Chapter 10: E-Commerce Unique Features

Crowdsourcing?

Crowds actively help solve business problems

What is the most popular E-Commerce Revenue model today?

One of the fastest growing areas of e-‐commerce revenues are Web 2.0 online services. With the most popular being social networking. Social shopping sites allow users to swap shopping ideas with friends. Facebook offers this same service on a voluntary basis. Online communities are also ideal venues to employ viral marketing techniques.

Social Technology?

The new Internet and E-‐Commerce empower users to create and distribute content on a large scale, and permit users to program their own content consumption.

Universal Standards?

The technical standards of conducting E-‐Commerce are universal standards. They are shared by all nations around the world and enable any computer to link with any other computer regardless of the technology platform each is using.

Affiliate Revenue Model?

Web sites send visitors to other web sites in return for a referral fee or percentage of the revenue from any resulting sales. Some bloggers are paid directly by manufacturers or receive free products, for speaking highly of products and providing links to sales channels.

Marketspace?

a market space extended past traditional boundaries and removed from a temporal or geographical location.

Podcasting?

is a method of publishing audio or video broadcasts via the Internet.

Cost transparency?

refers to the ability of consumers to discover the actual costs merchants pay for products. .

Community Provider?

Sites that create a digital online environment where people with similar interests can buy and sell goods; share interests, photos, videos, communicate and make avatars. (facebook, myspace, twitter). Social networking sites have been the fastest growing web sites in recent years.

Transaction Broker?

Sites that process transactions for consumers normally handled in person, by phone, or by mail. The largest industries using this model are financial services and travel services. The primary value proposition is saving money and time, as well as providing extraordinary inventory of financial products and travel packages, in a single location.

Dynamic Pricing ?

The price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller.

Information Density?

The total amount and quality of information available to all market participants, consumers, and merchants alike. Information density makes prices and costs more transparent.

Intellectual property?

refers to all forms of human expression that can be put into a tangible medium such as text, CD's, DVD's. or stored on any digital (or other) media, including the Web. The value proposition of online content providers is that consumers can find a wide range of content online, conveniently, and purchase this content inexpensively, to be played, or viewed, on multiple computer devices or smartphones. Providers do not have to be the creators of the content.

Customization?

the changing of the delivered product or service based on a user's preferences or prior behavior.

Ubiquity reduces transaction costs, which are what?

the costs of participating in a market

Net Marketplaces?

(e-‐hubs) provide a single digital marketplace based on web technology for many different buyers and sellers. They are industry owned or operated as independent intermediaries between buyers and sellers. Participants can set prices through online negotiations, auctions, or requests for quotations, or used fixed prices.

Advertising Revenue Model?

A Web site generates revenue by attracting a large audience of visitors who can then be exposed to advertisements. The advertising model is the most widely used revenue model in E-‐Commerce.

Subscription Revenue Model?

A web site offering content or services charges a subscription fee for access to some or all of its offerings on an ongoing basis.Netflix is one of the most successful subscriber sites with more than 15 million subscribers.

The Internet reduces information asymmetry, which is?

An information asymmetry exists when one party in a transaction has more information that is important for the transaction than the other party. That information helps determine their relative bargaining power.

The Wisdom of Crowds?

Argue that large numbers of people can make better decisions about a wide range of topics of products than a single person or even a small committee of experts.

Long Tail Marketing?

Before the Internet, reaching a large audience was very expensive and marketers had to focus on attracting the largest number of consumers with popular hit products. The Internet allows marketers to inexpensively find potential customers, for whom demand is very low, people on the far ends of the bell curve. For example, selling independent music profitably to very small audiences. There's always some demand for any product.

Mobile E-‐Commerce (m-‐commerce)?

Both business to business and business to consumer e-‐commerce transactions can take place using m-‐commerce technology.

Bricks-‐ and-‐clicks ?

Bricks-‐ and-‐clicks are subsidiaries or divisions of existing physical stores and carry the same products (walmart.com).

Sales Revenue Model?

Companies derive revenue by selling goods, information, or services to customers. Amazon.com makes money by selling it's products. Content providers make money by charging for downloads of entire files, such as music tracks. Micropayment systems provide content providers with a cost-‐effective method for processing high volumes of very small monetary transactions

Content Provider?

Content providers distribute information content, such as digital video, music, photos, text, and artwork over the web.

Why are Digital Markets Flexible?

Digital markets are very flexible and efficient because they operate with reduced search and transaction costs, lower menu costs, greater price discrimination, and the ability to change prices dynamically based on market conditions.

