E-Commerce: Digital Markets,
Digital Goods
Jovita Angela
Learning Objectives
01 02 03
What are the unique What are the principal e- How has e-commerce
features of e-commerce, commerce business and transformed
digital markets, and revenue models? marketing?
digital goods?
04 05 06
How has e- What is the role of mobile What issues must be
commerce affected commerce in business and addressed when building
business-to-business what are the most an e-commerce Web
transactions? important m-commerce site?
applications?
E-COMMERCE AND THE INTERNET
E-Commerce
Use of the Internet and
the Web to transact
business.
▪ 20.1% of retail purchases are expected
to take place online in 2024
▪ By 2027, 23% of retail purchases are
expected to take place online
▪ E-commerce sales are expected to
grow 8.8% in 2024
▪ The global e-commerce market is
expected to total $6.3 trillion in 2024
▪ By 2027, the e-commerce market is
expected to total over $7.9 trillion.
Source: Forbes Advisor
WHY E-COMMERCE IS DIFFERENT
Eight Unique Features Of E-commerce Technology
01 Ubiquity 02 Global Reach 03 Universal Standards
Available everywhere: at The technology reaches Internet standards are shared by all
work, at home, and across national boundaries, nations around the world and enable
elsewhere via mobile around the Earth. any computer to link with any other
devices. computer.
04 Richness 05 Interactivity 06 Information Density
Possible to deliver rich Allows an online merchant Reduce information collection,
messages with text, audio, to engage a consumer in storage, processing, and
and video simultaneously to ways similar to a face-to- communication costs while greatly
large numbers of people. face experience but on a increasing the currency, accuracy, and
massive, global scale. timeliness of information.
07 Personalization/customization 08 Social Technology
Allows personalized messages to Allowing users to create and share
be delivered customization of with their personal friends (and a
products and services are based larger worldwide community) content
to individuals as well as groups. in the form of text, videos, music, or
photos.
KEY CONCEPTS IN E-COMMERCE: DIGITAL MARKETS AND DIGITAL GOODS IN A
GLOBAL MARKETPLACE
Digital Market Digital Goods
▪ Consumers and suppliers can “see” ▪ Can be delivered over a digital
the prices being charged for goods network (Music tracks, video,
(transparent). Hollywood movies, software,
newspapers, magazines, and
▪ Provide many opportunities to sell books).
directly to the consumer bypassing
intermediaries, such as distributors ▪ Businesses dependent on physical
or retail outlets (disintermediation). products for sales—such as
bookstores, book publishers, music
▪ By reducing the number of labels, and film studios—face the
intermediaries, companies can possibility of declining sales and
raise profits while charging lower even destruction of their
prices. businesses.
E-COMMERCE: BUSINESS AND TECHNOLOGY
Types of E-Commerce:
Business-to-Consumer (B2C) Business-to-Business (B2B)
Electronic commerce involves retailing Electronic commerce involves sales of
products and services to individual goods and services among businesses.
shoppers. Example: BarnesandNoble.com Example: ChemConnect’s Web site for
sells books, software, and music to
buying and selling chemicals and
individual consumers.
plastics.
Consumer-to-Consumer (C2C)
Electronic commerce involves
consumers selling directly to
consumers. Example: eBay enables
people to sell their goods to other
consumers.
E-COMMERCE BUSINESS MODELS
Portal E-tailer Content provider
Provides initial point of entry Sells physical products directly to Creates revenue by providing
to the Web along with consumers or to individual digital content, such as news,
specialized content and other businesses. Example: Amazon, music, photos, or video, over the
services. Example: Yahoo, RedEnvelope.com Web. Example: WSJ.com,
Bing, Google. GettyImages.com, iTunes.com,
Games.com.
Transaction broker Market creator Service provider
Saves users money and time by Provides a digital environment Provides Web 2.0 applications such
processing online sales transactions where buyers and sellers can as photo sharing, video sharing, and
and generating a fee each time a meet, search for products, user-generated content as services.
transaction occurs. Example: display products, and establish Provides other services such as
ETrade.com, Expedia. prices for those products. online data storage and backup.
Example: eBay, Priceline.com, Example: Google Apps,
ChemConnect.com. Photobucket.com, Xdrive.com.
Community Provider
Provides an online meeting place where people
with similar interests can communicate and find
useful information. Example: Facebook, iVillage,
Twitter, MySpace.
E-COMMERCE REVENUE MODELS
How the firm will earn revenue, generate profits,
and produce a superior return on investment.
Advertising Revenue Model Sales Revenue Model Subscription Revenue Model
A Web site generates revenue Companies derive revenue by a Web site offering content or
by attracting a large audience selling goods, information, or services charges a subscription fee
of visitors who can then be services to customers. Example: for access to some or all of its
exposed to advertisements. iTunes Store makes money by offerings on an ongoing basis.
charging for downloads of Example: Netflix is one of the most
entire files. successful subscriber sites.
Free/Freemium Revenue Transaction Fee Revenue Model Affiliate Revenue Model
Model A company receives a fee for Web sites send visitors to other Web
Firms offer basic services or enabling or executing a sites in return for a referral fee or
content for free, while transaction. Example: eBay percentage of the revenue from any
charging a premium for provides an online auction resulting sales. Example: Some bloggers
advanced or special features. marketplace and receives a small are paid directly by manufacturers, or
Example: Google offers free transaction fee from a seller if the receive free products, for speaking
applications, but charges for seller is successful in selling an highly of products and providing links to
premium services. item. sales channels.
E-COMMERCE MARKETING
Search engine marketing, data
mining, recommender systems,
and targeted e-mail.
Behavioral targeting
Tracking the click-streams
(history of clicking behavior) 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.
B2B E-COMMERCE: NEW EFFICIENCIES AND RELATIONSHIPS
The challenge of B2B e-
commerce is changing existing
patterns and systems of
procurement, designing and
implementing new Internet-
based B2B solutions.
B2B E-COMMERCE: NEW EFFICIENCIES AND RELATIONSHIPS
(Cont’d)
Businesses can use Internet technology to create
extranets or electronic marketplaces for linking to other
businesses for purchase and sale transactions.
Private industrial networks typically consist of Net marketplaces (e-hubs) provide a single
a large firm using an extranet to link to its digital marketplace based on Internet
suppliers and other key business partners. technology for many different buyers and
sellers.
THE MOBILE DIGITAL PLATFORM AND MOBILE E-COMMERCE
M-Commerce: The use of the Internet for purchasing goods and services and
also for transmitting messages using wireless mobile devices.
M-Commerce Services and Applications
Information-based Transaction-based Personalized
services services services
Instant messaging, e- Purchasing stocks, Services that anticipate
concert tickets, music, or what a customer wants
mail, searching for a
games; searching for the based on that person’s
movie or restaurant
best price for an item location or data profile,
using a cell phone or
such as updated airline
handheld PDA. using a cell phone and
flight information or
buying it in a physical
beaming coupons for
store or on the Web. nearby restaurants.
BUILDING AN E-COMMERCE WEBSITE
The two most important management challenges in
building a successful e-commerce site are (1) developing
a clear understanding of your business objectives and (2)
knowing how to choose the right technology to achieve
those objectives.
Choices for building and maintaining Web sites The cost of building Web sites
