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  1. 1. E-commerce Overview of Electronic Commerce
  2. 2. Learning  Objec-ves   1.  Define  electronic  commerce  (EC)  and   describe  its  various  categories.   2.  Describe  and  discuss  the  content  and   framework  of  EC.   3.  Describe  the  major  types  of  EC  transac-ons.   4.  Discuss  e-­‐commerce  2.0.   5.  Describe  social  commerce  and  social   software.  
  3. 3. Learning  Objec-ves   6.  Understand  the  elements  of  the  digital  world.   7.  Describe  the  drivers  of  EC  as  they  relate  to   business  pressures  and  organizational   responses.   8.  Describe  some  EC  business  models.   9.  Describe  the  benefits  of  EC  to  organizations,   consumers,  and  society.   10. List  and  describe  the  major  limitations  of  EC.  
  4. 4. E-commerce Trends 2011-2012 n Social  networking  con-nues  to  grow   n Expansion  of  social  e-­‐commerce  plaIorm     n Mobile  compu-ng  begins  to  rival  PC   n Localiza-on  of  e-­‐commerce  (Groupon)   n Explosive  growth  in  online  video  viewing   n Con-nued  privacy  and  security  concerns  
  5. 5. The First 30 Seconds n First  16  years  of  e-­‐commerce   v Just  the  beginning   v Rapid  growth  and  change   n Technologies  con-nue  to  evolve  at   exponen-al  rates   v Disrup-ve  business  change   v New  opportuni-es  
  6. 6. What is E-commerce? n Use  of  Internet  and  Web  to  transact  business   n The  process  of  buying,  selling,  or  exchanging   products,  services,  or  informa-on  via   computer  networks   n More  formally:   v Digitally  enabled  commercial  transac-ons  between  and   among  organiza-ons  and  individuals  
  7. 7. E-commerce vs. E-business n E-­‐business:   v A  broader  defini-on  of  EC  that  includes  not  just  the  buying   and  selling  of  goods  and  services,  but  also  servicing   customers,  collabora-ng  with  business  partners,  and   conduc-ng  electronic  transac-ons  within  an  organiza-on   v Digital  enablement  of  transac-ons  and  processes  within  a   firm,  involving  informa-on  systems  under  firm’s  control   v Does  not  include  commercial  transac-ons  involving  an   exchange  of  value  across  organiza-onal  boundaries  
  8. 8. Why Study E-commerce? n E-­‐commerce  technology    is  different,  more   powerful  than  previous  technologies   n E-­‐commerce  bringing  fundamental  changes  to   commerce   n Tradi-onal  commerce:   v Passive  consumer   v Sales-­‐force  driven   v Fixed  prices   v Informa-on  asymmetry  
  9. 9. Pure versus Partial EC n  EC  can  take  several  forms  depending  on  the  degree  of   digi-za-on   1.  the  product  (service)  sold   2.  the  process  (e.g.,  ordering,  payment,  fulfillment)   3.  the  delivery  method   n brick-­‐and-­‐mortar  (old  economy)  organiza-ons    Old-­‐economy  organiza-ons  (corpora-ons)  that   perform  their  primary  business  off-­‐line,  selling   physical  products  by  means  of  physical    agents   n virtual  (pure-­‐play)  organiza-ons    Organiza-ons  that  conduct  their  business  ac-vi-es   solely  online   n click-­‐and-­‐mortar  (click-­‐and-­‐brick)  organiza-ons    Organiza-ons  that  conduct  some  e-­‐commerce   ac-vi-es,  usually  as  an  addi-onal  marke-ng  channel    
