1. E-Commerce

2. What is E-Commerce?
E-Commerce can be defined as …
The conduct of selling, buying, logistics, or other organization-management issues via the WEB. OR
Exchange of information, goods, service, and payments by electronic means.

3. Growth of E-Commerce $743.8B 2002 1st Q $28.91B 2000 $35.87B 2001
2002est
1996
$700M

4. History of E-Commerce
Background E-commerce actually began in the 1970s when larger corporations started creating private networks to share information with business partners and suppliers.
This process, called Electronic Data Interchange (EDI), transmitted standardized data that streamlined the procurement process between businesses, so that paperwork and human intervention were nearly eliminated.
EDI is still in place, and is so effective at reducing costs and improving efficiency that an estimated 95% of Fortune 1,000 companies use it.

5. History of E-Commerce
Prodigy was running text ads and selling flowers in the early '80s
The first documented Online sale in 1994 was what?
A CD

6. History of E-Commerce
Early EC was pioneered by Internet companies that didn't (and still don't) perform traditional retail. Called Pure Plays.
such as Amazon.com and CDNow.
More recently click and mortar stores have moved online
like Barnes and Noble, Best Buy, the Gap, and Wal-Mart

7. Product Attributes for Selling on the Web
Digital or Knowledge-based products
Software, video games, music, movies, books
Direct-to-consumer web services
Gambling and porn

9. Product Attributes for Selling on the Web
Digital or Knowledge-based products
Consulting services
Information or data provider [banner ad revenue]
Must be what your TM wants
Must be high quality
Must be unique

10. Product Attributes for Selling on the Web
Hard Goods
Computers and computer equipment
Books
CDs
Specialized Niche products
Virtual Vineyard

11. High Touch vs. Low Touch
High-Touch products are those which consumers prefer to hold, feel, or examine closely.
Low-Touch products are typically standardized goods that do not require examination.

12. Ways to Sell High-Touch Products
Technology

13. Ways to Sell High-Touch Products
Physical Solutions

14. Ways to Sell High-Touch Products
Branding

15. EC Advantages/Disadvantages
Ability to reach new markets
Reduces costs (for some businesses)
Increased purchasing opportunities
More efficient (electronic payments, telecommuting, etc.)
EC Disadvantages
Incompatibility for certain industries
Limitations of the medium
Costs!!!
Skills required
Cultural and legal issues

16. Business Model
The method by which a firm builds and uses its resources to offer its customers better value than its competitors and to make money doing so!
Two major parts of the business model:
Value Proposition
Financial Model

17. Value Proposition
The value your company adds that would make customers switch to you from their current provider.
Concepts involved in Value Proposition
Choice of Segments
Choice of Focal Customer Benefits
Choice of Unique and Differentiating Capabilities

18. Value Proposition Choice of Segments market size or growth
unmet customer needs
weak or no competition
Choice of Focal Customer Benefits
One or two KEY benefits based on the marketing mix variables
Ex: fast delivery, high quality products, customer service, low-prices, unique product
Choice of Unique and Differentiating Capabilities
Also known as : Core Competencies or Unique Resources
Tangible assets (location), Intangible (Brand name) or corporate skills and capabilities (knowledge of customers)

19. Financial Models There are four revenue models:
Advertising (sell ads, site sponsorships, interstituals)
Product sales (income from the sales of products, services, or information)
Transaction (revenue from charging a fee or a taking a % of a transaction)
Subscription (subscriber fees for magazines, information, services, …)
Or a combination of these

20. Revenue Model - Advertising

21. Revenue Model – Product Sales

22. Revenue Model – Transaction

23. Revenue Model – Subscription