ISM 3003 Exam 3 Week 11 Definition of e Commerce E commerce is commerce that is accelerated and enhanced through the use of IT in particular the Internet E commerce breaks down business barriers such as time geography language currency and culture Keys to success in e Commerce You must understand your business products services and customers You must have a clear path to profitability P2P You must identify your customers and determine how to reach them You must move money easily and securely The major e Commerce models o B2B o o o o o o Business to Business e commerce occurs when a business sells products and services to customers who are primarily other businesses An example of business to business e commerce would be a rubber company selling belts and hoses to an automotive manufacturer Business 2 business e commerce is where all the money is right now in the e commerce world B2B commerce is mainly the behind the scenes interactions that businesses engage in ultimately to support interaction with you as the customer B2B e marketplaces are virtural market places in which businesses buy from and sell products to each other share information and perform other important activities B2B e market places represent one of the fastest growing trends in the B2B e commerce model Businesses are increasingly aware that they must create supply chain management systems drive out costs create information partnerships with other businesses and even collaborate with other businesses on new products and service offerings B2B e marketplaces offer tremendous efficiencies to businesses for performing all of these tasks Busisness to consumer e commerce occurs when a business sells products and services to consumers who are primarily individuals If you have ever ordered a book from amazon or ordered a movie from Netflix you have participated in B2C commerce B2C e commerce get most of the attention these days in popular media B2C e commerce is a very cut throat enviornent no matter what the product or service is The B2C e commerce model is very different from the B2B e commerce model Consumers surf the web evaluating products and services at numerous e commerce sites until they eventually choose one site from which to make a purchase o B2C 1 While businesses prefer to enter into long term partnerships with other businesses in B2B e commerce consumers are fickle and purchase the same types of products and services from many different sites Consumer to business e commerce occurs when an individual sells products and services to a business In a C2B e commerce model the consumer drives supply and the business drives demand A good example of C2B e commerce is offered by fotolia There an individual can post photos and videos for sale to a business Businesses search through the archives and if they choose your photo or video they will pay you a royalty fee for use of your property Affiliate programs are another good example of C2B e commerce Through an affiliate program you can post links on your personal website to products and services and if a visitor uses that link and buys a product then a percentage of the sale will be paid to you Currently the C2B e commerce model represents only a fraction of the total revenues in the e commerce world but is expected to grow as businesses realize that individuals are more than just consumers of products and services Blogging can be another example of C2B e commerce if you know what you are doing Consumer to consumer e commerce occurs when an individual sells products and services to other indiividuals C2C e commerce usually takes place through an intermediary organization such as ebay Many C2C websites don t really support any sort of e commerce rather they facilitate the gathering of people with common interests and something to share Blogs might also fall into the category of C2C as they support people sharing and discussing common interests Many of theses sites are as supported meaning they derive their revenue by selling advertising space much like the concept of an affiliate program Government to Business e commerce occurs when a government entity sells products and services to a business An example of G2B e commerce is government surplus auctions Another example of G2B e commerce would be government branches selling information to companies who conduct research Government to consumer e commerce refers to electronic commerce activities performed between a government and its citizens or consumers including paying taxes registering vehicles and providing information and services Government to Government e commerce refers to the electronic commerce activities performed within a nations government It can also refer to electronic commerce activities preformed between two or more nations governments such as providing foreign aid o C2B o C2C o G2B o G2C o G2G 2 What is easiest to sell in e commerce B2C o In B2C e commerce as a general rule the best merchandise to sell is either commodity like or digital or a combination of both Commodity like products Commodity like product companies compete on the basis of o Price o Ease and speed of delivery o Ease of ordering o Your return policy Easy to sell online Digital Products Eliminate the need for shipping costs Itunes is an example of a digital product Types of products B2B o MRO vs Direct MRO Matinence Repair and Operations materials Indirect materials Theses are materials that are necessary for running a modern corporation but do not relate to the company s primary business activities B2B MRO materials are similar to convenience and commodity like items in the B2C e commerce model Direct materials are materials that are used in a manufacturing company or are placed on the shelf for sale in a retail environment Direct materials relate to a company s primary business activities o Convenience vs Specialty B2C In many respects you can differentiate between convenience and specialty merchandise on the basis of price and consumers frequency of purchase Convenience merchandise is typically lower priced but something they often need usually frequently Non perishable food items are an example Specialty merchandise items are typically ordered less frequently and priced higher than convenience items Specialty merchandise examples might be such things as a home stereo system or a computer 3 Types of auctions o Dutch o Reverse The regular concept of an auction The reverse of a regular auction The process in which a buyer posts its