Transcript Week 3 – Enabling Business-to-Consumer

Chapter 4 - Enabling Business-to-Consumer
Electronic Commerce
The Internet and World Wide Web are
extremely well suited for conducting
business electronically on a global basis
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Before We Begin
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Laptops
Cellphones
Questions about life?
Project 1 is up!
– Due in class Feb 11/12
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Agenda
• What eCommerce IS?
– It is IS
• Types of eCommerce business models
• Changes brought by eCommerce
• Long Tail
We’ve talked quite about how we would assess
an industry. Now lets talk about how to exploit
one.
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“There is no physical analog for what Amazon.com is becoming.”
Jeff Bezos
Cofounder and long-time CEO of Amazon.com
Complete the following sentences:
1.Amazon.com is ____________________
2.In the physical world, Amazon.com is like
_________________________________
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Chapter 4 Learning Objectives
After this chapter, you will be able to:
Electronic Commerce Defined
• Describe electronic commerce, how it has evolved, and the strategies that companies
are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing
• Describe the stages of business-to-consumer electronic commerce, understand the keys to successful
electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC
• Describe mobile commerce, consumer-to-consumer electronic commerce, and
consumer-to-business electronic commerce.
Managing Finances and Navigating Legal Issues in EC
• Describe how to conduct financial transactions and navigate the legal issues of
electronic commerce.
E-Government
• Explain different forms of electronic government.
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Electronic Commerce Defined
Electronic Commerce Defined
Describe electronic commerce, how it has evolved, and the
strategies that companies are adopting to compete in
cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing
Describe the stages of business-to-consumer electronic commerce, understand the keys to successful
electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC
Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business
electronic commerce.
Managing Finances and Navigating Legal Issues in EC
Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-Government
Explain different forms of electronic government.
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Electronic Commerce Defined
• Electronic Commerce
“the exchange of goods, services, and money among
firms, between firms and their customers, and between
customers, supported by communication technologies
and, in particular, the Internet”
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Question
• What are the most common types of ECommerce? (There are really only two)
– B2C – Business to Customer/Consumer
– B2B – Business to Business
• There are also pedantic ones like C2C or G2C,
these are foolish and don’t matter much
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Where is the money…B2B or B2C?
This is where the big money is
97%
This is where the media is
3%
Management Information Systems for the Information Age, Haag and Cummings
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Question 2
• Well, the presence of the internet gives rise to
some interesting capabilities on the part of
firms…
• Such as?
– Information Dissemination
– Information Integration
– Mass Customization
– Interactive Communication
– Transaction Support
– Disintermediation (probably the biggest one)
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Information Dissemination
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Information Integration
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Mass Customization
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Interactive Communication
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Transaction Support
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Disintermediation (This is the big one)
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These opportunities give rise to newly
possible business strategies
All of this is possible through this new fango thing we call the internet…
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The Internet . . . A network of networks
• Computers and other devices capable of communicating
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Servers, desktops and laptops
Phones, PDAs and other mobile devices
Xbox 360, Wii
Vending machines, appliances, etc.
• The infrastructure that connects them (fiber optics, copper,
modems, routers, microwave, etc.)
• The software tools and protocols that make communication
possible
• It is more than the World Wide Web!
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Web Services
The Gap
Stock DB
BigStore.com
ProductLookup
Application
Client
Shopping Application
GiantBank
The BigStore.com application can check
whether a product is in stock at The Gap, or the
verify a customer’s credit card at GiantBank.
Account
DB
Credit verification
application
BigStore.com doesn’t have to know the
technology in21use at the Gap or at GiantBank.
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Business-to-Consumer E-Commerce and
Internet Marketing
Electronic Commerce Defined
Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to
compete in cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing
Describe the stages of business-to-consumer electronic commerce,
understand the keys to successful electronic commerce applications,
and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC
Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business
electronic commerce.
Managing Finances and Navigating Legal Issues in EC
Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-Government
Explain different forms of electronic government.
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Stages of B2C e-Commerce
• Range from passive to active
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Three Stages of Evolution
• e-Information
– Dissemination of marketing material and product
info
• e-Integration
– Dynamic access to customized information
• e-Transaction
– Real time access to trading and markets for
exchange
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This leads naturally to electronic retail
• Benefits?
– Product: Unlimited number of products
– Place: Virtual Storefronts are unconstrained
geographically
– Price: Frictionless pricing (but do they?)
• Drawbacks?
– Delivery: Delayed
– Direct product Experience: None
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The Long Tail
• Recall that in information goods our MC  0
• The other benefit is that shelf space becomes
infinite
• Before Digitization
– Only Selling the red
• After Digitization
– We can offer all of the blue products as well!
– The sum of the blue products far exceeds red!
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Physical Economy
• Two Primary Limitations
– We need to find local audiences
• People need to be nearby to purchase our goods
– We are also constrained by the physics of the
world
• The radio spectrum is not infinite
• The size of our shelves is not infinite
• People have varying tastes – how can we offer
them everything they want
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In a Digital World
• Because MC  0 we can offer as much of any
good as we want
• We can offer it to anyone with a modem
• We can offer as many goods as we want
because our only shelf constraint is physical
memory
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How to Harness the Long Tail
• Three Rules
– Make everything available
• Increase variety to account for varying tastes
– Reduce the price by half and lower it
• Incentivize purchase
– Help me find it
• Reduce Search Costs
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Critical Thinking
• Is there value in the long tail?
