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Chapter 2. E-commerce fundamentals. Learning objectives. Evaluate changes in business relationships between organi z ations and their customers enabled by e-commerce Identify the main business and marketplace models for electronic trading

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chapter 2

Chapter 2

E-commerce fundamentals

learning objectives
Learning objectives
  • Evaluate changes in business relationships between organizations and their customers enabled by e-commerce
  • Identify the main business and marketplace models for electronic trading
  • Describe different revenue models and transaction mechanisms available through hosting an e-commerce site.

week 2 e-commerce fundamentals

b2b and b2c
B2B and B2C
  • Business to Business
  • Business to Consumer
    • Selling channel different
    • Customers different
  • Push products to customers
  • New:
    • Pull: customers initiate
      • Information
      • transactions

week 2 e-commerce fundamentals

b2b and b2c models
B2B and B2C models
  • Figure 2.2B2B and B2C interactions between an organization, its suppliers and its customers

week 2 e-commerce fundamentals

b2b and b2c characteristics
B2B and B2C characteristics

week 2 e-commerce fundamentals

transaction alternatives businesses consumers
Transaction alternatives businesses  consumers

Figure 2.3Summary of transaction alternatives between businesses and consumers

week 2 e-commerce fundamentals


Figure 2.4Disintermediation of a consumer distribution channel showing (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

week 2 e-commerce fundamentals

example cd s
Example – CD’s
  • Selling of CD’s collapsed
  • Why?
    • Less songs to sell?
    • People do not listen to music?
  • Who is producer
  • What is product
  • Added value of:
    • Record company
    • Wholesaler
    • Retailer
  • Alternatives

week 2 e-commerce fundamentals

  • Figure 2.7Reintermediation process: (a) original situation, (b) reintermediation contacts
  • Buying needs intermediate for: a) information b) transaction itself

week 2 e-commerce fundamentals

example kelkoo
Example - Kelkoo

week 2 e-commerce fundamentals

  • Creation of a new intermediary
  • Example:
    • B&Q
    • Opodo
    • Boots
    • Ford, DaimlerChrysler (
  • Partnering with existing intermediary – Mortgage broker Charcol and Freeserve

week 2 e-commerce fundamentals


Q1. Define portal

Q2. Is a search engine the same as a portal?Yes, NoQ3. Is a search engine the same as a directory?Yes, No

Q4. List search engines / portals you use and explain why

week 2 e-commerce fundamentals


Meta services


‘A gateway to


resources and


Example: Zeelandnet

Search engines


News aggregators



week 2 e-commerce fundamentals

types of portal
Types of portal

week 2 e-commerce fundamentals

importance of portals
Importance of portals

Nielsen//NetRatings – top 10 domains web properties in the UK (June 2000 measurement period, at home panel),

September 2002 ( Data for other countries available at: www.mediametrix.com

week 2 e-commerce fundamentals

methods for finding web pages
Methods for finding web pages

Invisible webNot indexed by searchengines




week 2 e-commerce fundamentals

location of trading
Location of trading

week 2 e-commerce fundamentals

trading arrangements
Trading arrangements

week 2 e-commerce fundamentals

business model
Business model

Timmers (1999) defines a ‘business model’ as:

An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue.

week 2 e-commerce fundamentals

business models
Business models

Figure 2.11Alternative perspectives on business models

week 2 e-commerce fundamentals

reverse auction example
Reverse auction example
  • Through 2001 there were over 512 online auction bidding events processed for DaimlerChrysler on vendor supported portal Covisint ( amounting to approximately €10 billion. That is a third of their total procurement volume. In May 2001, DaimlerChrysler staged the largest online bidding event ever, with an order volume of €3.5 billion in just four days. As well as savings in material purchasing prices, DaimlerChrysler also reduced throughput times in purchasing by 80 percent

week 2 e-commerce fundamentals

learning from the dot coms
Learning from the dot coms
  • Explain these financials!

week 2 e-commerce fundamentals

dot com lessons can you add to these
Dot com lessons – can you add to these?
  • Explore new business and revenue models.
  • Perform continuous scanning of the marketplace and respond rapidly.
  • Set up partner networks to leverage the expertise and reputation of specialists.
  • The real world is still important for product promotion and fulfilment.
  • Examine the payback and return on investment of new approaches carefully.

See also chapter 5 examining reasons for failure

week 2 e-commerce fundamentals