ITM 100 Chapter Notes - Chapter 5: Search Engine Optimization, E-Commerce, Computer Network

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Monday November 1st, 2010
Chapter 5
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
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
2. B2b
Electronic exchanges between companies
3. B2G
On-line sales to government agencies
Example: (Ontario government)
4. C2G
Electronic payment of taxes
5. C2C
Use of online auctions
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)
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Monday November 1st, 2010
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
-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 densitythe 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
-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
Personalization is a personalized marketing message for each potential customer based on
searching, browsing, or buying habits (e.g.,
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Monday November 1st, 2010
-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
Multiplying market niches
Changing marketplace drivers (forces that make things happen in the market, e.g., consumer
preferences, number of suppliers a business can choose from, etc.)
E-Commerce Business Strategy:
-Technology advances have changed business strategy
-A strategy is a broad-based formula for how a business is going to compete, what its goals should be,
and what plans and policies will be needed to carry out those goals1
-An e-commerce strategy is a general term for how a business is going to use web-based networks and
information systems to compete in a global marketplace
-Building an e-commerce strategy requires two views of an organization’s strategy:
1. what it wants to do (conceptual)
2. how it will do it (technology strategy)
-One strategy being used by many companies is customer relationship management (CRM), which
enables them to create one-to-one marketing experiences for their customers
-Other e-commerce strategies include:
virtual showrooms
increased channel choices
wider component choice
use of mobile technology
-Mobile commerce is the use of laptops, mobile phones, and PDAs to connect to the Internet and Web
to conduct many of the activities associated with e-commerce
Benefits for Consumers:
-Lower prices
-Shopping 24/7
-Greater search-ability for products
-Shorter Delivery times
-More sharing of information with other consumers
-Improved customer service
Limitations for Consumers:
-Delay in receiving goods
-Slow download speeds
-Security and privacy concerns
-Inability to touch, feel, smell tryout, or try on products prior to purchasing
-Unavailability of micropayments
Benefits for Business:
-Expansion of marketplace to global proportions
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