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Chapter 5

Chapter 5: E-Commerce

6 Pages
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Department
Information Technology Management
Course Code
ITM 102
Professor
David Atkinson

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CHAPTER 5 E-COMMERCE
E-COMMERCE DEFINED
E-commerce: 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
Includes all types of computer networks, transactions, and business relationships and
models
TYPE OF E-COMMERCE TRANSACTIONS
TRANSACTION DESCRIPTION
Business-to-customer (B2C)Online equivalent of retail store as well as other services
www.chapters.indigo.ca / www.telus.ca
Business-to-business (B2B)Electronic exchanges between companies
http://wwre.globalsources.com (worldwide retail exchange)
Business-to-government
(B2G)
Online sales to government agencies, as well as electronic payment of
taxes
www.doingbusiness.mgs.gov.on.ca
Consumer-to-government
(C2G)
Electronic payment of taxes as well as purchase of various types of
licences
www.netfile.gc.ca
Consumer-to-consumer Use of online auctions
www.ebay.ca / www.craigslist.ca
E-COMMERCE AND PRODUCTS PHYSICAL AND DIGITAL
Products divided into two primary categories:
1. PHYSICAL anything that require actual shipment of item from a central distribution point to
the buyer and requires off-line supply chain to handle the sales, order processing, and delivery
of goods
2. DIGITAL over the Internet or other computer networks and requires use of a completely IT-
enabled supply chain
Difference is that physical still needs back-office elements to handle order which requires
substantial technology interfaces between Web and computerized business systems (web
integration)
Digital does not offer return” when something is successfully downloaded because electronic
products or services have immediate value and cannot be off-loaded (deleted or disabled) by
vendor
E-COMMERCE BUSINESS MODELS
E-commerce business model: combines specific type of website with successful revenue model
that produces profits for website owner
Answer for online retailer: sell good products at good price, delivered on time, that will
leave enough margin (difference between selling price and COGS) to make reasonable
profit to pay websites operation
www.notesolution.com
Business models deal with how Internet companies, and traditional companies using
Internet, can make money online
Having great e-commerce business model will not generate profit if not associated with
website that brings in customers or visitors
THE E-COMMERCE ADVANTAGE
Frictionless transactions is the ability of consumer to move from thought to action (i.e. buying to
instantly fulfilling the product)
Creates new business opportunities to operate at lower costs by easing burden of supply
chain electronically
Consider technology, competitive issues, and strategy associated with e-commerce has unique
benefits: universal standards, global reach, ubiquity and accessibility, customization, higher
information density
Marketplace becoming marketspace because of direct access to Internet in varying degrees
Internet users with significant buying power is often concentrated because those with Internet
access often represent more economically advantaged economic class overall
Perfect market is an ideal situation that theoretically produces highest consumption at lowest price
for most goods
INFORMATION CLUTTER
Information density: quality and quantity of information about products and services of interest
to them
Ability of buyers to obtain endless amount of information creates new business challenges
Some businesses respond by creating business value based on customization-oriented
approach linked to e-commerce
Must make website easy for potential customers to find it:
ONLINE ADVERTISING
Linking paid advertising to searches of keywords by consumers
Cost per click (CPC) maximums, work almost like an auction of those competing
for placements against popular words and phrases
Banner ad placements
SEARCH ENGINE OPTIMIZATION
Spiders crawl the web and catalogue its content into labels and ranks
Insure site uses technologies that are easy to search, creating lots of links
between your site and others, and making good use of meta-tags and
content density to appear like a site that offers information and value
PARTNERING AND TAFFIC TRADING
Online, partner with other sites and each of you can cross-list others website and
trade potential traffic that comes to one site
Easy to track origin of traffic and reward partner site with commission or
fee related to sales it generates for you or vice-versa; low-cost
Mass customization: ability to create custom products or services on-demand
Personalization: marketing message that a business customizes for each potential
customer’s interests, based on searching, browsing, and buying habits
www.notesolution.com

