MISY 5350 Exam 1 Review - Chapter 1

Examples of major types of e-commerce

1. B2C—business-to-consumer 2. B2B—business-to-business 3. C2C—consumer-to-consumer 4. M-commerce—mobile e-commerce 5. Social e-commerce 6. Local e-commerce

Unique features of e-commerce technology (multiple questions)

1. Ubiquity—E-commerce technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime. 2. Global reach—The technology reaches across national boundaries, around the earth. 3. Universal standards—There is one set of technology standards. 4. Richness—Video, audio, and text messages are possible. 5. Interactivity—The technology works through interaction with the user. 6. Information density—The technology reduces information costs and raises quality. 7. Personalization/Customization—The technology allows personalized messages to be delivered to individuals as well as groups. 8. Social technology—User-generated content and social networks.

Social Technology

In a way quite different from all previous technologies, e-commerce technologies have evolved to be much more social by allowing users to create and share content with a worldwide community. Using these forms of communication, users are able to create new social networks and strengthen existing ones. All previous mass media in modern history, including the printing press, used a broadcast model (one-to-many): content is created in a central location by experts (professional writers, editors, directors, actors, and producers) and audiences are concentrated in huge aggregates to consume a standardized product. The telephone would appear to be an exception but it is not a mass communication technology. Instead the telephone is a one-to-one technology. E-commerce technologies have the potential to invert this standard media model by giving users the power to create and distribute content on a large scale, and permit users to program their own content consumption. E-commerce technologies provide a unique, many-to-many model of mass communication.

E-commerce first mover, examples of success and failure

One rather unique competitive advantage derives from being a first mover. A first-mover advantage is a competitive market advantage for a firm that results from being the first into a marketplace with a serviceable product or service. If first movers develop a loyal following or a unique interface that is difficult to imitate, they can sustain their first-mover advantage for long periods (Arthur, 1996). Amazon provides a good example. However, in the history of technology-driven business innovation, most first movers often lack the complementary resources needed to sustain their advantages, and often follower firms reap the largest rewards (Rigdon, 2000; Teece, 1986). Indeed, many of the success stories we discuss in this book are those of companies that were slow followers—businesses that gained knowledge from the failure of pioneering firms and entered into the market late.

Webrooming

So thousands of firms have failed, and those few that have survived dominate the market. The idea of thousands of suppliers competing on price has been replaced by a market dominated by giant firms. Consumers use the Web as a powerful source of information about products they often actually purchase through other channels, such as at a traditional bricks-and-mortar store, a practice sometimes referred to as "webrooming," "ROBO" (research online, buy offline), or O2O (online-to-offline). One survey found that 80% of consumers said they had webroomed in the past 12 months. This is especially true of expensive consumer durables such as automobiles, appliances, and electronics (Netsertive, 2018). This offline "Internet-influenced" commerce is very difficult to estimate, but definitely significant. For instance, Forrester Research estimates that half of all U.S. retail sales (about $2.6 trillion) in 2018 are influenced by consumers' use of digital devices prior to or during a physical shopping trip (Forrester Research, 2018). All together then, retail e-commerce (actual online purchases) and purchases influenced by online shopping but actually bought in a store (Internet-influenced commerce) are expected to amount to over $3.6 trillion in 2018. The "commerce" in e-commerce is basically very sound, at least in the sense of attracting a growing number of customers and generating revenues and profits for large e-commerce players.

Web 2.0

a set of applications and technologies that enable user-generated content, such as that posted on online social networks, blogs, wikis, and video- and photo-sharing websites and apps; widespread adoption of mobile devices such as smartphones and tablet computers; the expansion of e-commerce to include local goods and services; and the emergence of an on-demand service economy enabled by millions of apps on mobile devices and cloud computing. This period can be seen as both a sociological, as well as a technological and business phenomenon.

Friction free commerce

a vision of commerce in which information is equally distributed, transaction costs are low, prices can be dynamically adjusted to reflect actual demand, intermediaries decline, and unfair competitive advantages are eliminated.

Disintermediation

displacement of market middlemen who traditionally are intermediaries between producers and consumers by a new direct relationship between producers and consumers.

Digital Commerce

e-commerce and digital commerce to be synonymous.

Figure 1.11

illustrates the major stages in the development of corporate computing and indicates how the Internet and the Web fit into this development trajectory.

Social e-commerce

is e-commerce that is enabled by social networks and online social relationships. Social e-commerce is often intertwined with m-commerce, particularly as more and more social network users access those networks via mobile devices. The growth of social e-commerce is being driven by a number of factors, including the increasing popularity of social sign-on (signing onto websites using your Facebook or other social network ID), network notification (the sharing of approval or disapproval of products, services, and content), online collaborative shopping tools, social search (recommendations from online trusted friends), and the increasing prevalence of integrated social commerce tools such as Buy buttons, Shopping tabs, marketplace groups, and virtual shops on Facebook, Instagram, Pinterest, YouTube, and other social networks.Social e-commerce is still in its relative infancy, but with social media and networks playing an increasingly important role in influencing purchase decisions and driving sales, it is continuing to grow. With the top 500 retailers reportedly generating $6.5 billion from social commerce in 2017, total revenues from social commerce in 2018 are likely to top $10 billion.

B2C e-commerce

online businesses selling to individual consumers. The most commonly discussed type of e-commerce is business-to-consumer (B2C) e-commerce, in which online businesses attempt to reach individual consumers. B2C e-commerce includes purchases of retail goods, travel, financial, real estate, and other types of services, and online content. B2C has grown exponentially since 1995 and is the type of e-commerce that most consumers are likely to encounter.

Marketplace

physical space you visit in order to transact.

C2C e-commerce

provides a way for consumers to sell to each other, with the help of an online market maker (also called a platform provider). In C2C e-commerce, the consumer prepares the product for market, places the product for auction or sale, and relies on the market maker to provide catalog, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for. eBay, Craigslist, and Etsy were the original C2C platform provider pioneers, but today they face significant competition. For instance, third-party sales on Amazon have skyrocketed. Facebook has also entered the arena with Facebook Marketplace. There are also a number of new entrants focused on the C2C market, such as Letgo, Offerup, Posh-mark, ThredUp, and Kidizen. On-demand service companies such as Uber and Airbnb can also be considered as C2C platform providers.

Information Asymmetry Problems

refers to any disparity in relevant market information among parties in a transaction. Problem - Consumers were trapped by geographical and social boundaries, unable to search widely for the best price and quality.

Mobile e-commerce

refers to the use of mobile devices to enable online transactions. M-commerce involves the use of cellular and wireless networks to connect smartphones and tablet computers to the Internet. Once connected, mobile consumers can purchase products and services, make travel reservations, use an expanding variety of financial services, access online content, and much more.

Definition of transaction cost

the cost of making a sale or purchase.

Definition and example of e-business

the digital enabling of transactions and processes within a firm, involving information systems under the control of the firm. Example of e-business -

Definition E-Commerce

the use of the Internet, the Web, and mobile apps and browsers running on mobile devices to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals.

Menu costs

traditional retailing.