Chapter 10: E-Commerce

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Chapter 10 E-Commerce Digital Markets,
Digital Goods

• Dr. Andrew P. Ciganek, Ph.D.

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E-commerce

• Digitally enabled commercial transactions between
  and among organizations and individuals,
  primarily over Internet
• 8 reasons why e-commerce is different than
  previous forms of commerce
• Ubiquity, global reach, standards, richness,
  interactivity, information density,
  personalization/customization, social technology

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Ubiquity

• Internet technology available anytime and
  everywhere work, home, mobile devices
• Effect
• Marketplace is extended beyond traditional
  boundaries and is removed from temporal and
  geographic location
• Creates marketspace Marketplace extended beyond
  traditional temporal, geographical boundaries
• Shopping can take place anywhere - customer
  convenience enhanced, shopping costs are reduced

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Global Reach

• Technology reaches across national boundaries,
  around the world
• Effect
• Commerce enabled across cultural and national
  boundaries seamlessly, without modification
• Marketspace includes potentially billions of
  consumers and millions of businesses worldwide

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Universal Standards

• There is one set of Internet technology standards
• Effect
• Disparate computer systems can easily communicate
• Brings lower market entry costs (costs merchants
  pay to bring goods to market)
• Lowers search costs for consumers

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Richness

• Video, audio, text messages are possible
• Effect
• Video, audio, text integrated into single
  marketing message and experience

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Interactivity

• Technology works through interaction with user
• Effect
• Consumers engaged in dialog that adjusts to
  individual
• Consumer is co-participant in delivering goods to
  market

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Information Density

• Total amount and quality of information available
  to all market participants
• Effect
• Greater price transparency
• Greater cost transparency
• Enables merchants to engage in price
  discrimination

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Personalization/Customization

• Technology allows personalized messages/goods to
  be delivered to individuals as well as groups
• Permits customization
• Changing delivered product or service based on
  users preferences or prior behavior
• Effect
• Personalization of marketing messages and
  customization of products and services are based
  on individual characteristics

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Social Technology

• The technology promotes user content generation
  and social networking
• Effect
• New Internet social and business models enable
  user content creation and distribution, and
  support social networks

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4FOOD Burgers Go SocialThink-Share-Discuss
Exercise

• Read the article think about the following
  questions.
• Share answers to the questions with your team.
• Your team may be selected to discuss the answers.
• How else could crowdsourcing be used to benefit
  organizations?
• What companies in Thailand would benefit from
  using social networking techniques?

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Key Concepts in E-commerce

• Internet shrinks information asymmetry
• Information asymmetry when one party has more
  information important for transaction
• Digital markets more flexible and efficient
• Reduced search and transaction costs
• Lower menu costs (cost of changing prices)
• Dynamic pricing

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Key Concepts in E-commerce

• Internet enables disintermediation
• Removal of organizations or business process
  layers responsible for intermediary steps in
  value chain

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Internet Business Models

• Portal
• E-tailer
• Content Provider
• Transaction Broker
• Market Creator
• Service Provider
• Community Provider

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Most Popular Web 2.0 Service Social Networking

• Social networking sites sell banner ads, user
  preference information, music, videos, e-books
• Social shopping sites
• Swap shopping ideas with friends (Kaboodle,
  ThisNext)
• Wisdom of crowds/crowdsourcing
• Large numbers of people can make better decisions
  about topics and products than a single person
• Prediction markets
• Peer-to-peer betting markets on specific outcomes
  (elections, sales figures, designs for new
  products)

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E-commerce Marketing

• Internet provides marketers with new ways of
  identifying and communicating with customers
• Advertising formats include search engine
  marketing, display ads, rich media, and e-mail
• Long tail marketing Ability to reach a large
  audience inexpensively
• Behavioral targeting Tracking online behavior of
  individuals on thousands of Web sites

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Web Site Visitor Tracking
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Web Site Personalization
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M-commerce

• Although m-commerce represents small fraction of
  total e-commerce transactions, revenue has been
  steadily growing
• Location-based services
• Banking and financial services
• Wireless advertising and retailing
• Games and entertainment

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Building an E-commerce Site

• Assembling a team with the skills required to
  make decisions about
• Technology
• Site design
• Social and information policies
• Customers demands should drive the sites
  technology and design