organizations
Organizations that conduct their business activities solely online
Electronic Commerce: Definitions and Concepts
click-and-mortar (click-and-brick) organizations
Organizations that conduct some e-commerce activities, usually as an additional marketing channel

Brick&Mortar, Click&Mortar or Virtual/Pureplay EC?
www.amazon.com
www.mph.com
www.ebay.com



Traditional Commerce, Partial EC or Pure EC?
Buying physical book from Popular bookstore in Sunway Lagoon Shopping Ctr
Buying physical book from Amazon.com
Buying digital book from Amazon.com
Buying PC from Dell.com
Electronic Commerce: Definitions and Concepts
Internet versus Non-Internet EC
Most EC is done over the Internet, but EC also can be conducted on private networks, such as value-added networks, local area networks, or on a single computerized machine
Non-Internet EC includes the use of mobile handwriting-recognition computers used by field reps to write their notes in the field
Electronic Commerce: Definitions and Concepts
electronic market (e-marketplace)
An online marketplace where buyers and sellers meet to exchange goods, services, money, or information

What is a marketplace?
Electronic Commerce: Definitions and Concepts
interorganizational information systems (IOSs)
Communications systems that allow routine transaction processing and information flow between two or more organizations
intraorganizational information systems
Communication systems that enable e-commerce activities to go on within individual organizations
Selling MMU souvenirs online to MMU Students & Staff
Selling Telecom products to MMU and other Telecom-related subsidiaries
The EC Framework, Classification, and Content
intranet
An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols
extranet
A network that uses the Internet to link multiple intranets
The EC Framework, Classification, and Content
The EC Framework, Classification, and Content
EC applications are supported by infrastructure and by these five support areas:
People
Public policy
Marketing and advertisement
Support services
Business partnerships
The EC Framework, Classification, and Content
Classification of EC by the Nature of the Transactions or Interactions
business-to-business (B2B)
E-commerce model in which all of the participants are businesses or other organizations
The EC Framework, Classification, and Content
business-to-consumer (B2C)
E-commerce model in which businesses sell to individual shoppers
e-tailing
Online retailing, usually B2C
business-to-business-to-consumer (B2B2C)
E-commerce model in which a business provides some product or service to a client business that maintains its own customers
The EC Framework, Classification, and Content
consumer-to-business (C2B)
E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they need
mobile commerce (m-commerce)
E-commerce transactions and activities conducted in a wireless environment
The EC Framework, Classification, and Content
location-based commerce (l-commerce)
M-commerce transactions targeted to individuals in specific locations, at specific times
intrabusiness EC
E-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
The EC Framework, Classification, and Content
business-to-employees (B2E)
E-commerce model in which an organization delivers services, information, or products to its individual employees
collaborative commerce (c-commerce)
E-commerce model in which individuals or groups communicate or collaborate online
consumer-to-consumer (C2C)
E-commerce model in which consumers sell directly to other consumers
The EC Framework, Classification, and Content
peer-to-peer (P2P)
Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce
e-learning
The online delivery of information for purposes of training or education
e-government
E-commerce model in which a government entity buys or provides goods, services, or information from or to businesses or individual citizens
The EC Framework, Classification, and Content
exchange
A public electronic market with many buyers and sellers
exchange-to-exchange (E2E)
E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information
B-C, B-B, B-B-C, C-C, C-B?
Amazon.com - and
Dell.com - and
Godiva.Com- and and
Priceline.com – and
Ebay.com- and and

The EC Framework, Classification, and Content
The Interdisciplinary Nature of EC
Early Years ….90s…Yahoo, Amazon, AOL
The Google Revolution
1999 onwards …..EC Failures e.g. eToys, Webvan.com, Ford Motors…
2002 onwards …EC Successes e.g. Bay, Wal-Mart online, FacetoFace, Campusfood.com, Alibaba.com

The EC Framework, Classification, and Content
The Future of EC
Web 2.0
The second-generation of Internet-based services that let people collaborate and share information online in perceived new ways—such as social networking sites, wikis, communication tools, and folksonomies
The EC Framework, Classification, and Content
The EC Framework, Classification, and Content
Digital Revolution Drives EC
digital economy
An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy
What other economies are there?
Digital Revolution Drives EC
Business Environment Drives EC
The Business Environment
The business environment impact model
Business pressures
Organizational response strategies
Business Environment Drives EC
Business Environment Drives EC

Suppose you dream of a FANTASTIC Business idea that can help society and generate lots of $$$, how do you go about convincing the bankers to lend you the $ to start the business?
EC Business Models
business model
A method of doing business by which a company can generate revenue to sustain itself
Business Model subset of Business Plan/ Business Case

Six elements of a business model include descriptions of:
Customers to be served and the company’s relationships with these customers including customers’ value proposition
All products and services the business will offer
The business process required to make and deliver the products and services
The resources required and the identification of which ones are available, which will be developed in house, and which will need to be acquired
The organization’s supply chain, including suppliers and other business partners
The revenues expected (revenue model), anticipated costs, sources of financing, and estimated profitability (financial viability)
EC Business Models
revenue model
Description of how the company or an EC project will earn revenue
value proposition
The benefits a company can derive from using EC
EC Business Models
The major revenue models are:
Sales
Transaction fees
Subscription fees
Advertising fees
Affiliate fees
Other revenue sources


EC Business Models
Functions of a Business Model
Articulate a customer value proposition
Identify a market segment
Define the venture’s specific value chain structure
Estimate the cost structure and profit potential
Describe the venture’s positioning within the value network linking suppliers and customers
Formulate the venture’s competitive strategy

EC Business Models
Online direct marketing
Electronic tendering systems.
Name your own price
Find the best price
Affiliate marketing
Viral marketing
Group purchasing
Online auctions
Product and service customization
Electronic marketplaces and exchanges
Information brokers (informediaries)
Bartering
Deep discounting
Membership
Value-chain integrators
Value-chain service providers
Supply chain improvers
Social networks, communities, and blogging
Direct sale by manufacturers
Negotiation
EC Business Models
tendering (bidding) system
Model in which a buyer requests would-be sellers to submit bids; the lowest bidder wins
name-your-own-price model
Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price
EC Business Models
affiliate marketing
An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site
viral marketing
Word-of-mouth marketing in which customers promote a product or service to friends or other people
EC Business Models
SMEs
Small-to-medium enterprises
group purchasing
Quantity (aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased

EC Business Models
e-co-ops
Another name for online group purchasing organizations
customization
Creation of a product or service according to the buyer’s specifications
Benefits and Limitations of EC
Benefits to
Organizations
Consumers
Society
Limitations
Technological
Nontechnological
Social and Business Networks
social networks
Web sites that connect people with specified interests by providing free services such as photo presentation, e-mail, blogging, etc.
Business-oriented networks are social networks whose primary objective is to facilitate business
The Digital Enterprise
digital enterprise
A new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: reach and engage customers more effectively, boost employee productivity, and improve operating efficiency. It uses converged communication and computing technology in a way that improves business processes
The Digital Enterprise
corporate portal
A major gateway through which employees, business partners, and the public can enter a corporate Web site


Managerial Issues
Is it real?
Why is B2B e-commerce so attractive?
There are so many EC failures—how can one avoid them?
How do we transform our organization into a digital one?

Managerial Issues
How should we evaluate the magnitude of business pressures and technological advancement?
How can we exploit social/business networking?
What should be my company’s strategy toward EC?
What are the top challenges of EC?