Chapter 2
E-Commerce in Business
The E-Environment

E-Commerce 

Business conducted via electronic methods
E-Business 
Any process a business conducts over a
computer network
E-Commerce vs. E-Business
E-Commerce
E-Business
•A business buying
office supplies through
an online auction
•Withdrawing funds from
an ATM machine
•Purchasing a book over
the Internet
•A government
employee reserves a
hotel room over the
Internet
•Production process
including procurement,
ordering, automated stock
replenishment, payment
processing, and other links
with suppliers
•Customer Process including
marketing, selling,
processing of orders and
payments
•Management processes
including employees
services, training,
information sharing
Why People Buy Online
Reason
% of Surveyed Shoppers
Save time
70%
Shop off hours
69%
Avoid holiday crowds
68%
Find better prices
59%
Find products more easily 52%
Products not available in stores
50%
Easier to compare prices
47%
Have gifts sent direct
36%
Avoid wrapping gifts
13%
Earn loyalty points
13%
Purchase from wish list
10%
Benefits



Limitless Buyers
Open 24/7
Advertise Market and Analyze

Brand Loyalty - a customer’s preference for a
particular product


Coke vs. Pepsi
Managing Inventory
Benefits

Meeting Customer Needs

Mass Customization - the production of goods
that offer specialized choices to mainstream
buyers

Value Chain - the sequence of design, production,
and marketing efforts a business conducts to
deliver its products at the right place and time

Streamline the value chain - increase productivity and
profitability
Benefits

Starting Out





Purchase domain name
Build the site
Select business model
Photos of products
Establish and ship goods
Benefits

Pricing Competitively

Online community makes it easier to compare
prices

Elastic demand - pricing changes will create a
change in the amount of goods or services
consumers are willing to buy at the certain price
Think about it…
How can e-commerce weaken or add to a local
economy?
Did you pay attention?
1.
2.
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?
3.
How can a company streamline its value chain?
4.
Why is it difficult to charge more than your
competitors in an e-commerce marketplace?
Conducting Business on the
Web
You make the call…
You are in the market for a new laptop. You
use several manufacturers’ Web sites to
research the different models available. After
making your decision, you call the company’s
toll-free number to place your order.
Is this an e-commerce transaction?
Conducting Business on the
Web
Since no ownership of goods or services
actually took place over the computer
network, this is not technically an ecommerce transaction even though all of the
components (hardware, buyer, seller) are
present.
E-Commerce Business Models

Online transactions occur 24/7





Buy a shirt from AmericanEagle.com
File your income tax return electronically
Computer manufacturer purchases componants
from a suppler in China
Bid on an item on eBay
Business Model - a system of policies,
operations, resources, and technologies used
to generate revenue.
Common Business Models







Business-to-Business (B2B)
Business-to-Consumer (B2C)
Consumer-to-Consumer (C2C)
Consumer-to-Business (C2B)
Business-to-Government (B2G)
Government-to-Consumer (G2C)
Intermediary Hub
Business-To-Business

Applies when a business transacts
information, goods, or services with another
business


Oldest and fastest growing form of e-commerce
Example: A manufacturer in New Jersey uses
Paychex for its payroll service
Business-To-Consumer

Any business or organization that uses the
Internet to sell its products of services to
consumers or end users



Amazon.com
fnfg.com
WebMD.com
Business-To-Consumer



Studies show that the longer a customer
stays on a site, the more likely they are to
buy
Keep customers busy with a variety of
products, services and information.
Offer easy navigation, a secure way to
purchase products, as well as offer a reason
to return
Consumer-To-Consumer

Allows customers to interact with one another
online to transact goods and services

eBay - the most successful online auction site.
 30 million people buy and sell more than $20 billion
annually
 More than the GDP of all but 70 countries in the
world
Other Models

Business-to-Government - connecting private
sector to the government marketplace


Bids for government contracts
Government-to-Consumer - allows
consumers to easily access relevant
information from government agencies

irs.gov
What’s a hub?

Intermediary Hub - a business that does not
provide goods or services but instead acts as
a middleman, bringing buyers and sellers
together


Vertical Hubs - match buyers and sellers within a
particular industry
Horizontal Hub - provide the same types of
products or services across various industries
Value Line in the Energy Chain
Power Generator
Power Processor
(Management and Trading)
Shipper
Pipeline
Transmission System Operation
Business and Residential Customers
How did you do?
1.
2.
3.
Why do e-commerce businesses strive to
keep potential customers on their sites as
long as possible?
What are some of the key challenges facing
the B2C model?
How might the G2C model be helpful to the
average consumer?