Transcript Chapter 10

CHAPTER 10
E-commerce:
Digital
Markets,
Digital Goods
FEATURES OF E-COMMERCE
RELATED TERMS
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Marketspace (boundaries extended)
Transaction costs (costs to participate)
Market Entry Costs (cost to bring goods)
Search costs (costs to find products)
Richness (quality message)
Information Density (amount and quality of info)
Price transparency (find out prices in a market)
Cost transparency (discover costs merchants pay)
Price discrimination (dif ferent prices/different audiences)
Personalization (targeted marketing)
Customization (user’s preferences determine)
DIGITAL MARKETS AND DIGITAL GOODS
 Digital Markets
Information asymmetry reduced by Internet
Flexible and efficient
Lower menu costs
Greater price discrimination
Ability to use dynamic pricing
Can either reduce or increase switching costs
Many opportunities to sell directly to customer and bypass
intermediaries (like distributors or retail outlets)
 Removing organization or business process layers responsible for
intermediary steps in a value chain - Disintermediation
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 Digital Goods
 Delivered over a digital network
T YPES OF E-COMMERCE
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Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)
M-Commerce
 B2B or B2C used in this model
INTERNET BUSINESS MODELS
E-COMMERCE REVENUE MODELS
 Advertising Revenue Model (ads)
 Most widely used model
 Sales Revenue Model (selling to customers)
 Micropayment systems (process monetary transactions)
 Subscription Revenue Model (fee for subscription)
 Free/Freemium Revenue Model (initial free; then pay for
more)
 Transaction Fee Revenue Model (every transaction=fee)
 Af filiate Revenue Model (send to websites; fee for purchases)
NETWORKING AND MARKETING
 Social networking link people together who are interested in
the same areas
 Social shopping (viral marketing)
 “Wisdom of Crowds” (more better than few)
 Crowdsourcing (use customers for solving business problems)
 Many ways to market and advertise online
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Long tail marketing (find patterns/demand low)
Behavioral targeting (estimated 10 times more likely to produce a
customer response than a randomly chosen ad)
Metrics – use to measure the effectiveness of different behaviors
(abandoned shopping cart, page visits, tracked visitor, clickstream
data metrics, stickiness, unique visitor, page exposures, site
exposures, etc)
E-BUSINESS MARKETING FORMATS
B2B E-COMMERCE
 Growth rate 7%; by 2014 ($5.1 trillion)
 Refers to the commercial transactions that occur among
business firms
 80% of online B2B e-commerce is still based on proprietary
systems for Electronic Data Interchange (EDI)
 Private industrial networks (or private exchange ) – Extranet; link
suppliers and other business partners
 Share product design and development, marketing, production
scheduling, inventory mgmt, and unstructured communication; Bring
together small number of strategic business partner firms that
collaborate to develop highly efficient supply chains
 Net marketplace (e-hubs) – single digital marketplace based on
Internet technology for many different buyers and sellers;
establish prices online auctions, negotiations, or quote requests,
or can used fixed prices
 Sell direct goods or indirect goods
 Exchanges – independently owned third-party Net marketplaces that
connect thousands of suppliers and buyers for spot purchasing
MOBILE COMMERCE MISC
Main areas of growth
 Location-based services
 Software application sales
 Entertainment downloads
 Mobile display advertising
 E-book sales
 Banking and financial services
 Wireless advertising and retailing
 Games and Entertainment
E-COMMERCE WEBSITES
 We will discuss more for SDLC project
 Business objectives, system
functionality, information
requirements?
 In-house or outsourced?
 Build?
 Host?
 Budgets?