Chapter 8 E-Commerce

Advantages of e-commerce

-Enhances relationships with suppliers, customers, business partners -Creates price transparency -Operates around the clock and globe -Gathers more information on potential customers -Increases customer involvement -Improves customer service

Disadvantages of e-commerce

-bandwidth capacity problems -security/privacy issues -accessibility (not everyone is connected to the web) -acceptance (not everyone accepts this technology)

E-government Categories:

-government-to-citizen (G2C): tax filing and payments, downloading files, requests for record, online voter registration -government-to-business (G2B): sales of federal assets, license applications and renewals. -government-to-government (G2G): disaster assistance and crisis response -government-to-employee (G2E): e-training

e-commerce

buying and selling goods and services over the Internet. in other words, e-commerce is part of e-business. it builds on traditional commerce by adding the flexibility that networks offer and the availablity of the internet.

Business-to-Consumer (B2C) E-Commerce

companies- such as amazon, barnesandnoble.com- sell directly to consumers.

The Value Chain

one way to examine e-commerce and its role in the business world is through value chain analysis. Michael Porter introduced the value chain concept. It consists of a series of activities designed to meet business needs by adding value (or cost) in each phase of the process. Typically, a division within a business designs, produces, markets, delivers, and supports its products or services. Each activity adds cost and value to the product or service delivered to the customer. The top four components are organizational infrastructure, human resource development, and procurement and they are supporting activities. Primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service.

The Mixed Model (e-commerce business models)

refers to generating revenue from more than one source. for example, amazon generate revenue from amazon prime subscription fees and also from selling products and services to its customers.

Voice-Based E-Commerce

relies on voice recognition and text-to-speech technologies. voice assistant platforms such as amazons Alexa and googles assistant are moving voice commerce to the next level. Siri lets users send messages, make phone calls, set reminders using their voices. security features for this type of e-commerce includes call recognition, voice recognition, shipping to a set address

Trading Partner Agreements (major models of B2B e-commerce)

the main objectives are to automate negotiating processes and enforce contacts between participating businesses. using this model, business partners can send and receive bids, contracts, and other information needed when offering and purchasing products and services. this model will become more common with the development of electronic business eXtensible Markup Language (ebXML), a worldwide project working on using XML to standardize the exchange of e-commerce data, like electronic contracts. using this model enables customers to submit, via internet, electronic documents that previously required hard copies with signatures.

Major Models of B2B E-Commerce

there are three major models of B2B e-commerce, based on who controls the marketplace- seller, buyer, or intermediary (third party). seller-side marketplace, buyer-side marketplace, and third-party exchange marketplace. a fourth marketplace model, trading partner agreements, which facilitates contracts and negotiations among business partners, is also gaining popularity.

Omnichannel (B2C e-commerce evolution channel)

this strategy seeks to integrate the physical stores, the internet, and mobile technologies. using this, a sales associate who cannot find a product at his or her particular store will be able to quickly find it somewhere in the company operations and have it sent to the customer free of charge. it is designed to create seamless communication among all sales channels. advantages: improves customer satisfaction and retention, allows to meet customers where they are, retains more customers, increases revenue and improves brand recognition. Disadvantage: its complexity, it requires a large number of people in a lot of different places all to be on the same page

E-Commerce Supporting Technologies

-Electronic payment systems -Web marketing -Mobile marketing -Search engine optimization

electronic payment systems (e-commerce supporting technologies)

-electronic payment: a transaction in which money or scrip is exchanged, only electronically. this usually involves the internet, other computer networks, and digitally stored value systems. -smart cards: about the size of a credit card and contains an embedded microprocessor chip for storing important financial and personal information. the chip can be loaded with information and updated periodically. - e-cash: a secure and convenient alternative to bills and coins, complements credit, debit, and charge cards and adds convenience and control to everyday cash transactions. - e-check: the electronic version of a paper check, offers security, speed, and convenience for online transactions. -digital wallet: available in most handheld devices, offers a secure, convenient, and portable tool for online shopping. they store personal and financial information, such as credit card numbers, passwords, and PINs. -Paypal: popular online payment system used for many online transactions. users with valid e-mail addresses can set up accounts and make secure payments using their credit cards or bank accounts. -Venmo: users can transfer funds to others via mobile app, both the sender and receiver have to live in the US -Micropayments: transactions on the web involving very small amount of money. they began as a method for advertisers to pay for cost per view or cost per click.

five major activities involved in conducting B2C e-commerce

-information sharing: this type of e-commerce company can use a variety of methods to share information with its customers, such as company websites, online catalogs, emails, etc. -ordering: customers can use electronic forms or e-mail to order products from a B2C site. -payment: customers have a variety of payment options, such as credit cards, e-checks, and digital wallets. -fulfillment: delivering products or services to customers varies, depending on whether physical products (books, videos, CDs) or digital products (software, music, electronic documents) are being delivered. it often includes delivery address verification and digital warehousing and digital warehousing. several third-party companies are available to handle fulfillment functions for e-commerce sites. -service and support: more important in e-commerce than in traditional commerce, given that e-commerce companies don't have a physical location to help maintain current customers. since maintaining customers is less expensive than attracting new customers, e-commerce companies should make an effort to improve customers service and support by using e-mail confirmations and product updates, online surveys, help desks, etc.

