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eCommerce: Digital markets, Digital goods The new frontier of business Major League Baseball Hit a home run with information systems MLB Operate 2 top baseball leagues in north America National league American league Big business Tickets Television broadcast

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eCommerce:Digital markets, Digital goods

The new frontier of business


Major League Baseball

  • Hit a home run with information systems

    • MLB

      • Operate 2 top baseball leagues in north America

        • National league

        • American league


  • Big business

    • Tickets

    • Television broadcast

    • Find sources to pay for stadiums and teams

  • Promote and grow its business

  • Business challenges

    • Top players’ salary

    • Fans watch games

      • On TV

      • Rather attending in persons

    • Some teams fill the stadium

      • Most of half full or less


    • Publicize games

      • Traditional

        • Newspaper, television, radio

      • New way

        • Internet, IT

          • Broadcast offer to fans’ cell phone

          • Purchase ticket via cell phone

            bar code transmitted to cell phone

            accepted at the gate


    • MLB.com

      • Check game scores

      • Purchase game tickets

      • Shop for caps ….

      • Post opinions

      • Play “fantasy teams”

      • Streaming videos of games

        • 800,000 pay 79.95 per year


    • Working with SAS Inc.

      • Collect and analyze its customer data

        • The most popular parts of websites

        • Ball games watched or downloaded

        • Online games played

        • Team merchandise bought

    • Leverage streaming technology to other business

      • Major league soccer, entertainer Jimmy Buffet


    • eCommerce

      • New channels for reaching customers

        • Compete with other forms of entertainment

      • New digital products and service

      • New marketing tools


    10.1 eCommerce and the Internet

    10.2 eCommerce

    10.3 mCommerce

    10.4 Electronic commerce payment systems


    10.1 eCommerce & Internet

    • eCommerce

      • The use of the Internet and the Web to transact business

        • Digitally enabled commercial transactions

        • Exchange of values

      • First eCommerce

        • 1995, Netscape.com accept first Ads


    • The “dot-com” bubble

      • 2001, burst

        • A large number of company failed

        • Some results still positive

          • Amazon

          • eBay

          • Google


    • eCommerce outlook is positive

      • Online consumer sales will still increase in 2007

      • The number of individual online will expand

      • On the average day,

        • 140 million send email

        • 5 million write on their blogs

      • The number of people who have purchased something expand

      • B2B eCommerce will continue to expand


    • Why eCommerce is different

      • Unique features of the Internet & Web

        • Ubiquity

          • Traditional commerce

            • Marketplace is a physical place

              bookstore, classroom

          • eCommerce

            • Everywhere

              beyond traditional boundaries

            • any time

              remove from temporal


    • Customers’ viewpoint

      • Reduce transaction cost

        no need to spend money and time

        to reach market

        less mental efforts for purchasing


    • Global reach

      • Cross cultural and national boundaries

        • Conveniently

        • Cost effectively

      • Potential market size

    • Richness

      • The complexity and content of a message

        • Traditional sale rep

          Great richness

          personal, face-to-face service

        • Web


    • Universal standards

      • Internet standard

        • Shared by all nations

        • Regardless of the technology platform

      • Lower market entry cost

      • Reduce search cost

    • Interactivity

      • Allow two-way communication

      • Similar to face-to-face experience


    • Information density

      • The total amount and quality of info available

      • eCommerce

        • Reduce info costs

          collection, storage, processing, communication

        • Greatly increase quality

          currency, accuracy, timeliness

      • Customers

        • Price transparency

        • Cost transparency


    • Merchants

      • Discover more about customers

        segment markets

      • Price discrimination

        selling the same goods

        or almost the same goods

        to different group at different prices


    • Personalization / customization

      • Personalization

        • Adjust the message to customers’ interests and past purchases

      • Customization

        • Changing the delivered products and services based on a user’s preference

      • Ex: Wall Street Journal

        • Customers choose types of news first


    • Key concepts in eCommerce

      • Digital markets, digital goods

        • itune, music (video) download

      • Business Models

        • Location, timing, revenue of a business

          are based partly on

        • Cost and distribution of information

      • Ex: 水貨、跑單幫

        • Parallel imports (Timberland products)


    • Info asymmetry

      • One party of transaction has more info

        • Important to transaction

        • Help determining bargaining power

    • Digital market

      • More transparent in info

      • Reduced search and transaction cost

      • Lower menu price

        • Merchant’s cost of changing price

      • Lower price discrimination

        Ex: Auto sales


    • Dynamic pricing

      • Price varies on the demand characteristics

    • Switching cost

      • Increase or reduce

    • Immediate gratification

      • Can immediately consume a product

        • Digital music downloaded

      • Can not

        • Clothes purchased


    • Disintermediation

      • Removal of organizations and business process layer


    • Digital Goods

      • Goods that can be delivered over a digital network

        • Music

        • Video

        • Software

        • Newspaper

        • Magazine

        • eBooks


    • Cost structure

      • Cost of producing another copy

        • Marginal, (zero)

