Digital Business and E-Commerce

Management
Seventh Edition

Part 1
Introduction

Chapter 1
Introduction to Digital Business

Copyright © 2019, 2015, 2011 Pearson Education, Inc. All Rights Reserved 1
 Contents

• The impact of digital communications on traditional businesses

• What is the difference between a digital business and an e-

commerce business?
• Digital business opportunities

• Barriers to the adoption of technology by digital business

stakeholders
• Barriers to consumer digital adoption

2
Introduction to Digital Business

What is a digital business?

Digital business is aimed at enhancing the competitiveness of an

organization by deploying innovative digital technologies throughout an
organization and beyond, through links to partners and customers and
promotion through digital media.

It does not simply involve using technology to automate existing

processes, but is about digital transformation by applying technology to
help change these processes to add value to the business and its
customers.

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 Applying Technology
Organizations have now been applying technologies using the below to
transform their business

 Internet: refers to the physical network that links computers across the
globe. It consists of the infrastructure of network servers and wired and
wireless communication links between them that are used to hold and
transport data between the client devices and web servers.

 World Wide Web: The most common technique for publishing information on
the Internet. It is accessed through desktop or mobile web browsers which
display interactive web pages of embedded graphics and HTML/ XML
encoded text.

 Wireless communications: Conducting electronic transactions and

communications via mobile devices (like smartphones and laptops) using
various wireless connections. 4
  Applying
Technology
Disruptive digital technologies has offered many opportunities for
innovative businesses to transform their services.

Amazon Wikipedia
Yahoo! Skype
eBay Facebook
Hotmail YouTube
Google Pinterest
Alibaba Google Glass

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The impact of digital communications on
traditional businesses

Digital business transformation Significant changes to organizational

processes, structures and system implemented to improve organizational
performance through increasing the use of digital media and
technology platforms

The focus of the application of digital business transformation on

1. Inbound Marketing

2. Mobile Marketing

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 Inbound Marketing

Inbound Marketing: Consumers take the lead by actively seeking information to

fulfill their needs. Brands attract interactions through content, search, and social media
marketing.

Zero Moment of Truth (ZMOT)

A summary of today’s
multichannel consumer decision-
making for
product purchase where they
search, review ratings, styles,
prices and
comments on social media before
visiting a retailer. ZMOT was
introduced by Google in 2011
7
8
  Inbound Marketing Strategies

 Content Marketing: It involves managing various types of

content like text, rich media, audio, and video to engage
customers and prospects, aiming to achieve business objectives.

 Search Marketing: Businesses aim to enhance their visibility on

search engines for relevant search terms by expanding their
presence in search engine results pages.

 Social Media Marketing: This involves overseeing and

promoting customer-to-customer interaction and engagement
across various online platforms to foster positive relationships
with a company and its brands. These interactions can take place
on the company's website, social networks, and other third-party
sites.
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 Social media marketing
 The increasing popularity of social media is a major trend in digital
business –
in particular social network sites (SNS) such as Facebook, Twitter and, for
business-to-business users, LinkedIn.

Social media marketing: Monitoring and facilitating customer-customer

interaction and participation throughout the web to encourage positive
engagement with a company and its brands.

Social Media
Focuses on active participation and peer-to-peer communication, with platforms
enabling user-generated content (UGC) and message exchanges.

Social Networks
Platforms where users can create and share UGC, interact with others, and
exchange messages.
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 Social media marketing

Six categories simplify social media management:

1. Social Networking (e.g., Facebook for consumers, LinkedIn for businesses)
2. Social Knowledge (e.g., Yahoo! Answers, Wikipedia)
3. Social Sharing: social bookmarking (e.g., www.Delicious.com)
4. Social News (e.g., Twitter for real-time updates)
5. Social Streaming: Platforms like Spotify for rich media sharing (photos,
videos, audio)
6. Company User-Generated Content and Community: (e.g., product reviews,
customer support communities, blogs).
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 Mobile Marketing
 Definition: Online transactions and communications conducted via mobile
devices (smartphones, tablets) using wireless connections.

 Key Trends
Mobile Web Usage Surpassed Desktop: As predicted by Mary Meeker, mobile
web use overtook desktop web usage by 2014.

App Usage: 90% of mobile time is spent in apps (Yahoo Flurry, 2014), with
many apps acting as browsers.

Location-based Usage: Mobile devices are widely used for activities like
shopping and tracking goods in real time.

 Impact
Mobile commerce is a major driver of online transactions, reshaping how
consumers interact with businesses.
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What is the difference between
digital business and e‑commerce?

Digital business is applied as a broader term encompassing e-

commerce but also including all electronic transactions within an
organization.

E-commerce is the process of buying and selling goods or services

over the internet. It involves transactions conducted electronically
between businesses and consumers, typically through websites or
online platforms.

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E-commerce perspectives
The 4 perspectives for e-commerce which are still valid today:

 A communications perspective – the delivery of information,

products or services or payment by electronic means.

 A business process perspective – the application of technology

towards the automation of business transactions and workflows.

