Chapter 5
Electronic Commerce:
Strategies for the New
Economy
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
INTRODUCTION
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E-commerce is changing everything
Electronic commerce (ecommerce) – commerce, but it is
commerce accelerated and enhanced
by IT
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Build powerful relationships with
customers
Build powerful relationships with suppliers
Build powerful relationships with partners
5-2
E-COMMERCE BUSINESS
MODELS
5-3
B2B & B2C E-Commerce
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B2B e-commerce – business sells
products and services to customers
who are primarily other businesses
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Where all the e-commerce money is
B2C)e-commerce – business sells
products and services to customers
who are primarily individuals
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B2C is the glitzy e-commerce like
iTunes, eBay, etc
5-4
UNDERSTAND YOUR BUSINESS,
PRODUCTS, SERVICES, &
CUSTOMERS
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To be successful, you must…
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Define your products and services
Define your target customers
B2B (other businesses)
 B2C (individuals)
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Define your customers perception of the
value of your products and services
5-5
B2C: Convenience Versus
Specialty
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Convenience vs. specialty
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Lower vs. high priced
Frequency of purchase
Food items vs. stereos and computers
Commoditylike and digital
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Same no matter where you purchase it
Delivered over the Internet
Best product types for B2C e-commerce
5-6
B2B: Horizontal Versus Vertical
E-Marketplaces
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Electronic
marketplace (emarketplace) –
interactive business
providing a central
market where
multiple buyers and
sellers can engage
in e-commerce
5-7
FIND CUSTOMERS AND
ESTABLISH RELATIONSHIPS
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You must first find customers
Then establish relationships
Otherwise, you can’t make a sale
B2C and B2B techniques are very
different
5-8
Business to Consumer
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Determine your marketing mix set of marketing tools your
organization will use to pursue its
marketing objectives in reaching and
attracting potential customers
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Search engines
Online ads
Viral marketing
Affiliate programs
5-9
Business to Business Marketing
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Much more personal
Not usually done with generic ads
designed for mass distribution
Often take place in e-marketplaces
5-10
MOVE MONEY EASILY &
SECURELY
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In e-commerce, security becomes
very important
B2C
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Credit cards, financial cybermediaries,
electronic checks, EBPP, & smart cards
B2B
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Electronic data interchange (EDI)
Value-added networks (VANs)
Financial EDI
5-11
E-BUSINESS TREND – LONG
TAIL
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Long Tail –
first offered
by Chris
Anderson;
explains ecommerce
profitability
in terms of a
sales curve
5-12
E-BUSINESS TREND CROWDSOURCING
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Crowdsourcing – when businesses
provide enabling technologies that
allow people – instead of designated
employees – to create, modify, and
oversee the development of a
product or service.
Netflix – gave a million $$ to improve
its recommendation engine by 10%
eBay, Facebook, Twitter, YouTube
5-13
E-BUSINESS TREND –
VIRTUAL GOODS
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Virtual good – nonphysical object
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Music
E-cards
Toys, weapons, clothes, and accessories
you buy in online communities like
Farmville and World of Warcraft
2007 - $2.1 billion
2010 - $7.3 billion (245% increase)
2014 - $14 billion (projected)
5-14
E-BUSINESS TREND – MOBILE
COMMERCE
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Mobile commerce – electronic
commerce transactions conducted
over a wireless device such as a
smartphone, laptop, or tablet PC.
5-15