Chapter 7 E-Business and E-Commerce

Major E-Commerce Mechanisms

-Electronic catalogs -Electronic auctions -E-storefronts -E-malls -E-marketplaces

Ethical Issues

1. Threats to Privacy 2. Potential Job Loss -The use of EC may eliminate the need for some of a company's employees, as well as brokers and agents.

Reverse Auction

A major method of procuring goods and services in the buy-side model is the reverse auction.

Electronic Tendering System

Businesses request quotes from suppliers. Uses B2B with a reverse auction mechanism

Public Exchanges

Electronic marketplaces that are independently owned by a third party, and they connect many sellers with many buyers which are open to all business organizations and frequently owned and operated by a third party.

Taxes and Other Fees

Federal, state, and local authorities are now scrambling to create some type of taxation policy for e-business within their jurisdictions.

Key Mechanisms in the Sell-Side Marketplace Model

Forward auctions Electronic catalogs customized for each large buyer Third-Party Auction Sites (e.g., eBay)

E-Commerce

The process of buying, selling, transferring, or exchanging products, services, or information via computer networks, including the Internet.

Auction

a competitive buying and selling process in which prices are determined dynamically by competitive bidding.

Buy-Side Marketplaces Model

a model in which organizations attempt to procure needed products or services from other organizations electronically. Procurement is the overarching function that describes the activities and processes to acquire goods and services.

Virtual (or pure-play) Organizations

all dimensions of the organization are digital and they engage in pure electronic commerce only.

Virtual Credit Cards:

allow customers to shop online and can be used only once in order to thwart criminals by using a different, random card number every time you shop online.

Digital Wallet

an application used for making financial transactions. These apps can be on users' desktops or on their smartphones.

Consumer-to-consumer (C2C)

an individual sells products or services to other individuals.

Business-to-employee (B2E)

an organization uses EC internally to provide information and services to its employees.

Purchasing Cards

are the B2B equivalent of electronic credit cards and in some countries, purchasing cards are the primary form of payment between companies.

Electronic Checks: (e-checks),

are used primarily in B2B, are similar to regular paper checks.

Business-to-business (B2B)

both the sellers and the buyers are business organizations. B2B comprises the vast majority of EC volume.

Domain Names

considered legal when the person or business who owns the name has operated a legitimate business under that name for some time.

Electronic Exchanges:

deal in both direct and indirect materials.

Mobile commerce (M-commerce)

e-commerce that is conducted entirely in a wireless environment.

Electronic Payment Mechanisms:

enable buyers to pay for goods and services electronically, rather than writing a check or using cash.

Person-to-Person Payments

enable two individuals, or an individual and a business, to transfer funds without using a credit card (e.g., PayPal).

Private Exchanges:

have one buyer and many sellers.

Direct Materials:

inputs to the manufacturing process, such as safety glass used in automobile windshields and windows.

Copyright

intellectual property is protected by copyright laws and cannot be used freely which is difficult to enforce online.

Domain Tasting

lets registrars profit from the complex money trail of pay-per-click advertising. companies register domain names that are very similar to their competitors' domain names in order to generate traffic from people who misspell Web addresses. Domain tasters exploit this policy by claiming Internet domains for five days at no cost.

Reverse Auctions

one buyer, usually an organization, wants to purchase a product or a service and buyer posts a request for quotation (RFQ) on its Web site or on a third party site. Prices tend to decrease over time.

Sell-Side Marketplace Model

organizations attempt to sell their products or services to other organizations electronically from their own private e-marketplace Web site and/or from a third-party Web site. In the B2B sell-side marketplace the buyer is an organization

Clicks-and-Mortar (or Clicks-and-Bricks)

organizations that are partial electronic commerce (EC) combining both virtual and physical dimensions.

Brick-and-Mortar Organziations

organizations that exist as purely physical organizations.

Forward Auctions

sellers solicit bids from many potential buyers and prices tend to increase over time.

Indirect Materials

those items, such as office supplies, that are needed for maintenance, operations, and repairs (MRO).

E-procurement

uses reverse auctions, particularly group purchasing

Group Purchasing

(e-coops) Small buyers aggregate demand to create a large volume; the group then conducts tendering or negotiates a low price

Three Basic Types of Public Exchanges:

1. Vertical Exchanges: connect buyers and sellers in a given industry. 2. Horizontal Exchanges: connect buyers and sellers across many industries. 3. Functional Exchanges: needed services such as temporary help/labor or extra office space are traded on an "as-needed" basis.