 A service perspective – enabling cost cutting at the same time as

increasing the speed and quality of service delivery.

 An online perspective – the buying and selling of products and

information online.
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 Management of E-Commerce

Management of e-commerce involves prioritizing buy-side and sell-side

activities and putting in place the plans and resources to deliver the identified
benefits.

The two primary types of e-commerce transactions:

 Buy-side e-commerce e-commerce transactions between an

organisation and its suppliers and other partners.

 Sell-side e-commerce e-commerce transactions between an

organisation and its customers.

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Social Commerce

Social commerce is an integral part of e-commerce, enhancing

customer engagement and conversion rates.

• Incorporating reviews, ratings, and social media links helps

understand customer needs and boost sales.

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  Strategic Impact of E-
Commerce

Evaluation of e-commerce's strategic impact involves identifying buy-

side and sell-side opportunities.

Buy-side e-commerce involves procuring resources from suppliers

Sell-side e-commerce focuses on selling products to customers.

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Figure 1.4The distinction
between buy-​side and
sell-​side e‑commerce

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 Intranets and extranets

Intranet
 A private network within a company using Internet standards
for employees to access and share information.
 Intranet allows restricted access to sensitive company
information.
 Example: Yammer as an enterprise social media software tool
for real-time collaboration.

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 Intranets and extranets

Extranet
 Definition: Service delivered through Internet and web
technology, extending intranet access to customers, suppliers,
and collaborators.
 Allows selective access beyond the company.

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Intranets and extranets

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 Digital Marketing

Digital marketing: known as e-marketing or Internet marketing, is closely

related to e-commerce.
Term increasingly used to describe marketing efforts in the digital realm.
Digital marketing involves:
 Utilizing online channels like web, email, databases, mobile/wireless, and
digital TV.
 Supporting marketing activities for profitable acquisition and retention of
customers.
 Employing marketing tactics to reach and migrate customers to online
services.
 Focuses on improving customer knowledge and delivering targeted 22
 Digital Marketing

Digital marketing, synonymous with electronic marketing, entails

managing and executing marketing strategies via electronic platforms
such as the web, email, IP TV, and mobile media. It leverages digital
data on customers' characteristics and behaviors to optimize
campaigns.

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Options
for
companie
s to
reach
their
audience
online

24
 The Six Key Types of Digital Media
Channels

1. Search Engine Marketing (SEM)

Placing messages on a search engine to encourage clickthrough to a website when
the user types a specific keyword phrase.

Two key search marketing techniques are:

Paid placements or sponsored links using pay-​per-​click, and placements in the
natural or organic listings using search engine optimization (SEO).

Search engine optimization (SEO). A structured approach used to increase the

position of a company or its products in search engine natural or organic results
listings (the main body of the search results page) for selected keywords or
phrases.

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 The Six Key Types of Digital Media
Channels
2. Online PR (public relations)
Maximizing favourable mentions and interactions with a company’s brands
Strategies: Leveraging social networks, blogs, and press centres.
Importance: Building brand reputation and responding to negative mentions.
3. Online Partnerships
Creating and managing long-term arrangements to promote your online services on
third-party websites or through email communications.
Examples: Link building, affiliate marketing, sponsorship, and co-branding.
Channels: Third-party websites and email communications.

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 The Six Key Types of Digital Media
Channels
4. Interactive Advertising
Use of online ads like banners and rich media for brand awareness.
Goal: Encouraging click-throughs to target sites.
Importance: Enhancing brand visibility and engagement.

5. Opt-in Email Marketing

Renting email lists or placing ads in third-party e-newsletters.
Strategy: Customer activation and retention.
Benefits: Targeted communication and customer engagement.

6. Social Media Marketing

Encouraging customer communications on social platforms.
Channels: Company-owned sites, Facebook, Twitter, blogs, and forums.
Approach: Participating in customer conversations for brand perception
improvement.
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Web 2.0 and user-generated
content
Web 2.0 encompasses interactive tools and social communication
techniques introduced around 2004.
•Key Characteristics: Includes web services, user participation, user-
generated content, content rating, ad funding, data exchange standards,
rich media applications, and rapid development with Ajax.

•Description: Web 2.0 facilitates user interaction with websites,

promoting user-generated content and behaviors like community
participation, mashups, content rating, widget use, and tagging.
•Examples: Platforms like Flickr, Google Maps, Blogger, and social
networks exemplify Web 2.0 principles.

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Web 2.0 and user-generated
content
Figure 1.10 illustrates the evolution of digital and web-related
technologies.

•Importance of Web 2.0: Understanding Web 2.0 principles is crucial

for creating interactive and integrated desktop and mobile
experiences.

Web 3.0 Concept

•Description: Web 3.0, around 2009, emphasized high-speed
connectivity, complex cross-community interactions, and a full range
of digital media.
•Features: Included an intelligent or semantic web, where automated
applications could access data from different online services to assist
with complex tasks like supplier selection. 29
Web 2.0 and user-​generated
content

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  Supply Chain Management (SCM)

SCM involves coordinating all supply activities from suppliers to customers.

