Chapter 5

5 Pages

Information Technology Management
Course Code
ITM 102
Muhammad Shahbaz

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Tuesday, July 19, 2011 Chapter 5 E-Commerce E-Commerce Defined: -E-commerce is the use of information systems, technologies, and computer networks by individuals and organizations to carry out transactions in order to create or support the creation of business value -way of doing business around the world in an instant without the need for a physical business presence -E-commerce includes all types of computer networks, transactions, and business relationships including: • electronic funds transfers • EDI over private networks • retail sales and wholesale exchanges over public networks like the Internet -Most people think of e-commerce as electronic shopping over the Internet or B2C e-commerce Types of E-Commerce Transactions and Example Websites: 1. B2C  On-line equivalent of retail store as well as other services  Example:,, 2. B2b  Electronic exchanges between companies  Example:, 3. B2G  On-line sales to government agencies  Example: (Ontario government) 4. C2G  Electronic payment of taxes  Example: 5. C2C  Use of online auctions  Example:, E-Commerce and Products: Physical and Digital -Products can be divided into two primary categories: physical and electronic  Physical products: anything that requires an actual shipment of a package to the buyer  Digital products: can be received directly over the Internet or other computer network -E-commerce companies must have back-office elements to handle order fulfillment and returns for physical goods -Companies experienced in order fulfillment and returns have tended to be successful in e-commerce -E-commerce simply means extending an organization existing business model -Example of Digital Products:  Downloading an album on ITunes versus going to HMV to buy it -Example of Physical Products:  Requires sales, order processing, delivery of these goods, even if they are purchased online -main difference between digital and physical is the delivery process -returns may be not possible for digital products  Example: once officially downloaded (song album) it cannot be off-loaded (disabled/deleted) Tuesday, July 19, 2011 E-Commerce Business Models: -A business model defines how a company will meet the needs of its customers while making a profit -An e-commerce business model combines a specific type of website with a successful revenue model that produces profits for the website owner -The next three slides list and give examples of e-commerce business models E-Commerce Website Purpose: -The purpose of an e-commerce website is to bring in customers, or at least visitors -No matter how good the business model is, it will not generate a profit if not associated with an appealing website -There are eight commonly accepted types of websites: portal, search engine, browse or search and buy, sales support, information service, auction, travel, and special interest or services -A number of these match up with multiple business models E-Commerce Advantage: -The use of computer networks to carry out transactions is creating a tangible “e-commerce advantage” in our economy, especially with regard to  Technology  Competition  strategy -Over 1.5 billion potential customers in the marketplace due to increasing Internet access -Universal standards make it work the same way no matter where in the world you are -“advantage” is often referred to as frictionless transactions which is the ability of the consumer to move from thought to action which creates new opportunities for business to operate at lower costs by easing the burden of supply chain electronically Information Clutter: -The expansion of global e-commerce has produced global competition with sellers being able to reach any potential buyer worldwide -Technology has increased information density—the quality and quantity of information about products and services -Customers can obtain product guides, reviews, and prices from a number of websites due to online advertising and search engine optimization -there are also wide ranges of products rating sites that enable consumers to other consumers -therefore, it is clear that simply having a great website is not enough; you have to make it easy for consumers to find it  there are number of important strategies to accomplish this Mass Communication and Personalization: -One response to information density is to create business value based on a customization approach to e-commerce -Two approaches to customization are mass customization and personalization  Mass customization is the ability to create custom products or services on demand, (e.g., Dell Computer)  Personalization is a personalized marketing message for each potential customer based on searching, browsing, or buying habits (e.g., Tuesday, July 19, 2011 -by using personal messages business can make marketing messages more effective and efficient E-Commerce Competitive Differences: -E-commerce is having a dramatic effect on competition between organizations in a number of ways:  Reducing barriers to entry  Preventing any company from “owning” the market  Enhanced collaboration/alliances
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