Chapter 2
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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

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Chapter 2

E-commerce fundamentals

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

  • Business to Business

  • Business to Consumer

    • Selling channel different

    • Customers different

  • Push products to customers

  • New:

    • Pull: customers initiate

      • Information

      • transactions

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B2B and B2C models

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

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B2B and B2C characteristics

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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

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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

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  • Figure 2.7Reintermediation process: (a) original situation, (b) reintermediation contacts

  • Buying needs intermediate for: a) information b) transaction itself

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Example - Kelkoo

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  • Creation of a new intermediary

  • Example:

    • B&Q

    • Opodo

    • Boots

    • Ford, DaimlerChrysler (

  • Partnering with existing intermediary – Mortgage broker Charcol and Freeserve

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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

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Meta services


‘A gateway to


resources and


Example: Zeelandnet

Search engines


News aggregators



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Types of portal

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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

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Methods for finding web pages

Invisible webNot indexed by searchengines




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Location of trading

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Trading arrangements

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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.

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Business models

Figure 2.11Alternative perspectives on business models

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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

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Learning from the dot coms

  • Explain these financials!

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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

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