Strategic Challenges in Online Business

Questions and Answers

What is the primary distinction between e-business and e-commerce?

E-business only includes digital marketing, while e-commerce covers sales and logistics.

E-business involves all aspects of running a business online, while e-commerce focuses solely on online transactions. (correct)

E-business is exclusive to retail operations, while e-commerce includes various services.

E-commerce encompasses both online transactions and customer interactions, whereas e-business is limited to purchasing activities.

Which of the following is considered an advantage of e-commerce?

Restricted customer reach to local markets.

Dependency on physical store locations.

Lower overhead costs compared to traditional businesses. (correct)

Lack of competition in the online market.

What is a significant disadvantage of e-commerce?

High customer acquisition costs. (correct)

Limitless scalability for all businesses.

Increased transparency in pricing across platforms.

No requirements for digital infrastructure.

In the context of e-commerce, which model describes selling directly to consumers?

Business-to-Consumer (B2C) Signup and view all the answers

Which technology is discussed in relation to enhancing e-commerce?

Blockchain technology Signup and view all the answers

What is social commerce primarily associated with?

Selling products directly through social media platforms Signup and view all the answers

What is a major trend shaping the future of e-commerce?

Increase in mobile commerce transactions. Signup and view all the answers

Why must corporate strategy align with e-commerce strategy?

To take advantage of digital opportunities effectively. Signup and view all the answers

What is a primary risk associated with sharply changing demand in online businesses?

Demand Risk Signup and view all the answers

Which type of e-commerce involves a consumer selling their services to a business?

Consumer to Business (C2B) Signup and view all the answers

What defines a pure-play business?

A business with no physical storefront Signup and view all the answers

What is the fastest growing segment in e-commerce according to the provided information?

Mobile e-commerce (m-commerce) Signup and view all the answers

What strategic challenge involves the failure to adapt and innovate to stay competitive?

Innovation Risk Signup and view all the answers

Which type of e-commerce is characterized by transactions involving the government?

Business to Government (B2G) Signup and view all the answers

Which of the following is NOT a type of e-commerce as defined?

Corporate to Consumer Signup and view all the answers

What describes the inefficiency risk in online businesses?

The inability to leverage internet for cost reduction Signup and view all the answers

What is the largest form of e-commerce, predominantly involving business transactions?

Business to Business (B2B) Signup and view all the answers

What is the primary purpose of e-business?

To enhance communications and transactions with stakeholders Signup and view all the answers

Which option represents a Consumer to Consumer (C2C) platform?

eBay Signup and view all the answers

Which component is NOT part of e-business?

Marketing strategies Signup and view all the answers

How did e-commerce change during the COVID-19 pandemic in Canada?

E-commerce sales nearly doubled Signup and view all the answers

Which statement correctly differentiates e-business from e-commerce?

E-business refers to all aspects of operating an online business, while e-commerce is limited to the transaction of goods and services. Signup and view all the answers

What was the first item ever sold online?

A CD by Sting Signup and view all the answers

What was a common adaptation businesses made during the pandemic in response to e-commerce demands?

Increasing their web presence for online selling Signup and view all the answers

Which stakeholder is NOT typically included in e-business interactions?

Competitors Signup and view all the answers

Which of the following activities is considered e-commerce?

Selling products via a website Signup and view all the answers

What was the impact of the COVID-19 pandemic on total retail sales versus e-commerce sales in Canada?

Total retail sales declined by 18%, while e-commerce sales nearly doubled. Signup and view all the answers

What does e-business include when referring to stakeholder interactions?

All stakeholder communications and transactions Signup and view all the answers

What is a significant reason for the growth of m-commerce?

Increased accessibility with broadband technology Signup and view all the answers

Which of the following describes a benefit of mobile devices compared to computers?

Mobile devices provide access to multiple services in one device Signup and view all the answers

What barrier to e-commerce does mobile payment address?

Security concerns around online payments Signup and view all the answers

How does m-commerce enhance customer satisfaction?

By offering instant purchases and convenience Signup and view all the answers

What characterizes the retail model of e-commerce?

