Define (EC)
Electronic Commerce (EC) is the process of buying, selling, or exchanging products,
services, and information via computer networks
EC defined from these perspectives
Communications
Business process
Service
Online
Collaborations
Community
Define E-business
E-business is a broader definition of EC that includes not just the buying and selling of goods and
services,
Classification of EC by the Nature of the Transaction
Business-to-business (B2B) : EC model in which all of the participants are businesses or other
organizations
Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers
Business-to-business-to-consumer (B2B2C): EC model in which a business provides some
product or service to a client business
Consumer-to-business(C2B): individuals who use the Internet to sell products or services to
organizations and /or seek sellers to bid on products or services they need
Consumer-to-consumer (C2C) : consumers sell directly to other consumers
Mobile commerce (m-commerce)—EC transactions and activities conducted in a wireless
environment
Location-commerce—(l-commerce)
M-commerce transactions targeted to individuals in specific locations, at specific times
Business-to-employee (B2E): EC model in which an organization delivers services,
information, or products to its individual employees
Collaborative commerce (c-commerce): EC model in which individual or groups
communicate or collaborate online
E-government: Government-to-citizens (G2C): EC model in which a government entity buys
or provides good, services, or information to businesses or individual citizens
Revenue is generated through transaction fees—5 percent commission on each order
Business models are a component of a business plan or a business case
Value proposition is the description of the benefits a company can derive from using EC
Typical Business Models in EC (cont.)
Affiliate marketing is an arrangement whereby a marketing partner (business, organization or
individual) refers consumers to the selling company’s Web site
Viral marketing is word-or-mouth marketing in which customers promote a product or service
to friends or other people by using the Internet
Group purchasing is getting many small buyers together to by in large quantities
The term digital economy also refers to the convergence of computing and communication
technologies on the Internet and other networks and the resulting flow of information and
technology that is stimulating e-commerce and vast organizational changes
Web-based EC systems are accelerating the digital revolution by providing competitive
advantage to organizations
The term business environment refers to the social, economic, legal, technological, and
political actions that affect business activities
Business pressures are divided into the following categories:
Market (economic)
Societal
Technological
National Transportation Exchange (nte.com) is attempting to keep trucks on the road full on
both outbound and return trips—uses the Internet to connect shippers with fleet managers who
have space to fill
A marketplace in which sellers and buyers exchange goods and services for money (or for
other goods and services), but do so electronically
Electronic storefronts—a single company’s Web site where products and services are sold
Electronic malls (e-malls)—an online shopping center where many stores are located
Private e-marketplaces—online markets owned by a single company:
Public e-marketplaces—B2B markets, usually owned and/or managed by an independent third
party, that include many sellers and many buyers (exchanges)
Consortia—e-marketplaces that deal with suppliers and buyers in a single industry
Information portal—a personalized, single point of access through a Web browser to business
information inside (and marginally from outside) an organization
Supply chain—the flow of materials, information, money, and services from raw material
suppliers through factories and warehouses to the end customers
Value Chain & Value System
Value chain—the series of activities a company performs to achieve its goal(s) at various
stages of the production process
Value system—a set of value chains in an entire industry, including the value chains of tiers
of suppliers, distribution channels, and customers
Value chain and the supply chain concepts are interrelated
Value chain shows the activities performed by an organization and the values added
by each
The supply chain shows flows of materials, money, and information that support
the execution of these activities
Roles of intermediaries
Search costs—databases on customer preferences
Lack of privacy—anonymity of sellers and buyers
Incomplete information—gather product information
Contract risk—protect sellers against non-payment
Pricing inefficiencies—induce appropriate trades
E-Distributors on B2B
E-distributor—an e-commerce intermediary that connects manufacturers (suppliers) with
buyers by aggregating the catalogs of many suppliers in one place—the intermediary’s Web site
E-distributors also provide support services
Payments
Deliveries
Escrow services
Aggregate buyers’ and or sellers’ orders
Disintermediation & Reintermediation
Disintermediation—elimination of intermediaries between sellers and buyers
Reintermediation—establishment of new intermediary roles for traditional intermediaries that
were disintermediated
Differentiation—providing a product or service that is unique
Personalization—the ability to tailor a product, service, or Web content to specific user
preferences
Lower prices
Customer service is an extremely important competitive factor
Liquidity—the need for a critical mass of buyers and sellers
Quality uncertainty—the uncertainty of online buyers about the quality of products that they
have never seen, especially from an unknown vendor
Electronic catalogs—the presentation of product information in an electronic form; the
backbone of most e-selling sites
Search engine—a computer program that can access a database of Internet resources, search for
specific information or keywords, and report the results
Auction—a market mechanism by which a seller places an offer to sell a product and buyers
make bids sequentially and competitively until a final price is reached
Auctions deal with products and services for which conventional marketing channels are
ineffective or inefficient
Dynamic pricing—prices that change based on supply and demand relationships at any given
time
E-bartering—bartering conducted online, usually by a bartering exchange
Bartering exchange—a marketplace in which an intermediary arranges barter transactions
