Ecommerce
Digital Markets, Digital Goods
Business Information Systems
Laudon & Laudon, Ch.9 (P.296)
E-Commerce Today
• E-commerce: the use of the Internet and Web
to transact business; digitally enabled
transactions
• Began in 1995 with Netscape.com accepted
its first add and grew exponentially; still
growing at an annual rate of 25 percent
• Companies that survived the dot-com bubble
burst and now thrive
• The e-commerce revolution is still in its early
stages
The Growth of E-Commerce
Figure 9-1
Retail e-commerce revenues have grown exponentially since 1995 and have only
recently “slowed” to a very rapid 25 percent annual increase, which is projected to
remain the same until 2008.
Why E-commerce Is Different?
Why E-commerce Is Different
• Ubiquity (It is available everywhere at all
time)
• Global reach(Potential market size = more
than 1 billion)
• Universal standards (market entry costs,
search costs)
• Richness (complexity and content of a
message) Richness versus Reach
Why E-commerce Is Different
• Interactivity
• Information density (price
transparency, cost transparency, price
discrimination)
• Personalization/Customization(Based
on consumer’s purchases and
behavior)
Key Concepts in E-commerce
• Information symmetry
• Flexibility due to lower search cost,
transaction costs, menu
costs(merchants’ costs of changing
prices) and dynamic pricing( The price
of product varies depending on the
demand characteristics or supply
situation)
• Disintermediation
Key Concepts in E-commerce
• Digital goods: delivered over a digital
network
• Internet business models (Virtual store
front, Information broker, Transaction
broker, Online market place, Content
place, Social network, Portal, Service
provider )
Internet Business Models
• Communication and Social Networking
(eBay, GoIndustry , banner ads, popup) Social Shopping(Kaboodle,
ThisNext, StyleHive)
• Digital content, entertainment, and
services (New York Times, Online
games,Movies, music,podcasting,
vcast)
Categories of Electronic
Commerce
•
•
•
•
Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)
Mobile commerce (m-commerce)
Business-to-Business Electronic
Commerce
• Procurement/E-procurement
– Catalogs, Auctions
– Vendor-managed inventory systems
– Automated purchasing: Electronic Data
Interchange
– Payment systems
• Private industrial networks (Private
Exchanges)
– E.g. Network of all suppliers of Wal-Mart
• Net marketplaces (or Exchanges)
– Across industries
– Within a specific Industry (e.g. FoodTrader.com)
Electronic Data Interchange (EDI)
Figure 9-5
Companies use EDI to automate transactions for B2B ecommerce and continuous inventory replenishment. Suppliers
can automatically send data about shipments to purchasing
firms. The purchasing firms can use EDI to provide production
and inventory requirements and payment data to suppliers.
M-Commerce Services and
Applications
•
•
•
•
•
Mobile bill payment
Banking and financial services
Wireless advertising
Location-based services
Games and entertainment
M-Commerce Challenges
• Awkwardness of keyboards and
screens
• Data transfer speeds
• Cost
• Limited memory and power supplies on
devices
• Content
Types of Electronic Payment
Systems
• Digital credit card payment systems (eCharge)
• Digital wallet (Q*Wallet)
Shoppers don’t need to enter their address and card
information repeatedly.
• Micropayment
• Accumulated balance digital payment systems
(QPass)
• Stored value payment systems (eCount)
Payment is based on the value stored in an online
digital account.
Types of Electronic Payment
Systems
• Peer-to-peer payment systems (e.g.
PayPal)
• Digital checking payment systems (e.g.
eCheck)
• Electronic billing presentment and
payment systems (e.g. your bank’s
online bill payment feature; CheckFree
– consolidates bills)