7 E-Business and E-Commerce 7.1 Overview of E-Business and E-Commerce • • • • • Definitions and Concepts Types of E-Commerce Major E-Commerce Mechanisms Electronic Payment Mechanisms Benefits and Limitations of ECommerce Definitions and Concepts • Electronic Commerce – The process of buying, selling, transferring, or exchanging products, services, or information via computer networks, including the Internet. • Electronic Business (e-business) – A much broader concept than e-commerce – Servicing customers, collaborating with business partners, and performing electronic transactions within an organization Definitions and Concepts (Con’t) • Degree of digitization – Is the extent to which the commerce has been transformed from physical to digital • Brick-and-Mortar organizations – Referred to traditional commerce • Virtual Organizations – Pure e-commerce, all dimensions are digital • Clicks-and-Mortar Organizations – Conduct some e-commerce activities, yet their primary business is carried out in the physical world Major E-Commerce Mechanisms • Electronic catalogs – Consist of a product database, a directory and search capabilities, and a presentation function. • Electronic auctions – Competitive buying and selling process in which prices are determined dynamically by bidding. • E-storefronts – Is website that represents a single store • E-malls – Is a collection of individual shops under one Internet address. • E-marketplaces – Is a central, virtual market space on the web where many buyers and sellers can conduct e-commerce and e-business activities. Types of E-Commerce • Business-to-consumer (B2C) – The seller are org. and the buyers are individuals. • Business-to-business (B2B) – Transaction both the sellers and the buyers are business organizations • Consumer-to-consumer (C2C) – An individual sells products/services to other individuals. • Business-to-employee (B2E) – An organizations uses e-commerce internally to provide information and services to its employees. • E-Government – Using internet technology in general and e-commerce in particulae to deliver information and public services to citizens. • Mobile commerce (M-commerce) – Refers to e-commerce that is conducted entirely in a wireless environment. E-Commerce Business Models • Online direct marketing – Manufacturers or retailers sell directly to cutomers. Ex.: dell.com • Electronic tendering system – Business request quotes from suppliers. Uses B2B with reverse auction mechanism. Dellauction.com • Name-your-own-price – Customers decide how much they are willing to pay. Priceline.com • Find-the-best-price – Customers specify a need; an intermediary compares providers and shows the lowest price. Hotwire.com • Affiliate marketing – Vendors ask partners to place logos or banner on partner’s site. – If customers click, go to vendor’s site, and buy, will get the commisions E-Commerce Business Models • Viral marketing – Receivers send information about your product to their friends • Group purchasing (e-coops) – Small buyers aggregate demand to create a large volume for negotiate a lower price • Online Auctions – Companies run auctions of various type on the internet. – C2C, E-Bay.com • Product customization – Customers use the internet to self-configure products/services. Build-to-order E-Commerce Business Models (Continued) • Electronic marketplaces – Transactions are conducted efficiently in e-marketplaces (buyers & sellers get lower transaction costs) • Bartering online – Intermediary administers online exchange of surplus product and/or company receives ‘points’ for its contribution, which it can use to purchase other needed items. Bbu.com • Deep discounters – Company offers deep price discounts. Half.com • Membership – Only members can use service provided, including access to certain information, conducting trades, etc. Agreetings.com Electronic Payment Mechanisms • Electronic Checks (e-checks) – Which used primarily in B2B, similiar to reguler paper • Electronic Cards – Electronic credit cards: Used primarily in B2B, similar paper checks – Virtual credit cards: These card only used one time for online shops – Purchasing cards • Same with electronic credit cards. Credit provided 30-60 days for free. But cards only can used in a week for purchase – Stored-value money cards: • Prepaid money. Ex.: for transportation, telephone calls. – Smart cards: Contain a chip, for multipurpose, credit card, debit card, etc. • Person-to-Person Payments – Enable two individuals, individual to a business, to transfer funds without using credit cards Benefits & Limitations of E-Commerce Benefits Limitations • National and International markets are more Accessible • Lowers costs of processing, distributing, and retrieving information • Provides access to a vast number of products and services 24/7 • Deliver information, services, and products to people in cities, rural areas, and developing countries • Lack of universally accepted security standards • In less-developed countries telecommunications bandwidth is often insufficient, and Web access is expensive • Perceptions that e-commerce is insecure • Unresolved legal issues • Lacks a critical mass of buyers and sellers 7.2 Business-to-Consumer (B2C) Electronic Commerce • • • • Electronic Storefronts and Malls Electronic Malls Online Service Industries Issues in E-Tailing Electronic Storefronts and Malls Is the direct sale of products and services through estorefronts or e-mall, usually designed around an ecatalog format and/or auctions • Electronic Storefronts – Is a website that represents a single store (restaurant.com, alloy.com) • Electronic Malls – Is a collection of individual shops grouped under a single internet address (bing.com/shopping, hawaii.com) Online Services Industry • Disintermediation – One of the most pressing EC issues relating to online service (as well as in marketing tangible products) • Cyberbanking – =electronic banking, involves conducting various banking activities from home, or anywhere, instead of at a physical bank location. • Online Securities Trading – People using computers to trade stocks, bonds, and other financial instruments. • The Online Job Market – The internet offers a promising new environment for job seekers and for company searching for hard-to-find employees Online Services Industry • Travel Services – The internet is an ideal place to plan, explore, and arrange almost any trip economically, (Expedia.com, travelocity.com, etc) • Online Advertising – Is the practice of disseminating information in an attempt to influeance a buyer-seller transaction • Advertising Methods – The most common online advertising methods are banners, pop-ups, and e-mail Advertising Methods • Banners – A simply electronic billboards (short text, grapical) • Pop-up Ad – Appears in front of the current browser windows. • Pop-under Ad – Appears underneath the active windows • Spamming – The indiscriminate distribution of electronics ads without the permission of the receivers • 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 Issues in E-Tailing • Channel Conflict – Clicks-and-mortar company may face conflict with their regular distributor when they sell directly to consumer online • Multichanneling – Strategy to reduce channel conflict with integrating their online and offline channels • Order Fulfillment – Very complicated activities for order fullfilment with multiple steps to be done 7.3 Business-to-Business (B2B) Electronic Commerce • Sell-Side Marketplaces – Organizations attempt to sell their prod./serv. to other organizations electronically (like B2C) • Buy-Side Marketplaces – Procurement, is the overarching function that describes the activities and process to acquire goods and services • Electronic Exchanges – E-marketplace, is a private exchange have one buyer and many sellers, the website may owned or third party 7.4 Ethical and Legal Issues in E-Business • Ethical Issues – Two basic issues; privacy and job loss • Legal and Ethical Issues Specific to E-Commerce Legal and Ethical Issues Specific to E-Commerce • Fraud on the Internet • Domain Names – A domain name is considered legal when the the person or business who owns the name has operated a legitimate business under that name for some time • Cybersquatting – Refers to the practice of registering or using domain names for tthe purpose of profiting from the goodwill or the trademark that belongs to someone else • Taxes and Other Fees – Same with offline, the online transaction must be collecting taxes. But, the problem is particularly complex for inter state and international ecommerce • Copyright
