ITM Chapter 5.doc

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Ryerson University
Information Technology Management
ITM 102
Ross Mc Naughton

Chapter 5 - E-Commerce Electric Commerce For an organization to efficiently and effectively engage in e-commerce, it must tie to- gether business processes, enabling technologies, and its human resource and inte- grate them into its own unique electronic and digital value chain to enable it to execute its business strategy. E-Commerce Defined - Advances in technology, product variety, and consumer demand have brought an ac- companying change in retailing strategy - E-commerce is a way of doing business around the world in an instant without the need for a physical business presence. - Build to order is a way for manufacturers to directly solicit orders from consumers and deliver products directly. - E-commerce ---> transactions that involve buying and selling goods and services through the Internet. - E-business ---> the broader use of Internet technologies to reduce operating costs. Beyond the Basic Definition - 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. - Business-to-consumer (B2C) - Business-to-business (B2B) - Business-to-government (B2G) - Consumer-to-government (C2G) - Consumer-to-consumer (C2C) E-Commerce and Products: Physical and Digital - Physical products include anything that requires an actual shipment of the item from a central distribution point to the buyer. - requires an off-line supply chain to handle the sales, order processing, and de- livery of these goods - Digital products are received directly over the Internet or other computer networks. - requires the use of a completely IT-enabled supply chain - Back-office elements are required for businesses to have in place to handle order ful- fillment. Chapter 5 - E-Commerce - Web integration is substantial technology interfaces between the Web and the enter- prise’s existing computerized business systems. - Off-loaded means deleted or otherwise disabled. Ordering a Physical Good Over the Web 1. Order generated by customer 2. Order sen over Internet 3. Processing of order at retailer website 4. Transmission of order to warehouse or wholesaler 5. Warehouse or wholesaler picks, packs, and ships items 6. Items shipped to customer Ordering an Electronic Product Over the Web 1. Order generated by customer 2. Order sent over Internet 3. Processing of order at retailer website 4. Order shipped over Internet E-Commerce Business Models - Combines a specific type of website with a successful revenue model that produces profits for the website owner. - Online retailer: sell good products at god prices, delivered on time, that leave you with enough margin to make a reasonable profit to pay for the website’s operation. - Companies make money on the Web: - Displaying advertisements (traffic monetizing/advertising model) - Selling goods and services online (transactional/wholesale/retail merchant mod- el) - Earning royalties, access fees, or revenue sharing (API/applet model) - Selling aggregate data about online user behaviour or selling controlled access to users with infomediaries (the information or data aggregation model) - Getting users to subscribe to your service monthly or annually (subscription model) - Selling upgrades to a premium subscription service by first offering a free ser- vice with more limited capacity or capability (freemium model) - Imposing a very slight fee for specific transactions (micro-payments model) Chapter 5 - E-Commerce - Charging a portion of any transaction that you facilitate for others (revenue share/royalty model) - Using an auction or co-operative model (auction/co-operative model) - Selling your company to a strategic buyer (build to sell model) Websites Classified by Purpose - Portal - Provides a gate way to many other websites - Search engine - Finds websites that contain a word or phrase - Browse or search and buy - Sells goods and services - Sales support - Provides information on a product before or after the sale - Information service - Provides news, information, and commentary - Auction - Facilitates sales between third parties - Travel - Sells travel tickets and tours - Special interest or services - Provides information, product sales and support, and contacts between visitors The E-Commerce Advantage - Frictionless transactions is the ability of the consumer to move from thought to action creates new opportunities for businesses to operate at lower costs by easing the burden of the supply chain electronically. - Impact of e-commerce technologies on business - universal standards - global reach - ubiquity and accessibility - customization - higher information density - 1.5 billion people with Internet access as of June 2009 - 82% of the population have some form of regular access to the Internet Chapter 5 - E-Commerce - Perfect market is described for decades by economists as an ideal situation that theo- retically produces the highest co
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