CHAPTER 7

E-Business and E-Commerce

CHAPTER OUTLINE

7.1 Overview of E-Business & E-Commerce

7.2 Business-to-Consumer (B2C) ElectronicCommerce

7.3 Business-to-Business (B2B) Electronic Commerce

7.4 Electronic Payments

7.5 Ethical and Legal Issues in E-Business

LEARNING OBJECTIVES

1. Describe the six common types of electronic commerce; provide specific personal examples of how you have used or could use B2C, C2C, G2C, and mobile commerce; and offer a specific example of B2B and G2B.

2. Discuss the five online services of business-to-consumer electronic commerce, provide a specific example of each service, and state how you have used or would use each service.

LEARNING OBJECTIVES (continued)

3. Describe the three business models for business-to-business electronic commerce, and provide a specific example of each model.

4. Describe the four types of electronic payments, provide a specific example of each one, and explain whether you would use each type.

LEARNING OBJECTIVES (continued)

5. Illustrate the ethical and legal issues relating to electronic commerce with two specific examples of each issue, and describe how you would respond or react to the four examples you have provided.

7.1 Overview of E-Business and E-Commerce

Definitions and Concepts

Types of E-Commerce

E-Commerce and Search

Major E-Commerce Mechanisms

Benefits and Limitations of E-Commerce

Definitions and Concepts

Electronic commercethe buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet

Electronic businessa broader definition of EC, including buying and selling of goods and services, and also servicing customers, collaborating with partners, conducting e-learning and conducting electronic transactions within an organization

Definitions and Concepts (continued)

Pure versus Partial Electronic Commerce depends on the degree of digitization involved.

Brick-and-mortar organizations

Click-and-mortar organizations

Virtual organizations

What is your choice for buying books?

Bricks and Mortar, Partial EC, and Pure EC

Source: Rubberball/Mike Kemp/Getty Images, Inc.

Types of E-Commerce

Business-to-Consumer (B2C)

Business-to-Business (B2B)

Consumer-to-Consumer (C2C)

Source: Don Farrall/Photodisc/Getty Images, Inc.‘consumer’ is the final destination where the good is used up – all other intermediate stops

are ‘business’

Types of E-Commerce (continued)

Business-to-Employee (B2E)

E-Government

Mobile Commerce (m-commerce)

Source: Don Farrall/Photodisc/Getty Images, Inc.

B2B and B2C Electronic Commerce

© Toh Kheng Guan/Age Fotostock America, Inc.

Major E-Commerce Mechanisms

Auctions

Forward Auctionsa channel to many potential buyers

Reverse Auctions

one buyer, usually an organization, wants to buy a product or a service. The buyer posts a request for quotation (RFQ) on its Web site or on a third-party Web site

© ZOONAR GMBH LBRF/Age Fotostock America, Inc.

Forward and Reverse Auctions

Bid price

Bid price

Time Time

Forward Auction Reverse Auction

E-Commerce Business Models

Online direct marketing to customers

Electronic tendering system by an organization (could be a government) seeking bids for items and/or services

Name-your-own-price [the Priceline example and recently www.whatsyourprice.com]

Find-the-best-price

E-Commerce Business Models (continued)

Affiliate marketing: asking partners to place logos or banners on partner’s site. If customers click on logo, go to vendor’s site, and buy, then vendor pays commission to partners

E-Commerce Business Models (continued)

Viral marketing - receivers send information about your product to their friends (think of word-of-mouth in the age of social media)

Group purchasing - small buyers aggregate demand to get a large volume; then the group conducts tendering or negotiates a lower price

Online auctions

Bartering Online

Benefits of E-Commerce

Benefits to organizationsMakes national and international markets more accessible

Lowering costs of processing, distributing, and retrieving information

Benefits to customersAccess a vast number of products and services around the clock (24/7/365)

Limitations of E-Commerce

Technological Limitations Lack of universally accepted security

standards Insufficient telecommunications bandwidth Expensive accessibility

Non-technological Limitations Perception that EC is unsecure Unresolved legal issues Lacks a critical mass of sellers and buyers

Online Service Industries

Cyberbanking

Online securities trading

Online job market

Travel services

Online advertising

Disintermediation

A key issue is disintermediation. Middlemen provide information and/or provide value-added services. When the function(s) of these intermediaries can be automated or eliminated, this process is called disintermediation

Online Advertising

Online Advertising methodsBanners

Pop-up ad

Pop-under ad

Permission marketing

Viral marketing

Drivers of today’s online advertising

The emergence of “communitainment.”

The increasing popularity of Usites.

Mainstreaming of the Internet.

Declining usage of traditional media.

Fragmentation of content consumption.

Consumers are multitasking and they do not like ads.

Source: PiperJaffrayHulu

Communitainment

Communitainment is the blending of community, communication, and entertainment into a new form of online activity driven by consumers.  

The bank predicts that consumers will shift more than 50% of their content consumption over the next decade to communitainment formats (e.g., social networking, video, and photo sharing sites), displacing traditional forms of media content like TV, magazines, and large Internet sites. 

This trend presents a major challenge for advertisers.

Popular Usites

Yelp

Broadcaster - a video entertainment community and live webcam social network. The site allows users to create personal profiles, post pictures, upload videos, and chat with the site's other users through a live webcam chat feature.(has been taken off the web)

Mainstreaming of the Internet

Source: Mike Flippo/Shutterstock

Declining usage of traditional media

© JUICE LIGHT LBRF/Age Fotostock America, Inc.

For example, the demise of the Boston Globe

Eight Types of Web sites for Advertising

Portals: most popular; best for reach but not targeting

Search: second largest reach; high advertising value

Commerce: high reach; not conducive to advertising

Source: PiperJaffray

Eight types of sites (continued)

Entertainment: large reach; strong targetability

Community: emphasize being a part of something; good for specific advertising

Communications: not good for branding; low targetability

Eight types of sites (continued)

News/weather/sports: poor targetability

Games: good for very specific types of advertising

Source: Don Farrall/Photodisc/Getty Images, Inc.

7.3 Business-to-Business (B2B) Electronic Commerce

In B2B e-commerce, the buyers and sellers are organizations.

© Richard Thomas/Age Fotostock America, Inc.

B2B Sell-Side Marketplace

Key mechanisms: electronic catalogs and forward auctions

Common Sell-Side Marketplaces include:

• Ariba

•Dell Auction

•bigboXX.com

© Richard Thomas/Age Fotostock America, Inc.

B2B Buy-Side Marketplace

United Sourcing Alliance is a common Sell-Side Marketplace

Key mechanism: reverse auctions

© Richard Thomas/Age Fotostock America, Inc.

Electronic Exchanges

Vertical Exchanges – connect buyers and sellers in a specific industry

Horizontal Exchanges – connect buyers and sellers across industries, frequently for maintenance/operations/repair materials

Functional Exchanges – typically services required on an ‘as needed’ basis

7.4 Electronic Payments

Electronic checks (e-checks)

Electronic credit cards

Purchasing cards

Electronic cashStored-value money cards

Smart cards

Person-to-person paymentsFrederic Lucano/Stone/Getty Images, Inc.

7.5 Ethical and Legal Issues

Ethical IssuesPrivacy

Job Loss

Legal Issues Specific to E-Commerce

Fraud on the Internet

Domain Names

Cybersquatting - refers to the practice of registering domain names solely for the purpose of selling them later at a higher price

Legal Issues Specific to E-Commerce (continued)

Domain Tasting

Taxes and Other Fees

Copyright