1. E-Commerce: The Revolution is Just Beginning

2. Topic Objectives
At the end of this topic, you should be able to do the following:
Define e-commerce and describe how it differs from e-business
Describe the unique features of e-commerce technology and how they are relevant to business
Describe the major types of e-commerce and explain how they differ from each other

3. What is E-Commerce Definition of E-Commerce Key words
The use of the Internet and the Web to carry out business transactions digitally
Key words
“digitally enabled transactions”
Business transactions carried out digitally
“commercial transactions”
Involve the exchange of value (such as money) across organizational boundaries in return for products and/or services
Note: without exchange of value, commerce do not occur

4. What is E-Business E-Business
Digitally enablement of transactions and processes within a firm, involving information systems under the control of the firm
E-business turns into e-commerce when an exchange of value occurs
Example:
Online inventory management system
Key word “within a firm”
Does not involve commercial transactions outside businesses or consumers

5. Degree of digitization
Pure verses Partial EC
Degree of digitization
Dimension
Digital
Physical
Product sold
Software, music, electronic Magazine
Books, flowers
Delivery Process
Through the internet
Courier, postal, truck
Agent
Non-significant physical presence, location
Brick and mortar, physical retail outlet
Choi, et al., 1997

6. Paradigm Shift Traditional brick and mortar Mass-marketing
Sales force driven process
Customers as passive targets of advertisement campaigns and branding blitz
Customers trapped by social and geographical boundaries
Businesses create profits through information asymmetry
information asymmetry occurs when the seller has more relevant market information than the buyer in a transaction. This will allow the seller to take advantage of the buyer.

7. Unique Features of E-Commerce
The seven unique features of e-commerce technology
Ubiquity (ubiquitous)
Global reach
Universal standards
Richness
Interactivity
Information density
Personalization / customization

8. Unique Features of E-Commerce
Ubiquity
Commerce is available just about everywhere, at all times
It liberates the market from being restricted to a physical space (e.g. m-commerce)
Marketspace (instead of marketplace)
Reduces limitations of temporal (time) and geographical locations (place)
Reduces transaction costs
Examples of transaction costs are telephone calls, filling up forms, filing, searching for information, recording relevant information of transactions
Reduces cognitive energy (mental effort) to transact

9. Unique Features of E-Commerce
Global reach
Permits commercial transactions to cross cultural and national boundaries far more convenient and cost effectively than in the past
Increases the potential market size
Reach
A measure of the number of users or potential customers an e-business can obtain
Television and newspapers can reach a specific region, and at best one whole country

10. Unique Features of E-Commerce
Universal standards
Strength of e-commerce technologies is that it employ universal standards
Easily and readily adopted by most countries in the world
Not true with telephones, radio and television
Television signals, for example, are different between some countries

11. Unique Features of E-Commerce
Richness
Richness refers to the complexity and content of a message
Traditional markets
Provide personal, face-to-face services using aural and visual cues
Challenge of e-commerce is to find ways to overcome lack of richness when communicating with customers
The Web, multimedia technology and interactive nature of web sites have improved the richness of communication in business transactions
What it lacks in richness is compensated with reach

12. Unique Features of E-Commerce
Interactivity
Technology allows for two-way communication between seller and consumer
Television, radio and newspaper do not offer interactivity like the Web

13. Unique Features of E-Commerce
Information density
Reduce cost of
Information collection, storage, processing and communications
Increases the currency, accuracy and timeliness of information
Prices and costs become more transparent
Price transparency refers to the ability of customers to find out the variety of prices in the market
Cost transparency refers to the ability of customers to find out the cost sellers pay for products

14. Unique Features of E-Commerce
Information density
The more sellers know about customers, the better able for them to implement price discrimination
Price discrimination takes place when a seller sells products or services at different prices to different buyers (depending on the buyers’ willingness to pay)

15. Unique Features of E-Commerce
Personalization
Target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases
Customization
Design and produce the delivered products or services based on the buyer’s preferences or prior behaviour

16. Types of E-Commerce Type Name Description B-2-C Business to Consumers
Online businesses selling to individual consumers
B-2-B
Business to Business
Online businesses selling to other businesses
C-2-C
Consumer-to-consumer
Consumers selling to other consumers
P-2-P
Peer-to-peer
Use of peer to peer technology, which enables Internet users to share files
M-Commerce
Mobile commerce
Use of wireless digital devices to enable transactions on the Web

17. Comparing E-Commerce I and II
E-Commerce II
(2000 onwards)
Technology driven
Business driven
Revenue growth emphasis
Earnings and profits emphasis
Venture capital financing
Traditional financing
Ungoverned
Stronger regulation and governance
Entrepreneurial
Large traditional firms
Disintermediation
Strengthening intermediaries
Perfect markets
Imperfect markets, brands, network effects
Pure online strategies
Mixed “click and bricks” strategies
First movers strategies
Strategic follower strength