In these post I will highlight the most important point in every section of chapter seven
7.1 Overview of E-Business and E-Commerce
7.1 Overview of E-Business and E-Commerce
*Definitions and Concepts
Electronic commerce (e-commerce, EC) describes the buying,
selling, transferring or exchanging of products, services or information via
computer networks, including the Internet.
E-business is a broader definition of EC, including buying
and selling of goods and services, and also servicing customers, collaborating
with partners, conducting e-learning and conducting electronic transactions
within an organization.
Pure versus Partial Electronic Commerce depends on the
degree of digitization involved.
Brick-and-mortar organizations are purely physical
organizations.
Virtual organizations are companies that are engaged only in
EC. (Also called pure play)
Click-and-mortar organizations are those that conduct some
e-commerce activities, yet their business is primarily done in the physical
world. i.e. partial EC.
*Types of E-Commerce
Business-to-consumer (B2C): the sellers are organizations
and the buyers are individuals.
Business-to-business (B2B): both the sellers and buyers are
business organizations. B2B represents the vast majority of e-commerce.
Consumer-to-consumer (C2C): an individual sells products or
services to other individuals.
Business-to-employee (B2E): An organization uses e-commerce
internally to provide information and services to its employees. Companies
allow employees to manage their benefits, take training classes electronically;
buy discounted insurance, travel packages, and event tickets.
E-Government: the use of Internet Technology in general and
e-commerce in particular to deliver information about public services to
citizens (called Government-to-citizen [G2C EC]), business partners and
suppliers (called government-to-business [G2B EC]),
Mobile Commerce (m-commerce) refers to e-commerce that is
conducted in a wireless environment. For example, using cell phone to shop over
the Internet.
*Major E-Commerce Mechanisms
Auctions: An auction is a competitive process in which
either a seller solicits consecutive bids from buyers or a buyer solicits
consecutive bids from sellers.
Forward Auctions: Sellers use a forward auction as a channel
to many potential buyers.
Reverse Auctions: In reverse auctions, one buyer, usually an
organization, wants to buy a product or a service. The buyer posts a request
for quotation (RFQ) on its Web site or on a third-party Web site. The RFQ contains detailed information on the desired
purchase. Suppliers study the RFQ and submit bids, and the lowest bid wins the
auction.
In general, forward auctions result in higher prices over
time, where reverse auctions result in lower prices over time.
*E-Commerce Business Models
Online direct marketing: manufacturers or retailers sell
directly to customers.
Electronic tendering system: businesses (or governments)
request quotes from suppliers; uses B2B (or G2B) with reverse auctions. Image above is the Hong Kong Government’s
electronic tending system homepage.
Name-your-own-price: customers decide how much they want to
pay. Image above is William Shatner, Priceline’s spokesman.
Find-the-best-price: customers specify a need and an
intermediary compares providers and shows the lowest price.
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
buy, then vendor pays commission to partners.
Viral marketing: receivers send information about your
product to their friends.
Group purchasing: small buyers aggregate demand to get a
large volume; then the group conducts tendering or negotiates a lower price.
Online auctions: companies run auctions of various types on
the Internet.
Product customization: customers use the Internet to
self-configure products or services. Sellers then price them and fulfill them
quickly.
Deep discounters: company offers deep price discounts.
Membership: only members can use the services provided.
*Benefits of E-Commerce
Benefits to organizations:-
- Makes national and international markets more accessible
- Lowering costs of processing, distributing, and retrieving information
Benefits to customers:-
- Access a vast number of products and services around the clock (24/7/365)
Benefits to Society
- Ability to easily and conveniently deliver information, services and products to people in cities, rural areas and developing countries.
*Limitations of E-Commerce
Technological Limitations:-
- Lack of universally accepted security standards
- Insufficient telecommunications bandwidth
- Expensive accessibility
Non-technological Limitations:-
- Perception that EC is unsecured
- Unresolved legal issues
- Lacks a critical mass of sellers and buyers
7.2 Business-to-Consumer (B2C) Electronic Commerce
Electronic storefronts: An electronic storefront is a Web
site that represents a single store.