      • Cost of producing the original

        • Relatively high

    • The impact of the Internet

      • Music industry

        • Loss CD sales, reach more customers

      • Books

      • Video


    Virtual storefront

    amazon.com

    Information brokers

    realtor.com

    Transaction brokers

    etrade.com

    Online marketplace

    eBay.com

    Content provider

    WSJ.com

    Online service provider

    Salesforce.com

    Virtual community

    iVillage.com

    Portal

    yahoo.com

    Internet business models


    • Communication and community

      • Internet’s rich communication capability

        • eBay

      • online community

        • iVillage

      • Source of revenue

        • Banner ads

        • Pop-up ads


    • Social networking

      • MySpace.com

      • Can create more targeted promotion

      • Visitors are more “sticky”

      • Social shopping

        • Provide online meeting place to swap shopping idea


    • Digital content, entertainment, service

      • Alternatives of traditional print and broadcast media

        • New York Times (online)

        • Online games

        • Internet radio

        • Podcasting

          • Self publishing

        • Portal

          • Syndicators

        • Application service provider

    Pure players

    Clicks-and-mortar


    10.1 eCommerce and the Internet

    10.2 eCommerce

    10.3 mCommerce

    10.4 Electronic commerce payment systems


    10.2 electronic commerce

    • Categories

      • Classify by the nature of the participant

        • Business-to-consumer (B2C)

          • Retailing

          • amazon.com

        • Business-to-business (B2B)

          • 企業採購作業 business procurement

          • 台塑採購網

        • Consumer-to-consumer (C2C)

          • eBay


    • Classify by participant’s connection

      • Wired network

      • Mobile commerce (m-Commerce)

        • The use of wireless internet appliance


    Achieving customer intimacy

    • Internet

      • Additional channel of communication

      • Closer interaction

      • More cost effective

  • Interactive marketing & personalization

    • Make products available

      • for million

      • and personal


    • Interactive feature of website

      • Hold customer’s attention

      • Capture customer’s taste and interests

        • Tailor

          promotion

          Product

          Service

          Pricing

  • Customer info

    • “Register”

    • Software tools to track website activities


    • Clickstream tracking

      • Collect data on customer activity at website

    218.175.238.94 - - [08/Oct/2006:23:37:28 +0800] "GET /seminar/pom/2005/tinghan/%AAA %B0%C8%AB~ %BD%E8%A7 @%B7~.doc HTTP/1.1" 200 51712 "http://www.google.com.tw/search?hl=zh-TW&q=PZB%E6%A8%A1%E5%BC%8F &meta=lr%3Dlang_zh-TW" "Mozilla/4.0 (compatible; MSIE 6.0; Windows NT 5.1; SV1; .NET CLR 1.1.4322)"

    218.175.238.94 - - [08/Oct/2006:23:37:29 +0800] "OPTIONS /seminar/pom/2005/tinghan/ HTTP/1.1" 200 - "-" "Microsoft Office Protocol Discovery"

    218.175.238.94 - - [08/Oct/2006:23:38:35 +0800] "OPTIONS / HTTP/1.1" 200 - "-" "Microsoft Data Access Internet Publishing Provider Protocol Discovery"

    218.175.238.94 - - [08/Oct/2006:23:38:35 +0800] "OPTIONS /seminar/pom/2005/tinghan/%25AAA%25B0%C8 %AB%7E%25BD%25E8%25A7%40%25B7%7E.doc HTTP/1.1" 200 - "-" "Microsoft Data Access Internet Publishing Provider Protocol Discovery"

    220.134.186.63 - - [08/Oct/2006:23:42:20 +0800] "GET /2004/jasper/ch4%B8%EA%AE%C6%A4%C0%AAR%BBP%B0Q%BD%D7.doc HTTP/1.1" 200 159744 "http://www.google.com.tw/search?hl=zh-TW&q=%E5%9B%A0%E7%B4%A0%E9%99%A1%E5%9D %A1%E5%9C%96&btnG=Google+%E6%90%9C%E5%B0%8B&meta=cr%3DcountryTW" "Mozilla/4.0 (compatible; MSIE 6.0; Windows NT 5.1; SV1; InfoPath.1; .NET CLR 1.1.4322)"

    220.134.186.63 - - [08/Oct/2006:23:42:21 +0800] "OPTIONS /2004/jasper/ HTTP/1.1" 200 - "-" "Microsoft Office Protocol Discovery"