Sales occur without any intermediaries Signup and view all the answers

Which of the following is an example of peer-to-peer (P2P) e-commerce?

Etsy Signup and view all the answers

What enables easy access to rich content on mobile devices?

Advances in mobile processing power Signup and view all the answers

What is a significant reason customers may avoid online shopping?

Concerns about security and privacy Signup and view all the answers

What is the primary use of crowdfunding in e-commerce?

To collect money for future product launches Signup and view all the answers

What aspect of m-commerce makes it more accessible than traditional e-commerce?

Mobile devices require less technical skill to navigate Signup and view all the answers

How can businesses most effectively build customer trust online?

By ensuring high-quality website presentation Signup and view all the answers

Which factor is essential for a product to be considered information-intense?

Requires considerable information for description Signup and view all the answers

Which of the following is NOT a characteristic of m-commerce?

Only utilizes high-end smartphones Signup and view all the answers

What is the potential economic impact of fake reviews on global online spending?

$152 billion Signup and view all the answers

What problem may arise from inadequate product descriptions on an online platform?

Customer dissatisfaction with the product Signup and view all the answers

Why might businesses be at risk if they do not maintain an online presence?

Potential customers may choose competitors with online access Signup and view all the answers

What technological issue can affect customers' online shopping experience?

Insufficient bandwidth Signup and view all the answers

What should retailers focus on to ensure product expectations are met?

High-quality images and clear descriptions Signup and view all the answers

Which of the following best describes trust in the online business environment?

Built over time through consistent quality and interaction Signup and view all the answers

Which approach is NOT effective in removing fake reviews?

Automatically approving all reviews Signup and view all the answers

What is a primary function of a mobile wallet?

To facilitate contactless payments Signup and view all the answers

How does blockchain primarily operate?

As a peer-to-peer network Signup and view all the answers

What is a potential drawback of using mobile wallets?

Risk of consumer credit information theft Signup and view all the answers

Which entity traditionally governs financial transactions?

Government-controlled organizations Signup and view all the answers

What is one of the benefits of using Bitcoin?

It allows lower fees compared to traditional banking Signup and view all the answers

What does a smart contract enable in the context of business transactions?

Automatic execution of payment upon conditions being met Signup and view all the answers

What is a common concern regarding the adoption of blockchain technology?

Widespread acceptance may take many years Signup and view all the answers

Which of the following is NOT an example of a mobile wallet?

eBay Payments Signup and view all the answers

In what way does Bitcoin differ from traditional currency?

It operates without any central authority Signup and view all the answers

What does blockchain technology aim to remove from transactions?

Intermediaries like bankers and brokers Signup and view all the answers

What is a significant concern when choosing third-party hosting for a website?

Accumulating service fees. Signup and view all the answers

Which service does hiring a full-service web developer provide?

Design, programming, and support. Signup and view all the answers

What is the primary goal of Search Engine Optimization (SEO)?

To enhance organic search visibility. Signup and view all the answers

What payment method is considered the most popular for online transactions?

Credit cards. Signup and view all the answers

Which of the following is true about e-transfers in Canada?

A security question can enhance transaction security. Signup and view all the answers

What does Search Engine Marketing (SEM) involve?

Both SEO and paid advertising. Signup and view all the answers

What is required to register for PayPal?

An email address. Signup and view all the answers

Which factor contributes to the ultimate cost of building a website?

The size and complexity of the project. Signup and view all the answers

Why is it important for merchants to offer multiple payment methods?

To ensure customers complete their purchases. Signup and view all the answers

What strategy is NOT part of SEO?

Using social media marketing exclusively. Signup and view all the answers

What is a key advantage of using Bitcoin for transactions compared to traditional payment methods?

It can be used globally without currency conversion. Signup and view all the answers

What is a disadvantage of using Bitcoin compared to traditional banking systems?

The system is considered experimental. Signup and view all the answers

How are transaction fees structured in the Bitcoin network?

Dependent on the number of confirmations requested. Signup and view all the answers

What is the primary focus of the NALA firm in Tanzania?

