Internet Studies

What is e-commerce?

A working definition of e-commerce would describe it as the conducting of business activities using the Internet platform and in particular the Web.

Two types of e-commerce

B2B and B2C

The Mercer Framework

Four factors that determine a technology’s acceptance: affordability, convenience, stable platform and platform availability. Each of these dimensions can be plotted against a four-dimensional system with the zero rating as “poor” and one as “excellent.” The bigger the perimeter, closer to the outer limits of the diamond, the more likely the technology will succeed in the marketplace.

Demographic (social) and technological drivers:

Proportion of college-educated people, percent of computers in households…
1. Increasing quality at a decreasing price
2. Computers become ubiquitous
3. High bandwidth connection
4. Compression technologies

Activities in B2C e-commerce:

Promotion - Ordering - Delivery - After-Sales Service
Limitations of the web:
1. High bandwidth - small segments of advertising
2. The web surfer is still a mouse click away
3. Advertisements effectiveness evaluation is not established for the web
Business should focus on developing a relationship with the consumer via interactivity (or available activities on the web).
Advantages of the web:
1. Interactive
2. Instantaneous
3. More client-focused - the web experience can be tailored to each user. It can be converted to a micromarketing tool. This is often done by bribing the user to part with personal information…in exchange for free goodies.
After-sales support: electronic support has been found to be a good complement to telephone-based support
Establishing e-community
The use of web-based arrangements to allow customers to support each other is not only good public relations move, but it also takes a considerable load off the company’s support staff. By providing users and developers with information and contacts, it builds loyalty to its brand name and promotes collaboration between its customers.
Establishing a popular e-community involves several formidable tasks. The challenge is to develop a meaningful community based of relationships that engender not only personal involvement but also loyalty to the hosting company and its products. Done successfully, the benefit to the company of a virtual community of users is several times the costs of hosting a web site.
Interactions:
• One-to-one - example dating sites
• One-to-many - task driven environment when users log onto to receive information from the host
• Many-to-many - discussion boards

Creating Business Value

Three types or dimensions of business values:
• Operational excellence - low costs, low overhead, quick response, streamlined processes
• Customer intimacy - establishing lifelong relationships with customers and meeting their individual needs
• Product and service leadership - continuous innovation in product and service lines and investment in research and development

B2C Models

In short, it tells the what and how of business.
Retail merchants vs. portals
Pure-play vs. brick-and-mortar businesses

Few pure-play companies have survived to this point. Their business models did not prove viable. The strategies of “getting customers at any cost” did not work. The expenses required to establish a brand name proved too high and there was no commensurate revenue stream because of the excessive number of players in any market segment.

Business models for primarily brick-and-mortar companies expanding to the web can include several goals:
1. Establish new channels - disintermediation
2. Reinforce existing promotion efforts
3. Provide an alternate channel for ordering
4. Assist in customer support

B2B e-commerce

…the potential of the Internet to dramatically reduce costs across the supply chain. It is allowing them to reshape relationships with suppliers by integrating production and shipments.

Business and Technology Drivers

1. Competition - greater choice
2. Reduce prices vs. superior service - by eliminating a step in the supply chain you eliminate the additional markup associated with it.

A typical value chain: supplier - manufacturer - wholesaler - retailer - consumer
Advances in communication and processing technologies are enabling reconfiguration of value chain.

E-Business

IBM popularized the term e-business. E-business encompasses all the activities of a company that make e-commerce possible. IBM defines e-business as the “use of Internet technologies to improve and transform key business processes.” Basically, e-commerce activities are a subset of e-business activities.

Information technology Platform for E-Business

The Internet provides a new technological platform. It is more productive than a telephone, more interactive than a television, and more current than a newspaper. Businesses are still working out new business models that this platform makes profitable…Envisaging the potential of a new platform requires a deep understanding of the technological platform, its capabilities, and its limits.

Resource

Chaudhury A., Kuiwboer J., (2002) E-Business and e-Commerce Infrastructure: Technologies Supporting the E-Business Initiative, Boston, McGraw-Hill Irwin p.3-36