Transcript e-commerce business models

CHAPTER 5
E-Business and
E-Commerce
CHAPTER 5:
E-Business and E-Commerce
5.1 Overview of E-Business & E-Commerce
5.2 Business-to-Consumer (B2C) Electronic
Commerce
5.3 Business-to-Business (B2B) Electronic
Commerce
5.4 Electronic Payments
5.5 Ethical and Legal Issues in E-Business
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LEARNING OBJECTIVES
1. Describe the six common types of electronic
commerce; provide specific personal examples of how
you have used or could use B2C, C2C, G2C, and
mobile commerce; and offer a specific example of B2B
and G2B.
2. Discuss the five online services of business-toconsumer electronic commerce, provide a specific
example of each service, and state how you have used
or would use each service.
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LEARNING OBJECTIVES
(CONTINUED)
3. Describe the three business models for business-tobusiness electronic commerce, and provide a specific
example of each model.
4. Describe the four types of electronic payments, provide
a specific example of each one, and explain whether
you would use each type.
5. Illustrate the ethical and legal issues relating to
electronic commerce with two specific examples of
each issue.
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OPENING CASE
CASE 5.1 From Social Networks to Social Commerce
The Problem
We’re all familiar with national advertising campaigns for big brands
that spend millions on 30-second television commercials, as an
example. But did you know that local advertising is also big
business? Much of that money is wasted, because local commerce
is highly segmented and inefficient. A small company cannot acquire
customers or advertise with the efficiency of a large chain that has
multiple locations in the same town. The problem, therefore, is how
to make local advertising more efficient and effective for small
businesses.
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OPENING CASE
The Solution
The solution may lie in the emerging area of social commerce, as
illustrated by Groupon (www.groupon.com). Every day, Groupon emails its subscribers discounts on goods and services, but only if a
minimum of people sign up for the deals. Groupon’s social
commerce model pays off in three ways: (1) The subscriber gets a
better price; (2) the merchant gets additional business and potential
new customers; and (3) Groupon receives a share of the revenues
generated by the deals.
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OPENING CASE
The Results
Groupon’s business model has been wildly successful. The company
has about 10,000 employees and sends out more than 900 deals
each day in over 550 markets. The company, which launched in
2008, gained 1 million subscribers within a year and went from zero
to $500 million in sales within 18 months. In 2012, gross billings rose
by 35 percent to $5.4 billion.
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OPENING CASE
Discussion
– Discuss the attributes of Groupon’s business model.
– How does Groupon remain competitive in the market facing
more than 500 companies around the world offering similar
services?
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OPENING CASE
What We Learned From This Case
– Electronic commerce affects organizations in many significant
ways, including the following: increasing an organization’s reach,
removing barriers for entrepreneurs who are starting their own
business, and drastically changing the nature of competition.
– Case 5.1 demonstrated how social networking can build social
commerce business models.
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5.1 OVERVIEW OF E-BUSINESS
AND E-COMMERCE
•
Definitions and Concepts
– E-commerce, Social Commerce, Degree of Digitalization, Ebusiness
•
•
•
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Types of E-Commerce
E-Commerce and Search
Major E-Commerce Mechanisms
Benefits and Limitations of E-Commerce
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DEFINITIONS AND CONCEPTS
(CONTINUED)
•
Pure versus Partial Electronic Commerce depends on
the degree of digitization involved.
– Brick-and-mortar organizations
– Virtual organizations
– Click-and-mortar organizations
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BRICKS AND MORTAR, PARTIAL
EC, AND PURE EC
•
Example Buy books at university bookstore:
– bricks and mortar
•
Use Internet to order physical book from Amazon:
– partial EC
•
Order and download book from Amazon: pure EC
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TYPES OF E-COMMERCE
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•
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Business-to-Consumer (B2C)
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)
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TYPES OF E-COMMERCE
(CONTINUED)
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Business-to-Employee (B2E)
E-Government
Mobile Commerce (m-commerce)
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E-COMMERCE AND SEARCH
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E-COMMERCE BUSINESS MODELS
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On-line direct
Electronic tendering system
Name-your-own-price
Affiliate marketing
Viral Marketing
Group purchasing
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E-COMMERCE BUSINESS MODELS
(CONTINUED)
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Online direct marketing
Electronic tendering system
Name-your-own-price
Find-the-best-price
Affiliate marketing
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E-COMMERCE BUSINESS MODELS
(CONTINUED)
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Product customization
Deep discounters
Membership
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E-COMMERCE BUSINESS MODELS
(CONTINUED)
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Viral marketing
Group purchasing
Online auctions
Bartering Online
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MAJOR E-COMMERCE
MECHANISMS
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On-line Auctions
Forward Auctions
Reverse Auctions
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FORWARD AND REVERSE
AUCTIONS
Bid
price
Bid
price
Time
Time
Forward Auction
Reverse Auction
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BENEFITS OF E-COMMERCE
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•
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Benefits to organizations
– Makes national and international markets more
accessible
– Lowering costs of processing, distributing, and
retrieving information
Benefit to customers
– Access a vast number of products and services
around the clock (24/7/365)
Benefit to society
– Ability to easily and conveniently deliver information,
services, and products to people in cities, rural areas,
and developing countries
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LIMITATIONS OF E-COMMERCE
•
Technological Limitations
– Lack of universally accepted security standards
– Insufficient telecommunications bandwidth
– Expensive accessibility
•
Non-technological Limitations
– Perception that EC is unsecure
– Unresolved legal issues
– Lacks a critical mass of sellers and buyers
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5.2 BUSINESS-TO-CONSUMER
(B2C) ELECTRONIC COMMERCE
•
•
Electronic storefronts
Electronic malls
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IT’S ABOUT BUSINESS 5.1
Internet Registry Enhances Island Nation’s Economy
Matt Lauzon developed Gemvara, a website that enables consumers
to design custom, high-end jewelry without ever having to visit a
jewelry store. Since it’s launch in February 2011, the website has
experienced monthly revenue growth in the double digits, had more
than 1 million page views per month, and recorded an average order
price of about $1,000.
