Lecture 7 E-Commerce PDF

Lecture 7 BHMS4472 ICT in Business E-Commerce: Digital Markets, Digital Goods ICT (Information, Communication, and Technology) Learning Objectives What are the unique features of e-commerce, digital markets, and digital good...

Lecture 7 BHMS4472 ICT in Business E-Commerce: Digital Markets, Digital Goods ICT (Information, Communication, and Technology) Learning Objectives What are the unique features of e-commerce, digital markets, and digital goods? What are the principal e-commerce business and revenue models? How has e-commerce transformed marketing? How has e-commerce affected business-to-business transactions? What is the role of m-commerce in business, and what are the most important m-commerce applications? What issues must be addressed when building an e-commerce presence? E-commerce Comes to the Dashboard: The Battle for the “Fourth Screen” (1 of 2) Problem – Opportunities presented by new technology Solutions – Design business and revenue model – Partner with software providers – Data privacy restrictions – Design non-distracting interfaces – Dashboard display screens – Customer and auto databases – Android Auto, Apple CarPlay, Android Automotive E-commerce Comes to the Dashboard: The Battle for the “Fourth Screen” (2 of 2) Illustrates some major trends in e-commerce – E-commerce moves to the automobile platform – Sales of information and services – Use of advanced data mining and location-based advertising – Big tech firms competing with major auto makers E-commerce Today E-commerce: Use of the Internet and Web to transact business Began in 1995 and grew exponentially; still stable even in a recession Companies that survived the dot-com bubble now thrive The new e-commerce: social, mobile, local Move from desktop to smartphone The Growth of E-commerce Why E-commerce is Different (1 of 2) Ubiquity – Marketspace is virtual – Transaction costs reduced Global reach – Transactions cross cultural and national boundaries Universal standards – One set of technology standards: Internet standards Richness – Supports video, audio, and text messages Why E-commerce is Different (2 of 2) Interactivity Information density – Greater price and cost transparency – Enables price discrimination Personalization/customization – Technology permits modification of messages, goods Social technology – Promotes user content generation and social networking Key Concepts in E-commerce – Digital Markets and Digital Goods in a Global Marketplace Internet and digital markets have changed the way companies conduct business Information asymmetry reduced Menu costs, search and transaction costs reduced Dynamic pricing enabled Switching costs Delayed gratification Disintermediation Digital Markets Vs Traditional markets Digital Markets Traditional Markets Information Asymmetry Asymmetry reduced Asymmetry high Search Cost Low High Transaction Cost Low (sometime virtually High (time, travel) nothing) Delayed Gratification High (or lower in the case of Lower: purchase now a digital good) Menu Cost Low High Dynamic pricing Low cost, instant Low cost, instant Price discrimination Low cost, instant Low cost, instant Disintermediation More possible/likely More possible/likely The Benefits of Disintermediation to the Consumer Digital Goods “Goods that can be delivered over a digital network” Cost of producing first unit is almost entire cost of product Costs of delivery over the Internet very low Marketing costs remain the same; pricing highly variable Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc.) Types of E-commerce Three major types – Business-to-consumer (B2C)  Example: Amazon.com – Business-to-business (B2B)  Example: Elemica – Consumer-to-consumer (C2C)  Example: eBay E-commerce can be categorized by platform – Mobile commerce (m-commerce)  14 Types of e-Commerce Business-to-Business (B2B) E-business services across the supply chain or in parts of the supply chain such as e- procurement, logistics, stock control, ordering, payments and distribution.  15 Types of e-Commerce Business-to-Consumer (B2C) The term business-to-consumer (B2C) refers to the process of selling products and services directly between a business and consumers who are the end-users of its products or services. Most companies that sell directly to consumers can be referred to as B2C companies One subcategory of B2C model is “direct-to- consumer” (DTC).  16 Types of e-Commerce Consumer-to-Consumer (C2C) When one consumer sells goods or services to other consumers online. It is a type of trade relationship where both the sellers and buyers are consumers instead of businesses. E-commerce Business Models Portal E-tailer Content provider Transaction broker Market creator Service provider Community provider E-commerce Business Models E-commerce Business Models E-commerce Revenue Models Advertising Sales Subscription Free/Freemium Transaction fee Affiliate How Has E-commerce Transformed Marketing? (1 of 2) Internet provides new ways to identify and communicate with customers Long tail marketing Different marketing and advertising formats – Search – Display ads – Video and rich media – Email How Has E-commerce Transformed Marketing? (2 of 2) Behavioral targeting – Tracking online behavior of individuals – On individual websites/apps and across advertising networks Programmatic ad buying Native advertising Website Visitor Tracking Website Personalization How an Advertising Network Works Social E-commerce and Social Network Marketing (1 of 2) Social media one of fastest growing branding and marketing methods Social e-commerce based on digital social graph Features – Newsfeed – Timelines – Social sign-on – Collaborative shopping – Network notification – Social search (recommendations) Social E-commerce and Social Network Marketing (2 of 2) Social network marketing – Seeks to leverage individuals’ influence over others – Targeting a social network of people sharing interests and advice – Facebook’s “Like” button – Social networks have huge audiences Social shopping sites Wisdom of crowds Crowdsourcing How Has E-commerce Affected Business-To Business Transactions? U.S. B2B trade in 2020 estimated at about $14.5 trillion – U.S. B2B e-commerce in 2020 estimated at $6.7 trillion Internet and networking helps automate procurement Variety of Internet-enabled technologies used in B2B – Electronic data interchange (EDI) – Private industrial networks (private exchanges) – Net marketplaces – Exchanges Electronic Data Interchange (EDI) Computer-to-computer exchange of standard transactions such as invoices, purchase orders. Major industries have EDI standards – Define structure and information fields of electronic documents More companies are moving toward web-enabled private networks – Allow them to link to a wider variety of firms than EDI allows – Enable sharing a wider range of information Electronic Data Interchange (EDI) New Ways of B2B Buying and Selling Private industrial networks – Private exchanges – Large firm using a secure website to link to suppliers and partners Net marketplaces (e-hubs) – Single digital marketplace for many buyers and sellers – May focus on direct or indirect goods – May be vertical or horizontal marketplaces Exchanges – Independently owned third-party Net marketplaces for spot purchasing A Private Industrial Network A Private Industrial Network Example: Healthcare Provider Network In the healthcare sector, a private industrial network can connect various entities such as hospitals, clinics, laboratories, and insurance providers to streamline operations and improve patient care. Key Participants: Hospitals and Clinics: Primary care providers that treat patients and manage their health records. Laboratories: Facilities that conduct tests and provide diagnostic services. Pharmacies: Entities that dispense medications and manage prescriptions. Insurance Companies: Organizations that manage patient coverage and claims processing. A Net Marketplace A Net Marketplace Example: Amazon A well-known example of a net marketplace is Amazon, which allows third- party sellers to list their products alongside Amazon's own offerings. This model creates a diverse shopping experience for consumers while providing sellers with access to a massive customer base. M-commerce in Business M-commerce, or mobile commerce, refers to the buying and selling of goods and services through mobile devices, such as smartphones and tablets. It encompasses a wide range of activities that occur via mobile apps and websites, enabling users to conduct transactions on the go. Mobile Apps and Websites: Businesses often create dedicated mobile applications or optimize their websites for mobile use to enhance user experience. Mobile Payments: M-commerce includes various payment methods such as digital wallets (e.g., Apple Pay, Google Pay), mobile banking, and QR code payments. Location-Based Services: M-commerce can leverage GPS technology to offer personalized deals, promotions, or store locators based on the user’s location. Social Commerce: Many social media platforms incorporate shopping features, allowing users to purchase products directly through social channels. What is the Role of M-commerce in Business, and What are the Most Important M-commerce Applications? M-commerce in 2020 is about 45 percent of all e-commerce Fastest growing form of e-commerce – Growing at 20 percent or more per year Main areas of growth – Mass market retailing (Amazon, eBay, etc.) – Sales of digital content (music, TV, etc.) – In-app sales to mobile devices Mobile Retail Commerce Revenues Location-Based Services and Applications Used by 74 percent of smartphone owners Based on GPS map services Geosocial services – Where friends are Geo advertising – What shops are nearby Geo information services – Price of house you are passing Other Mobile Commerce Services Financial account management apps – Banks, credit card companies Mobile advertising market – Google and Facebook are largest markets – Ads embedded in games, videos, and mobile apps Over 45 percent of top retailers have m-commerce websites Virtually all large traditional and online retailers have m- commerce apps. Mobile App Payment Systems Three main types – Near Field Communication (NFC)  Apple Pay, Google Pay, Samsung Pay, Octopus – QR Code  Starbucks, Walmart, Target, Dunkin Donuts – Peer-to-peer (P2P) payment systems  Alipay HK, WeChat Pay, PayMe, Octopus, Tap & Go  What Issues Must Be Addressed When Building an E-commerce Presence? Most important management challenges – Developing clear understanding of business objectives – Knowing how to choose the right technology to achieve those objectives Develop an e-commerce presence map – Four areas: websites, e-mail, social media, offline media Develop a timeline: milestones – Breaking a project into discrete phases Copyright © 2022, 2020, 2018 Pearson Education, Ltd. All Rights Reserved  E-commerce Presence Map Copyright © 2022, 2020, 2018 Pearson Education, Ltd. All Rights Reserved  Midterm Exam - Arrangement Date: Tuesday, 29 October 2024 (During lecture time) Time: 60 minutes Venue: KW-N1103 Tutorial Session: A02A Tutorial Session: A02B  Time: 04:00 - 05:00 pm  Time: 05:00 - 06:00 pm Make sure you know your tutorial group, as you will NOT be allowed in other tutorial session. 45