E-Commerce & Internet

Marketing
WHAT IS E-COMMERCE?
• E-commerce consists of the buying and
selling of products or services over
electronic systems such as the Internet
and other computer networks.
• Electronic commerce commonly known
as e-commerce or eCommerce.
• Electronic commerce was identified
as the facilitation of commercial
transactions electronically, using
technology such as Electronic Data
Interchange (EDI) and Electronic
Funds Transfer (EFT).
• What is EDI?
• What is EFT?
Electronic Data Interchange:
Electronic Funds Transfer:
• EDI is the structured
transmission of data
between organizations
by electronic means. It
is used to transfer
electronic documents
or business data from
one computer system
to another computer
system.
• EFT is the electronic
exchange or transfer
of money from one
account to another.
History of E-Commerce
• The growth and acceptance of credit cards,
automated teller machines (ATM) and
telephone banking in the 1980s were also
forms of electronic commerce.
• Another form of E-Commerce was the
airline reservation system, for example
Sabre in the USA and Travicom in the UK.
• By the end of 2000, many European and
American business companies offered
their services through the World Wide
Web.
• Since then people began to associate a
word “E-Commerce" with the ability of
purchasing various goods through the
Internet using secure protocols and
electronic payment services.
Advantages of E-commerce

• Faster buying/selling procedure, as well

as easy to find products.
• Buying/selling 24/7.
• Low operational costs and better quality
of services.
• Easy to start and manage a business.
• No need of physical company set-ups.
• Customers can easily select products
from different providers without moving
around physically.
Disadvantages of E-commerce

• There is no
guarantee of product
quality.
• There are many
hackers who look for
opportunities, and
thus an ecommerce
site, service,
payment gateways,
all are always prone
to attack.
Classifying ecommerce merchants
according to what they’re selling

1. Stores that sell physical goods

• These are your typical online retailers. They can include
apparel stores, homeware businesses, and gift shops,
just to name a few. Stores that sell physical goods
showcase the items online and enable shoppers to add
the things they like in their virtual shopping carts.

• Some examples of these ecommerce stores include

eyewear retailer Warby Parker, menswear
store Bonobos, and shoe retailer Zappos.
2. Service-based e-tailers
• Services can also be bought and sold online.
Online consultants, educators, and freelancers
are usually the ones engaging e-commerce.

• The buying process for services depends on the merchant.

Some may allow you to purchase their services straightaway
from their website or platform. An example of this comes
from Fiverr.com, a freelance marketplace. People who want to
buy services from Fiverr must place an order on the website
before the seller delivers their services.
• 3. Digital products
• Ecommerce is, by nature, highly digital, so it’s no
surprise that many merchants sell “e-goods” online.
Common types of digital products include ebooks, online
courses, software, graphics, and virtual goods.

• Examples of merchants that sell digital products

are Shutterstock (a site that sells stock
photos), Udemy (a platform for online courses),
and Slack (a company that provides real-time
messaging, archiving and search for teams).
 Types of E-comerce
❖B2B (Business-to-Business)
❖B2C (Business-to-Consumer)
❖C2B (Consumer-to-Business)
❖C2C (Consumer-to-Consumer)
 1) BUSINESS TO BUSINESS
(B2B)
• B2B can be open to
all interested parties
or limited to specific,
pre-qualified
participants (private
electronic market).
• Companies doing
business with each
other such as
manufacturers
selling to distributors
and wholesalers
selling to retailers.
 2) BUSINESS TO CONSUMER
(B2C)
• Businesses selling to the general public
typically through catalogs utilizing shopping
cart software.
• B2C is the indirect trade between the company
and consumers.
• It provides direct selling through online.
• If you want to sell goods and services to
customer so that anybody can purchase any
products directly from supplier’s website.
 3) CONSUMER TO BUSINESS
(C2B)
• A consumer posts his project with a set
budget online and within hours
companies review the consumer's
requirements and bid on the project.
• The consumer reviews the bids and
selects the company that will complete
the project.
• C2B empowers consumers around the
world by providing the meeting ground
and platform for such transactions.
4)CONSUMER TO CONSUMER
(C2C)
• It facilitates the online transaction of goods or
services between two people.
• Though there is no visible intermediary
involved but the parties cannot carry out the
transactions without the platform which is
provided by the online market maker such as
eBay.
E-COMMERCE EXAMPLES:

• An individual purchases a book on the

Internet.
• A government employee reserves a
hotel room over the Internet.
• A business buys office supplies on-line
or through an electronic auction.
• A manufacturing plant orders electronic
components from another plant within
the company using the company's
intranet.
E-Commerce Revenue Models
Top 10 e-commerce sites in the
Philippines 2019
Top 10 e-commerce sites in the
Philippines 2019

