Introduction To E-Commerce
Introduction To E-Commerce
ELECTRONIC
COMMERCE, SEVENTH
ANNUAL EDITION
Objectives 2
Second Wave
Electronic commerce (e-commerce)
Businesses trading with other businesses and
internal processes
Electronic Commerce
(continued)
Second wave:
Global enterprises in many countries are participating in
electronic commerce
Established companies fund electronic commerce initiatives
with their own capital
Customized e-mail strategies are now integral to customer
contact
Business Models, Revenue 15
Merchandising
Combination of store design, layout, and product display
knowledge
Product/Process Suitability 17
to Electronic Commerce
Commodity item
Hard to distinguish from the same products or services
provided by other sellers
Features have become standardized and well known
Product/Process Suitability 18
to Electronic Commerce
(continued)
Shipping profile
Collection of attributes that affect how easily a product can
be packaged and delivered
Commerce
Electronic commerce can increase sales and
decrease costs
If advertising is done well on the Web, it can get a
firm’s promotional message out to potential
customers in every country
Using e-commerce sales support and order-taking
processes, a business can:
Reduce costs of handling sales inquiries
Provide price quotes
Advantages of Electronic 20
Commerce (continued)
It increases purchasing opportunities for buyers
Negotiating price and delivery terms is easier
The following cost less to issue and arrive securely and
quickly:
Electronic payments of tax refunds
Public retirement
Welfare support
Disadvantages of 21
Electronic Commerce
Perishable grocery products are much harder to sell online
It is difficult to:
Calculate return on investment
Integrate existing databases and transaction-processing
software into software that enables e-commerce
Cultural and legal obstacles also exist
Economic Forces and 22
Electronic Commerce
Economics
Study of how people allocate scarce resources
Transaction costs are the total costs that a buyer and seller
incur
Commerce to Reduce
Transaction Costs
Businesses and individuals can use electronic commerce
to reduce transaction costs by:
Structures
Network economic structures
Neither a market nor a hierarchy
Companies coordinate their strategies, resources, and skill
sets by forming long-term, stable relationships with other
companies and individuals based on shared purposes
Strategic alliances (strategic partnerships)
Relationships created within the network economic structure
Network Economic 26
Structures (continued)
Virtual companies
Strategic partners
Network effect
As more people or organizations participate in a
network, the value of the network to each
participant increases
Identifying Electronic 28
Commerce Opportunities
Firm
Multiple business units owned by a common set of
shareholders
Industry
Multiple firms that sell similar products to similar customers
Strategic Business Unit 29
Value Chains
Value chain
A way of organizing the activities that each strategic business
unit undertakes
Primary activities include:
Designing, producing, promoting, marketing, delivering, and
supporting the products or services it sells
Supporting activities include:
Human resource management and purchasing
30
Industry Value Chains 31
Value system
Electronic Commerce
Companies with established reputations:
Often create trust by ensuring that customers know who they
are
Can rely on their established brand names to create trust on
the Web
Customers’ inherent lack of trust in “strangers” on the Web
is logical and to be expected
Language Issues 37
(continued)
Flat-rate access system
Consumer or business pays one monthly fee for
unlimited telephone line usage
Contributed to rapid rise of U.S. electronic
commerce
Targets for technological solutions include
paperwork and processes that accompany
international transactions
41
Summary 42
Commerce
Negotiated exchange of goods or services
Electronic commerce
Application of new technologies to conduct business more
effectively
First wave of electronic commerce
Ended in 2000
Second wave of electronic commerce
New approaches to integrating Internet technologies into
business processes
Summary (continued) 43