To provide low-cost transactions through cryptocurrency. Signup and view all the answers

Which statement is true about Bitcoin transactions compared to PayPal?

Transactions are irreversible once confirmed. Signup and view all the answers

What percentage of Tanzania’s population reportedly does not have a bank account?

70% Signup and view all the answers

What makes receiving Bitcoin transactions unique in terms of fees?

No fees are associated with receiving Bitcoins. Signup and view all the answers

What is a significant advantage of having an online presence for a business?

Potential to serve customers globally Signup and view all the answers

How does the speed of Bitcoin transaction confirmations compare to other payment methods?

Bitcoin transactions average 10 minutes for confirmation. Signup and view all the answers

How does e-commerce improve efficiency in business operations?

Through online ordering and reduced order errors Signup and view all the answers

What is a significant social factor affecting online purchasing behavior?

Social networks provide user data. Signup and view all the answers

Which of the following is NOT an advantage of e-commerce?

Limited product offerings due to space constraints Signup and view all the answers

What is the term used to describe the elimination of intermediaries in e-commerce?

Disintermediation Signup and view all the answers

What is a potential risk associated with using Bitcoin as a payment method?

It is still considered experimental. Signup and view all the answers

How does customer feedback contribute to online businesses?

It provides valuable data for improving products and services Signup and view all the answers

What aspect of e-commerce allows businesses to operate without added labor costs?

24/7 online operations and automation Signup and view all the answers

Which of the following best describes a disadvantage of e-commerce?

Potential loss of personal customer interaction Signup and view all the answers

What allows online businesses to track customer habits effectively?

Digital interaction data collected through websites Signup and view all the answers

Which of these options is a characteristic of e-commerce that enhances customer service?

Use of chatbots for customer queries Signup and view all the answers

What is one way e-commerce can lead to cost reduction for businesses?

Saving on infrastructure costs associated with physical stores Signup and view all the answers

What does the term New Retail refer to?

An integrated system that combines offline, online, logistics, and data. Signup and view all the answers

What primary challenge do firms face with social media?

Addressing cybersecurity and data privacy challenges. Signup and view all the answers

What can be a key benefit of using social media data for marketers?

Improved ability to deliver targeted messages. Signup and view all the answers

Which of the following best describes e-business?

A broad term encompassing various online and offline processes. Signup and view all the answers

What is a significant feature of e-commerce platforms?

They can facilitate a range of business models. Signup and view all the answers

Which type of e-commerce involves transactions between consumers?

C2C Signup and view all the answers

What emerging trend represents a seamless shopping experience regardless of the medium?

New Retail model integrating online and offline. Signup and view all the answers

In what way has social media changed consumer behavior?

Consumers provide a wealth of information that aids targeted marketing. Signup and view all the answers

How can firms effectively manage consumer perceptions on social media?

Through consistent monitoring and engagement. Signup and view all the answers

What is the role of data in modern e-commerce strategies?

Data helps in understanding consumer preferences and enhancing offerings. Signup and view all the answers

What is a significant benefit of social commerce compared to traditional e-commerce?

Audience growth through social media Signup and view all the answers

How does social media impact search engine ranking for businesses?

By increasing engagement and traffic to the website Signup and view all the answers

Which aspect of social media engagement is essential for building customer loyalty?

Two-way communication with customers Signup and view all the answers

What is a primary benefit of using a Mobile Wallet for transactions?

It provides a contactless payment method for convenience. Signup and view all the answers

What is an analytical advantage of using social media for commerce?

Real-time tracking of conversions Signup and view all the answers

Why is authentic engagement considered a significant benefit of social commerce?

It fosters deeper branding opportunities Signup and view all the answers

Which characteristic best describes New Retail as defined by Jack Ma?

A model that merges offline and online experiences to improve customer service. Signup and view all the answers

Which of the following options best describes social commerce?

Utilizing social networks for promoting goods and services Signup and view all the answers

What is a concern associated with the use of Bitcoin as a form of payment?

