E-Commerce with Digital Marketing

M1 Study Guide

OVERVIEW OF E- COMMERCE
Module 1 (SUBTOPIC 1 Reviewer) Electronic Commerce: Definitions and Concepts

1. Electronic commerce (EC) refers to using the Internet and intranets to purchase, sell, transport, or
trade data, goods, or services.
2. E-business refers to a broader definition of EC, not just the buying and selling of goods and services,
but conducting all kinds of business online such as servicing customers, collaborating with business
partners, delivering e-learning, and conducting electronic transactions within an organization.
3. EC can be conducted in an electronic market (e-marketplace), an online location where buyers
and sellers conduct commercial transaction such as selling goods, services, or information. Any
individual can also open a market selling products or services online.
4. Electronic markets are connected to sellers and buyers via the Internet or to its counterpart within
organizations, an intranet. An intranet is a corporate or government internal network that uses
Internet tools, such as Web browsers and Internet protocols. Another computer environment is an
extranet, a network that uses Internet technology to link intranets of several organizations in a
secure manner.
5. Classifying e-commerce aids understanding of this diversified field. In general, selling and buying
electronically can be either business-to consumer (B2C) or business-to-business (B2B). Online
transactions are made between businesses and individual consumers in B2C, such as when a person
purchases a coffee at starbucksstore.com or a computer at dell.com.
6. An EC Framework the EC field is diverse involving many activities, organizational units, and
technologies. Therefore, a framework that describes its contents can be useful.
7. People - Sellers, buyers, intermediaries, information systems and technology specialists, other
employees, and any other participants.
8. Public policy - Legal and other policy and regulatory issues, such as privacy protection and taxation,
which are determined by governments. Included are technical standards and compliance.
9. Marketing and advertising - Like any other business, EC usually requires the support of marketing
and advertising. This is especially important in B2C online transactions, in which the buyers and
sellers usually do not know each other.
10. Support service - Many services are needed to support EC. These range from content creation to
payments to order delivery.
11. Business partnerships - Joint ventures, exchanges, and business partnerships of various types are
common in EC. These occur frequently throughout the supply chain (i.e., the interactions between a
company and its suppliers, customers, and other partners).
12. Infrastructure - Describes the hardware, software, and networks used in EC. All of these
components require good management practices. This means that companies need to plan, organize,
motivate, devise strategy, and restructure processes, as needed, to optimize the business use of EC
models and strategies.

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 E-Commerce with Digital Marketing
M1 Study Guide

13. Business-to-business (B2B) EC refers to transactions between and among organizations. Today,
about 85% of EC volume is B2B. For Dell, the entire wholesale transaction is B2B. Dell buys most of
its parts through e-commerce, and sells its products to businesses (B2B) and individuals (B2C) using
e-commerce.
14. Business-to-consumer (B2C) EC includes retail transactions of products or services from
businesses to individual shoppers. The typical shopper at Amazon.com is of this type. Since the
sellers are usually retailers, we also call this type e-tailing.
15. Business-to-business-to-consumer (B2B2C) EC, a business (B1) sells a product to another
business (B2). B2 then sells, or gives away, the product to individuals who may be B2’s own
customers or employees.
16. Consumer-to-business (C2B), people use the Internet to sell products or services to individuals and
organizations. Alternatively, individuals use C2B to bid on products or services.
17. Intra-business EC category refers to EC transactions among various organizational departments
and individuals.
18. Business-to-employees (B2E) category refers to the delivery of services, information, or products
from organizations to their employees. A major category of employees is mobile employees, such as
field representatives or repair services that go to customers. EC support to such employees is also
called business-to-mobile employees (B2ME).
19. Consumer-to-consumer (C2C) EC category individual consumers sell to or buy from other
consumers. Examples of C2C include individuals selling computers, musical instruments, or personal
services online. EBay auctions are mostly C2C as are the ads in Craigslist.
20. Collaborative commerce (c-commerce) refers to online activities and communications done by
parties working to attain the same goal. For example, business partners may design a new product
together.
21. E-government EC, a government agency buys or provides goods, services, or information from or to
businesses (G2B) or from or to individual citizens (G2C). Governments can deal also with other
governments (G2G).
22. A Brief History of EC
• The pioneering of e-commerce applications can be tracked to the early 1970’s when money
was transferred electronically.
• Funds routed electronically from one organization to another by electronic funds transfer
[EFT])
• Then came electronic data interchange (EDI), a technology used to enable the electronically
transfer of routine documents.
• The Internet appeared on the scene in 1969, as an experiment by the U.S. government, and its
initial users were mostly academic researchers and other scientists.
• A major milestone in the development of EC was the appearance of the World Wide Web (The
“Web”) in the early 1990’s.

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 E-Commerce with Digital Marketing
M1 Study Guide

• When the Internet became commercialized and users began flocking to participate in the
World Wide Web in the early 1990’s, the term electronic commerce was introduced. EC
applications rapidly expanded.
• Large number of so called dot-coms, or Internet start-up , also appeared. Almost all companies
in the developing countries have presence on the Web.
• In 2005, social networks started to receive quite a bit of attention, as did m- commerce and
wireless applications. As of 2009, EC added social commerce channels. An example is the
increasing commercial activities on Facebook and Twitter.
• Given the nature of technology and Internet usage more and more EC successes are emerging.
23. EC is driven by many factors depending on the industry, company, and application involved.
24. There are many benefits of EC and they continue to increase with time. We elected to organize them
in three categories: organizations, individual customers, and society.

