Strategic Challenges in Online Business

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.

Social Commerce

• 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.

Benefits of Social Commerce

• 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.

Analytics in Social Media

• 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.

Social Media Marketing Trends

• 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.