It can lead to fluctuations in value, affecting purchases. Signup and view all the answers

Which technology operates as an open, distributed record of transactions?

Blockchain, allowing peer-to-peer transaction recording. Signup and view all the answers

What trend was noted regarding the growth of social media users in early 2017?

A growth to over 2.7 billion users Signup and view all the answers

How do businesses benefit from customer reviews in social commerce?

They enhance customer trust and inform purchase decisions Signup and view all the answers

What defines a Brick-and-Click business model?

A model combining brick-and-mortar presence with an online platform. Signup and view all the answers

What impact does Social Commerce have on shopping behavior?

It enhances shopping through interactive social networks. Signup and view all the answers

Why do organizations increase their social media marketing budgets?

To adapt to increasing user engagement on these platforms Signup and view all the answers

How does Electronic Business (E-Business) improve organizational performance?

Through various methods such as increasing profitability and market share. Signup and view all the answers

Which of the following is NOT a common benefit associated with social media marketing?

Guaranteed direct sales with no investments Signup and view all the answers

What is a primary feature of Pure-Play businesses?

They conduct business exclusively through online platforms. Signup and view all the answers

What distinguishes E-Commerce Business Models from traditional business models?

They engage in varied transactional relationships for online revenue generation. Signup and view all the answers

What is a common concern regarding Fake Reviews in e-commerce?

They can be generated by bots, misleading potential buyers. Signup and view all the answers

What is described as the automatic recurring purchase of a product or service until canceled by the subscriber?

Subscription Signup and view all the answers

Which of the following correctly defines Transaction Brokers?

Companies that facilitate a transaction for a fee Signup and view all the answers

What is included in the B2C e-commerce cycle when a customer decides to finalize their order?

Navigating to the shopping cart Signup and view all the answers

Which type of product requires inventory to be managed and involves physical shipping?

Physical Products Signup and view all the answers

What is a significant characteristic of an e-commerce platform?

It provides complete inventory management and analytics Signup and view all the answers

Which of the following describes a self-hosted e-commerce platform?

Requires companies to manage their own server space Signup and view all the answers

What happens when a customer decides to return a product in some e-commerce companies?

A return label is generated for printing Signup and view all the answers

Which of the following is NOT a characteristic of digital products?

They require inventory to be replenished Signup and view all the answers

Which feature is essential for an online store's accessibility?

Having a reliable hosting solution Signup and view all the answers

In the context of e-commerce, how are services defined?

As skills exchanged for compensation Signup and view all the answers

Study Notes

Chapter Overview

E-business encompasses all electronic transactions and interactions with stakeholders to improve organizational performance, while e-commerce focuses specifically on buying and selling goods online.
Successful completion of the chapter covers definitions, advantages, disadvantages, strategies, types, models, technologies, and current trends in e-commerce.

Definitions

E-business includes activities like customer relationship management (CRM), supply chain management (SCM), and enterprise resource planning (ERP).
E-commerce is the online buying and selling of goods and services, first exemplified by the sale of a CD on August 11, 1994.
E-commerce has significantly evolved, enabling widespread selling and marketing practices among various businesses, from freelancers to large corporations.

E-Commerce in Canada

E-commerce sales in Canada nearly doubled during the COVID-19 pandemic, increasing by 99.3% despite an overall retail sales decline of 18%.
Non-essential items saw the greatest gains as businesses adapted to online selling models.

E-Commerce Advantages

Expanded Markets: Businesses can reach customers beyond local areas, potentially on a global scale.
Increased Availability: Online stores operate 24/7, accommodating customer needs at any hour.
Reduced Costs: Shift to online sales saves on physical overhead expenses; businesses can also eliminate intermediaries.
Improved Efficiency: Online processes streamline transactions, improving operation speed and accuracy.
Enhanced Customer Service: Real-time interactions via chatbots and automated return processes elevate customer satisfaction.

