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Chapter 6

chapter 6. e-business and e-commerce

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York University
Administrative Studies
ADMS 2511
Anita Patel

CHAPTER 6. E-BUSINESS AND E-COMMERCE. Advantages of e-commerce:  Increases organization’s reach  Removes many barriers.  Provides companies with opportunities for companies to expand worldwide at low cost. Definitions and concepts Electronic commerce (EC/e-commerce): process of buying, selling, transferring/exchanging products, services, or information via computer networks (incl. Internet). E-Business: e-commerce+ servicing customers+ collaborating with business partners_ performing electronic transactions w/ organizations. Pure vs. partial e-commerce Based on degree of digitization: product/service sold process of production, delivery agent or intermediary.  Purely physical organizations/ bricks-and-mortar organizations- everything is physical  Virtual/pure-play organizations: purely digital  Clicks-and-mortar organizations- ecommerce activities but business is primarily performed in the physical world.(partial EC) TYPES OF E-COMMERCE  Business-to-consumer (B2C): sellers-organizations, Buyers- individuals.  Business-to-business (B2B): sellers+ buyers- organizations.  Consumer-to-consumer (C2C): sellers+buyers- individuals. Eg. EBay Internet marketing- opens a wider market for the seller- international, and local.  Business-to-employee(B2E): Organization to employee- services like benefits, training classes, purchase of discounted insurance, travel packages, tickets to events, corporate products on company’s website  E-government: deliver information and public services to citizens and business partners and suppliers. - Efficient way of conducting transactions, delivery of public services.  Mobile commerce (m-commerce): EC conducted entirely in wireless environment. Business model: method by which company generates revenue to survive. Online direct marketing, Electronic tendering system, name-your-own-price, find-the-best-price, affiliate marketing, viral marketing, group purchasing(e-coops), on-line auctions, product customization, electronic marketplaces and exchanges, bartering-on-line, deep discounters, membership Face book advertising: “advertisers distract users, users ignore advertisers; advertisers distract better, users ignore better” MAJOR E-COMMERCE MECHANISMS Catalogues: product database, directory and search capabilities, and a presentation function.  Auctions: competitive process where seller solicits consecutive bids from buyers or buyer solicits bids from sellers.  Forward auctions: seller places item for auction- buyers continuously bid- highest bidder wins. Eg. EBay  Reverse auctions: buyer post request for quotation (RFQ)-provide details, buyer bids- lowest bidder wins. Electronic storefront- website representing a single store. Electronic mall- cybermall/e-mall- collection of individual stores. Electronic market- central virtual market space on web where buyers and sellers conduct e- commerce and e-business activities. BENEFITS AND LIMITATIONS OF E-COMMERCE Benefits Limitations Markets are more accessible Technological limitations-lack of universally accepted security standards Low cost of processing, distributing, and , insufficient telecommunications retrieving information bandwidth Expensive accessibility Vast number of products and services Non-technological limitations- anytime, anywhere perceptions that EC is insecure Easy and convenient delivery of Unresolved legal issues, lack of critical information, services and products mass of sellers and buyers BUSINESS-TO-CONSUMER (B2C) ELECTRONIC COMMERCE B2B B2C Larger Smaller, more complex- because larger no. Of buyers, smaller no. of sellers making transaction per day. Needs to be efficient, timely in regard to purchase, payments, delivery. And management of payment systems. Electronic storefronts and malls Electronic retailing (e-tailing): direct sale of products and services through electronic storefronts or e-malls, usually designed around an electronic catalogue format and/or auctions. E-storefronts: website that represents a single store with unique internet address/ uniform resource locator (URL).Eg. Future shop, sears, chapters. E-malls/ cybermall- collection of individual shops under a single internet address- one stop shopping place-includes thousands of vendors. In most e-malls- customers get transferred from the mall to a participating storefront- thus making it known as referral malls. On-line service industries Buying an airline ticket or purchasing stocks. Insurance- delivered on e-commerce and reduces cost. Intermediaries-functions: • Provide information • Perform value-added services like consulting. Online services can provide information, and is fully automated so intermediaries involved in information will be eliminated- this is called Disintermediation. Web benefits for service providers- • When number of participants is enormous • Information to be exchanged is complex. Cyber-banking Electronic banking: conducting banking activities from anywhere at any time – paying bills to applying for loan. Advantage: • To customers-saves time and is convenient. • To banks- inexpensive, attract remote customers; provide added on-line services-> virtual banks. International banking- ability to handle trading in multiple currencies, transfers of electronic funds and electronic letters of credit. Important support- trade card inc.- provides customers to make digital payments anywhere on the globe. On-line securities trading Use computers to trade stocks, bonds, and other financial instruments. Advantages  Cheaper service compared to full service or discount broker  Access to vast amount of information online. Eg. Bloomberg.com, bmoinvestorline.com The on-line job market  Environment for job seekers to search and reply on-line to employment ads, place resumes on sites and use recruiting firms like monster and work polis.  Companies can search for hard-to-find employees, govt agencies and companies advertise positions, accept resumes, take applications and offer jobs over the internet. Travel services  Plan, explore, and arrange trips anywhere at any time.  Purchase airline tickets, reserve hotel rooms, and rent cars.  All major airline vacation services, large conventional travel agencies, car rental agencies, hotels and tour companies.  Set price online and let the website search for suitable vendor. Disadvantage: quick access means any mistakes caused and posted online can be detrimental to a company. Issues in e-tailing Disadvantages-  Channel conflict: regular distributors may not like the company’s method of direct selling to customers on-line. Conflict may arise from pricing of products and services and resource allocation. Conflict from logistics provided by off-line activities to on-line activities. This may increase expenses and reduce synergy between the two--> solution: multi-channelling.  Order fulfillment: online orders need to be fulfilled- activities involved- quickly locate products, pack, arrange for speedy delivery, collect money from customers, in advance/ bill, handle returns. Problem: large amount of small packages. Delivery: includes product + instructions for assembly. Problem: late deliveries, wrong item, high delivery costs, unhappy customers. Taking orders-easy, delivering orders- difficult. On-line advertising Advertising: disseminating information in an attempt to influence a buyer-seller transaction. Traditional advertising eg. TV or newspaper Direct-response marketing / telemarketing eg.direct mail or telephon
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