• The Cello Suites: Johan Sebastian Bach
– More than 200 versions on iTunes
– Does this variety actually grow the market?
• Reducing Search Costs…
– Does it actually matter if consumers don’t know the
item exists?
• Consolidating the market
– If the blockbuster is all people want why go through
the effort and spend the money to get everything
else?
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Time for a Break
• What eCommerce IS?
– It is IS
• Types of eCommerce business models
• Changes brought by eCommerce
• Long Tail
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Take 10
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Before the break
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What eCommerce IS?
Types of eCommerce business models
Changes brought by eCommerce
Long Tail
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Remainder of Class
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Mobile Commerce
Online Auctions
Financial management in the online age
E-Government
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Mobile Commerce, Consumer-to-Consumer
EC, and Consumer-to-Business EC
Electronic Commerce Defined
Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to
compete in cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing
Describe the stages of business-to-consumer electronic commerce, understand the keys to successful
electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC,
and Consumer-to-Business EC
Describe mobile commerce, consumer-to-consumer
electronic commerce, and consumer-to-business electronic
commerce.
Managing Finances and Navigating Legal Issues in EC
Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-Government
Explain different forms of electronic government.
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Mobile Commerce (mCommerce)
• In addition to influencing the products firm’s
can carry the Internet has influenced
consumer access
– i.e. exploiting the
“always on” society
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Mobile EC - Types
• Location-Based M-Commerce
– Services can be offered tailored to a person’s needs based
on their current location
• Information on the Go
– Customers can get further information about a product
wherever they are, including in the store, but this can lead
to “showrooming”
• Product and Content Sales
– Consumers use mobile apps to make purchases while onthe-go
• When will these items increase revenue for the firm?
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E-Auctions
• It has similarly given rise to the auction economy
– Forward
– Reverse
• Forward auction
– English or Dutch
– Highest offer wins
• Reverse auction (traditional bid process for projects)
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Buyers post a request for quote (RFQ).
Seller proposes a bid.
Lowest seller bid wins.
This is frequently in B2B e-commerce.
• You will encounter this frequently in your professional life
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Managing Finances and Navigating Legal
Issues in EC
Electronic Commerce Defined
Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to
compete in cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing
Describe the stages of business-to-consumer electronic commerce, understand the keys to successful
electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC
Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business
electronic commerce.
Managing Finances and Navigating Legal Issues in
EC
Describe how to conduct financial transactions and
navigate the legal issues of electronic commerce.
E-Government
Explain different forms of electronic government.
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E-Banking
• Online Banking
– Convenience
– Security Concerns
– Mobile banking
• Online Investing
– Increased access to financial information and
analytical tools
– Online investing
– Mobile investing
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Payment Services
• Online transactions without sharing private
information with actual seller
• Payment service keeps information secure.
– PayPal (owned by eBay)
• Can send and receive money if you have an e-mail
account.
– Google Checkout
• Linked with Google search
• Users can see if merchants offer this option.
• Conceptually this is funding escrow
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Securing Payments in the Digital World
• Credit and Debit Cards
– Credit Cards are a simple mechanism
– Consumers have to transfer a lot of personal
information to the seller
– Difference between the European and American
methods…
• Managing Risk
– Businesses are financially liable for fraudulent
transactions
– Businesses have to look for fraud indicators and
sometimes reject risky transactions
– How can firms leverage analytics to assist with this?
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Legal Issues in EC
• Digital Rights Management
– Preventing unauthorized duplication
– Restrict which devices can play media
– Limit number of times media can be played
• Taxation
– Sales Taxes
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Legal Issues in EC—Taxation
 The Internet Tax Freedom Act (1998)
 Moratorium on online commerce taxation
 Internet Tax Nondiscrimination Act (2004)
 Replication of the ITFA
 Internet sales treated as mail-order sales
 No sales taxes paid in states where the company has
no presence
 Critical thinking: is this a progressive or regressive tax?
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E-Government
Electronic Commerce Defined
Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to
compete in cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing
Describe the stages of business-to-consumer electronic commerce, understand the keys to successful
electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC
Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business
electronic commerce.
Managing Finances and Navigating Legal Issues in EC
Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-Government
Explain different forms of electronic government.
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E-Government
• Government-to-Citizens
– e-Filing of taxes
– Licensure
• Government-to-Business
– Taxation
– Procurement
– Contracting
• Government-to-Government
– Law enforcement
– Information Sharing
– Health informatics
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Critical Thinking: Amazon and Alibaba
• Amazon and Alibaba
are online retail stores
based in Seattle, WA
and Hangzhou, China
providing B2C, C2C, and
B2B sales of goods via
their respective web portals
• In 2014 they were valued at $157.52B and $168.0B respectively.
• Consider the relative market position of each firm and their
relative dominance in their focal markets. Why might Alibaba be
at an advantage? Why might Amazon be at an advantage?
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Recap
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What eCommerce IS?
Types of eCommerce business models
Changes brought by eCommerce
Long Tail
Mobile Commerce
Online Auctions
Financial management in the online age
E-Government
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Administrivia
• Project 1
– Due in class Feb 11/12
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