Importance: Crucial for efficient operation and customer satisfaction.

Value Chain Describes value-adding activities connecting a company's supply side

with its demand side.
 Internal and External Value Chains: Internal activities within the organization;
external activities performed by partners.
Significance: Helps analyze how supply chain activities add value to products and
services.

Value Network Links between an organization and its strategic and non-strategic
partners forming its external value chain.

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 Business or consumer models of
e‑commerce transactions
E-Commerce Transaction Models
E-commerce transactions are categorized as either business-to-consumer
(B2C) or business-to-business (B2B).
e.g: Companies like BP and Dell Computer often cater to both consumers and
businesses, requiring distinct approaches for each audience.

Additional Transaction Types

Consumer-to-Consumer (C2C) and Consumer-to-Business (C2B): - Rise of
C2C Interactions: C2C interactions, facilitated by social networks, have become
more common with the growth of broadband and mobile access.

Government and Public Services

Employee-to-Employee (E2E): Employees are considered a separate type of
consumer, especially through intranets facilitating E2E interactions.
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 Business or consumer models of
e‑commerce transactions

Business-to-Consumer (B2C):
Transactions where an organization sells products or services
directly to individual consumers.

Business-to-Business (B2B):
Transactions involving the exchange of goods or services
between two organizations, also known as inter-organizational
marketing.

Consumer-to-Business (C2B):
Instances where consumers make offers or proposals to
businesses.

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34
E-Government Defined

• Definition: E-government involves applying e-commerce

technologies to government and public services.

• Scope: Similar to e-business, e-government encompasses

interactions with citizens, suppliers, and internal
communications.

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 E-Government Applications

• Citizens: Provides online services and information dissemination at local

and national levels, such as tax filings and refuse collection schedules.

• Suppliers: Utilizes electronic supply chain management and e-

procurement for government departments' vast network of suppliers.

• Internal Communications: Enhances efficiency within government

departments through information collection, dissemination, email, and
workflow systems.

Benefits: Enhances government efficiency, improves citizen services, and

promotes cultural diversity through digital initiatives.

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Digital business opportunities

Drivers of Digital Technology Adoption:

First and foremost, businesses are concerned about how the benefits of digital
business will impact profitability or generate value for an organization. The two
main ways in which this can be achieved are:

1. Increased Revenue: Digital business adoption is motivated by the potential to

expand customer reach and foster loyalty, leading to higher sales and repeat
purchases.

2. Cost Reduction: Adopting digital technologies enables organizations to cut

expenses by delivering services electronically, thereby reducing staff, transport,
and material costs.
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Key Drivers Identified in
Digital Technology Adoption:

Cost/Efficiency Drivers:
 Accelerated supply procurement and dispatch.
 Lowered sales, purchasing, and operating costs.

Competitiveness Drivers:
 Meeting customer demand
 Enhancing service quality and variety
 Preventing market share loss to competitors already engaged in e-
commerce initiatives.

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Risks and Barriers to Digital Business
Adoption:
1. Strategic Risks: Making incorrect decisions regarding digital business
investments can lead to failure in achieving expected returns. The impact of
digital technologies varies across industries, requiring managers to assess
whether it fundamentally alters their business.

2. Practical Risks: Neglecting practical risks can result in poor customer

experiences and tarnish the company's reputation. Examples include website
failures, security breaches, unauthorized email communication, fulfillment issues,
and ineffective customer service.

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Online Value Proposition (OVP):

 It's essential for companies offering e-commerce services to create a

clear OVP to attract and retain customers.

 An articulation of the advantages provided by online services

strengthens the central proposition and sets apart an organization's
online offerings from its offline counterparts and those of competitors.

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 The Six Cs of Customer
Value
1. Content: Rich, relevant information remains crucial for online purchases, aiding
transactional and relationship-building experiences.
2. Customization: Mass customization tailors content like 'Amazon recommends' to
individual preferences, enhancing user engagement.
3. Community: Internet forums and chat rooms empower consumer interaction,
fostering a sense of belonging and shared interests.
4. Convenience: Online shopping offers 24/7 accessibility from desktops, ensuring
flexibility and ease of purchase for consumers.
5. Choice: The internet provides a vast array of products and suppliers, expanding
consumer options beyond traditional channels.
6. Cost Reduction: Online platforms often offer competitive prices due to lower
overhead costs, attracting customers seeking value for money.

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Barriers to consumer Internet adoption:
 No Perceived Benefit: Some consumers may not see the value or benefits of
using the internet for purchases.

 Lack of Trust: Trust issues regarding online transactions and data security can
deter consumers from adopting internet services.

 Security Problems: Concerns about online security, including identity theft and
fraud, can act as barriers to internet adoption.

 Lack of Skills: Some consumers may lack the necessary skills or knowledge to
effectively use the internet for purchasing goods and services.
 Cost: Financial considerations, such as the cost of internet access and associated
devices, can also hinder consumer adoption.

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Thank You
Jumana AL-Gaafreh
[email protected]