Chapter 6 – E-Business and E-
OVERVIEW OF E-BUSINESS AND E-COMMERCE – Electronic commerce is the process of
buying, selling, transferring or exchanging products, services, or information via computer
networks. E-business along with everything including e-commerce also services customers,
collaborates with partners and performs electronic transactions. They are sometimes used
• Pure versus partial EC – E-commerce takes different forms depending on the degree of
digitization of products, processes, the delivery agents. In pure EC, all components are
digital. Traditional organizations are called bricks and mortar and partial organizations
are called clicks and mortar organizations.
Types of E-Commerce – there are six types of e-commerce:
• Business-to-consumer – sellers are organizations and buyers are individuals
• Business-to-business – both sellers and buyers are organizations
• Consumer-to-consumer – both sellers and buyers are individuals
• Business-to-employee – this is to provide information and service to employees.
Ordering supplies and training and travel packages are examples
• E-Government – use of internet to deliver information and public services to citizens.
Things such as electronic benefits transfer are examples.
• Mobile commerce – m-commerce is e-commerce conducted on a wireless environment,
for e.g. shopping online on one’s phone.
The above mentioned types are executed in differed business models. A business model is the
method by which a company generates revenue to sustain itself. The business models are:
• Online Direct marketing digital – sell directly to customers. Can allow product
• Electronic tendering system – business requests quotes from suppliers.
• Name-your-own-price customers decide how much they are willing to pay. An
intermediary tries to match a provider • Find-the-best-price – customers specify a need and an intermediary finds the lowest
price. The offer must be accepted within specified time.
• Affiliate marketing – vendors ask partners to place logos on partner’s site. Upon clicking
and purchasing, the partners earn commission.
• Viral marketing – receivers send information about products to their friends
• Group purchasing (e-coops) – small buyers aggregate demand to get a large volume.
Then they negotiate a low price
• Online auctions – companies run auctions online
• Product customization – customers can self-configure products. Sellers then price and
• Membership – only members can use the services provided.
E-Commerce and Search – initially both offline and online brands were kept distinct. The
importance of search has been one of the most important changes in e-commerce. The search
option helps us find what we are looking for online and any website that does not support the
feature can suffer from loss of business.
Major E-Commerce Mechanisms – one can buy and sell through electronic catalogs, auctions,
storefronts, e-malls etc. forward auctions are auctions that sellers use to many potential
buyers. For e.g. eBay. Reverse auction is where the buyer, usually an organization wants a
product or service. The suppliers study the requirements and bid for the project. The lowest
bidder wins the project. Auctions can be conducted form the seller’s, buyer’s or a third party’s
Benefits and limitations of E-Commerce – the benefits are; it makes national and
international markets more accessible, lowers cost of processing, distributing and retrieving
information. Customers get access to vast products and services. Society benefits from people
having access and aiding in development.
Disadvantages are; there is lack of universally accepted security standards, expensive
accessibility. People perceive EC to be insecure and has unresolved legal issues.
BUSINESS-TO-CONSUMER ELECTRONIC COMMERCE – B2B is large but B2C is much
more complex. Millions of transactions happen every day involving small to large volume
customers which require fast and efficient processing. The complexity creates two major
challenges for sellers: channel conflict and order fulfillment.
Electronic Storefronts and Malls – electronic retailing or e-tailing is direct sale of products
and services online. There are thousands of sellers and options for customers through e-
storefronts and e-malls: • Electronic storefronts – a website that represents a single store. Some stores are
extensions of physical stores like Walmart etc. or Dell.
• Electronic Malls – collection of individual shops under a single web address. Provides
shopper with more choice. For e.g. the Microsoft store offers products from thousands of
Online Service Industries – selling products online can reduce selling costs. Only products
such as software and music can be fully digitized for online delivery. Disintermediation can
occur in EC. Intermediaries either provide information, or perform value-added services. The
first function can be fully automated and the need for such personnel will be eliminated. This is
called disintermediation. The second function personnel may prosper since it requires expertise.
Some online service industr