ITM 102 Chapter Notes - Chapter 5: E-Commerce Payment System, Technology Strategy, Web Banner

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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
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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
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