Electronic Commerce

• Electronic commerce


  Shopping on the Web, businesses trading with other businesses, internal company processes
• Electronic business (e-business)


  Includes all business activities using Internet technologies
• Dot-com (pure dot-com)


  Businesses operating only online
• Categories of electronic commerce

  • Business-to-consumer (B2C)
  • Business-to-business (B2B): e-procurement
  • Business processes
• Business activity


  A task performed by a worker doing their job, may or may not be related to a transaction
• Transaction


  An exchange of value, such as a purchase, sale, or conversion of raw materials into finished product
• Business processes


  Groups of logical, related, sequential activities and transactions
• The Web helps people work more effectively
• B2B has much greater dollar volume and number of transactions than B2C
• The number of transactions in supporting business processes is greater than B2C and B2B combined
• Consumer-to-consumer (C2C)


  Individuals buying and selling among themselves on a web auction site
• Business-to-government (B2G)


  Business transactions with government agencies, such as paying taxes and filing required reports
• Electronic Funds Transfers (EFTs)


  Wire transfers, electronic transmissions of account exchange information over private communications networks
• Electronic Data Interchange (EDI)


  Business-to-business transmission of computer-readable data in standard format, which reduces errors, avoids printing and mailing costs, and eliminates the need to reenter data
• Trading partners


  Businesses engaging in EDI with each other
• Value-added network (VAN)


  Independent firm offering EDI connection and transaction-forwarding services
• From 1997 to 2000, more than 12,000 Internet businesses were started, and from 2000 to 2003, more than 5,000 start-ups went out of business, with extensive coverage of the "dot-com bust"
• $200 billion was spent on bailing out and starting businesses, which set the stage for significant future growth
• The second wave of electronic commerce (2004-2009)


  • Expanding international scope, established companies used own funds to finance gradual expansion, faster and less expensive Internet technologies available, increase in broadband connections, e-mail became an integral part of marketing and customer contact, renewed interest in Internet advertising
• The second wave of electronic commerce (2004-2009) (cont'd.)


  • Promise of available technologies fulfilled, legal distribution of music, video, and other digital products, Web 2.0 technologies, shift in online business strategy away from first-mover advantage to smart-follower strategy
• The third wave of electronic commerce (2010-present)

  • Critical mass of mobile users with powerful devices, increased availability of smartphones and tablets, mobile apps used for over 40% of online sales, increase in electronic commerce activity, growing number of people using handheld devices to access the Internet, widespread participation in social networking, businesses can use social commerce to advertise, promote or suggest specific products and services, increased online participation by smaller businesses in sales, purchasing, and capital-raising activities, crowdsourcing, sophisticated analysis of data companies collect about online customers (big data and data analytics), increased integration of tracking technologies into B2B electronic commerce and the management of business processes within companies (RFID devices and biometric technologies)
• distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use
• The Third Wave of Electronic Commerce, 2010 - Present


  Factors in the third wave (cont'd)
• Increased online participation by smaller businesses in sales, purchasing, and capital-raising activities

  • Crowdsourcing
  • Sophisticated analysis of data companies collect about online customers
  • Big data and data analytics
  • Increased integration of tracking technologies into B2B electronic commerce and the management of business processes within companies
  • RFID devices and biometric technologies
• The Third Wave of Electronic Commerce, 2010 - Present
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• Business model


  Set of processes combined to achieve company goal
• In the first wave of electronic commerce, investors sought Internet-driven business models


  • Expectations of rapid sales growth, market dominance
  • Successful "dot-com" business models emulated
  • Led to many business failures
• Michael Porter argued business models did not exist
• Instead of copying model, companies should examine their business elements

  Streamline, enhance, or replace with Internet technology driven processes
• Revenue model


  Specific collection of business processes used to identify, market and make sales to customers
• Revenue model


  Classifies revenue-generating activities for communication and analysis purposes
• Examples of business processes

  • Purchasing raw materials or goods for resale
  • Converting materials and labor into finished goods
  • Managing transportation and logistics
  • Hiring and training employees
  • Managing business finances
• Identify processes that benefit from ecommerce technologies

  • Not all processes can be improved with technology
  • Firms can use it to help them adapt to change
• Merchandising


  Combination of store design, layout, and product display knowledge
• Salespeople


  Have skills to identify customer needs and meet them
• Merchandising and personal selling skills can be difficult to practice remotely
• Companies must be able to transfer these skills to have Web site success
• Some products are easier to sell on the Internet than others
• Some products good candidates for electronic commerce

  • Customers do not need to experience physical characteristics before purchase
  • Commodity items are standardized, well-known products only differentiated by price
  • Must have attractive shipping profile to sell online
  • Includes books, clothing, shoes, kitchen accessories and other small household items