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E-Commerce1. History of e-commerce First wave- Commercialization of the Internet in the early 1990so Internet was previously used for scientific and education purposes - Relationships changed– Disintermediation- business that could directly contact their customers in ways they couldn’t do it before• Suppliers of products directly selling to customers • Ex: travel agents: before you HAD to go through travel agent, now you can go directly to the source – Direct relationships between manufacturers and end customers- Friction-free commerce emerged– Transaction costs decreased- because you have fewer people touching the product; supplier can sell directly to the customer instead of going through an intermediary (retailer) - First movers had the advantage– Capture market share– Create switching costs- any costs (time, effort, money) that in the mind of the consumer keeps the consumer from switching to another competitor – Create network effects• Ex: telephone- first telephone not very valuable; more people using telephones, the more valuable it becomes - Who were the successes and the failures?o AOLo EBAYo AMAZON 2. How the Internet / Web changed commerce- Does the internet change everything about business? If you think yes, you are in a dangerous positiono The fundamental things about business and strategy always remain the same- Triggered rampant experimentationo So many people trying to sell things on the internet - Complement not substitute resourceso Staples- had real stores and online stores- operating as two separate businesses - Makes strategy more important than evero Companies who realized this were more successful 3. The role of strategy- Strategy plays a major role in ecommerce. Take a look at Kozmo.com…they lacked a strategy and therefore their business started to fail. 4. Why did many early dot-coms fail?- In the world of ecommerce, you must constantly strive to stay ahead of the competition. You have to determine innovative ways in which to offer products and services that your customers will perceive add value. And you must constantly reevaluate traditional business models such as Black Friday. Black Friday still has its place in the brick and mortar world but Cyber Monday is now the big shopping day in the virtual world. If your organization doesn’t act on this information, you may be out of business. 5. How e-commerce has changed the way we shop?- It has created everything through the internet. People shop now on the internet. KEY IDEAS: THE INTERNET’S IMPACT:- Not necessarily a blessing for some companieso Alters industry structure to lower overall profitabilityo Made it harder to make a profit - The great leveler- leveled the playing field; made it easier for smaller companies o Like…Citibank’s ATMso Mass replicated “best practices” help no one Companies would try to copy each other Not enough to be successfulo Speeds competitive leveling Small business can compete just as well as a big business - Internet and industry structureo Created some new industries People selling to other people(EBAY)o Reconfigured some existing industries 6. Difference between e-commerce and e-business- - Ecommerce- the process of buying, selling, or exchanging products, services, and information via computer networks; subset of E-business - E-business- a broader definition that also includes; how your business interacts with customers and partners; how it conducts internal business; an interactive business providing a central market space where multiple buyers and suppliers can engage in ecommerce and/or other ecommerce business activities.o Servicing customerso Collaborating with business partnerso Conducting electronic transactions within an organization 7. What are the different e-commerce business models?- B2C- business to consumer- B2B- a business offering goods, products, service, information to another business; more long term- C2C- consumer to consumer; EBAY, craigslist - G2C- government to consumer; pay your utilities; order new license; pay for registration on car; license for hunting and fishing - C2B and G2B- not very common; consumer offering somethingBack to business; government to business - B2G, C2G, G2G8. How e-commerce customers perceive valueBusiness to Consumer (B2C):- Convenience- low priced products but something needed on a frequent basis; milk, paper towels, gaso Keep price low but at the same time will make you money - Specialty- higher priced, ordered less frequently, often require customization-the ability of an organization to give its customers the opportunity to tailor its product or service to the customer’s specificationso Can get something they need that might be more challenging to find and get it customized: computers; Nike shoes, cars - Commoditylike- the same no matter where you buy ito Refrigerators- Digital- the best of all because of low cost of inventory and shippingo Music- buy which songs you like individuallyo Books/textbooksBusiness to Business (B2B):- Maintenance, repair, and operations (MRO) materials- necessary items that do not relate directly to the company’s primary business activities o All types of items that support production but are not the raw materials that go into actually producingo Boxes, copier- Direct materials- materials used in production in a manufacturing company or placed on the shelf for sale in a retail environment Extra Vocabulary:- Path to profitability (P2P)- a formal business plan that outlines key business issues such as customer targets(by demographic, industry, etc.), making strategies, operations strategies (production, transportation, and logistics), and projected targets for income statement and balance sheet items.- Demand aggregation- the combining of purchase requests from multiple buyers into a single large order, which justifies a discount from the business- Reverse auction- the process in which a buyer posts its interest in buying a certain quantity of items with notations concerning quality, specification, and delivery timing, and sellers compete for the business by submitting successively lower bids until there is only one seller left- create power for buyers- Marketing mix- the set of marketing tools that your organization will use to pursue its marketing objectives in reaching and attracting potential customers.- Online ads- often called banner ads, are small advertisements that appear on other sites- Pop up ad- a small Web page containing an

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FSU ISM 3003 - E-Commerce

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