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Description
CHAPTER 5 E-COMMERCE E-COMMERCE DEFINED • E-commerce: 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 • Includes all types of computer networks, transactions, and business relationships and models TYPE OF E-COMMERCE TRANSACTIONS TRANSACTION DESCRIPTION Business-to-customer (B2C) Online equivalent of retail store as well as other services www.chapters.indigo.ca / www.telus.ca Business-to-business (B2B) Electronic exchanges between companies http://wwre.globalsources.com (worldwide retail exchange) Business-to-government Online sales to government agencies, as well as electronic payment of (B2G) taxes www.doingbusiness.mgs.gov.on.ca Consumer-to-government Electronic payment of taxes as well as purchase of various types of (C2G) licences www.netfile.gc.ca Consumer-to-consumer Use of online auctions www.ebay.ca / www.craigslist.ca E-COMMERCE AND PRODUCTS PHYSICAL AND DIGITAL • Products divided into two primary categories: 1. PHYSICAL anything that require actual shipment of item from a central distribution point to the buyer and requires off-line supply chain to handle the sales, order processing, and delivery of goods 2. DIGITAL over the Internet or other computer networks and requires use of a completely IT- enabled supply chain • Difference is that physical still needs back-office elements to handle order which requires substantial technology interfaces between Web and computerized business systems (web integration) • Digital does not offer “return” when something is successfully downloaded because electronic products or services have immediate value and cannot be off-loaded (deleted or disabled) by vendor E-COMMERCE BUSINESS MODELS • E-commerce business model: combines specific type of website with successful revenue model that produces profits for website owner • Answer for online retailer: sell good products at good price, delivered on time, that will leave enough margin (difference between selling price and COGS) to make reasonable profit to pay website’s operation www.notesolution.com • Business models deal with how Internet companies, and traditional companies using Internet, can make money online • Having great e-commerce business model will not generate profit if not associated with website that brings in customers or visitors THE E-COMMERCE ADVANTAGE • Frictionless transactions is the ability of consumer to move from thought to action (i.e. buying to instantly fulfilling the product) • Creates new business opportunities to operate at lower costs by easing burden of supply chain electronically • Consider technology, competitive issues, and strategy associated with e-commerce has unique benefits: universal standards, global reach, ubiquity and accessibility, customization, higher information density • Marketplace becoming marketspace because of direct access to Internet in varying degrees • Internet users with significant buying power is often concentrated because those with Internet access often represent more economically advantaged economic class overall • Perfect market is an ideal situation that theoretically produces highest consumption at lowest price for most goods INFORMATION CLUTTER • Information density: quality and quantity of information about products and services of interest to them • Ability of buyers to obtain endless amount of information creates new business challenges • Some businesses respond by creating business value based on customization-oriented approach linked to e-commerce • Must make website easy for potential customers to find it: ONLINE ADVERTISING • Linking paid advertising to searches of keywords by consumers • Cost per click (CPC) maximums, work almost like an auction of those competing for placements against popular words and phrases • Banner ad placements SEARCH ENGINE OPTIMIZATION • Spiders crawl the web and catalogue its content into labels and ranks • Insure site uses technologies that are easy to search, creating lots of links between your site and others, and making good use of meta-tags and content density to appear like a site that offers information and value PARTNERING AND TAFFIC TRADING • Online, partner with other sites and each of you can cross-list others’ website and trade potential traffic that comes to one site • Easy to track origin of traffic and reward partner site with commission or fee related to sales it generates for you or vice-versa; low-cost • Mass customization: ability to create custom products or services on-demand • Personalization: marketing message that a business customizes for each potential customer’s interests, based on searching, browsing, and buying habits www.notesolution.com • Possible because of previously shared information through website registration WEB USAGE AND STATISTICS • Pay attention to how traffic that finds your site uses your site • Uses web statistics reporting software programs or SaaS to get web metrics for various timeframes • EX. number of unique visits, number of page views, where user is coming from, which page users exit from site, which search engines visitors use to find website E-COMMERCE COMPETITIVE DIFFERENCE • E-commerce affects competition between organizations: • Reducing barriers to market entry • Preventing company from “owning” the market • Enhancing collaboration/alliances • Multiplying market niches • Changing marketplace drivers (i.e. limitations such as time, distance, and price) • Co-operative website: owners co-operate by advertising on the same site • Niche markets: one area where e-commerce has shown itself to be superior to almost any existing form of marketing E-COMMERCE AND BUSINESS STRATEGY • Business strategy is a plan, pattern, position, and perspective • Strategy emerges and evolves over time in natural response to constantly emerging competitive landscape and individual performance level of competitor in that market space • May start a new perspective (vision, direction) that calls for a certain position • E-commerce strategy: general term of how a business intends to use computer web-based networks and information systems to compete in global marketplace • Meaningful e-commerce strategy requires two di
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