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Chapter 1Overview of Electronic Commerce * Video example: https://www.youtube.com/watch?v=EoaOy2sTRKk0Learning 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.Discuss e-commerce 2.0.Describe social commerce and social software.1-11Learning ObjectivesUnderstand the elements of the digital world.Describe the drivers of EC as they relate to business pressures and organizational responses.Describe some EC business models.Describe the benefits of EC to organizations, consumers, and society. List and describe the major limitations of EC.1-2* Opening Case => Net-a-Porter: Dress For Success http://www.net-a-porter.com/ 2Electronic Commerce: Definitions and Conceptselectronic commerce (EC)The process of buying, selling, or exchanging products, services, or information via computere-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 organization1-33Electronic Commerce: Definitions and Concepts1-4ordering

4Electronic Commerce: Definitions and ConceptsMAJOR EC CONCEPTSPure Versus Partial ECEC Organizationsbrick-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 onlineclick-and-mortar (click-and-brick) organizationsOrganizations that conduct some e-commerce activities, usually as an additional marketing channel1-55Electronic Commerce: Definitions and Conceptselectronic market (e-marketplace)An online marketplace where buyers and sellers meet to exchange goods, services, money, or information1-66Electronic 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 organizations1-77The Electronic Commerce Field: Classification, Content, and HistoryintranetAn internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocolsextranetA network that uses the Internet to link multiple intranets1-88

1-99The Electronic Commerce Field: Classification, Content, and HistoryAN EC FRAMEWORKEC applications are supported by infrastructure and by the following five support areas:PeoplePublic policyMarketing and advertisingSupport servicesBusiness partnerships1-1010

1-1111The Electronic Commerce Field: Classification, Content, and HistoryEC IS CLASSIFIED BY THE NATURE AND DIRECTION OF TRANSACTIONS AND INTERACTIONSbusiness-to-business (B2B)E-commerce model in which all of the participants are businesses or other organizationsbusiness-to-consumer (B2C)E-commerce model in which businesses sell to individual shopperse-tailingOnline retailing, usually B2C1-1212The Electronic Commerce Field: Classification, Content, and Historybusiness-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 customersconsumer-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 need1-1313The Electronic Commerce Field: Classification, Content, and Historyintrabusiness 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 organizationbusiness-to-employees (B2E)E-commerce model in which an organization delivers services, information, or products to its individual employees -> B2ME1-1414The Electronic Commerce Field: Classification, Content, and Historyconsumer-to-consumer(C2C)E-commerce model in which consumers sell directly to other consumers ex. Ebays auctionscollaborative commerce (c-commerce)E-commerce model in which individuals or groups communicate or collaborate online1-1515The Electronic Commerce Field: Classification, Content, and Historye-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 (G2B) or individual citizens (G2C) or other governments (G2G)1-16- f-commerce ? 16

1-1717The Electronic Commerce Field: Classification, Content, and a Brief HistoryA BRIEF HISTORY OF ECThe Interdisciplinary Nature of ECThe Google Revolutionf-commerceE-commerce activities conducted on Facebook or influenced by the siteEC FailuresEC SuccessesTHE FUTURE OF EC1-1818social computingAn approach aimed at making the human-computer interface more natural Web 2.0 * OReilly Media (2005)The second-generation of Internet-based services that let people collaborate and share information online in new ways, such as social networking sites, wikis, communication tools, and folksonomies1-19* Folk + taxonomy, user-generated taxonomy, also known as collaborative tagging, social classification, social indexing, or social taggingE-Commerce 2.0: From Social Commerce to Virtual Worlds19E-Commerce 2.0: From Web 2.0 to Enterprise Social Networking and Virtual Worldssocial networkA category of Internet applications that help connect friends, business partners, or individuals with specific interests by providing free services such as photo presentations, e-mail, blogging, and so on using a variety of tools

