The Nature of
E-Commerce
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Chapter 2
The Nature of
E-Commerce
Section
2-1
Section
2-2
Characterizing E-Commerce
in Business
The Nature of
Conducting Business
E-Commerce
on the Web
2
The Nature of E-Commerce
Section 2-1
Why It’s Important
E-commerce has impacted the economy in
countless ways.
Successful e-commerce entrepreneurs are aware
of the specific advantages and disadvantages of
conduction business online and plan accordingly.
Section 2-1
3
The Nature of E-Commerce
Section 2-1
Key Terms
e-business
brand loyalty
mass customization
Section 2-1
value chain
elastic demand
4
The Nature of E-Commerce
E-Commerce Environment
Business in the old economy focused almost
exclusively on manufacturing physical goods.
Today, in the new, electronic economy,
knowledge production is the primary business
driver.
Section 2-1
5
The Nature of E-Commerce
E-Commerce versus
E-Business
In Chapter 1 you learned that e-commerce is
business conducted via electronic methods.
E-commerce also refers to electronic
transactions involving the transferring of
ownership of goods or services. The buyer and
seller have to agree on an exchange, whether
monetary or non-monetary.
Section 2-1
6
The Nature of E-Commerce
E-Commerce versus
E-Business
Government, not-for-profit
organizations, and
corporations all conduct
e-business.
Section 2-1
e-business any process
a business conducts over
a computer network
7
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
In the era of e-commerce, the number of
potential buyers is limitless.
Section 2-1
8
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
The electronic marketplace is open 24 hours a
day, 7 days a week. In this respect, it has made
the retail marketplace more customer-focused.
All-hours e-commerce poses various challenges
to businesses, which must now be able to
operate effectively at any time.
Section 2-1
9
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
E-commerce offers businesses a multitude of
effective and inexpensive ways to reach new
and existing customers.
Section 2-1
10
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
Web sites enable businesses to track customers’
purchasing habits.
Section 2-1
11
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
If a customer will not accept
a substitute, even when
there are many other
comparable products
available, he or she is
demonstrating brand
loyalty.
Section 2-1
brand loyalty refers to a
customer’s preference for
a particular product
12
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
Online retailers may be able to bypass many
difficult decisions regarding inventory.
Customers can not shoplift from a virtual store.
Section 2-1
13
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
With e-commerce, there is
a trend toward mass
customization.
Section 2-1
mass customization
the production of goods
that offer specialized
choices to mainstream
buyers
14
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
Mass customization
influences all aspects of the
value chain.
When a company
streamlines its value chain,
productivity and profitability
generally increase.
Section 2-1
value chain the
sequence of design,
production, and marketing
efforts a business
conducts to deliver its
products at the right price
and time
15
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
A virtual storefront is much faster, easier, and
cheaper to set up than a bricks-and-mortar store.
Online businesses can also be grown quickly,
whether through alliances with other
e-businesses or by offering additional goods
and services.
Section 2-1
16
The Nature of E-Commerce
Benefits and Characteristics
of E-Commerce
The e-commerce
environment fosters elastic
demand.
Section 2-1
elastic demand when
pricing changes create a
change in the amount of
goods or services
consumers are willing to
buy at a certain price
17
The Nature of E-Commerce
Section 2-1
Review
1.
What does it mean for a company to “manage” its
inventory? How is an online company’s inventory
easier to manage than that of a bricks-and-mortar
business?
2.
How can a company streamline its value chain?
3.
Why is it difficult to charge a higher price for an
item than your competitors in the e-commerce
marketplace?
Section 2-1
18
The Nature of E-Commerce
Section 2-2
Why It’s Important
There are a variety of business models available for
online businesses to follow.
You can maximize your chances for e-commerce
success by familiarizing yourself with the models
and using them to your advantage.
Section 2-2
19
The Nature of E-Commerce
Section 2-2
Key Terms
business model
business-to-business
business-to-consumer
consumer-to-consumer
Section 2-2
consumer-to-business
business-to-government
government-to-consumer
20
The Nature of E-Commerce
The Process of Buying
and Selling Online
The rest of this chapter explores the different
types of business models common in
e-commerce.
Section 2-2
21
The Nature of E-Commerce
E-Commerce
Business Models
If you plan to launch a
business on the Web, you’ll
want to pay close attention
and select the best
business model for your
e-commerce venture.
Section 2-2
business model a
system of policies,
operations, resources,
and technologies used to
generate revenue
22
E-Commerce Business Models
business-tobusiness (B2B)
business-toconsumer (B2C)
consumer-toconsumer (C2C)
intermediary hub
Common
Busines
s Models
consumer-tobusiness (C2B)
Section 2-2
government-toconsumer (G2C)
business-togovernment (B2G)
23
The Nature of E-Commerce
E-Commerce
Business Models
The oldest and fastestgrowing form of
e-commerce, business-tobusiness (B2B) allows ebusiness to collaborate,
partner, and share research
and complex data with other
businesses.
Section 2-2
business-to-business
(B2B) business model
that applies when a
business transacts
information, goods, or
services with another
business
24
The Nature of E-Commerce
E-Commerce
Business Models
Turning browsers into
buyers, building customer
loyalty, and fulfilling
customer orders in a timely
and satisfactory way are all
concerns for business-toconsumer (B2C) sites.
Section 2-2
business-to-consumer
(B2C) business model
that applies to any
business or organization
that uses the Internet to
sell its products or
services to consumers
25
The Nature of E-Commerce
E-Commerce
Business Models
Online auctions are the
most common forum for
consumer-to-consumer
(C2C) e-commerce.
Section 2-2
consumer-to-consumer
(C2C) business model
that allows consumers to
interact with one another
online to transact goods
and services
26
The Nature of E-Commerce
E-Commerce
Business Models
A consumer-to-business
(C2B) model uses a
reverse-auction scenario:
The business responds to
the consumer’s requested
product and its price.
Section 2-2
consumer-to-business
(C2B) business model
in which the customer
initiates the transaction,
posting an intent or
desire to buy a certain
product at a certain price
27
The Nature of E-Commerce
E-Commerce
Business Models
Businesses that bid on
government contracts use
the business-togovernment (B2G)
business model.
Section 2-2
business-togovernment (B2G)
business model that
connects the private
sector to the government
marketplace
28
The Nature of E-Commerce
E-Commerce
Business Models
The government-toconsumer (G2C) business
model allows citizens to
interact with government
agencies online.
Section 2-2
government-toconsumer (G2C)
business model that
allows consumers to
easily access relevant
information from
government agencies
29
The Nature of E-Commerce
E-Commerce
Business Models
Some businesses don’t buy or sell products or
purchase services themselves. Instead they act
as an intermediary, bringing buyers and sellers
together.
An intermediary hub is a business that acts as a
third party or go-between in moving products
from the manufacturer to the end user.
Section 2-2
30
The Nature of E-Commerce
Section 2-2
Review
1.
Why do e-commerce businesses strive to keep
potential customers on their sites as long as
possible?
2.
What are some key challenges facing the B2C
model?
3.
How might the G2C model be helpful to the average
consumer?
Section 2-2
31
The Nature of E-Commerce
32
End of
The Nature of
E-Commerce
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