CH01(Overview of E-Commerce)

2008 Pearson Prentice Hall, Electronic Commerce 2008, Efraim Turban, et al. Chapter 1Overview of Electronic Commerce

1-*Learning ObjectivesDefine electronic commerce (EC) and describe its various categories.Describe and discuss the content and framework of EC.Describe the major types of EC transactions.Describe the digital revolution as a driver of EC.Describe the business environment as a driver of EC.

1-*Learning ObjectivesDescribe some EC business models.Describe the benefits of EC to organizations, consumers, and society.Describe the limitations of EC.Describe the contribution of EC to organizations responding to environmental pressures.Describe online social and business networks.

1-*Electronic Commerce: Definitions and Conceptselectronic commerce (EC)The process of buying, selling, or exchanging products, services, or information via computer networks

1-*Electronic Commerce: Definitions and ConceptsEC can be defined from these perspectives:Business processServiceLearningCollaborationCommunity

1-*Electronic Commerce: Definitions and Conceptse-businessA broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization

1-*Electronic Commerce: Definitions and ConceptsPure versus Partial ECEC can take several forms depending on the degree of digitization the product (service) soldthe process (e.g., ordering, payment, fulfillment)the delivery method

1-*Electronic Commerce: Definitions and Concepts

1-*Electronic Commerce: Definitions and Conceptsbrick-and-mortar (old economy) organizationsOld-economy organizations (corporations) that perform their primary business off-line, selling physical products by means of physical agentsvirtual (pure-play) organizationsOrganizations that conduct their business activities solely online

1-*Electronic Commerce: Definitions and Conceptsclick-and-mortar (click-and-brick) organizationsOrganizations that conduct some e-commerce activities, usually as an additional marketing channel

1-*Electronic Commerce: Definitions and ConceptsInternet versus Non-Internet ECMost EC is done over the Internet, but EC also can be conducted on private networks, such as value-added networks, local area networks, or on a single computerized machineNon-Internet EC includes the use of mobile handwriting-recognition computers used by field reps to write their notes in the field

1-*Electronic Commerce: Definitions and Conceptselectronic market (e-marketplace)An online marketplace where buyers and sellers meet to exchange goods, services, money, or information

1-*Electronic Commerce: Definitions and Conceptsinterorganizational information systems (IOSs)Communications systems that allow routine transaction processing and information flow between two or more organizationsintraorganizational information systemsCommunication systems that enable e-commerce activities to go on within individual organizations

1-*The EC Framework, Classification, and Content

intranetAn internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocolsextranetA network that uses the Internet to link multiple intranets


EC applications are supported by infrastructure and by these five support areas:PeoplePublic policyMarketing and advertisementSupport servicesBusiness partnerships


Classification of EC by the Nature of the Transactions or Interactionsbusiness-to-business (B2B)E-commerce model in which all of the participants are businesses or other organizations


business-to-consumer (B2C)E-commerce model in which businesses sell to individual shopperse-tailingOnline retailing, usually B2Cbusiness-to-business-to-consumer (B2B2C)E-commerce model in which a business provides some product or service to a client business that maintains its own customers


consumer-to-business (C2B)E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they needmobile commerce (m-commerce)E-commerce transactions and activities conducted in a wireless environment


location-based commerce (l-commerce)M-commerce transactions targeted to individuals in specific locations, at specific timesintrabusiness ECE-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization


business-to-employees (B2E)E-commerce model in which an organization delivers services, information, or products to its individual employeescollaborative commerce (c-commerce)E-commerce model in which individuals or groups communicate or collaborate onlineconsumer-to-consumer (C2C)E-commerce model in which consumers sell directly to other consumers


peer-to-peer (P2P)Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commercee-learningThe online delivery of information for purposes of training or educatione-governmentE-commerce model in which a government entity buys or provides goods, services, or information from or to businesses or individual citizens


exchangeA public electronic market with many buyers and sellersexchange-to-exchange (E2E)E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information


The Interdisciplinary Nature of ECThe Google RevolutionEC FailuresEC Successes

1-*digital economyAn economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economyDigital Revolution Drives EC

1-*Digital Revolution Drives EC

1-*Business Environment Drives ECThe Business EnvironmentThe business environment impact modelBusiness pressuresOrganizational response strategies

1-*Business Environment Drives EC

1-*EC Business Modelsbusiness modelA method of doing business by which a company can generate revenue to sustain itself

1-*EC Business ModelsSix elements of a business model include descriptions of:Customers to be served and the companys relationships with these customers including customers value propositionAll products and services the business will offerThe business process required to make and deliver the products and servicesThe resources required and the identification of which ones are available, which will be developed in house, and which will need to be acquired The organizations supply chain, including suppliers and other business partnersThe revenues expected (revenue model), anticipated costs, sources of financing, and estimated profitability (financial viability)

1-*EC Business Modelsrevenue modelDescription of how the company or an EC project will earn revenuevalue propositionThe benefits a company can derive from using EC

1-*EC Business ModelsThe major revenue models are:Sales Transaction feesSubscription feesAdvertising feesAffiliate feesOther revenue sources

1-*EC Business Models

1-*EC Business ModelsFunctions of a Business ModelArticulate a customer value propositionIdentify a market segment Define the ventures specific value chain structureEstimate the cost structure and profit potentialDescribe the ventures positioning within the value network linking suppliers and customers Formulate the ventures competitive strategy

1-*EC Business ModelsOnline direct marketing Electronic tendering systems.Name your own price Find the best price Affiliate marketingViral marketingGroup purchasingOnline auctionsProduct and service customizationElectronic marketplaces and exchangesInformation brokers (informediaries)BarteringDeep discountingMembershipValue-chain integratorsValue-chain service providersSupply chain improversSocial networks, communities, and bloggingDirect sale by manufacturersNegotiationTypical EC Business Models

1-*EC Business Modelstendering (bidding) systemModel in which a buyer requests would-be sellers to submit bids; the lowest bidder winsname-your-own-price modelModel in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price

1-*EC Business Modelsaffiliate marketingAn arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling companys Web siteviral marketingWord-of-mouth marketing in which customers promote a product or service to friends or other people

1-*EC Business ModelsSMEsSmall-to-medium enterprisesgroup purchasingQuantity (aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased

1-*EC Business Modelse-co-opsAnother name for online group purchasing organizationscustomizationCreation of a product or service according to the buyers specifications

1-*Benefits and Limitations of ECBenefits toOrganizationsConsumersSocietyLimitationsTechnologicalNontechnological

1-*Social and Business Networkssocial networksWeb sites that connect people with specified interests by providing free services such as photo presentation, e-mail, blogging, etc.Business-oriented networks are social networks whose primary objective is to facilitate business

1-*The Digital Enterprisedigital enterpriseA new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: reach and engage customers more effectively, boost employee productivity, and improve operating efficiency. It uses converged communication and computing technology in a way that improves business processes

1-*The Digital Enterprisecorporate portalA major gateway through which employees, business partners, and the public can enter a corporate Web site

1-*Managerial IssuesIs it real?Why is B2B e-commerce so attractive?There are so many EC failureshow can one avoid them?How do we transform our organization into a digital one?

1-*Managerial IssuesHow should we evaluate the magnitude of business pressures and technological advancement?How can we exploit social/business networking?What should be my companys strategy toward EC?What are the top challenges of EC?

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CH01(Overview of E-Commerce)