What is Ubiquity?

E-Commerce is ubigious, meaning it is available virtually anywhere, at all times.

Global Reach?

E-Commerce permits commercial transaction to move across cultural and national boundaries far more easily than traditional commerce

Interactivity?

E-‐Commerce technologies allow for two-‐way communication between merchant and consumer.

Consumer to Consumer (C2C)?

Electronic commerce involves customers selling directly to consumers. Ebay is an example of a company that enables consumers to sell directly to other consumers. Craigslist is the most widely used platform used by consumers to buy and sell directly to other consumers.

Business to Business (B2B)?

Electronic commerce involves sales of goods and services among businesses. A chemical company that sells to cleaning company manufacturers is an example.

Electronic Data Interchange?

Enables the computer to computer exchange between two organizations of standard transactions such as invoices, bills of lading, shipment schedules, or purchase orders. Transactions are automatically transmitted from one information system to the other through a network, eliminating the printing and handling of paper at one end and the inputting of data on the other.

Prediction Markets?

Established as peer-‐to-‐peer betting markets where participants make bets on specific outcomes of things like designs for new products

Free/Freemium Revenue Model?

Firms offer basic services or content for free, while charging a premium for advanced or special features. One problem with this model is converting people from being "free loaders" into paying customers.

Digital Goods?

Goods that can be delivered over a digital network. The marginal cost of producing another unit is about zero. The cost of producing the original file is relatively high - in fact, it is nearly the total cost of the product because there are few other costs of inventory and distribution.

Exchanges?

Independently owned third party net marketplaces that connect thousands of suppliers and buyers for spot purchasing. Many essential direct purchases are not conducted on a spot basis because they require contracts and consideration of issues such as delivery, timing, customization, and quality of products.

Market Creator?

Market creators build a digital environment in which buyers and sellers can meet, display products, search for products, and establish prices. The value proposition of online market creators is that they provide a platform where sellers can easily display their wares and where purchasers can buy directly from sellers. (Ebay.com).

Personalization/Customization?

Merchants can target their marketing messages to specific individuals by adjusting the message to a person's name, interests and past purchases.

E-‐Tailer?

Online retail stores, often called e-‐tailers come in all sizes. The value proposition of e-‐tailers is to provide convenient low-‐cost shipping 24/7, offering large selections and consumer choice.

Portal?

Portals such as Google, Bing and, Yahoo offer powerful Web search tools as well as an integrated package of content and services, such as news and email. Portals were originally used for "gateways" to the Internet. Today, they provide a destination site where users start their web searching and linger to read the news. They generate revenue by attracting large audiences, charging for advertisements and collecting referral fees.

Richness?

Refers to the complexity and content of a message. The Web makes it possible to deliver rich messages with text, audio, and video simultaneously to large numbers of people.

Behavioral Targeting?

Refers to tracking the click-‐streams of individuals on thousands of Web sites for the purpose of understanding their interests and intentions, and exposing them to advertisements that are uniquely suited to their behavior. This leads to more efficient marketing. It also is a breach of consumer privacy and can lose the trust of the consumer which can halt purchases altogether. Behaviorally targeted ads are 10 times more likely to produce a consumer response than a randomly chosen banner ad.

Disintermediation?

Removal of organizations or business process layers responsible for intermediary steps in a value chain

Service Provider?

Service providers offer services online. Software is no longer a physical product, but increasingly software as a service that you subscribe to online rather than purchase from a retailer. Google has led the way with Google Apps.

The internet provides marketing with what?

The Internet provides marketers with new ways of identifying and communicating with millions of potential customers at costs far lower than traditional media

Private Industrial Networks?

Typically consist of a large firm using an extranet to link it's suppliers and other key business partners. The network is owned by the buyer, and it permits the firm and designated suppliers, distributors and other business partners to share product design and development. Another word for it is Private Exchange.

Publishing?

is a streaming method for music and video files that flows a continuous stream of content to a user's device without being stored locally on the device.

EDI?

is becoming increasingly more web enabled because Web technology allows for a much more flexible and low-‐cost platform for linking to other firms.

Price transparency?

refers to the ease with which consumers can find out the variety of prices in a market.

This allows for price discrimination, which is?

selling the same goods, or nearly the same goods to different groups and different prices

Transaction Fee Revenue Model?

A company receives a fee for enabling or executing a transaction. For example, Ebay provides an online auction marketplace and receives a small transaction fee from a seller if the seller is successful in selling an item.