E-Commerce Disadvantages

Technical Issues: Bandwidth limitations may hinder some consumers' online experiences.
Security & Privacy Concerns: High-profile security breaches lead to customer hesitance about online shopping.
Building Trust: Establishing online trust is more challenging than in physical retail; businesses need to present high-quality, transparent experiences.
Fake Reviews: Fake reviews are estimated to make up 4% of all online reviews, influencing consumer trust and spending.

Online Strategy Considerations

Assess customer internet usage and product information intensity to determine the necessity of an online presence.
Companies must adapt to digital trends, considering demand fluctuations, innovation, and operational efficiency.

Types of E-Commerce

Business to Business (B2B): Sales of goods/services between businesses, such as software or office supplies.
Business to Consumer (B2C): Direct sales to individual consumers, exemplified by retailers like Nike.
Consumer to Consumer (C2C): Transactions among consumers, prominently featured on platforms like eBay.
Consumer to Business (C2B): Consumers sell services/products to businesses, such as influencers or freelance services.
Business to Government (B2G): E-commerce transactions involving government services.
Consumer to Government (C2G): Individuals interacting with government services online.
Mobile Commerce (M-Commerce): Transactions via mobile devices are rapidly growing, accounting for 73% of e-commerce sales.

Growth and Benefits of M-Commerce

Countered by increasing mobile users, enhanced technology, and demand for convenience.
Access: Mobile internet access is more affordable than traditional desktop methods.
Convenience: Mobile phones promote constant connectivity and ease of shopping.
Low Costs: Mobile devices serve multiple purposes, eliminating the need for additional computers.
Ease of Use: Mobile apps streamline purchases with minimal technical barriers, along with secure mobile payment options.### Mobile Payments and Rich Content
Mobile Preference: Easy and secure payment options enhance mobile usage among consumers.
Processing Power: Advances enable rich content access via mobile browsers and applications, enhancing product demonstration.
Rich Media: Brands can showcase product features, testimonials, and actual usage effectively through rich content.

Peer-to-Peer (P2P) E-Commerce

Definition: P2P e-commerce connects individuals for transactions on online platforms.
Examples: Platforms include Etsy, Uber, Airbnb, and TaskRabbit.

E-Commerce Business Models

Retail: Direct sales from business to customer, with no intermediaries.
Wholesale: Bulk sales often directed to retailers who sell to consumers.
Dropshipping: Third parties manufacture and ship products to customers.
Crowdfunding: Pre-sale funding from consumers to launch products, exemplified by Kickstarter.
Subscription: Ongoing purchases of products/services until cancellation, common in media streaming.
Transaction Brokers: Facilitate transactions while earning a portion of revenue, such as Airbnb and EventBrite.

Objects Exchanged in E-Commerce

Physical Products: Tangible goods requiring inventory and shipping.
Digital Products: Downloadable items like courses and templates.
Services: Skills exchanged for payment, encompassing a variety of service sectors.

B2C E-Commerce Cycle

Process Overview: Customers browse products, choose items, and navigate to checkout to finalize orders.
Order Fulfillment: Businesses prepare and ship orders, with customers often prompted for reviews.
Customer Support: Options for order issues via customer service; online return processes enhance convenience.

E-Commerce Technology

E-Commerce Platforms: More than just sales tools; they manage inventory, marketing, and analytics. Examples include Shopify, Wix, and BigCommerce.
Hosting Solutions: Necessary for public access; platforms may offer built-in hosting or require self-hosting.

Hosting Types

Hosted Platforms: Focus on business functionality without technical management issues.
Self-Hosted: Involves managing server space and requires more internal resources, often through open-source options.

Search Engine Optimization (SEO)

Importance: Techniques to enhance visibility in organic search results, boosting website traffic.
SEM: Encompasses SEO and paid advertising for increased visibility.

Payment Methods in E-Commerce

Security & Trust: Essential to minimize customer concerns about online transactions.
Credit Cards: Predominant payment method for online purchases.
Electronic Payment: Encompasses various methods like debit and credit cards, e-transfers, and mobile wallets.

E-Transfers

Functionality: Allows bank-to-bank money transfers in Canada through services like Interac with added security features.
Adoption: Growing trend with a large percentage of the population registered for e-transfers.

