E-Commerce in Business Chapter 2 E-Commerce in Business

The E-Environment E-Commerce - E-Business - Business conducted via electronic methods E-Business - Any process a business conducts over a computer network

E-Commerce vs. E-Business A business buying office supplies through an online auction Withdrawing funds from an ATM machine Purchasing a book over the Internet A government employee reserves a hotel room over the Internet Production process including procurement, ordering, automated stock replenishment, payment processing, and other links with suppliers Customer Process including marketing, selling, processing of orders and payments Management processes including employees services, training, information sharing

Why People Buy Online Reason % of Surveyed Shoppers Save time 70% Shop off hours 69% Avoid holiday crowds 68% Find better prices 59% Find products more easily 52% Products not available in stores 50% Easier to compare prices 47% Have gifts sent direct 36% Avoid wrapping gifts 13% Earn loyalty points Purchase from wish list 10%

Benefits Limitless Buyers Open 24/7 Advertise Market and Analyze Brand Loyalty - a customer’s preference for a particular product Coke vs. Pepsi Managing Inventory

Benefits Meeting Customer Needs Mass Customization - the production of goods that offer specialized choices to mainstream buyers Value Chain - the sequence of design, production, and marketing efforts a business conducts to deliver its products at the right place and time Streamline the value chain - increase productivity and profitability

Benefits Starting Out Purchase domain name Build the site Select business model Photos of products Establish and ship goods

Benefits Pricing Competitively Online community makes it easier to compare prices Elastic demand - pricing changes will create a change in the amount of goods or services consumers are willing to buy at the certain price

How can e-commerce weaken or add to a local Think about it… How can e-commerce weaken or add to a local economy?

Did you pay attention? What does it mean for a company to “manage” its inventory? How is an online company’s inventory easier to manage than that of a bricks-and-mortar business? How can a company streamline its value chain? Why is it difficult to charge more than your competitors in an e-commerce marketplace?

Conducting Business on the Web You make the call… You are in the market for a new laptop. You use several manufacturers’ Web sites to research the different models available. After making your decision, you call the company’s toll-free number to place your order. Is this an e-commerce transaction?

Conducting Business on the Web Since no ownership of goods or services actually took place over the computer network, this is not technically an e-commerce transaction even though all of the components (hardware, buyer, seller) are present.

E-Commerce Business Models Online transactions occur 24/7 Buy a shirt from AmericanEagle.com File your income tax return electronically Computer manufacturer purchases componants from a suppler in China Bid on an item on eBay Business Model - a system of policies, operations, resources, and technologies used to generate revenue.

Common Business Models Business-to-Business (B2B) Business-to-Consumer (B2C) Consumer-to-Consumer (C2C) Consumer-to-Business (C2B) Business-to-Government (B2G) Government-to-Consumer (G2C) Intermediary Hub

Business-To-Business Applies when a business transacts information, goods, or services with another business Oldest and fastest growing form of e-commerce Example: A manufacturer in New Jersey uses Paychex for its payroll service

Business-To-Consumer Any business or organization that uses the Internet to sell its products of services to consumers or end users Amazon.com fnfg.com WebMD.com

Business-To-Consumer Studies show that the longer a customer stays on a site, the more likely they are to buy Keep customers busy with a variety of products, services and information. Offer easy navigation, a secure way to purchase products, as well as offer a reason to return

Consumer-To-Consumer Allows customers to interact with one another online to transact goods and services eBay - the most successful online auction site. 30 million people buy and sell more than $20 billion annually More than the GDP of all but 70 countries in the world

Other Models Business-to-Government - connecting private sector to the government marketplace Bids for government contracts Government-to-Consumer - allows consumers to easily access relevant information from government agencies irs.gov

What’s a hub? Intermediary Hub - a business that does not provide goods or services but instead acts as a middleman, bringing buyers and sellers together Vertical Hubs - match buyers and sellers within a particular industry Horizontal Hub - provide the same types of products or services across various industries

Value Line in the Energy Chain

How did you do? Why do e-commerce businesses strive to keep potential customers on their sites as long as possible? What are some of the key challenges facing the B2C model? How might the G2C model be helpful to the average consumer?