Chp. 10 E-Commerce: Digital Markets, Digital Goods Vocab

Information density

The total amount and quality of info available to all market participants, consumers, and merchants alike. In e-commerce markets make prices and costs more transparent

Mobile commerce m commerce

The use of handheld wireless devices for purchasing goods and services from any location

Crowdsourcing

the practice of obtaining information or input into a task or project by enlisting the services of a large number of people, either paid or unpaid, typically via the Internet.

E commerce business models (7)

1. Portal - provides initial point of entry to the web along with specialized content and other services Yahoo, Bing, Google 2. E tailer - sells physical products directly to consumers or to individual businesses. Amazon, Blue Nile 3. Transaction broker - saves users money and time by processing online sales transactions. ETrade, Expedia 4. Market creator - eBay, Priceline 5. Content provider - WSJ, iTunes, Games 6. Community provider - Facebook, Google+ 7. Service provider - Google Apps, Dropbox

2 most important management challenges in building a successful e commerce presence are

1. developing a clear understanding of your business objectives 2. knowing how to choose the right tech to achieve those objectives

Transaction fee revenue model

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

Social Graph

A mapping of all significant online social relationships. Synonymous with the idea of a social network used to describe offline relationships.

Marketspace

A marketplace extended beyond traditional boundaries and removed from a temporal and geographic location

Podcasting

A method of publishing audio or video broadcasts through the Internet, allowing subscribing users to download audio or video files onto their personal computers, smartphones, tablets, or portable music players.

Streaming

A publishing 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

Advertising revenue model

A websites generates revenue by attracting a large audience of visitors who can then be exposed to advertisements. Most widely used revenue model in ecommerce, and arguably, without advertising revenues, the web would be a vastly different experience from what it is now because people would be asked to pay for access to content.

What are the steps needed to start an ecommerce business? (SA)

Access to the internet and ways to sell Develop a presence map Type of presence: Websites, email, social media, and offline media Develop a timeline Phases: Planning Website development Web implementation Social media plan Social media implementation Mobile plan

E commerce Revenue models (6)

Advertising Revenue Model Sales Revenue Model Subscription Revenue Model Free/Freemium Revenue Model Affiliate Revenue Model Transaction Fee Revenue Model

Types of E commerce (3)

B2B - Elemicas B2C - Amazon, walmart, iTunes C2C - eBay

Market creator

Build a digital environment in which buyers and sellers can meet, display products, search for products, and establish prices. They provide a platform where sellers can easily display their wares and purchasers can buy directly from sellers.

Geoinformation services

Can tell you the price of a house you are looking at or about special exhibits at a museum you are passing.

Geoadvertising services

Can tell you where to find the nearest Italian restaurant

Geosocial service

Can tell you where your friends are meeting

Customization

Changing the delivered product or service based on a user's preferences or prior behavior

Sales revenue model

Companies derive revenue by selling goods, information, or services to customers. Companies like Amazon, LLBean.com, and Gap.com all have this.

Consumer to consumer (C2C)

Ecommerce involves consumers selling directly to consumers. Ex. eBay, the giant web auction site, enables people to sell their goods to other consumers by auctioning their merchandise off to the highest bidder or for a fixed price.

Business to Consumer (B2C)

Ecommerce involves retailing products and services to individual shoppers. Amazon, Walmart, and iTunes are examples.

Business to Business (B2B)

Ecommerce involves sales of goods and services among businesses. Elemica's website for buying and selling chemicals and energy is an example.

Electronic Data Interchange (EDI)

Enables the computer to computer exchange between two organizations of standard transactions such as invoices, bills of lading, shipment schedules, or purchase orders. Used to define the structure and info fields of electronic documents for that industry.

Info asymmetry

Exists when one party in a transaction has more information that is important for the transaction than the other party. Helps determine their relative bargaining power.

Free/freemium revenue model

Firms offer basic services or content for free and charge a premium for advanced or special features. Ex. Google offers free apps but charges for premium services.

Example of Geosocial

Foursquare, Facebook, Google

Digital Goods

Goods that can be delivered over a digital network. Music, video, software...

Location based services

Include geosocial, geoadvertising, and geoinformation services. 74% of smartphone owners use this.

Exchanges

Independently owned third party Net marketplaces that connect thousands of suppliers and buyers for spot purchasing. Many provide vertical markets for a single industry, such as food, electronics, or industrial equipment, and they primarily deal with direct inputs.

Key concepts in e commerce

Info asymmetry Dynamic pricing Digital goods Intellectual property "works of the mind"

Native advertising

Involves placing ads in social network newsfeeds or within traditional editorial content, such as a newspaper article. Also referred to as organic advertising, where content and advertising are in very close proximity or integrated together.

Personalization

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

Menu costs

Merchants' cost of changing prices

Revenue model

Model that describes how the firm will earn revenue, generate profits, and produce a superior return on investment.

e tailers

Online retail stores. Similar to a typical bricks and mortar storefront,

Subscription revenue model

Provide content or services charges a subscription fee for access to some or all of its offerings on an ongoing basis. Content providers often use this model.

Micropayment systems

Provide content providers with a cost effective method for processing high volumes of very small monetary transactions. The largest on the web is Apple's iTunes Store.

Price Discrimination

Selling the same goods, or nearly the same goods, to different targeted groups at different prices.

Social Shopping

Sites such as Pinterest and Kaboodle, you can swap shopping ideas with friends

Community providers

Sites that create a digital online environment where people with similar interests can transact (buy and sell goods); share interests, photos, videos; communicate with like minded people; receive interest related information; and even play out fantasies by adopting online personalities called avatars.

Wisdom of crowds

Some argue that large numbers of people can make better decisions about a wide range of topics or products than a single person or even a small committee of experts. Not always the case.

Intellectual Property

Tangible and intangible products of the mind for which the creator claims a property right.

Behavioral targeting

Techniques used to increase the effectiveness of banners, rich media, and video ads. Refers to tracking the clickstreams (history of clicking behavior) of individuals on thousands of websites to understand their interests and intentions and expose them to advertisements that are uniquely suited to their online behavior.

Cost transparency

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

Richness

The complexity and content of the message.

Market entry costs

The cost merchants must pay simply to bring their goods to market

Transaction costs

The costs of participating in a market

Price transparency

The ease with which consumers can find out the variety of prices in a market

Search costs

The effort required to find suitable products

Dynamic pricing

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

Disintermediation

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

Long tail Marketing

The theory that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.

Private industrial networks

Typically consist of a large firm using a secure website to line to its suppliers and other key business partners. Buyer owns the network, and it permits the firm and designated suppliers, distributors, and other business partners to share product design and development, marketing, production... another term is private exchange

Unique features of E commerce (8)

Ubiquity Global reach universal standards richness interactivity info density personalization/customization social

Example of Geoinformation

Waze

Affiliate revenue model

Websites send visitors to other websites in return for a referral fee or percentage of the revenue from any sales. Referral fees are also referred to as lead generations fees. Ex. MyPoints makes money by connecting companies to potential customers by offering special deals to its members.

Indirect goods

all other goods not directly involved in the production process, such as office supplies or products for maintenance and repair.

Net Marketplaces

e hubs, provide a single, digital marketplace based on Internet tech for many buyers and sellers. Industry owned or operate as independent intermediaries between buyers and sellers. Generate revenue from purchase and sale transactions and other services provided to clients. Participants can establish prices through online negotiations, auctions, or requests for quotations, or they can use fixed prices.

Direct goods

goods used in a production process, such as sheet steel for auto body production.