Electronic Commerce for the Competence Examination

1. Electronic Commerce for the Competence Examination Dr. Basil Dudin

2. Definitions and Concepts • Electronic Commerce: The process of buying, selling, or exchanging products, services, or information via computer networks. • Electronic Business: A broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization. • Defined through the perspectives of communications, business process, services, learning and collaboration.

3. Dimensions of Electronic Commerce

4. Organisations in E-Commerce • EC organizations Brick-and-mortar organizations Old-economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents Virtual (pure-play) organizations Organizations that conduct their business activities solely online Click-and-mortar (click-and-brick) organizations Organizations that conduct some e-commerce activities, but do their primary business in the physical world

5. Framework for Electronic Commerce

6. Major Business Pressures and Roles of Electronic Commerce

7. Business Environment Drivers for E-Commerce • Organizational response strategies • Strategic systems • Agile systems • Continuous improvement efforts and business process restructuring • Customer relationship management • Business alliances • Electronic markets

8. Business Environment Drivers for E-Commerce • Reductions in Cycle Time and Time-to-Market cycle time reduction Shortening the time it takes for a business to complete a productive activity from its beginning to end • Empowerment of Employees EC allows the decentralization of decision making and authority via empowerment and distributed systems, but simultaneously supports a centralized control • Supply Chain Improvements EC can help reduce supply chain delays, reduce inventories, and eliminate other inefficiencies

9. Business Environment Drivers for E-Commerce • Mass Customization: Make-to-Order in Large Quantities mass customization Production of large quantities of customized items • Intrabusiness: From Sales Force Automation to Inventory Control knowledge Management (KM) The process of creating or capturing knowledge, storing and protecting it, updating and maintaining it, and using it

10. E-Commerce Business Models • Typical EC Business Models • Online direct marketing • Electronic tendering systems: tendering (reverse auction) Model in which a buyer requests would-be sellers to submit bids; the lowest bidder wins -Name-your-own-price model: Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price

11. E-Commerce Business Models • Typical EC Business Models • Find the best price affiliate marketing An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site viral marketing Word-of-mouth marketing in which customers promote a product or service to friends or other people

12. E-Commerce Business Models • Typical EC Business Models group purchasing Quantity purchasing that enables groups of purchasers to obtain a discount price on the products purchased SMEs Small-to-medium enterprises e-co-ops Another name for online group purchasing organizations

13. E-Commerce Business Models • Typical EC Business Models • Online auctions • Product and service customization customization Creation of a product or service according to the buyer’s specifications • Electronic marketplaces and exchanges • Information brokers

14. E-Commerce Business Models • Typical EC Business Models • Bartering • Deep discounting • Value-chain integrators • Value-chain service providers • Supply chain improvers

15. Global Reach Cost Reduction Supply Chain Improvements Extended Hours Customization New Business Models Vendors’ Specialization Rapid Time-to-Market Lower Communication Costs Efficient Procurement Improved Customer Relations Up-to-Date Company Material No City Business Permits and Fees Other Benefits Organisational Benefits

16. Ubiquity More Products and Services Customized Products and Services Cheaper Products and Services Instant Delivery Information Availability Participation in Auctions Electronic Communities No Sales Tax Consumer Benefits

17. Societal Benefits • Telecommuting • Higher Standard of Living • Homeland Security • Hope for the Poor • Availability of Public Services

18. Electronic Marketplaces • Market space components • Customers • Sellers • Products and services digital products Goods that can be transformed into digital format and delivered over the Internet • Infrastructure

19. Electronic Marketplaces • Market space components front end The portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment gateway back end The activities that support online order-taking. It includes fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery

20. Electronic Marketplaces • Market space components intermediary A third party that operates between sellers and buyers. • Other business partners • Support services

21. Types of Electronic Marketplaces • Electronic Storefronts storefront A single company’s Web site where products or services are sold • Most common mechanisms are a(n): • electronic catalog • search engine • electronic cart • e-auction facilities • payment gateway

22. Types of Electronic Marketplaces e-mall (online mall) An online shopping center where many online stores are located • Types of Stores and Malls • General stores/malls • Specialized stores/malls • Regional versus global stores • Pure online organizations versus click-and-mortar stores

23. Types of Electronic Marketplaces e-mall (online mall) An online shopping center where many online stores are located • Types of Stores and Malls • General stores/malls • Specialized stores/malls • Regional versus global stores • Pure online organizations versus click-and-mortar stores

24. Types of Electronic Marketplaces • Types of E-Marketplaces e-marketplace An online market, usually B2B, in which buyers and sellers exchange goods or services; the three types of e-marketplaces are private, public, and consortia private e-marketplaces Online markets owned by a single company; may be either sell-side or buy-side e-marketplaces

25. Types of Electronic Marketplaces • Types of E-Marketplaces sell-side e-marketplace A private e-marketplace in which a company sells either standard or customized products to qualified companies buy-side e-marketplace A private e-marketplace in which a company makes purchases from invited suppliers

26. Types of Electronic Marketplaces public e-marketplaces B2B marketplaces, usually owned and/or managed by an independent third party, that include many sellers and many buyers; also known as exchanges information portal A single point of access through a Web browser to business information inside and/or outside an organization

27. Types of Electronic Marketplaces Six major types of portals • Commercial (public) portals • Corporate portals • Publishing portals • Personal portals • Mobile portals • Voice portals

28. Types of Electronic Marketplaces mobile portal A portal accessible via a mobile device voice portal A portal accessed by telephone or cell phone

29. Intermediation in Electronic Commerce infomediaries Electronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to others • Five limitations of direct interaction • Search costs • Lack of privacy • Incomplete information • Contract risk • Pricing inefficiencies e-distributor An e-commerce intermediary that connects manufacturers (suppliers) with business buyers by aggregating the catalogs of many suppliers in one place—the intermediary’s Web site

30. Intermediation in Electronic Commerce • disintermediation • Elimination of intermediaries between sellers and buyers • reintermediation • Establishment of new intermediary roles for traditional intermediaries that have been disintermediated

31. Electronic Retailing Overview of Electronic Retailing electronic retailing (e-tailing) Retailing conducted online, over the Internet e-tailers Retailers who sell over the Internet

32. Electronic Retailing Characteristics of Successful E-Tailing • High brand recognition • A guarantee provided by highly reliable or well-known vendors • Digitized format • Relatively inexpensive items • Frequently purchased items • Commodities with standard specifications • Well-known packaged items that cannot be opened even in a traditional store

33. Electronic Retailing Business Models Classification by Distribution Channel • Mail-order retailers that go online • Direct marketing from manufacturers • Pure-play e-tailers • Click-and-mortar retailers • Internet (online) malls

34. Electronic Retailing Business Models direct marketing Broadly, marketing that takes place without intermediaries between manufacturers and buyers; in the context of this book, marketing done online between any seller and buyer

35. Electronic Retailing Business Models virtual (pure-play) e-tailers Firms that sell directly to consumers over the Internet without maintaining a physical sales channel click-and-mortar retailers Brick-and-mortar retailers that offer a transactional Web site from which to conduct business

36. Electronic Retailing Business Models brick-and-mortar retailers Retailers who do business in the non-Internet, physical world in traditional brick-and-mortar stores multichannel business model A business model where a company sells in multiple marketing channels simultaneously (e.g., both physical and online stores)

37. Electronic Retailing Business Models • Retailing in Online Malls • Referring Directories • Malls with Shared Services • Representative B2C Services • Postal Services • Services and Products for Adults • Wedding Channels • Gift Registries