Electronic-Commerce

Topic 7

Text MaterialsChapter 9 – Electronic Commerce

The Internet

• Universal, easy-to-use set of technologies and standards

• Web sites available 24/7• Extended distribution channels• Reduced transaction costs• Reduced network and coordination costs• Redundant

September 7, 2010

Trends

• Black Friday 2009 about $10B

• Cyber-Monday

Youtube, search for e-bay cyber Monday

Onlinebusiness.com

Trends

• Dissintermediation

• E-commerce is changing everything• Electronic commerce (e-commerce) – commerce, but it is

commerce accelerated and enhanced by IT– Build powerful relationships with customers– Build powerful relationships with suppliers– Build powerful relationships with partners

Creating a Sustainable Competitive Advantage

• • • • •

E-commerce business models

B2B E-Commerce

when a business sells products and services to customers who are primarily other businesses

– Where all the e-commerce money is– Basically, it’s about businesses doing business with other businesses– Supply chain management is a big part of B2B e-commerce

Potential Benefits

• • • • •

B2C E-Commerce

Source: BusinessWeek traffic

Top Online Retail

Source: internetretailer.com January 2010, annual online retail sales estimates, excludes other revenues

Top Online Retail

Why do consumers buy online?

#1

#2

Sources: Nielsen Online and BizRate Research February 2010

Sources: Coremetrics, money.cnn, and Comscore February 2010

Cyber Monday 2009 versus 2008

2009 $887MHeaviest Online Spending Day in History5 to 10% increase over 2008

Mean order amount $180 vs. $130lead by apparel retailers

$10B Black Friday

Single Day Sales

Sources: Forrester Research February 2010

Size of Annual Online Sales

$150B+ 2009 growing to $250B+ in 2012

C2C E-Commerce

B2B and B2C Success Criteria

• Understand your business and your customers• Find and establish relationships with customers• Move money easily and securely

Understand your business and your customers

• Who are your target customers?• What is the value of your products and services as perceived by your customers?

Find Customers and Establish Relationships

B2C• Registering with search engines• Online ads• Viral marketing• Affiliate programs

Viral marketing and viral advertising refer to marketing techniques that use preexisting social networks to produce increases in brand awareness, through self-replicating viral processes, analogous to the spread of pathological and computer viruses. It can be word-of-mouth delivered or enhanced by the network effects of the Internet.[1] Viral marketing is a marketing phenomenon that facilitates and encourages people to pass along a marketing message voluntarily.[2] Viral promotions may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software, images, or even text messages.It is claimed that a satisfied customer tells an average of three people about a product or service he/she likes, and eleven people about a product or service which he/she did not like.[3] Viral marketing is based on this natural human behavior.The goal of marketers interested in creating successful viral marketing programs is to identify individuals with high Social Networking Potential (SNP) and create Viral Messages that appeal to this segment of the population and have a high probability of being passed along.The term "viral marketing" is also sometimes used pejoratively to refer to stealth marketing campaigns[4]--the use of varied kinds of astroturfing both online and offline [5] to create the impression of spontaneous word of mouth enthusiasm.

B2B• Relationships• Supply Chain Management• Information Technology

Find Customers and Establish Relationships

Move Money Easily and Securely

• Secure Sockets Layer (SSL)…– Creates a secure connection between a Web client and

server– Encrypts the information– Sends the information over the Internet

• Denoted by lock icon on browser or https:// (notice the “s”)

Move Money Easily and Securely

The “s” in https and the padlock

B2C Payment Systems

• Credit Cards• Financial cybermediaries• Electronic checks• Smart Cards

Financial Cybermediaries

– Internet-based company that makes it easy for one person to pay another person or organization over the Internet

– PayPal (www.paypal.com) is the most well-known

Smart Cards

• Smart card – plastic card (the size of a credit card) that contains an embedded chip on which digital information can be stored and updated

– Debit cards are an implementation

B2B Payment Systems

Electronic Data Interchange - EDI

• Electronic data interchange (EDI) – direct computer-to-computer transfer of transaction information in standard business documents, such as invoices and purchase orders, in a standard format– How businesses communicate with each other– Used in e-marketplaces and VANs

Private Network

Value-Added Network

EDI and a VAN

E-Business Trends, Biometrics

E-Business Trends

• “E” is certainly changing many things• Many trends in every part of your life• Three important ones

1. Youth

2. M-commerce

3. The Long Tail

E-Business Trends, Youth

E-Business Trends, M – Mobile Commerce

• Mobile computing – your ability to use technology to wirelessly connect to and use centrally located information and/or application software

• M-commerce – e-commerce conducted over a wireless device– Subset of mobile computing

• Mobility is key for the next generation of e-commerce that will rely on

1.Knowing where we are

2.Our ability to do anything from anywhere

E-Business Trends, M – Mobile Commerce

E-Business Trends, Long Tail

• Long Tail – first offered by Chris Anderson; explains e-commerce profitability in terms of a sales curve

• Brick-and-mortar businesses carry limited inventory, inventory that is popular

• E-businesses can carry huge amounts of “niche” inventory that may only sell a couple of times a year

E-Business Trends, Long Tail

E-Business Trends, Long Tail