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E-Commerce
E-Commerce vs. E-Business
• We use the term e-business to refer primarily to the digital
enablement of transactions and processes within a firm, involving
information systems under the control of the firm
• E-business does not include commercial transactions involving an
exchange of value across organizational boundaries
Features of E-commerce
• Is ubiquitous (available everywhere, all the time)
• Offers global reach (across cultural/national boundaries)
• Operates according to universal standards (lowers market entry
for merchants and search costs for consumers)
• Provides information richness (more powerful selling
environment)
• Is interactive (can simulate face-to-face experience, but on a
global scale)
• Increases information density (amount and quality of information
available to all market participants)
• Permits personalization/customization
Types of E-Commerce
Classified by nature of market relationship
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
Classified by type of technology used
• Peer-to-Peer (P2P)
• Mobile commerce (M-commerce)
Growth of the Internet
• A worldwide network of computer networks built
on common standards
• Was created in late 1960s
• Services include the Web, e-mail, file transfers, etc.
• Can measure growth of Internet by looking at
number of Internet hosts with domain names
The Growth of the Internet, Measured by Number of
Internet Hosts with Domain Names
SOURCE: Internet Systems Consortium, Inc. (www.isoc.org), 2005.
Growth of the Web
• The most popular service on the Internet
• Developed in early 1990s
• Provides access to Web pages (documents created with HTML)
• Can include text, graphics, animations, music, videos
• Web content in form of Web pages has grown exponentially, from
over 2 billion pages in 2000 to over 1 billion pages in 2015
Origin of E-Commerce
• Precursors to e-commerce include
 Baxter Healthcare
 Electronic Data Interchange (EDI)
 French Minitel (1980s videotext system; still in
use today)
• None of these precursor systems had the
functionality of the Internet
• For our purposes, we date the beginning of ecommerce to 1995
• Since then, has been fastest growing form of
commerce in United States
Figure: EDI (Electronic Data Interchange)
Figure: 1980 Alcatel Minitel terminal with non-AZERTY keyboard
The Growth of B2C E-commerce
SOURCE: Based on data from eMarketer, Inc., 2005a; Shop.org and Forrester Research,
2005; Forrester Research, 2004.
Need to reach to customers…
• Demand risk
•
– started in 1888 - 90% of film sales and 85% of camera sales in the U.S.
by 1976 - 1st digital camera in 1976 – again No. 1 in US in 2005
with $5.7 billion sales.
Need to reach to customers…
• Innovation risk
• Consumers are always looking for something new and different
• itunes
• Failure to meet the need for change may make business obsolete
• Typewriter
• Stay in touch with new ideas
• Emails, online catalogue, messaging, feedbacks
Need to reach to customers
• Inefficiency risk
• Always in need to reduce cost
• More emails, messaging or web portals than call centers or postage
• AirLines
• Cost of handling service requests than using online interactive forms
• FAQs
• Disintermediation
• Reformulate traditional business model
• Eliminate brokers, dealers, agents or offices
• Budget AirLines
• Physical inputs and outputs
• Car dealers
B2C Business Models: Web Portals
• A medium to increase growth by focusing product or market
• Tesco
• A way to create new market of existing products
• HATIL
• A customized interaction between a vendor and a supplier
• Internet banking
• An adaptive approach to focus on individuals
• Firefly
• A way to reach to consumers exceeding the location and size of business
• A way to diversify the market by new product in a new market
• bKash
Reaching to customers…
• Classifying customer segment
• Single Channel
• ING Direct
• Multi Channel
• Characteristics & reason for focus
•
•
•
•
Efficiency
Niche Players
Traffic Drivers
Triple Plays
Reaching to customers…
• Success in a multi-channel environment
• “Right Channeling” / “Re-Routing”
• Success factors & technologies
Mitigating Risk in ‘Re-Routing’
• Understand channel economics
• ‘true cost’ beyond raw margins: loyalty, frequency,
acquisition costs, freight, returns, service
• Incentives to guide customers to the right channel
• “carrots & sticks”
• Communication program
• for internal & external constituencies
True Cross-Channel Design
Customer clicks “Save
Application” from any
application page
Banker in store retrieves all
saved application data and
can Complete the application.
Source: Watson, Latinbanking.com
Right channeling Messages & Results
Messaging & alerts
B2C Business Models: E-tailer
• Online version of traditional retailer
• Types include:
 Virtual merchants
 Bricks-and-cricks
 Catalog merchants
 Manufacturer-direct
B2C Business Models: Content Provider
• Information and entertainment companies that provide digital
content over the Web
• Typically utilizes a subscription, pay for download, or advertising
revenue model
B2C Business Models: Transaction Broker
• Processes online transactions for consumers
• Primary value proposition—saving of time and money
• Typical revenue model—transaction fee
• Industries using this model include:
 Financial services
 Travel services
 Job placement services
B2C Business Models: Market Creator
• Uses Internet technology to create
markets that bring buyers and
sellers together
• Examples:
 Priceline.com
 eBay.com
• Typically uses a transaction fee
revenue model
B2C Business Models: Service Provider
• Offers services online
• Value proposition: valuable, convenient, time-saving, low-cost
alternatives to traditional service providers
• Revenue models: subscription fees or one-time payment
B2C Business Models: Community Provider
• Sites that create a digital online environment where people with
similar interests can transact, communicate, and receive interestrelated information.
• Typically rely on a hybrid revenue model
The future …
• Infrastructure
• Social media, community, market place
• Platform
• Google analytics, Google AdWords
• Software
• Cloud computing
• Customer relationship management (CRM) for Salesforce sales, service, marketing,
analytics, community, and mobile apps
• Business analytics
• Sisense for Target, Samsung
• Predictive analysis
Class Discussion
• How many of you use Google, Yahoo, or Microsoft’s Bing? Does the
class differ from the overall Web population?
• Why do you use a particular search engine?
• Why is Google moving beyond search and advertising into
applications?
• How is Bing trying to distinguish itself from Google? Do you think this
strategy will work?
How Analytics works
Report Data
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