10.1 © 2010 by Pearson
10Chapter
E-Commerce: DigitalMarkets, Digital Goods
10.2 © 2010 by Pearson
LEARNING OBJECTIVES
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Identify the unique features of e-commerce, digitalmarkets, and digital goods.Describe how Internet technology has changed businessmodels.Identify the various types of e-commerce and explainhow e-commerce has changed consumer retailing andbusiness-to-business transactions.Evaluate the role of m-commerce in business, anddescribe the most important m-commerce applications.Identify the principal payment systems for electroniccommerce.
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
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Electronic Commerce and the Internet
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E-Businessrefers to the use of digital technology and the Internet toexecute the major business processes in the enterprise.
E-business includes activities for the internal management ofthe firm and for coordination with suppliers and otherbusiness partners. It also includes e-commerce.
E-commerceis the part of e-business that deals with the buying and sellingof goods and services over the Internet.
It encompasses activities supporting those markettransactions, such as advertising, marketing, customersupport, security, delivery, and payment.
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
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Electronic Commerce and the Internet
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E-commerceUse of the Internet and Web to transact business
Digitally enabled transactions
History of e-commerceBegan in 1995 and grew exponentially; still growing at anannual rate of 16 percent
Rapid growth led to market bubble
While many companies failed, many survived with soaringrevenues
E-commerce today the fastest growing form of retail trade inU.S., Europe, Asia
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
10.5 © 2010 by Pearson
Figure 10-1
Retail e-commerce revenues have grownexponentially since 1995 and have only recently“slowed” to a very rapid 16 percent annual increase,which is projected to remain the same until 2010.
The Growth of E-Commerce
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Eight unique features of e-commerce technologyUbiquity
Internet/Web technology available everywhere: work, home,etc., and anytime
Global reach
The technology reaches across national boundaries, aroundEarth
Universal standards
One set of technology standards: Internet standards
Richness
Supports video, audio, and text messages
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Eight unique features (cont.)Interactivity
The technology works through interaction with the user
Information density
Vast increases in information density—the total amount andquality of information available to all market participants
Personalization/Customization:
Technology permits modification of messages, goods
Social technology
The technology promotes user content generation and socialnetworking
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Key concepts in e-commerce: The effects of digitalmarkets on the ways companies conduct business.
Digital markets reduceInformation asymmetry
Search costs:
Transaction costs:
Menu costs:
Digital markets enablePrice discrimination
Dynamic pricing
Disintermediation
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
10.9 © 2010 by Pearson
Figure 10-2
The typical distribution channel has several intermediary layers, each of which adds to the final costof a product, such as a sweater. Removing layers lowers the final cost to the consumer.
The Benefits of Disintermediation to the Consumer
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Key concepts in e-commerce (cont.)
Digital goodsGoods that can be delivered over a digital network
E.g., Music tracks, video, software, newspapers, books
Cost of producing first unit almost entire cost of product:marginal cost of producing 2nd unit is about zero
Costs of delivery over the Internet very low
Marketing costs remain the same; pricing highly variable
Industries with digital goods are undergoing revolutionarychanges (publishers, record labels, etc.)
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Internet business modelsPure-play modelsClicks-and-mortar models
Social NetworkOnline meeting placeSocial shopping sitesCan provide ways for corporate clients to target customers throughbanner ads and pop-up ads
Online marketplace:Provides a digital environment where buyers and sellers canmeet, search for products, display products, and establish pricesfor those products
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Content providerProviding digital content, such as digital news, music, photos,or video, over the Web
Online syndicators: Aggregate content from multiple sources,package for distribution, and resell to third-party Web sites
Service providerProvides Web 2.0 applications such as photo sharing andinteractive maps, and services such as data storage
Portal“Supersite” that provides comprehensive entry point for hugearray of resources and services on the Internet
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Virtual storefront:Sells physical products directly to consumers or toindividual businesses. Such as Amazon.com
Information broker:Provides product, pricing, and availability information toindividuals and businesses. Such as Realtor.com.
Transaction broker:Saves users money and time by processing online salestransactions and generating a fee for each transaction,Such as E*Trade.com
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce and the Internet
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Types of Electronic Commerce
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Business-to-consumer (B2C)
Retailing products and services to individual shoppers
Business-to-business (B2B)Sales of goods and services among businesses
Consumer-to-consumer (C2C)Consumers selling directly to other consumers
Mobile commerce (m-commerce)the purchase of goods and services using handheld wirelessdevices.