1-2020social network service (SNS)A service that builds online communities by providing an online space for people to build free homepages and that provides basic communication and support tools for conducting different activities in the social networksocial networkingThe creation or sponsoring of a social network service and any activity, such as blogging, done in a social network (external or internal)1-21E-Commerce 2.0: From Social Commerce to Virtual Worlds21Enterprise Social networksSocial networks whose primary objective is to facilitate businessExamples of Enterprise Social Networkscarnivalconnections.comxing.comsocial commerceThe e-commerce activities conducted in social networks and/or by using social software (i.e., Web 2.0 tools)

1-22E-Commerce 2.0: From Social Commerce to Virtual Worlds22VIRTUAL WORLDS AND SECOND LIFEvirtual world (metaverse)A user-defined world in which people can interact, play, and do business. The most publicized virtual world is Second LifeHow Students Make Money in a Virtual World (p. 51)THE MAJOR TOOLS OF WEB 2.0Wikis RSS feedsBlogs Microblogs (e.g.,Twitter)1-23E-Commerce 2.0: From Social Commerce to Virtual Worlds23The Digital World: Economy, Enterprises, and Societydigital 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 economy1-2424The Digital World: Economy, Enterprises, and Societydigital 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 processescorporate portalA major gateway through which employees, business partners, and the public can enter a corporate website.THE DIGITAL SOCIETY1-2525The Changing Business Environment,Organizations Response, and EC SupportTHE CHANGING BUSINESS ENVIRONMENTPERFORMANCE, BUSINESS PRESSURES, AND ORGANIZATIONAL RESPONSES AND EC SUPPORTThe Business Environment and Performance Impact ModelBusiness Pressures: market (economic), societal, and technologicalOrganizational Response StrategiesThe support of ECThe Major Capabilities of E-Commerce1-2626

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28Electronic Commerce Drivers and the Changing Business EnvironmentThe Changing Business EnvironmentEconomic, legal, societal, and technological factors have created a highly competitive business environment in which customers are becoming more powerful These environmental factors can change quickly, vigorously, and sometimes in an unpredictable mannerCompanies need to react quickly to both the problems and the opportunities resulting from this new business environment1-2929Electronic Commerce Business Modelsbusiness modelA method of doing business by which a company can generate revenue to sustain itself -> Business models are a set of a business plan -> HBR Jan.-Feb. (2011) business model innovations (5 articles) e-commerce1-3030Electronic Commerce Business ModelsTHE STRUCTURE AND PROPERTIES OF BUSINESS MODELSRevenue ModelsSalesTransaction feesSubscription feesAdvertising feesAffiliate fees: (Amazon.com)Other revenue sources1-31* Buy low-sell high31

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1-3333Electronic Commerce Business ModelsValue propositionThe benefits a company can derive from using ECFunctions of a Business ModelAmit & Zott (2001): four sets of values -> search and transaction cost efficiency -> complementarities: involve bundling some goods and services together to provide more value than from offering them separately -> lock-in: high switching cost -> novelty: creates value through innovative ways1-3434Electronic Commerce Business ModelsTYPICAL EC BUSINESS MODELSOnline direct marketing2. tendering (bidding) system (reverse auction)Model in which a buyer requests would-be sellers to submit bids; the lowest bidder winsElectronic marketplaces and exchangesViral marketing (Web-based word-of-mouth ads) Group purchasing * Groupon Case (p.64)1-35 14. 3. 4 : ( 4) / , 160 13. 11 : 2 6 (14 )35The Benefits, Limitations, and Impacts of Electronic CommerceTHE BENEFITS AND IMPACTS OF ECEC provides benefits to organizations, individual customers, and society (EC revolution)EC as a Provider of Competitive AdvantageTHE LIMITATIONS AND BARRIERS OF ECethicsThe branch of philosophy that deals with what is considered to be right and wrongWHY STUDY E-COMMERCE? - Since 19951-36361-37

37Managerial IssuesIs EC real?Why is B2B e-commerce so essential and successful?Which EC business model should I choose?How can we exploit social commerce?What are the top challenges of EC today?1-3838SummaryDefinition of EC and description of its various categoriesThe content and framework of ECThe major types of EC transactionsE-commerce 2.0Description of social commerce and social software1-3939SummaryThe elements of the digital worldThe drivers of ECThe major EC business modelsBenefits of EC to organizations, consumers, and societyLimitations of e-commerce1-4040