    • Web personalization

      • Modify webpages presented to each customer

        • Collaborative filter

          • Compare info collected about a specific user’s behavior

            Ex: www.books.com.tw

            買這本書的人,也會購買 …


    Web personalization


    • Blog

      • Weblog

      • A personal way of presenting info

        • Typically chronological entries

        • Popular and impact the news and political events

      • Corporate blog

        • Macromedia (acquired by adobe in 2005)

          • Use blog to tie customers with new software development

          • New users come to learn


    • Marketers analyze

      • Blog

      • Chat group

      • Message board

        for comments of new product, old brands

        “blog watching service”


    • Customer self-service

      • Web-based service

        • At customer’s convenience

        • Lower cost

          • Not a live customer service

        • FAQ

          • Airlines’ websites

        • Tracking shipment

          • Fedex


    • B2B e-commerce:

      • New efficiencies & relationship

      • EDI

        • Electronic data interchange

          • Proprietary

        • 80% of e-commerce

          • Computer-to-computer exchange of transactions

            • Invoices

            • Orders …


    • EDI

      • Private networks

    • Internet and web based

      • Public network

        • Flexible and low cost

      • Extranet

        • Private intranet extend to authorized users outside the company

          • Fedex.com


    • Private industrial network

      • B2B extranet

      • Collaboration and supply chain management

        • Suppliers

        • Distributors

        • Business partners

      • Private exchange

        • VWGroupSupply.com

          • Volkswagon


    • Net marketplace

      • Transaction oriented digital market

        • Sellers

        • Buyers

      • Types of net marketplace

        • Direct goods

        • Indirect goods

        • Vertical markets

          • 鋼鐵業 Steel

        • Horizontal market

          • 家具 office furniture


    • Industry-owned net marketplace

      • Exostar

        • Aerospace and defense industry

          • Boeing

          • Lockheed Martin

          • Raytheon …


    • Exchanges

      • Independently owned third-party net marketplaces

        • Foodtrader.com

      • Many have failed

        • Suppliers reluctant to join

          • Encourage competitive bidding

            Drive price down

          • Did not offer long term relationship

            Make lowering price un-worthwhile

          • Do not offer delivery timing, customization, and quality of products


    10.1 eCommerce and the Internet

    10.2 eCommerce

    10.3 mCommerce

    10.4 Electronic commerce payment systems


    10.3 m-Commerce

    • Use wireless mobile devices

      • Purchasing

      • Transmitting message

  • M-Commerce services and applications

    • Content and location-based service

      • NTT DoCoMo

        • Wireless websites

          • Train schedule, movie listing, …


    • Banking and financial services

      • Text message of credit card transactions

      • Check balance

      • Transfer funds

    • Wireless advertising

      • Same as portal

      • Ads come with search results


    • Games and entertainments

      • Portable entertainment platforms

        • Downloadable digital games

        • Ringtone

        • On-demand video clips

        • Music


    • Accessing info from wireless web

      • Display screen is small

        • Info handled at one time is limited

      • Wireless portal

        • Feature contents and service optimize for mobile device


    • M-Commerce challenges

      • Wi-Fi hotspots

        • Wireless internet access is limited

      • Keyboard and screen

        • Tiny and awkward to use

      • Phone

        • Limited memory and power supply

          (3G & smart phones remove all these challenges)


    10.1 eCommerce and the Internet

    10.2 eCommerce

    10.3 mCommerce

    10.4 Electronic commerce payment systems


    10.4 eCommerce payment systems

    • Electronically pay for goods on the Internet

      • Digital credit card payments

      • Digital wallet

      • Accumulated balance digital payment systems

      • Stored value payment systems

      • Digital checking

      • Electronic billing presentment and payment systems


    • eCommerce payment systems

      • Credit cards

        • 80% of online payments in the US

        • Authenticating the purchaser’s credit card

      • Digital wallets

        • Securely store credit card and owner identification

          • Eliminate the needs for shoppers to enter

            • Address

            • Credit card info

          • Amazon.com: 1-click shopping


    • Micropayment

      • Accumulated balance digital payment

        • Accumulate a debit balance

        • Pay periodically via

          • Credit card

          • Phone bill

      • Stored value payment

        • Digital account

        • Smart card

          • 7-Eleven i-cash

        • Digital cash

          • Used client software to exchange money


    • Peer-to-peer payment system

      • Vendor and individual who are not set up to accept credit card payment

        • PayPal

    • Digital checking

      • Checks are encrypted with a digital signature

        • Can be verified by banks


    • Electronic billing presentment and payment systems

      • Service

        • Enable users to

          • View their bill electronically

          • Pay bill through electronic fund transfer


    • Digital payment systems for mCommerce

      • Take advantage of all existing forms of Internet payment

      • Micropayment systems

        • Soft drink

        • Newspaper

        • paid by

        • mobile telephone bill

          • NTT DoCoMo

        • PayPal mobile


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