6. Globe Online Shop

7. MetroDeal
8. BeautyMNL
9. ArgoMall
10. Galleon.ph
Value Chain in E-Commerce

• To decide when and how to use it in the

business, one way is to focus on
specific business processes as
candidates for electronic commerce.
This is to break down the business into
a series of value-adding activities that
combine to generate profits and meet
other goals of the firm.
Strategic Business Unit

• One particular combination of product,

distribution channel, and customer type.
Multiple business units owned by a
common set of shareholders make up a
firm, and multiple firms that sell similar
products to similar customers make up
an industry
Value Chain

• Way of organizing the activities that

each strategic business unit undertakes
to design, produce, promote, market,
deliver, and support the products or
services it sells.
Role of E-commerce

• One opportunity that many businesses

are finding as they examine their
industry values is that e-commerce can
play a role in reducing costs, improving
product quality, reaching new customers
or suppliers, and creating new ways of
selling existing products.
• The value chain concept is a useful way to
think about business strategy in general. When
firms are considering electronic commerce, the
value chain can be an excellent way to
organize their examination of business
processes within their business units and in
other parts of their product’s life cycle.

• Using the value chain reinforces the idea that

e-commerce should be a business solution, not
a technology implemented for its own sake.
Economic Forces and
Electronic Commerce
• Economics
– Study of how people allocate scarce
resources

• Two conditions of a market

– Potential sellers of a good come into
contact with potential buyers

– A medium of exchange is available

Electronic
Commerce, 37
Seventh Annual
Transaction Costs

• Transaction costs are the total costs that a

buyer and seller incur

• Significant components of transaction costs:

– Cost of information search and acquisition

– Investment of the seller in equipment or in the

hiring of skilled employees to supply products or
services to the buyer

Electronic
Commerce, 38
Seventh Annual
 Using Electronic Commerce
to Reduce Transaction Costs

• Businesses and individuals can use

electronic commerce to reduce
transaction costs by:

– Improving the flow of information

– Increasing coordination of actions

Electronic
Commerce, 39
Seventh Annual
Network Economic
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
Electronic
Commerce, 40
Seventh Annual
Network Economic
Structures (continued)
• Virtual companies

– Strategic alliances that occur between

or among companies operating on the
Internet

• Strategic partners

– Entities that come together as a team

for a specific project or activity
Electronic
Commerce, 41
Seventh Annual
Network Effects
• Law of diminishing returns
– Most activities yield less value as the
amount of consumption increases

• Network effect
– As more people or organizations
participate in a network, the value of
the network to each participant
increases
Electronic
Commerce, 42
Seventh Annual
Identifying Electronic
Commerce Opportunities

• Firm
– Multiple business units owned by a
common set of shareholders
• Industry
– Multiple firms that sell similar products
to similar customers

Electronic
Commerce, 43
Seventh Annual
 Strategic Business Unit
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

Electronic
Commerce, 44
Seventh Annual
Electronic
Commerce, 45
Seventh Annual
Industry Value Chains

• Value system

– Larger stream of activities into which a

particular business unit’s value chain is
embedded

– Also referred to as industry value chain

Electronic
Commerce, 46
Seventh Annual
Electronic
Commerce, 47
Seventh Annual
SWOT Analysis: Evaluating
Business Unit Opportunities

• In SWOT analysis:

– An analyst first looks into the business

unit to identify its strengths and
weaknesses

– The analyst then reviews the operating

environment and identifies
opportunities and threats
Electronic
Commerce, 48
Seventh Annual
Electronic
Commerce, 49
Seventh Annual
Electronic
Commerce, 50
Seventh Annual
International Nature of
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

Electronic
Commerce, 51
Seventh Annual
Language Issues
• To do business effectively in other cultures a
business must adapt to those cultures
• Researchers have found that customers are
more likely to buy products and services from
Web sites in their own language
• Localization
– Translation that considers multiple elements of the
local environment

Electronic
Commerce, 52
Seventh Annual
Culture Issues
• An important element of business trust
is anticipating how the other party to a
transaction will act in specific
circumstances
• Culture:
– Combination of language and customs
– Varies across national boundaries
– Varies across regions within nations

Electronic
Commerce, 53
Seventh Annual
 Infrastructure Issues
• Internet infrastructure includes:
– Computers and software connected to the Internet
– Communications networks over which message packets
travel
• Organization for Economic Cooperation and
Development’s (OECD) Statements on Information
and Communications Policy deal with
telecommunications infrastructure development
issues

Electronic
Commerce, 54
Seventh Annual
Infrastructure Issues (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

Electronic
Commerce, 55
Seventh Annual
Summary
• 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

Electronic
Commerce, 56
Seventh Annual
Summary (continued)

• Using electronic commerce, businesses have:

– Created new products and services
– Improved promotion, marketing, and delivery of existing
offerings
• The global nature of electronic commerce leads to
many opportunities and few challenges
• To conduct electronic commerce across
international borders, you must understand the
trust, cultural, language, and legal issues

Electronic
Commerce, 57
Seventh Annual