E-Commerce vs. Traditional Commerce

Although the goal of e-commerce and traditional commerce is the same- selling products and services to generate profit- they do it quite differently. In e-commerce: the web and telecommunication technologies play a major role. Often there is no physical store, and the buyer and seller do not see each other. Uses web sites, online catalogs, e-mail, extranets, and electronic data interchange (EDI). In traditional commerce the web does not play as big of a role and there is a physical store with more buyer and seller interaction. uses magazines, flyers, regular mail, phone calls, faxes, printed forms.

Click-and-brick e-commerce

These companies operate as a mix of traditional commerce and e-commerce, however, and have some kind of e-commerce presence. It mixes traditional commerce and e-commerce. It capitalizes on the advantages of online interaction with customers yet retains the benefits of having a physical store location.

E-Commerce Business Models

To achieve profitability, e-commerce companies focus their operations in different parts of the value chain. Models: merchant model, brokerage model, advertising model, mixed model, infomediary model, subscription model

Buyer-Side Marketplace (major models of B2B e-commerce)

a buyer, or a group of buyers, opens an electronic marketplace and invites sellers to bid on announced products or make a request for quotation (RFQ). using this model, buyers can manage the procurement process more efficiency, lower administrative costs, and implement uniform pricing. companies invest in this model with the goal of establishing new sales channels that increase their market presence and lower the cost of each sale. this model allows sellers to: conduct sales transaction, automate the order management process, conduct post sales analysis, automate the fulfillment function, improve understand of buying behaviors, provide an alternative sales channel and reduce order placement and delivery time

Multichannel (B2C e-commerce evolution channel)

a customer uses one channel of a given business to purchase an item, including in-store, on a cell phone, on the company website, social media channels, comparison shopping engines, third-party marketplaces, other companies websites, and so forth. advantages: it targets consumers at different stages of the buyers activities, it leverages the power of marketplace and search engines because multichannel sellers have more freedom and flexibility and are able to take advantage of different features that each channel offers. disadvantages: selling on the wrong channels, an infrastructure must be in place in order to maintain a multichannel strategy.

Cross-Channel (B2C e-commerce evolution channel)

a customer uses several channels in order to buy an item. this strategy offers more freedom and convenience to the customer. for example, "click & collect" allows customers to order online and pick up the item in-store or at some agreed-upon location. alternatively, a customer tries some items on at a store, thinks about it later at home, and eventually orders it online. using this strategy, channels aren't in competition any longer and they could complement each other. advantages: makes buyers purchase activities more enjoyable, makes customer service more personal, attracts new customers, improves brand image, increases sales opportunities. disadvantages: limited resources and the challenges involved for the integration of various channels.

Search Engine Optimization (SEO) (e-commerce supporting technologies)

a method for improving the volume or quality of traffic to a web site. it helps a web site receive a high ranking in the search results, which tends to generate more revenue. unlike web-marketing methods that involve paying for listings on search engines, SEO aims at increasing a web sites performance on search engines in a natural and free fashion. SEO includes techniques that make it easier for search engines to find and index a site for certain keywords. for example: keywords, page title, inbound links, content, and links to others.

Social Commerce

a subset of e-commerce that is influenced by social networks and other online media enhanced by the ever-increasing power of smartphones. it involves the interaction and user contribution aspects of social online media to assist online buying and selling of products and services, like social media influencers recommending or promoting products. the categories of social networks and online media that collectively constitute social commerce: social networking sites, group buying platforms, peer-to-peer e-commerce platforms, recommendation web sites, participatory e-commerce, social advice, user-curated shopping.

The Advertising Model (e-commerce business models)

an extension of traditional advertising media, such as radio or television. directories such as Yahoo! provide content to users for free. by creating more traffic with this free content they can charge companies for placing banner ads or leasing spots on their sites.

Social Media Information System (SMIS)

an information system that includes all the components like other information systems such as hardware, software, people, and procedures that support content sharing among its members or users. three additional components of a SMIS include: application providers, user communities, sponsors. SMIS plays a major role in fostering hypersocial organizations by creating communities to transform interactions with users, customers, employees, and business partners into a mutually productive relationship.

Mobile Commerce (m-commerce)

based on the Wireless Application Protocol (WAP), it is the use of handheld devices, such as smartphones or wireless devices, to conduct business transactions. supporting technologies for this include wireless wide area networks (WWANs) and 3G and 4G networks, short-rani wireless communication technologies, such as Wi-Fi, WiMAX, bluetooth, and RFID. applications for this include iPhone apps.

