Management Information Systems
Chapter Ten
E-Commerce: Digital Markets, Digital Goods
Md. Golam Kibria
Lecturer, Southeast University
E-commerce and the Internet
• E-commerce today:
– Use of the Internet and Web to transact
business; digitally enabled transactions
– Began in 1995 and grew exponentially, still
growing even in a recession
– Companies that survived the dot-com bubble
burst and now thrive
– E-commerce revolution is still in its early
stages
THE GROWTH OF E-COMMERCE
Why e-commerce is different
Ubiquity
Internet/Web technology available everywhere:
work, home, etc., anytime.
Effect:


Marketplace removed from temporal, geographic
locations to become “marketspace”
Enhanced customer convenience and reduced
shopping costs
Global Reach
The technology reaches across national boundaries,
around Earth
Effect:


Commerce enabled across cultural and national
boundaries seamlessly and without modification
Marketspace includes, potentially, billions of
consumers and millions of businesses worldwide
Universal standards
One set of technology standards: Technical
standards of Internet
Effect:
– Disparate computer systems easily communicate
with each other
– Lower market entry costs—costs merchants must
pay to bring goods to market
– Lower consumers’ search costs—effort required to
find suitable products
Richness
Supports video, audio, and text messages
Effect:
– Possible to deliver rich messages with text, audio,
and video simultaneously to large numbers of
people
– Video, audio, and text marketing messages can be
integrated into single marketing message and
consumer experience
Richness
Supports video, audio, and text messages
Effect:
– Possible to deliver rich messages with text, audio,
and video simultaneously to large numbers of
people
– Video, audio, and text marketing messages can be
integrated into single marketing message and
consumer experience
Information density
Large increases in information density—the total
amount and quality of information available to
all market participants
Effect:
– Greater price transparency
– Greater cost transparency
– Enables merchants to engage in price discrimination
Personalization/Customization
Technology permits modification of messages,
goods
Effect
– Personalized messages can be sent to individuals as
well as groups
– Products and services can be customized to
individual preferences
Social technology
The technology promotes user content
generation and social networking
Effect
– New Internet social and business models enable
user content creation and distribution, and support
social networks
Types of e-commerce
Business-to-consumer (B2C)
B2C involves retailing products and services to individual
shoppers.
Example: Amazon.com
Business-to-business (B2B)
B2B involves sales of goods and services among businesses.
Example: ChemConnect.com
Consumer-to-consumer (C2C)
C2C involves consumers selling directly to consumers.
Example: eBay.com
E-commerce Business Models
Portal
Portals offer powerful web search tools as well as an
integrated package of content and services such as news,
email, maps, and more, all in one place.
Example: Yahoo, Google
E-tailer
Online retail stores that sell product and services by using
website.
Example: Amazon.com
Content Provider
Creates revenue by providing digital contents, such as news,
music, photos, or video over the web.
Example: iTunes.com, Games.com
Transaction Broker
Saves users money and time by processing online sales
transactions and generating a fee each time a transaction
occurs.
Example: Etrade.com, Expedia
Market Creator
Market Creator provides a digital environment where buyers
and sellers can meet, search for products, display products, and
establish prices for those products.
Example: eBay
Community Provider
Provides an online meeting place where people with similar
interasts can communicate and find useful information
Example: Facebook, MySpace
Service Provider
Provides Web 2.0 applications such as photo sharing, video
sharing, and user generated content as services.
Example: Google Apps, Xdrive.com
E-commerce revenue models
Advertising Revenue Model
In the advertising revenue model, a Web site generates
revenue by attracting a large audience of visitors who can then
be exposed to advertisements.
Example: Yahoo.com
Sales Revenue Model
In the Sales Revenue Model, companies derive revenue by
selling goods, information, or services to customers.
Example: Amazon.com
Subscription Revenue Model
In subscription model, a web site offering content or services
charges a subscription fee for access to some or all of its
offerings on an ongoining basis.
Example: Wall Street Journal
Free/ Freemium Revenue Model
In this model, firms offer basic services or content for free,
while charging a premium for advanced or special features.
Example: Google, Pandora
Transaction Fee Revenue Model
A company receives a fee for enabling or executing a
transaction.
Example: ebay, E*Trade
Affiliate Revenue Model
In the affiliate revenue model, Web sites send visitors to other
Web sites in return for a refferal fee or percentage of the
revenue from any resulting sales.
Example: MagicRooms Solutions