E-Commerce and Digital Business

E-Commerce Definition

• E-Commerce is the use of the Internet, Web, and mobile apps and browsers to transact business
• It involves digitally enabled commercial transactions between and among organizations and individuals

Key E-Commerce Concepts

• E-Business: the digital enabling of transactions and processes within a firm, involving information systems under the control of the firm
• Mobile Platform: a platform that provides the ability to access the Internet from a variety of mobile devices such as smartphones and tablets
• Personalization: targeting of marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases
• Customization: changing the delivered product or service based on a user’s preferences or prior behavior

E-Commerce Types

• Business-to-Consumer (B2C) E-Commerce: online businesses selling to individual consumers
• Business-to-Business (B2B) E-Commerce: online businesses selling to other businesses
• Consumer-to-Consumer (C2C) E-Commerce: consumers selling to other consumers
• Mobile E-Commerce (m-Commerce): use of mobile devices to enable online transactions
• Social E-Commerce: E-Commerce enabled by social networks and online social relationships
• Local E-Commerce: E-commerce that is focused on engaging the consumer based on his or her current geographic location

E-Commerce Benefits

• Disintermediation: displacement of market middlemen who traditionally are intermediaries between producers and consumers by a new direct relationship between producers and consumers
• Friction-Free Commerce: a vision of commerce in which information is equally distributed, transaction costs are low, prices can be dynamically adjusted to reflect actual demand, intermediaries decline, and unfair competitive advantages are eliminated

Web 2.0 and Business Models

• Web 2.0: a set of applications and technologies that enable user-generated content
• Business Model: a set of planned activities designed to result in a profit in a marketplace
• E-Commerce Business Model: a business model that aims to use and leverage the unique qualities of the Internet, the Web, and the mobile platform
• Value Proposition: defines how a company’s product or service fulfills the needs of customers
• Revenue Model: describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital

Revenue Models

• Advertising Revenue Model: a company provides a forum for advertisements and receives fees from advertisers
• Subscription Revenue Model: a company offers its users content or services and charges a subscription fee for access to some or all of its offerings
• Freemium Strategy: companies give away a certain level of product or services for free, but then charge a subscription fee for premium levels of the product or service
• Transaction Fee Revenue Model: a company receives a fee for enabling or executing a transaction
• Sales Revenue Model: a company derives revenue by selling goods, information, or services