B2C E-Commerce Evolution

because of the increasing competition among traditional and e-commerce businesses, both groups are deploying multiple sales channels in order to attract more customers and provide additional convenience to them. these channels include multichannel, cross-channel, and omnichannel

The Brokerage Model (e-commerce business models)

brings sellers and buyers together on the Web and collects commissions on transactions between these parties. best example is an online auction. auction sites can generate additional revenue by selling banner advertisements. another example are online stockbrokers which generate revenue by collecting commissions from buyers and sellers of securities

Ways e-commerce can enhance a value chain

by offering new ways to reduce costs or improve operations, like using e-mail rather than regular mail to notify customers of upcoming sales can reduce costs, selling to customers via the company web site can generate new sources of revenue, particularly from customers who live far away from the company headquarters or physical stores, offering online customer service can make products or services more appealing to customers.

The Infomediary Model (e-commerce business models)

collect information on consumers and businesses and then sell this information to other companies for marking purposes. For example, bizrate collects information about the performance of other sites and sells this information to advertisers.

Hypersocial Organizations

companies that leverage social media in order to turn the business into a social process, and, as a result, be able to better connect with their customers and sell more products and services. these organizations share information through many different avenues, like direct social media interactions as in Facebook or twitter posts. these organizations leverage the power of online communities, there are four key elements for a successful community: members, content, member profiles, and transactions.

The Subscription Model (e-commerce business models)

e-commerce sites sell digital products or services to customers. for example, Wall Street journal offer online subscriptions and antivirus vendors use this model to distribute their software and updates.

Business-to-Business (B2B) E-Commerce

electronic transactions between businesses. these transactions have been around for many years in the form of electronic data interchange (EDI) and electronic funds transfer (EFT). the internet has increased the number of these transactions and it has become the fastest-growing segment of e-commerce. extranets are used for this so that companies can rely on other companies for supplies, utilities, and services.companies using these applications for purchase orders, invoices, inventory status, etc. report millions of dollars in savings by increasing transaction speed, reducing errors, and eliminating manual tasks.

e-business

encompasses all the activities a company performs in selling and buying products and services using computers and communication technologies. includes several related activities, such as online shopping, sales force automation, supple chain management, electronic procurement/payment systems, web advertisement. it includes not only transactions that center on buying and selling goods and services to generate revenue but also transactions that generate demand for goods and services, offer sales support and customer service, and facilitate communication between partners.

Consumer-to-Consumer (C2C) E-Commerce

involves business transactions between users, such as when consumers sell to other consumers via the internet. when people use online classified ads or auction sites.

Organizational or Intrabusiness E-Commerce

involves e-commerce activities that take place inside an organization, typically via the organization's intranet. These activities can include the exchange of goods, services, or information among employees. Not part of the nine major categories of e-commerce, but they support overall e-business activities. other examples are conducting training programs and offering human resource services. some of these activities, though not specifically buying and selling, are considered supporting activities in porters value chain

Consumer-to-Business (C2B) E-Commerce

involves people selling products or services to businesses, such as when a consumer creates online surveys for a company to use. also when businesses use crowd-sourcing by asking consumers to perform services- such as contributing to a website- for a fee.

Government and Nonbusiness E-Commerce

many government and other nonbusiness organizations use e-commerce applications, including department of defense, the internal revenue service, and the department of the treasury. this applications are broadly called E-GOVERNMENT applications and have 3 different categories.

Mobile Marketing (e-commerce supporting technologies)

online businesses should have a mobile marking strategy in order to stay competitive. popular mobile marketing strategies are: app-based marketing, in-game mobile marketing, location-based marketing, QR codes (quick response codes), mobile search ads, mobile image ads, SMS (short message service)

Third-Party Exchange Marketplace (major models of B2B e-commerce)

this model is not controlled by sellers or buyers. instead, its controlled by a third party, and the marketplace generates revenue from the fees charged for matching buyers and sellers. A vertical market concentrates on a specific industry or market, such as the utilities industry, the beef and dairy industry. A horizontal market concentrates on a specific function or business process and automates it for different industries. employee-benefits administration and media buying are examples. this model offers suppliers a direct channel of communication to buyers through online storefronts. the interactive procedures in the marketplace have features like product catalogs, requests for information (RFI), rebates and promotions

Seller-Side Marketplace (major models of B2B e-commerce)

this model occurs most often. sellers who cater to specialized markets, such as chemicals, electronics, and auto components, come together to create a common marketplace for buyers- sort of one-stop shopping model. sellers can pool their market power and buyers search for alternative sources is simplified. a popular application of this model is e-procurement, which enables employees in an organization to order and receive supplies and services directly from suppliers. e-procurement streamlines the price negotiation part, which reduces costs, saves time, and improves relationships between suppliers and participating organizations.

The Merchant Model (e-commerce business models)

transfer the old retail model to the e-commerce world by using the medium of the internet. in the most common type of this model, an e-commerce company uses internet technologies and web services to sell goods and services over the web. companies following this model offer good customer service and lower prices to establish a presence on the web.

Web Marketing (e-commerce supporting technologies)

uses the web and its supporting technologies to promote goods and services. examples: ad impression, banner ads, click, cost per thousand, cost per click, click-through rate, cookie, hit, meta tag, page view, pop-up ads, pop-under ads, splash screen, spot leasing.