  10. 10. Electronic Commerce: Definitions and Concepts n electronic  market  (e-­‐marketplace)    An  online  marketplace  where  buyers  and  sellers   meet  to  exchange  goods,  services,  money,  or   informa-on   n interorganiza3onal  informa3on  systems  (IOSs)    Communica-ons  systems  that  allow  rou-ne   transac-on  processing  and  informa-on  flow   between  two  or  more  organiza-ons   n intraorganiza3onal  informa3on  systems    Communica-on  systems  that  enable  e-­‐commerce   ac-vi-es  to  go  on  within  individual  organiza-ons  
  11. 11. Unique Features of E-commerce Technology 1.  Ubiquity     2.  Global  reach     3.  Universal  standards     4.  Informa-on  richness     5.  Interac-vity     6.  Informa-on  density   7.  Personaliza-on/customiza-on   8.  Social  technology  
  12. 12. The EC Framework, Classification, and Content n intranet    An  internal  corporate  or  government  network   that  uses  Internet  tools,  such  as  Web   browsers,  and  Internet  protocols   n extranet    A  network  that  uses  the  Internet  to  link   mul-ple  intranets  
  13. 13. Types of E-commerce n Classified  by  market  rela-onship   v Business-­‐to-­‐Consumer  (B2C)   v E-­‐commerce  model  in  which  businesses  sell  to  individual  shoppers   v Business-­‐to-­‐Business  (B2B)   v E-­‐commerce  model  in  which  all  of  the  par-cipants  are  businesses   or  other  organiza-ons   v Consumer-­‐to-­‐Consumer  (C2C)   v E-­‐commerce  model  in  which  individuals  use  the  Internet  to  sell   products  or  services  to  organiza-ons  or  individuals  who  seek   sellers  to  bid  on  products  or  services  they  need   n Classified  by  technology  used   v Peer-­‐to-­‐Peer  (P2P)   v Mobile  commerce  (M-­‐commerce)  
  14. 14. Other Types n  loca3on-­‐based  commerce  (l-­‐commerce)   *  targeted  to  individuals  in  specific  loca-ons,  at  specific  -mes   n  intrabusiness  EC   *  internal  organiza-onal  ac-vi-es     n  business-­‐to-­‐employees  (B2E)   *  organiza-on  delivers  services,  informa-on,  or  products  to  its  individual  employees   n  collabora3ve  commerce  (c-­‐commerce)   *  individuals  or  groups  communicate  or  collaborate  online   n  e-­‐learning   *  The  online  delivery  of  informa-on  for  purposes  of  training  or  educa-on   n  e-­‐government   *  a  government  en-ty  buys  or    provides  goods,  services,  or  informa-on  from  or  to   businesses  or  individual  ci-zens   n  Exchange   *  A  public  electronic  market  with  many  buyers  and  sellers  
  15. 15. •  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
  16. 16. The Internet n Worldwide  network  of  computer  networks   built  on  common  standards   n Created  in  late  1960s   n Services  include  the  Web,  e-­‐mail,  file   transfers,  etc.   n Can  measure  growth  by  looking  at  number  of   Internet  hosts  with  domain  names    
  17. 17. The Web n Most  popular  Internet  service   n Developed  in  early  1990s   n Provides  access  to  Web  pages     v HTML  documents  that  may  include  text,  graphics,   anima-ons,  music,  videos   n Web  content  has  grown  exponen-ally   v   Google  indexes  between  75  –  100  billion  pages  
  18. 18. Origins & Growth of E-commerce n Precursors:   v Baxter  Healthcare     v Electronic  Data  Interchange  (EDI)     n 1995:  Beginning  of  e-­‐commerce   v First  sales  of  banner  adver-sements   n E-­‐commerce  fastest  growing  form  of   commerce  in  United  States    
  19. 19. Technology and E-commerce in Perspective n The  Internet  and  Web:  Just  two  of  a  long  list   of  technologies  that  have  greatly  changed   commerce   v Automobiles   v Radio   n E-­‐commerce  growth  will  eventually  cap  as  it   confronts  its  own  fundamental  limita-ons.  
