E-Commerce

E commerce is about digitally enabled commercial transactions

between and among organizations and individuals
Brief History

Began in 1995, when one of the first internet portals, Netscape.com,

accepted the first ads from major corporations and popularized the
idea that the web could be used as new medium for advertising and
sales
E-commerce retail sales, which doubled and tripled in the early years
until the recession of 2008-2009.
In 2010, the number of online buyers increased by 6 percent to $133
million
Why E-Commerce is Different
• Ubiquity: available just about everywhere.
• Global Reach: transactions across cultural and national boundaries.
• Universal Standards: standards for conducting e-commerce are universal
standards.
• Richness: audio and video simultaneously.
• Interactivity: two-way communication.
• Information Density: Price transparency and Cost transparency.
• Personalization/Customization: user preferences
Key Concepts in E-commerce
Information asymmetry:
exists when one party in a transaction has more information that is
important for the transaction than the other party.

Digital Markets:
where millions of people all over the world are able to exchange
massive amounts of information directly, instantly, and for free
Digital Goods:

goods that can be delivered over a digital network. Music tracks, video,
Hollywood movies, software, newspaper, magazines, and books can all
be expressed, stored, delivered, and sold as purely digital products.
Types of E-commerce
Business-to-consumer (B2C):
electronic commerce involves retailing products and services to individual
shoppers.

Business-to-Business (B2B):
electronic commerce involves sales of goods and services among
businesses.

Consumer-to-Consumer (C2C)
electronic commerce involves consumers selling directly to consumers.
E-COMMERCE REVENUE MODELS
Advertising Revenue Model:
a website generates revenue by attracting a large audience of visitors who
can then be exposed to advertisements.

Companies spent $240 billion on advertisements in 2010 and $25 billion of that
amount on online advertising.

Ninety-eight percent of Google’s revenue derives from selling keywords to

advertisers in an auction-like market.
The average facebook user spends five hours a week on the site
Sales Revenue Model

companies derive revenue by selling goods, information, or services to

customers.
iTunes store, Hulu.com
MyMISlab, FlipKart
Subscription Revenue Model:
a website offering content or services charges a subscription fee for
access to some or all of its offerings on an ongoing basis.

Net Flex
Wall Street Journal
Naukri.com
Free/Freemium Revenue model:
firms offer basic services or content for free, while charging a
premium for advanced or special features.
Google offers free applications, but charges for premium services.
Transaction Fee Revenue Model:
a company receives a fee for enabling or executing a transaction.

eBay provides an online auction marketplace and receives a small

transaction fee from a seller, if the seller is successful in selling an item.
Affiliate Revenue Model:
websites send visitors to other web sites in return for a referral fee
or percentage of the revenue from any resulting sales.
Amazon uses affiliates who steer business to the Amazon Web site by
placing the Amazon logo on their blogs.