Email-Based Methods

PayPal: A popular email payment method linking users to their bank or credit cards.

Mobile Wallets

Definition: Applications that store payment information for contactless transactions, used for in-person and online shopping.
Concerns: Security of stored information; examples include Apple Pay and Google Pay.

Blockchain Technology

Definition: A decentralized network providing transaction records without intermediaries, enhancing efficiency.
Applications: Already utilized in supply chain tracking; seen as a transformative technology for various sectors.

Bitcoin

Characteristics: A digital currency operating independently of central banks, enabling lower-cost transactions.
Advantages: No currency conversion needed, lower fees, irreversible transactions, and access via digital wallets.

Tanzania Bitcoin Project

Goal: Introduced cryptocurrency to combat counterfeit currency and high transaction fees among the unbanked population.

Influence: Social factors impact consumer behavior; online networks provide valuable insights for marketing.
Platforms: Utilization of social networks like Facebook and Instagram to enhance customer engagement.

Audience Growth: Over 2.7 billion social media users provide vast market reach for businesses.
Higher Search Rankings: Increased website traffic from social media improves search engine visibility.
Authentic Engagement: Two-way communication on social platforms encourages stronger customer connections and service channels.### Customer Loyalty and S-commerce
S-commerce emphasizes relationship building through social platforms rather than solely focusing on sales.
Strong relationships increase consumer trust and loyalty to brands, leading to repeat purchases.

Social media platforms like Facebook, Twitter, Instagram, Pinterest, and LinkedIn provide analytics tools.
These tools track and evaluate metrics such as traffic, clickthrough rates, followers, likes, sentiment analysis, and conversions.
Analytics help businesses monitor ROI effectively.

Growing global connectivity through social media leads to increased marketing budgets allocated for these platforms.
Successful strategies align social media initiatives with broader corporate objectives to maximize impact.
Social media content tends to be inexpensive due to a high volume of online creators.
Brands can achieve visibility as trending topics; however, managing perceptions can be difficult due to the uncontrolled nature of social media messaging.
Data from social media enables targeted marketing, while firms face cybersecurity and data privacy challenges.

New Retail Concept

"New Retail," coined by Jack Ma of Alibaba, integrates offline, online, logistics, and data to enhance customer experience.
Eliminates the boundary between offline and online commerce to provide a seamless shopping experience.
Innovations like pop-up shops, partnerships for physical displays, and the ability to buy online and pick up in store are prominent features.

E-business and E-commerce

E-business encompasses various components, including e-commerce, which is a specific transactional model.
E-commerce can be categorized into seven types: B2B, B2C, C2C, B2G, C2B, m-commerce, P2P.
Revenue generation online can occur through multiple (and often new) business models.

Technologies in E-commerce

E-commerce utilizes various technologies, including all-in-one platforms and digital payment systems.
Blockchain technology supports transactions through cryptocurrencies like Bitcoin.

Rise of Electronic Payments

Electronic payments include debit, credit cards, gift cards, e-transfers, mobile wallets, and cryptocurrencies.
Relevant due to the convenience and efficiency they provide to consumers and businesses alike.

Innovations and Future of E-commerce

Focus on trends that blur lines between offline and online shopping experiences.
Examples of innovations could include contactless payments, augmented reality for product displays, and advanced analytics for consumer behavior.

Key Terms Overview

Bitcoin: Digital currency usable globally; classified as cryptocurrency.
Blockchain: Peer-to-peer network for recording transactions.
Brick-and-Click: Businesses with both physical and online presence.
E-Payment: Overall category for electronic transactions.
New Retail: Concept integrating various elements to enhance shopping experiences.
Social Commerce: Using social networks for product promotion and interactive shopping experiences.
Mobile M-Commerce: Shopping through wireless technology, such as smartphones.

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Description

Explore the strategic challenges businesses face when leveraging the internet for their products and services. This quiz dives into the importance of a website, especially for firms in lower-performance quadrants. Understand the critical aspects of internet presence in business strategy.