Features of e-commerce (memorize these)

7 features of e-commerce 1. Ubiquity 2. Global Reach 3. Universal Standards 4. Richness 5. Interactivity 6. Information Density 7. Personalization/Customization

Why study these feature?  To some extend, these features are unique to e-commerce and explain why this technology has change the world so much more than other technologies  Do these technologies have any of 7 features? Phone, electricity, cars, planesPhone, electricity, cars, planes  Yes, but not all 7.

Ubiquity  Available everywhere  Built into other devices  Hidden, but still there  Why is ubiquity good?

Ubiquity  Ubiquity lowers transaction costs for the consumer/buyer.  How so?  Think about buying gifts last Christmas  Think about the fact that gas costs $2.40/gallon

Related Concept  Cognitive Energy – mental effort needed to complete a task.  Ubiquity reduces cognitive energy. Humans tend to seek options that require the minimum cognitive energy.Humans tend to seek options that require the minimum cognitive energy. Consider the mental effort needed to buy your book online vs. hunting for it at various book stores.Consider the mental effort needed to buy your book online vs. hunting for it at various book stores.

Global Reach  e-commerce technologies enable a business to easily reach across geographic boundaries.  Its really easy to understand how this feature can benefit business and consumers.

Global Reach  While e-commerce can reach across geographic boundaries, can it reach across demographic boundaries.  Demographics ageage incomeincome racerace gendergender religionreligion  There is one demographic boundary that technology can reach. Luckily, business doesn’t have an interest in reaching this group.

Universal Standards  e-commerce is made possible through hardware (Internet) and software/content (World Wide Web)  The Internet – In its infancy, the architects developed standards that are now globally recognized (TCP/IP)  The World Wide Web – Standards are becoming #1 priority (XML, HTML, etc.)

Universal Standards  Universal standards can greatly influence market entry costs.  How so?  Consider the cost of bring goods to a market  Consider the cost of setting up a virtual, web-based store, vs. a real brick-mortar store?

Universal Standards  Standards make it much easier to build business from existing technologies.  This reduces entry costs  You can setup an e-commerce website for about $10/month in technology overhead costs.  By reducing entry costs, there is a lot more competition.

Related Concept  Price discovery - can the consumer/buyer find prices easily, with minimal cognitive energy.  Since e-commerce is built on standard technology (XML, HTML), its really to integrate, aggregate, and summarize information. Standardization  Low Entry Cost  More completion. Standardization  Info. integration  More price discovery opportunities. More competition + price discovery opportunity = lower consumer prices

Richness  Advertising and branding are an important part of commerce.  e-commerce can deliver video, audio, animation, etc. much better than other technologies (billboards, signs, etc.) However, its about as rich as television technology.However, its about as rich as television technology.  Comparison: Airplanes enable global reach, but how about Richness?

Interactivity  Consumer/user can interact with the content. Here is where Web technology kick’s TV’s ass!Here is where Web technology kick’s TV’s ass!  TV is a passive activity Engaging consumer/user is a powerful feature.Engaging consumer/user is a powerful feature.

Information Density  The e-commerce technology reduces information costsreduces information costs raises the quality of informationraises the quality of information  How does the technology reduce costs?  How does it raise quality.  Consider the old way to share information, i.e., paper, mail, voice communication, etc.

Personalization/Customization  It seems like a contradiction that e- commerce has more opportunities for personalization then, umm, going to a store and buying an item face- to-face with a cleck.  How can e-commerce permit or enhance personalization and customization.

Customization Example  1992: Dr. B buys Compaq computer at CompUSA.  2007: Dr. B buys a Mac Pro computer at  Which product is more customized?

Personalization Example  Dr. B’s 3-year old son is watching Sponge Bob and sees an advertisement for Polly Pocket. BTW, he hates Polly Pocket or anything pink for that matter.  Dr. B’s 3-year old son is play the Bob the Builder Game on noggin.com and suddenly a pop-up ad for the Talking Bob the Builder appears.