Lauzon attributes much of Gemvara’s success to its superb
customer service, which his company provides 24/7.
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IT’S ABOUT BUSINESS 5.1
Discussion
– Access the Gemvara website. What are its strengths? Its
weaknesses? Would you design and purchase jewelry on the
site? Why or why not?
– Search out websites for Gemvara competitors. Discuss each
site’s strengths and weaknesses. In light of your findings, do you
think Gemvara will be successful in the long term?
Why or why not?
– How would a traditional brick-and-mortar jewelry store compete
against Gemvara and other similar websites?
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ONLINE SERVICE INDUSTRIES
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A key issue is disintermediation
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ONLINE SERVICE INDUSTRIES
(CONTINUED)
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Cyberbanking
Online securities trading
Online job market
Travel services
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ONLINE ADVERTISING
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Online Advertising methods
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Banners (example of a banner ad below)
Pop-up ad
Pop-under ad
Spamming
Permission marketing
Viral marketing
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ONLINE ADVERTISING ON SOCIAL
NETWORKS
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Types of Online Advertising:
– Self-service advertising is advertising purchased without the
assistance of a sales representative.
– Brand advertising relies on large advertising campaigns that
emphasize the company’s brand and use special features like
fan pages that are unique to Facebook and other social
networking sites.
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ONLINE ADVERTISING ON SOCIAL
NETWORKS (CONTINUED)
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Performance-based advertising occurs when the
advertising company pays only for measurable results;
that is, when someone clicks on a company’s ad and
goes on to purchase something.
Impression-based advertising occurs when a
company purchases a set amount of impressions. An
impression is a single instance of an ad appearing on
a website.
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ISSUES IN E-TAILING
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Channel conflict: occurs when clicks-and-mortar
companies may face a conflict with their regular
distributors when they sell directly to customers on-line.
Multichannelling: a process many companies use to
integrate their on-line and off-line channels
Order fulfillment: involves finding the product to be
shipped; packaging the product; arrange for speedy
delivery to the customer; and handle the return of
unwanted or defective products.
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5.3 BUSINESS-TO-BUSINESS
(B2B) ELECTRONIC COMMERCE
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In B2B e-commerce, the buyers and sellers are
organizations.
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B2B SELL-SIDE MARKETPLACE
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Key mechanisms: electronic catalogs and forward
auctions
Click on the Dell Auction link to access a Sell-Side
Marketplace:
– Dell Auction
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B2B BUY-SIDE MARKETPLACE
•
•
Key mechanism: reverse auctions
Click on the link below to access a Buy-Side
Marketplace:
– United Sourcing Alliance is a common Sell-Side Marketplace
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ELECTRONIC EXCHANGES
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There are three basic types of public exchanges:
vertical, horizontal, and functional
– Vertical Exchanges
– Horizontal Exchanges
– Functional Exchanges
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5.4 ELECTRONIC PAYMENTS
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•
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Electronic checks (e-checks)
Electronic credit cards
Purchasing cards
Electronic cash
– Stored-value money cards
– Smart cards
– Person-to-person payments
•
Digital Wallets
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HOW E-CREDIT CARDS WORK
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5.5 ETHICAL AND LEGAL ISSUES
•
Ethical Issues
– Privacy
– Job Loss
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LEGAL ISSUES SPECIFIC TO ECOMMERCE
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Fraud on the Internet: fraudulent activity i.e. stocks,
auctions, investments, business opportunities.
Domain Names are considered to be legal when the
person or business who owns the name has operated a
legitimate business under that name for some period of
time. http://www.cira.ca/
Cybersquatting is the practice of registering or using
domain names for the purpose of profiting from the
goodwill or the trademark that belongs to someone else.
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LEGAL ISSUES SPECIFIC TO ECOMMERCE (CONTINUED)
• Domain Tasting
• Taxes and Other Fees
• Copyright
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CHAPTER CLOSING
• Six common types of electronic commerce: B2C, B2B, C2C,
B2E, G2C EC and G2B EC
• Five on-line services of B2C EC: Electronic banking, On-line
securities trading, On-line job matching, On-line travel services, and,
On-line advertising
• Four types of electronic payments: Electronic cheques, Electronic
credit, Electronic cash (e-cash), and, Person-to-person payments
• Three business models for B2B EC: sell-side marketplace, buyside marketplace, and, public exchanges.
• Two major ethical issues relating to electronic commerce:
privacy and job loss
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CLOSING CASE
CASE 5.2 The Future of Shopping
The Problem
Once considered a retail pioneer, by late 2011, eBay had become an
auction wasteland and was mired in obsolete technology.
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CLOSING CASE
The Solution
In order to save the company, John Donahoe (eBay’s new CEO)
completely remodeled the company’s business practices.
He removed layers of bureaucracy between engineers and
management, opened PayPal to outside developers, created a
website that consumers could experiment with and comment on, and
invested in new e-commerce technology. He also shifted eBay’s
focus as a website.
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CLOSING CASE
The Results
With their new business strategy put in place, eBay has made it
easier, faster, and more convenient for its customers to shop.
Furthermore, the company’s customers have more choices than ever
before, and many of those choices are relevant to the customer’s
location.
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CLOSING CASE
Discussion
– What are the advantages of eBay’s hybrid shopping experience
vision for the customer?
– What are potential disadvantages of eBay’s hybrid shopping
experience vision for the customer?
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Copyright
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