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Chapter 5

ITM 102 Chapter Notes - Chapter 5: E-Commerce, Online Advertising, Perfect Competition

Information Technology Management
Course Code
ITM 102
Ross Mc Naughton

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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-

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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-
-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
-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)
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