Bartering Oinline

Intermediary administers online exchange of surplus products and/or company receives "points" for its contribution, which it can use to purchase other needed items (www.bbu.com)

E-Commerce Business Models

Online direct marketing Electronic tendering system Name-your-own-price Find-the-best-price Affiliate marketing Viral marketing Group purchasing (e-coops)

Business-to-Business (B2B) Electronic Commerce

Sell-Side Marketplaces Buy-Side Marketplaces Electronic Exchanges

Electronic Cards:

There are a variety of electronic cards, and they are used for different purposes. The most common types are electronic credit cards, virtual credit cards, purchasing cards, stored-value money cards, and smart cards.

Electronic marketplaces or transactions

Transactions are conducted efficiently (more information to buyers and sellers, lower transaction costs) in electronic marketplaces (private or public)

Electronic Storefront

a Web site that represents a single store.

Electronic Marketplace (e-marketplace)

a central, virtual market space on the Web where many buyers and many sellers can conduct e-commerce and e-business activities.

Stored-Value Money Cards:

allow you to store a fixed amount of prepaid money and then spend it as necessary and each time you use the card, the amount is reduced by the amount you spent.

Sell-Side Marketplace Model

organizations attempt to sell their products or services to other organizations electronically from their own private e-marketplace Web site and/or from a third-party Web site. In the B2B sell-side marketplace the buyer is an organization.

Cybersquatting

the practice of registering or using domain names for the purpose of profiting from the goodwill or the trademark that belongs to someone else. The Anti-Cybersquatting Consumer Protection Act (1999) permits trademark owners in the United States to sue for damages in such cases.

Purchasing

the process of ordering and receiving goods and services and it is a subset of the procurement process.

Business-to-consumer (B2C)

the sellers are organizations, and the buyers are individuals.

Benefits & Limitations of E-Commerce

1. Organization Benefit: national and international markets more accessible by lowering the costs of processing, distributing, and retrieving information. 2. Customer Benefit: by being able to access a vast number of products and services, around the clock. 3. Benefit to Society: the ability to easily and conveniently deliver information, services, and products to people in cities, rural areas, and developing countries.

Threats to Privacy:

Business makes it easier to store and transfer personal information To protect the buyers' identities businesses must frequently use encryption to provide this protection Tracking: individuals' activities on the Internet can be tracked by cookies that store a user's browsing history on their PC's hard drive Antivirus software packages must routinely search for potentially harmful cookies.

Online Auctions

Companies run auctions of various types on the Internet. Very popular in C2C, but gaining ground in other types of EC as well (www.ebay.com)

Deep Discounters

Company offers deep price discounts. Appeals to customers who consider only price in their purchasing decisions (www.half.com)

Name-your-own-price

Customers decide how much they are willing to pay. An intermediary tries to match a provider (www.priceline.com)

Find-the-best-price

Customers specify a need; an intermediary compares providers and shows the lowest price. Customers must accept the offer in a short time, or they may lose the deal (www.hotwire.com)

Product Customization

Customers use the Internet to self configure products or services. Sellers then price them and fulfill them quickly (build-to-order) (www.jaguar.com)

E-Government

E-government is the use of Internet technology in general and e-commerce in particular to deliver information and public services to citizens.

Key Mechanisms in the Sell-Side Marketplace Model:

Forward auctions Electronic catalogs customized for each large buyer Third-Party Auction Sites (e.g., eBay)

Technological Limitations:

Lack of universally accepted security standards In less-developed countries, telecommunications bandwidth often is insufficient, and accessing the Web is expensive.

Online Direct Marketing

Manufacturers or retailers sell directly to customers. Very efficient for digital products and services. Can allow for product or service customization (www.dell.com)

E-Commerce Business Models (Continued)

Online Auctions Product customization Electronic marketplaces Bartering online Deep discounters Membership

Membership

Only members can use the services provided, including access to certain information, conducting trades, etc. (www.egreetings.com)

Non-technological Limitations of E-Commerce

Perceptions that EC is insecure EC has unresolved legal issues EC lacks a critical mass of sellers and buyers.

Procurement

Procurement: involves the activities necessary to establish requirements, sourcing activities such as market research and vendor evaluation, and negotiation of contracts.

Viral Marketing

Recipients of your marketing notices send information about your product to their friends

Affiliate Marketing

Vendors ask partners to place logos (or banners) on partner's site. If customers click on logo, go to vendor's site, and make a purchase, then the vendor pays commissions to the partners

Smart Cards

a chip that can store a considerable amount of information—more than 100 times the amount contained on a stored-value money card and are frequently multipurpose. That is, you can use them as a credit card, a debit card, a stored-value money card, or a loyalty card.

E-Business

in addition to the buying and selling of goods and services, e-business (a broader concept) refers to servicing customers, collaborating with business partners, and performing electronic transactions within an organization.

Degree of Digitization

the extent to which the commerce has been transformed from physical to digital which can relate to both the product or service being sold and the delivery agent or intermediary. In other words, the product can be either physical or digital, and the delivery agent can also be either physical or digital.