Information Systems &

Technology
Session 16 & 17
E-Business / E-Commerce
• Online business processes, typically involving transactions, through
websites/apps on the internet
• Business processes may include buying and selling of goods/services
through website (eCommerce), managing supply chains, recruiting
employees, etc.

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E-Commerce Business Strategies

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Alibaba
• Alibaba.com – B2B
• Taobao.com – C2C
• Alipay – Payment
• Tmall.com – B2C
• Aliexpress.com – international B2B

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Different Types of eCommerece
Oracle, SAP, MJunction

Amazon.com Govt. Business Management

Kiabza.com?

C G
Inter Department
IncomeEfiling
Ola, Uber, OLX

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Benefits of E-commerce in developing
markets
• Reduced transaction costs
• Costs of information and search – internet as an efficient channel
• Costs of processing transaction – automated
• Costs of inventory management and logistics
• Disintermediation
• New forms – reintermediation
• Transparency in pricing
• E-markets – publishing of information
• Reduced price differentials and dynamic pricing
• Economies of scale and network effects

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 E-Commerce Models in India
Sell only owned inventory Sell owned inventory Sell owned inventory No owned inventory No owned inventory
No 3rd party products Sell 3rd party products Sell 3rd party products Sell only 3rd party products Sell only 3rd party products
No used Goods No used Goods Used Goods are allowed No used Goods Used Goods are allowed
Prices are Fixed Prices are Fixed Prices are Fixed Prices are Fixed Price is discovered
Control Fulfillment & Control Fulfillment & Control Fulfillment & Control Fulfillment & No Control on Logistics or
Returns Returns Returns Returns Fulfillment

Pure Inventory Led Model Hybrid Model Hybrid Model+ Managed Marketplace Pure Marketplace

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Is e-commerce same as e-business?
• In e-commerce, ICT is used in inter-business or inter-organizational
transactions and in business-to-consumer transactions
• In e-business, on the other hand, ICT is used to enhance one’s
business
• Three primary processes are enhanced in e-business:
• Production processes
• Customer focused processes
• Internal management processes

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Unique features of e-commerce
• Ubiquity
• Internet availability anytime and everywhere: work, home, mobile devices

• Business significance:
• Creates marketspace: Marketplace extended beyond traditional temporal,
geographical boundaries
• Shopping can take place anywhere - customer convenience is enhanced,
shopping costs are reduced

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Unique features of e-commerce
• Social Media Technology
• User Content generation and social networking

• Business significance:
• New Internet social and business models enable user content creation and
distribution, and support social networks

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Unique features of e-commerce
• Richness
• Video, audio, text messages are possible

• Business significance:
• Video, audio, text integrated into single marketing message and experience

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Unique features of e-commerce
• Interactivity
• Technology works through interaction with user

• Business significance:
• Consumers engaged in dialog that adjusts to individual; consumer is co-
participant in delivering goods to market

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AI & ML

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Unique features of e-commerce
• Information Density
• Technology reduces information costs and raises quality

• Business significance:
• Information processing, storage, and communication cost drops dramatically.
• Information becomes plentiful, cheap, and more accurate
• Increased accuracy and timeliness
• Increases price transparency

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Unique features of e-commerce
• Personalization/customization
• Technology allows personalized messages to be delivered to individuals as
well as groups
• Permits customization—changing delivered product or service based on
user’s preferences or prior behavior

• Business significance:
• Personalization of marketing messages and customization of products and
services are based on individual characteristics

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eCommerce Revenue Models
Revenue Model Example Revenue Source
Advertising Yahoo.com, Google search Fee from advertisers in exchange
for advertisements
Subscription WSJ.com, Netflix, Bharatmatrimony Fees from subscribers in exchange
for access to content or services
Transaction fees Ebay.com; BMS; Nobroker Fees for enabling or executing a
transaction
Sales Amazon.com; Flipkart.com Sale of goods, information or
services
Affiliate Meesho Fees for business referrals

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 17

Digital Goods
Digital Goods
• Goods that can be delivered over network
• E.g. Music tracks, video, e-books, software
• Cost for producing first unit is nearly total cost of product; Cost for
producing additional units very low
• Impact of Internet on market for digital goods is revolutionary
• Video rental services
• Music recording companies
• Newspapers and magazines

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How the Internet Changes the Markets for
Digital Goods?
Digital Goods Traditional Goods
Marginal Cost/unit Zero > Zero, High
Cost of Production High Variable cost
Copying cost Almost Zero > Zero, High
Distribution & Delivery Cost Low High
Inventory Cost Low High
Marketing Cost Variable Variable

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Digital Innovation

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 21

What did these

businesses do better?
• New way of doing business
• Growth at a rapid rate-> captures
customers fast
• Disrupts/destroys existing markets
Sustainable Innovation
• Incremental improvements on the existing product
• Enhanced value for existing customer segment

E.g.: Query Keyboard for Nokia Phone,

IoT to track parcels by Amazon,
Fifth blade in Gillett

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 What is
disruptive
innovation?

Intel Vs AMD

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Intel Vs AMD

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Disruptive Innovation

https://youtu.be/Cu6J6taqOSg

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Disruptive Innovation

https://youtu.be/qDrMAzCHFUU

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Note for Managers
• Disruptive innovations originate in low-end of new market footholds
• Xerox and Personal photocopying
• Disruptive innovations don’t catch on with mainstream customers
until quality catches up to their standards
• Disruption is a process – Netflix
• Disrupters often build business models that are very different from
those of incumbents – Apple iPhone, Kindle
• Not all disruptive innovations succeed
• The mantra “disrupt or be disrupted” can be misguiding

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EOS!

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