© John Wiley & Sons Canada, Ltd. Chapter 7 E-commerce © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. WHAT WE WILL COVER • E-commerce Defined • The E-commerce Advantage • Benefits and Limitations of E-commerce • E-commerce Between Organizations • The Technology of E-commerce © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. E-COMMERCE DEFINED 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 © John Wiley & Sons Canada, Ltd.

BRIEF HISTORY OF RETAIL INNOVATION © John Wiley & Sons Canada, Ltd.

TYPES OF E-COMMERCE TRANSACTIONS Business-to-consumer (B2C) Business-to-business (B2B) Business-to-government (B2G) Consumer-to-government (C2G) Consumer-to-consumer (C2C) © John Wiley & Sons Canada, Ltd.

E-COMMERCE AND PRODUCTS: PHYSICAL AND DIGITAL We can divide such products into two primary categories: physical and digital. Physical products include anything that requires an actual shipment of while consumers can receive digital products directly over the Internet or other computer networks. The main difference between the two is the delivery process as shown on the next slide. © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd.

THE E-COMMERCE ADVANTAGE This advantage is often referred to as the frictionless economy, the transactional ability of the consumer to move from thought to action creates new opportunities for businesses to operate at lower costs by easing the burden of the supply chain electronically. © John Wiley & Sons Canada, Ltd.

IMPACT OF E-COMMERCE TECHNOLOGIES ON BUSINESS © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. INTERNET USERS AROUND THE WORLD © John Wiley & Sons Canada, Ltd.

E-COMMERCE COMPETITIVE DIFFERENCE E-commerce dramatically affects competition between organizations in a number of interesting ways, such as: reducing barriers to market entry preventing any company from “owning” the market enhancing collaboration/alliances multiplying market niches changing marketplace drivers © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. E-COMMERCE STRATEGY How a business intends to use computer Web-based networks and information systems to compete in its global marketplace. © John Wiley & Sons Canada, Ltd.

BENEFITS AND LIMITATIONS OF E-COMMERCE Consumer • Lower prices • Delay in receiving physical products, plus shipping charges • Shopping 24/7 • Slow download speeds in areas without high-speed Internet • Greater searchability of products worldwide • Security and privacy concerns, especially with the rise of phishing (a scam intended to gain private information for fraudulent use) • Shorter delivery times for digital products • Inability to touch, feel, smell, try out, or try on products prior to purchasing • More sharing of information with other consumers • Unavailability of micropayments for purchases of small-cost products • Improved customer service © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. BENEFITS AND LIMITATIONS OF E-COMMERCE Business • Expansion of marketplace to global proportions • Increased competition due to global marketplace • Cheaper electronic transactions • Ease of comparison between competing products drives prices down • Greater customer loyalty through customized web pages and one-to-one marketing • Customers want specific choices and will not accept substitutes • Expansion of niche marketing opportunities • Customers control flow of information instead of companies • Direct communications with customers through website, often resulting in better customer service © John Wiley & Sons Canada, Ltd.

E-COMMERCE BETWEEN ORGANIZATIONS B2B is by far the larger market in terms of volume of transactions and dollar amounts compared to B2C. There are two types of transaction models: spot buying and strategic sourcing. © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. B2B E-commerce Spot Buying Company needs to find a public marketplace or exchange that sells these desired products and services. Buyer and seller do not know each other. Products are usually uniform in quality and differ only somewhat in price. Strategic Sourcing Involves forming a long-term relationship with another company. Prices are set through negotiation. Both the buyer and seller are usually well known to each other and wish to continue a trading relationship into the future. Strategic sourcing often relies on a one-to-one business model, although company-centric and exchange models are also used, see next slide. © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd.

THE TECHNOLOGY OF E-COMMERCE In its relatively brief history, e-commerce has been through several distinct generations of growth as depicted in the next slide. The increasing heights of the bars represent both the growing number of users and increased technology capability. © John Wiley & Sons Canada, Ltd.

GENERATIONS OF E-COMMERCE © John Wiley & Sons Canada, Ltd.

© John Wiley & Sons Canada, Ltd. RECAP What is e-commerce? What are the advantages of e-commerce? How has e-commerce changed the way we do business? © John Wiley & Sons Canada, Ltd.