Transcript e-commerce

Topic 7
Text Materials
Chapter 5 – 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
China says it’s poised to be top Internet country
The Associated Press – 1/19/2008
The Chinese government said Friday that its internet population
has soared to 210 million, putting it on track to surpass the U.S.
online community this year to become the world’s largest.
About 7000 miles
• Black Friday
2009 about $10B
• Cyber-Monday
Youtube, search for e-bay cyber Monday
• Dissintermediation
Source: internet world stats Sept 2009
• 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
• Brand-Name Recognition
• Best-of-Breed Processes and Features
• Creating Repeat Customers
• Customization
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
Top Online Retail
Source: BusinessWeek traffic
Top Online Retail
Source: January 2010, annual online retail sales estimates, excludes other revenues
Why do consumers buy online?
Sources: Nielsen Online and BizRate Research February 2010
Cyber Monday 2009 versus 2008
2009 $887M
Heaviest Online Spending Day in History
5 to 10% increase over 2008
Mean order amount $180 vs. $130
lead by apparel retailers
$10B Black Friday
Single Day Sales
Sources: Coremetrics, money.cnn, and Comscore February 2010
Size of Annual Online Sales
$150B+ 2009 growing to $250B+ in 2012
Sources: Forrester Research February 2010
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
• Registering with search engines
• Online ads
• Viral marketing
• Affiliate programs
A blog (a portmanteau of web log) is a website where entries are
commonly displayed in reverse chronological order. "Blog" can
also be used as a verb, meaning to maintain or add content to a
Many blogs provide commentary or news on a particular subject;
others function as more personal online diaries. A typical blog
combines text, images, and links to other blogs, web pages, and
other media related to its topic. The ability for readers to leave
comments in an interactive format is an important part of many
blogs. Most blogs are primarily textual, although some focus on
art (), photographs (photoblog), sketchblog, videos (vlog), music
(MP3 blog), audio (podcasting) are part of a wider network of
social media. Micro-blogging is another type of blogging which
consists of blogs with very short posts.
As of December 2007, blog search engine Technorati was
tracking more than 112 million blogs.[1]
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.
Find Customers and Establish Relationships
• Relationships
• Supply Chain Management
• Information Technology
Move Money Easily and Securely
• Secure Sockets Layer (SSL)…
– Creates a secure connection between a Web client and
– 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 ( is the most well-known
Electronic Check
• Electronic check – mechanism for sending money from your
checking or savings account to another person or organization
– Many implementations
– Most common implementation is online banking
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
– Debit cards are an implementation
B2B Payment Systems
Electronic Data Interchange - EDI
• Electronic data interchange (EDI) – direct computer-tocomputer 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 ecommerce 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