Chapter 7
E-Commerce: Applications and Issues
*E-Business
and E-Commerce:
E-Commerce (EC): describes the process of buying, selling, transferring or
exchanging of products, services or information via computer networks, including
the Internet.
E-business: is a broader definition of EC, including
§
buying and selling of goods and services
§
servicing customers
§
collaborating with partners
§
conducting e-learning
§
conducting electronic transactions within an
organization.
Pure versus Partial EC depends
on the degree of digitization involved:
§
The product can be physical or digital.
§
The process can be physical or digital.
§
The delivery agent can be physical or digital
Brick-and-mortar: purely physical organizations
Click-and-mortar: organizations are those that conduct some EC activities, yet their
business is primarily done in the physical world [multichannneling]
Pure Play: organizations that are engaged only in EC.
*Types
of E-Commerce:
Ø
Business-to-Consumer (B2C): the sellers
are organizations and the buyers are individuals
Ø
Business-to-Business (B2B): both the sellers and buyers are business
organizations
Ø
Consumer-to-Consumer (C2C): both the
sellers and buyers are individuals
Ø
Business-to-Employee (B2E): An organization uses e-commerce internally to
provide information and services to its employees.
Ø
E-Government (E-Gov.): the use of Internet technology to deliver
information about public services to citizens (Government-to-Citizen [G2C]),
business partners and suppliers (called government-to-business [G2B]) and
between governments [G2G].
Ø
Mobile Commerce (m-commerce): e-commerce that is conducted using a mobile
phone
*E-Commerce
Business Models:
Ø
Name-your-own-price: customers
decide how much they want to pay
Ø
Find-the-best-price: customers specify a need and an intermediary
compares providers and shows the lowest price
Ø
Affiliate
marketing: Vendors ask partners to
place logos or banners on partner’s site. If customers click on logo, go to the
vendor’s site, and buy, then the vendor pays commission to partners.
Ø
Viral
marketing: receivers send information about your product
to their friends.
Ø
Group
purchasing: small buyers aggregate demand to get a large
volume discount [E-Coops]
Ø
Product
customization: customers use the Internet to self-configure
products or services. Sellers then price them and fulfill them quickly.
Ø
Deep
discounters: company offers deep price discounts. Appeals to
customers who consider only price in their purchasing decisions
Ø
Membership: only members can use the services provided,
including access to certain information, conducting trade, etc.
*Benefits
of E-Commerce:
Ø
Benefits to organizations
o
Makes national and international markets more
accessible
o
Lowering costs of processing, distributing, and
retrieving information
Ø
Benefits to customers
o
Access a vast number of products and services
around the clock (24/7/365)
Ø
Benefits to Society
o
Ability to easily and conveniently deliver
information, services and products to people in cities, rural areas and
developing countries
*Limitations
of E-Commerce :
Ø
Technological Limitations
§
Lack of universally accepted security standards
§
Insufficient telecommunications bandwidth
§
Expensive accessibility
Ø
Non-technological Limitations
§
Perception that EC is unsecure
§
Unresolved legal issues
§
Lacks a critical mass of sellers and buyers
*Business-to-Consumer
B2C:
Electronic
retailing (E-tailing): the direct sale
of products and services through the Internet
·
E-marketplace: a
central, virtual market space on the Web where many buyers and sellers can
conduct E-commerce and E-Business activities
·
E-storefront: a Web
site that represent a single store
·
E-mall/ Cybermall: a
collection of individual shops under one Internet address
*Online
Service Industries:
§ Cyberbanking: involves conducting banking activities from
home, a place of business or on the road instead of at a physical bank
location.
§ E-Bank / virtual Bank/ Cyber Bank: a bank
that is dedicated only to Internet transactions
§ Online securities trading
§ Online job market
§ The
internet offers promising new environment for job seekers and for companies
searching for hard-to-find employees.
§ Travel services
§ The
internet is an ideal place to plan, explore and arrange almost any trip
economically
§ Real Estate
*Issues
in E-Tailing:
§ Channel conflict: occurs when manufacturers disintermediate their
channel partners such as distributors, retailers, dealers, and sales
representatives, by selling their products directly to consumers, usually over
the Internet through e-commerce.
§ Multi channeling: is a process in which a company integrates its
offline and online channels.
§ Order fulfillment: finding the product to be shipped; packaging
the product; arrange for speedy delivery to the customer; and handle the return
of unwanted or defective products.
*Online advertising :
an attempt to disseminate information in order
to influence a buyer-seller transaction.
Online
Advertising methods
·
Banner: simply
electronic billboard [can be customized]
·
Pop-up ad :
appears in front of the current browser window.
·
Pop-under
ad:
appears underneath the active window.
·
Permission
marketing: asks consumers to give their permission to
voluntarily accept online advertising and e-mail.
·
Viral
marketing: refers to online “word-of-mouth” marketing.
*Business-to-Business
(B2B):
In B2B e-commerce,
the buyers and sellers are organizations. There are several business models for
B2B applications:
v
B2B
Sell-Side Marketplace
v
B2B
Buy-Side Marketplace
v
Electronic
Exchanges
*B2B Sell-Side
Marketplace:
In the sell-side marketplace,
organizations sell their products or services to other organizations
electronically from their own Web site and/or from a third-party Web site.
This model is similar to the B2C
model in which the buyer comes to the seller’s site, views catalogs, and places
an order. In the B2B sell-side
marketplace, the buyers are organizations
*B2B
Buy-Side Marketplace:
The buy-side marketplace is a
model in which organizations buy needed products and services from other
organizations electronically.
*Electronic
Exchanges:
Exchanges independently own by a third party and connect many buyers and
many sellers
v
Vertical Exchanges: connects
buyers and sellers in a given industry
v
Horizontal Exchanges:
connects buyers and sellers across many industries, and are used mainly for MRO
materials
v
Functional Exchanges: needed
services such as
temporary help or extra office space are traded on an “as-needed” basis
*Electronic
Payments:
v
Implementing EC typically requires
E-payment
v
E-payment systems enable you to pay for goods and
services electronically.
E-check: encrypted check with digital signature that is similar to a paper
check, and is used mostly in B2B.
E-credit
card: allows customers to charge online
payments to their credit card account, and is used mostly in B2C.
Purchasing
card: is
the B2B equivalent of electronic credit cards and is typically used for
unplanned B2B purchases.
Electronic
cash:
v
Stored-value money cards allow
you to store a fixed amount of prepaid money and then spend it as necessary.
v
Smart cards contain a chip called a microprocessor that
can store a considerable amount of information and are multipurpose – can be
used as a debit card, credit card or a stored-value money card.
v
Person-to-person payments are a
form of e-cash that enables two individuals or an individual and a business to
transfer funds without using a credit card.
v
E-wallet
*Ethical
and Legal Issues:
Ø Privacy: ecommerce provides opportunities for businesses
to track online consumers using cookies or special spyware
Ø
Fraud on the Internet
Ø Cybersquatting refers to the practice of registering domain
names solely for the purpose of selling them later at a higher price.
Ø Taxes and other Fees: when and where (and in some cases whether)
electronic sellers should pay taxes
Ø Copyright: protecting intellectual property in e-commerce
and enforcing copyright laws is extremely difficult
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