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Module 1 (SUBTOPIC 2 Reviewer) E- Commerce 2.0

25. The first generation of EC involved mainly trading, e-services, and corporate-sponsored
collaboration. Currently, we are moving into the second generation of EC, which we call E-
Commerce 2.0. It is based on Web 2.0 tools, social media, social networks, and virtual worlds – all
the offspring of social computing.
26. Social computing refers to a computing system that involves social interactions and behaviors. It is
performed with a set of tools that includes blogs, wikis, social network services, and other social
software tools, and social marketplaces. Whereas traditional computing systems concentrate on
business processes particularly cost reduction and increases in productivity.
27. Web 2.0 was coined by O’Reilly Media in 2004. Web 2.0 is the second generation of Internet-based
tools and services that enables users to easily generate content, share media, and communicate and
collaborate, in innovative ways.
28. Social media has many definitions. A popular definition is that social media involves user generated
online text, image, audio, and video content that are delivered via Web 2.0 platforms and tools. The
media is used primarily for social interactions and conversations such as to share opinions,
experiences, insights, and perceptions and to collaborate online.
29. Social-networking define as the execution of any Web 2.0 activity, such as blogging or having a
presence in a social network. It also includes all activities conducted in social networks.
30. E-commerce activities that are conducted in social networks by using social software (i.e., Web 2.0
tools) are referred to as social commerce.

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M1 Study Guide

31. A special class of social networking is the virtual world. A virtual world, also known as a meta-verse
- It is a 3-D computer-based simulated environment built and owned by its residents. In addition to
creating buildings, people can create and share cars, clothes, and many other items. Community
members inhabit virtual spaces and interact and socialize via avatars.
32. The Digital Economy, also known as the Internet economy , is an economy based on online
transactions, mostly e-commerce. It includes digital wire line or wireless communication networks
(e.g., the Internet, intranets, extranets, and VANs), computers, software, and other related
information technologies. This digital economy displays the following characteristics:
33. Sharing economy refers to an economic system constructed around the concept of sharing goods
and services among the participating people. Also known as ‘collaborative consumption’ and
‘collaborative economy’ such systems appear in different forms and frequently use information
technologies in their operations. A well-known example is car sharing.
34. Several EC models and companies are based on the concept of the sharing economy. Example: Uber.
Can you give other? New apps change the way that people communicate, work and play. People are
looking for apps for thousands of new uses.
35. The digital enterprise is a new business model that uses IT to gain competitive advantage by
increasing employee productivity, improving efficiency and effectiveness of business processes, and
better interactivity between vendors and customers.
36. The concept of social business was developed decades ago and was not related to computers. Today,
the Social Business Forum defines social business as “an organization that has put in place the
strategies, technologies and processes to systematically engage all the individuals of its ecosystem
37. Social customers (sometimes called digital customers) are usually members of social networks who
share opinions about products, services, and vendors, do online social shopping, and understand
their rights and how to use the wisdom and power of social communities to their benefit.
38. Online direct marketing. The most obvious EC model is that of selling products or services online.
Sales may be from a manufacturer to a customer, eliminating intermediaries or physical stores, or
from retailers to consumers, making distribution more efficient. This model is especially efficient for
digitizable products and services (those that can be delivered electronically).
39. Electronic tendering systems. Large organizational buyers usually make large-volume or large-
value purchases through a tendering (bidding) system, also known as a reverse auction. Such
tendering can be done online, saving time and money.
40. Electronic marketplaces and exchanges. Electronic marketplaces existed in isolated applications
for decades. But as of 1996, hundreds of e-marketplaces (old and new) have introduced new
methods and efficiencies to the trading process. If they are well organized and managed, e-
marketplaces can provide significant benefits to both buyers and sellers.
41. Viral marketing. According to the viral marketing model, people use e-mail and social networks to
spread word-of -mouth advertising. It is basically Web-based word-of- mouth advertising, and is
popular in social networks.

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 E-Commerce with Digital Marketing
M1 Study Guide

42. Group purchasing. Group purchasing is a well-known offline method, both in B2C and B2B. It is
based on the concept of quantity discounts (“cheaper by the dozen”). The Internet model allows
individuals to get together, so they can gain the large-quantity advantage.
43. Rappa ( 2010 ) classified the EC business models into seven categories:
• Brokerage: Market makers that charges fee for their services.
• Advertising: Websites that provide content and charge advertisers for related ads.
• Infomediary: Provide information and/or infrastructure that help buyers and/or sellers and
charge for their services.
• Merchant: Retailers (such as Walmart or Amazon): These buy the products and sell them at
profit.
• Direct model: Sell without intermediaries.
• Affiliate: Paying website owners to place banners. Share fees received from advertisers.
• Community: A social media-based model that utilizes Web 2.0 tools, social networks, its
characteristics.
44. Limitations of e-commerce. The major limitations of EC are the resistance to new technology, fear
from fraud, integration with other IT systems may be difficult, costly order fulfillment, privacy issue,
unclear regulatory issues, lack of trust in computers, and unknown business partners, difficulties to
justify EC initiatives, and lack of EC skilled employees.
• Several economic, technological, and societal trends impact EC and shape its direction.
• EC will impact some industries more than others. This impact is changing with time.
• There will be a surge in the use of e-commerce in developing countries
• With more people on the Internet, EC will increase.
• The future of EC depends of technological, organizational, and societal trends.

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