  20. 20. Potential Limitations on the Growth of B2C E-commerce n Expensive  technology     n Sophis-cated  skill  set     n Persistent  cultural  agrac-on  of  physical   markets  and  tradi-onal  shopping  experiences   n Persistent  global  inequality  limi-ng  access  to   telephones  and  computers   n Satura-on  and  ceiling  effects  
  21. 21. E-commerce: A Brief History n 1995-­‐2000:  Innova-on   v Key  concepts  developed   v Dot-­‐coms;  heavy  venture  capital  investment   n 2001-­‐2006:  Consolida-on   v Emphasis  on  business-­‐driven  approach   n 2006-­‐Present:  Reinven-on   v Extension  of  technologies   v New  models  based  on  user-­‐generated  content,  social   networks,  services  
  22. 22. EC Business Models n business  model    A  method  of  doing  business  by  which  a   company  can  generate  revenue  to  sustain   itself  
  23. 23. EC Business Models n  Six  elements  of  a  business  model  include   descrip-ons  of:   1.  Customers  to  be  served  and  the  company’s  rela-onships  with  these   customers  including  customers’  value  proposi2on   2.  All  products  and  services  the  business  will  offer   3.  The  business  process  required  to  make  and  deliver  the  products  and   services   4.  The  resources  required  and  the  iden-fica-on  of  which  ones  are   available,  which  will  be  developed  in  house,  and  which  will  need  to   be  acquired     5.  The  organiza-on’s  supply  chain,  including  suppliers  and  other   business  partners   6.  The  revenues  expected  (revenue  model),  an-cipated  costs,  sources  of   financing,  and  es-mated  profitability  (financial  viability)  
  24. 24. EC Business Models n revenue  model    Descrip-on  of  how  the  company  or  an  EC  project  will  earn  revenue   n The  major  revenue  models  are:   *  Sales     *  Transac-on  fees   *  Subscrip-on  fees   *  Adver-sing  fees   *  Affiliate  fees   *  Other  revenue  sources     n value  proposi3on    The  benefits  a  company  can  derive  from  using  EC    
  25. 25. EC  Business  Models   •  Online  direct  marke-ng     •  Electronic  tendering  systems.   •  Name  your  own  price     •  Find  the  best  price     •  Affiliate  marke-ng   •  Viral  marke-ng   •  Group  purchasing   •  Online  auc-ons   •  Product  and  service   customiza-on   •  Electronic  marketplaces  and   exchanges   •  Informa-on  brokers   (informediaries)   •  Bartering   •  Deep  discoun-ng   •  Membership   •  Value-­‐chain  integrators   •  Value-­‐chain  service  providers   •  Supply  chain  improvers   •  Social  networks,  communi-es,   and  blogging   •  Direct  sale  by  manufacturers   •  Nego-a-on   Typical EC Business Models
  26. 26. EC  Business  Models   n tendering  (bidding)  system    Model  in  which  a  buyer  requests  would-­‐be   sellers  to  submit  bids;  the  lowest  bidder  wins   n 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  
  27. 27. EC  Business  Models   n affiliate  marke3ng    An  arrangement  whereby  a  marke-ng  partner   (a  business,  an  organiza-on,  or  even  an   individual)  refers  consumers  to  the  selling   company’s  Web  site   n viral  marke3ng    Word-­‐of-­‐mouth  marke-ng  in  which  customers   promote  a  product  or  service  to  friends  or   other  people  
  28. 28. EC  Business  Models   n SMEs    Small-­‐to-­‐medium  enterprises   n group  purchasing    Quan-ty  (aggregated)  purchasing  that  enables   groups  of  purchasers  to  obtain  a  discount   price  on  the  products  purchased  
  29. 29. EC  Business  Models   n e-­‐co-­‐ops    Another  name  for  online  group  purchasing   organiza-ons   n customiza3on    Crea-on  of  a  product  or  service  according  to   the  buyer’s  specifica-ons  
  30. 30. Social  and  Business  Networks   n social  networks    Web  sites  that  connect  people  with  specified   interests  by  providing  free    services  such  as   photo  presenta-on,  e-­‐mail,  blogging,  etc.   n Business-­‐oriented  networks  are  social   networks  whose  primary  objec-ve  is  to   facilitate  business  
  31. 31. The  Digital  Enterprise   n corporate  portal    A  major  gateway  through  which  employees,   business  partners,  and  the  public  can  enter  a   corporate  Web  site