E-Commerce Today PDF

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...

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 Copyright © 2020 Pearson Education Ltd. Figure 10.1 The Growth of E-Commerce Copyright © 2020 Pearson Education Ltd. 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 Copyright © 2020 Pearson Education Ltd. 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 Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (1 of 8) (1) Ubiquity  Internet/Web technology available everywhere: work, home, and so on, anytime.  Effect: – Marketplace removed from temporal, geographic locations to become “marketspace” – Enhanced customer convenience and reduced shopping costs  Reduces transaction costs – Costs of participating in market Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (2 of 8) (2) Global reach The technology reaches across national boundaries, around Earth Effect:  Commerce enabled across cultural and national boundaries seamlessly and without modification.  Marketspace includes, potentially, billions of consumers and millions of businesses worldwide. Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (3 of 8) (3) Universal standards – One set of technology standards: Internet standards – Effect:  Disparate computer systems easily communicate with one another  Lower market entry costs—costs merchants must pay to bring goods to market  Lower consumers’ search costs—effort required to find suitable products Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (4 of 8) (4) [Media] Richness – Supports video, audio, and text messages – Effect:  Possible to deliver rich messages with text, audio, and video simultaneously to large numbers of people.  Video, audio, and text marketing messages can be integrated into single marketing message and consumer experience. Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (5 of 8) (5) Interactivity – The technology works through interaction with the user. – Effect:  Consumers engaged in dialog that dynamically adjusts experience to the individual.  Consumer becomes co-participant in process of delivering goods to market. Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (6 of 8) (6) Information density – Large increases in information density—the total amount and quality of information available to all market participants – Effect:  Greater price transparency  Greater cost transparency  Enables merchants to engage in price discrimination Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (7 of 8) (7) Personalization/Customization – Technology permits modification of messages, goods – Effect:  Personalized messages can be sent to individuals as well as groups.  Products and services can be customized to individual preferences. Copyright © 2020 Pearson Education Ltd. Characteristics of E-commerce (8 of 8) (8) Social technology – The technology promotes user content generation and social networking – Effect:  New Internet social and business models enable user content creation and distribution, support social networks  Many-to-many model Copyright © 2020 Pearson Education Ltd. 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 Copyright © 2020 Pearson Education Ltd. Figure 10.2 The Benefits of Disintermediation to the Consumer Copyright © 2020 Pearson Education Ltd. 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.) Copyright © 2020 Pearson Education Ltd. Types of E-commerce Three major types – Business-to-consumer (B2C)  Example: Barnes and Noble.com – Business-to-business (B2B)  Example: ChemConnect – Consumer-to-consumer (C2C)  Example: eBay E-commerce can also be categorized by platform – Mobile commerce (m-commerce) Copyright © 2020 Pearson Education Ltd. E-commerce Business Models Portal E-tailer Content provider Transaction broker Market creator Service provider Community provider Copyright © 2020 Pearson Education Ltd. E-commerce Revenue Models Advertising Sales Subscription Free/Freemium Transaction fee Affiliate Copyright © 2020 Pearson Education Ltd. 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 Copyright © 2020 Pearson Education Ltd. Figure 10.6: Electronic Data Interchange (EDI) Copyright © 2020 Pearson Education Ltd. 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 Copyright © 2020 Pearson Education Ltd. Figure 10.7 A Private Industrial Network Copyright © 2020 Pearson Education Ltd. Figure 10.8 A Net Marketplace Copyright © 2020 Pearson Education Ltd. What Is the Role of M-commerce in Business, and What Are the Most Important M-commerce Applications? M-commerce in 2019 is 45 percent of all e-commerce Fastest growing form of e-commerce – Growing at 30 percent or more per year Main areas of growth – Mass market retailing (Amazon, eBay, etc.) – Sales of digital content (music, T V, etc.) – In-app sales to mobile devices Copyright © 2020 Pearson Education Ltd. Figure 10.9 Mobile Retail Commerce Revenues Copyright © 2020 Pearson Education Ltd. 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 Copyright © 2020 Pearson Education Ltd. 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 65 percent of online retailers have m-commerce websites Copyright © 2020 Pearson Education Ltd.