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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Interactive marketing and personalization
Web sites are bountiful source of details about customerbehavior, preferences, buying patterns used to tailorpromotions, products, services, and pricing
Clickstream tracking tools: Collect data on customeractivities at Web sites
Used to create personalized Web pages
Collaborative filtering: Compares customer data to othercustomers to make product recommendations
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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BlogsPersonal web pages that contain series of chronologicalentries by author and links to related Web pagesHas increasing influence in politics, newsCorporate blogs: New channels for reaching customers,introducing new products and servicesBlog analysis by marketers
Customer self-service
Web sites and e-mail to answer customer questions or toprovide customers with product informationReduces need for human customer-support expert
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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B2B e-commerce: New efficiencies and relationshipsElectronic data interchange (EDI)
Computer-to-computer exchange of standardtransactions such as invoices, purchase ordersMajor industries have EDI standards that define structureand information fields of electronic documents for thatindustry
More companies increasingly moving away from privatenetworks to Internet for linking to other firms
E.g., Procurement: Businesses can now use Internet to locatemost low-cost supplier, search online catalogs of supplierproducts, negotiate with suppliers, place orders, etc.
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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Figure 10-5
Companies use EDI to automate transactions for B2B e-commerce and continuous inventoryreplenishment. Suppliers can automatically send data about shipments to purchasing firms. Thepurchasing firms can use EDI to provide production and inventory requirements and payment data tosuppliers.
Electronic Data Interchange (EDI)
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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Private industrial networks (private exchanges)Large firm using extranet to link to its suppliers, distributorsand other key business partners
Owned by buyer
Permits sharing of:
Product design and development
Marketing
Production scheduling and inventory management
Unstructured communication (graphics and e-mail)
A private industrial network, also known as a private exchange, links a firmto its suppliers, distributors, and other key business partners for efficientsupply chain management and other collaborative commerce activities.
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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Net marketplaces (e-hubs)Single market for many buyers and sellers
Industry-owned or owned by independent intermediary
Generate revenue from transaction fees, other services
Use prices established through negotiation, auction, RFQs, orfixed prices
May focus on direct or indirect goods
May support long-term contract purchasing or short-term spotpurchasing
May serve vertical or horizontal marketplaces
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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Figure 10-7
Netmarketplacesare onlinemarketplaceswhere multiplebuyers canpurchase frommultiple sellers.
A Net Marketplace
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce
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http://emallsofamerica.com/
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Consumer-to-Consumer (C2C)
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Online auctionsElectronic auction (e-auction) - Sellers andbuyers solicit consecutive bids from eachother and prices are determined dynamicallyForward auction - Sellers use the site as aselling channel to many buyers and thehighest bid winsReverse auction - Buyers use the site topurchase a product or service, selecting theseller with the lowest bid
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M-Commerce
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M-commerce services and applications
Although m-commerce represents small fraction oftotal e-commerce transactions, revenue has beensteadily growing
Location-based services
Banking and financial services
Wireless Advertising
Games and entertainment
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
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Figure 10-8
M-commerce sales represent a small fraction of total e-commerce sales, but thatpercentage is steadily growing.
Global M-commerce Revenue 2000-2012
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
M-Commerce
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Limitations in mobile’s access of Web information
Data limitations
Small display screens
Wireless portals (mobile portals)
Feature content and services optimized for mobiledevices to steer users to information they are mostlikely to need
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
M-Commerce
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Types of electronic payment systems
Digital walletStores credit card and owner identification information andenters the shopper’s name, credit card number, andshipping information automatically when invoked tocomplete a purchase
Accumulated balance digital payment systemsUsed for micropayments ($10 or less)
Accumulating debit balance that is paid periodically oncredit card or telephone bills
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce Payment Systems
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Electronic Commerce Payment Systems
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Stored value payment systemsEnable online payments based on value stored in onlinedigital accountMay be merchant platforms or peer-to-peer (PayPal)
Digital checkingExtend functionality of existing checking accounts to be usedfor online payments
Electronic billing presentment and payment systemsPaying monthly bills through electronic fund transfers orcredit cards
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
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Digital payments systems for m-commerce
Three types of mobile payment systems in usein Japan
Stored value system charged by credit cards or bankaccounts
Mobile debit cards
Mobile credit cards
In the U.S., the cell phone has not yet evolvedinto a mobile payment system
Management Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods
Electronic Commerce Payment Systems
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NEW TRENDS IN E-BUSINESS:E-GOVERNMENT
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E-government - refers to the application of theInternet and networking technologies to digitallyenable government and public sector agencies'relationships with citizens, businesses, and otherarms of government.In addition to improving delivery of governmentservices, e-government can make governmentoperations more efficient and also empowercitizens by giving them easier access toinformation.
10.31 © 2010 by Pearson
NEW TRENDS IN E-BUSINESS:E-GOVERNMENT
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G2C and C2GG2B and B2GG2G
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NEW TRENDS IN E-BUSINESS:E-GOVERNMENT
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