Electronic malls: Electronic malls are collections of
individual shops under a single Internet address.
*Online Advertising
Advertising is an attempt to disseminate information in
order to influence a buyer-seller transaction.
Online Advertising methods:-
Banners are simply electronic billboards.
Pop-up ad appears in front of the current browser window.
Pop-under ad appears underneath the active window.
Permission marketing asks consumers to give their permission
to voluntarily accept online advertising and e-mail.
Viral marketing refers to online “word-of-mouth” marketing.
Eight Types of Web sites for Advertising:
- Portals: most popular; best for reach but not targeting
- Search: second largest reach; high advertising value
- Commerce: high reach; not conducive to advertising
- Entertainment: large reach; strong target ability
- Community: emphasize being a part of something; good for specific advertising
- Communications: not good for branding; low target ability
- News/weather/sports: poor target ability
- Games: good for very specific types of advertising
7.3 Business-to-Business (B2B) Electronic Commerce
In B2B e-commerce, the buyers and sellers are organizations.
B2B Sell-Side Marketplace: In the sell-side marketplace, organizations sell their
products or services to other organizations electronically from their own Web
site and/or from a third-party Web site. This model is similar to the B2C model
in which the buyer comes to the seller’s site, views catalogs, and places an
order. In the B2B sell-side marketplace,
the buyers are organizations.
B2B Buy-Side Marketplace: In the sell-side marketplace,
organizations sell their products or services to other organizations
electronically from their own Web site and/or from a third-party Web site. This
model is similar to the B2C model in which the buyer comes to the seller’s
site, views catalogs, and places an order.
In the B2B sell-side marketplace, the buyers are organizations.
*Electronic Exchanges
Vertical Exchanges: Vertical exchanges connect buyers and sellers
in a given industry.
Horizontal Exchanges: Horizontal exchanges connect buyers
and sellers across many industries and are used mainly for MRO materials.
Functional Exchanges: In functional exchanges, needed
services such as temporary help or extra office space are traded on an
“as-needed” basis.
7.4 Electronic Payments
Electronic payment systems enable you to pay for goods and
services electronically.
Checks (e-checks) are similar to paper checks and are used
mostly in B2B.
Electronic credit cards allow customers to charge online
payments to their credit card account.
Purchasing cards are the B2B equivalent of electronic credit
cards and are typically used for unplanned B2B purchases.
Electronic cash:
- Stored-value money cards allow you to store a fixed amount of prepaid money and then spend it as necessary.
- Smart cards contain a chip called a microprocessor that can store a considerable amount of information and are multipurpose – can be used as a debit card, credit card or a stored-value money card.
- Person-to-person payments are a form of e-cash that enables two individuals or an individual and a business to transfer funds without using a credit card.
7.5 Ethical and Legal Issues
*Ethical Issues
Privacy: ecommerce provides opportunities for businesses and
employers to track individual activities on the WWW using cookies or special
spyware. This allows private/personal information to be tracked, compiled, and
stored as an individual profile. This profile can be used or sold to other
businesses for target marketing or by employees to aide in personnel management
decisions (i.e., promotions, raises, layoffs).
Job Loss
*Legal Issues Specific to E-Commerce
Fraud on the Internet: i.e. stocks, investments, business
opportunities, auctions.
Domain Names: problems with competition.
Cybersquatting: refers to the practice of registering domain
names solely for the purpose of selling them later at a higher price.
Domain Tasting: is a practice of registrants using the
five-day "grace period" at the beginning of a
domain registration to
profit from pay-per-click advertising.
Taxes and other Fees: when and where (and in some cases
whether) electronic sellers should pay
business license taxes, franchise fees,
gross-receipts taxes, excise taxes, …etc.
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