E-Commerce: Digital

Markets, Digital Goods

E-Business
 Electronic business

 Electronic business, or e-business, refers to

the use of digital technology and the Internet
to execute the major business processes in
the enterprise. E-business includes activities
for the internal management of the firm and for
coordination with suppliers and other business
partners. It also includes electronic
commerce, or e-commerce.
 E-commerce

 E-commerce is the part of e-business that deals

with the buying and selling of goods and
services over the Internet. It also encompasses
activities supporting those market transactions,
such as advertising, marketing, customer
support, security, delivery, and payment.
eCommerce Versus eBusiness
 Key Concepts in E-Commerce
 Digital goods
 Goods that can be delivered over a digital network
 For example: music tracks, video, software,
newspapers, books
 Cost of producing first unit is almost entire cost of
product
 Costs of delivery over the Internet very low
 Marketing costs remain the same; pricing highly
variable
Key Concepts in E-Commerce

Digital market: In Digital market,

consumers and suppliers can ‘see’ the
prices being charged for goods, and in
that sense digital markets are said to
be more ‘transparent’ than traditional
market.
 Effect of the Internet on the marketplace

 Reduces information asymmetry

 Offers greater flexibility and efficiency because of:
 Reduced search costs and transaction costs
 Lower menu costs
 Greater price discrimination
 Dynamic pricing
 May reduce or increase switching costs
 Increased market segmentation
 Stronger network effects
 More disintermediation
 The Benefits of Disintermediation to the Consumer

The typical distribution channel has several intermediary layers, each of which adds to the final cost
of a product, such as a sweater. Removing layers lowers the final cost to the consumer.
 The Growth of E-commerce

Retail e-commerce revenues grew 15–25 percent per year until the recession of 2008–2009, when they slowed
measurably. In 2014, e-commerce revenues are growing again at an estimated 12 percent annually.
Evolution of e-Commerce
 eCommerce: A Brief History

1995–2000: Innovation
Key concepts developed

Limited bandwidth and media

First-mover advantages

Dot-com crash of 2000

 eCommerce: A Brief History
 2001–2006: Consolidation
 Emphasis on business-driven approach
 Traditional large firms expand presence
 Start-up financing shrinks up
 More complex products and services sold
 Growth of search engine advertising
 Business Web presences expand to include
e-mail, display and search advertising, and
limited community feedback features
 eCommerce: A Brief History
 2007–Present: Reinvention
 Rapid growth of: Online social networks,
Mobile platform, Local commerce
 Entertainment content develops as source of
revenues
 Transformation of marketing Coordinated
marketing on social, mobile, local platforms
 Analytic technologies
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Ubiquity
 Global reach
 Universal standards
 Richness
 Interactivity
 Information density
 Personalization/customization
 Social technology
Unique Features of E-commerce, Digital Markets, and Digital Goods

 Ubiquity
 Internet/Web technology available everywhere:
work, home, and so on, anytime
 Effect:

 Marketplace removed from temporal, geographic

locations to become “marketspace”
 Enhanced customer convenience and reduced
shopping costs
 Reduces transaction costs
 Costs of participating in market
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Global reach
• The technology reaches across national boundaries,
around Earth
• Effect:
 Commerce enabled across cultural and national
boundaries seamlessly and without modification.
 Marketspace includes, potentially, billions of
consumers and millions of businesses worldwide.
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Universal standards
 One set of technology standards: Internet standards
 Effect:
 Disparate computer systems easily communicate with
one another
 Lower market entry costs—costs merchants must pay to
bring goods to market
 Lower consumers’ search costs—effort required to find
suitable products
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Richness
 Reach
 Supports video, audio, and text messages
 Effect:
 Possible to deliver rich messages with text, audio, and
video simultaneously to large numbers of people.
 Video, audio, and text marketing messages can be
integrated into single marketing message and consumer
experience.
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Interactivity
 The technology works through interaction with the
user.
 Effect:
 Consumers engaged in dialog that dynamically adjusts
experience to the individual.
 Consumer becomes co-participant in process of
delivering goods to market.
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Information density
 Large increases in information density—the total
amount and quality of information available to all
market participants
 Effect:
 Greater price transparency
 Greater cost transparency
 Enables merchants to engage in price discrimination
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Personalization/Customization
 Technology permits modification of messages, goods
 Effect:
 Personalized messages can be sent to individuals as well
as groups.
 Products and services can be customized to individual
preferences.
 Unique Features of E-commerce, Digital Markets, and Digital Goods

 Social technology
 The technology promotes user content
generation and social networking
 Effect:
 New Internet social and business models enable
user content creation and distribution, support
social networks
 Many-to-many model
 Categories of E-Commerce

There are many ways in which e-commerce

can be classified. On the basis of the
nature of the participants, e-commerce are
three types. These are
 Business-to-consumer (B2C)
 Business-to-business (B2B)
 Consumer-to-consumer (C2C)
 Business-to-consumer (B2C)
 Business-to-customer(B2C): Selling or
retailing of products and services directly to
individual customers (Wal-Mart.com)
 It involves commercial interaction between a
business entity and an individual consumer,
where a business sells to a consumer – for
example, a customer buying a shirt from a
retailer through the Internet. Munshigi.com,
bengalcommerc.com, bajna.com and e-
bangla.com are the most popular B2C e-
commerce in Bangladesh.
 Business-to-Business (B2B)
 Business-to-business (B2B): Sales
of goods and services to other
businesses (Grainger.com,
Ariba.com)
 Business-to-business applications of E-
commerce involve electronic catalog,
exchange, and auction marketplaces that
use Internet, intranet, and extranet websites
and portals to unite buyers and sellers.
Categories of E-Commerce
 Business-to-Business (B2B)

 It involves online commercial interaction

between two business entities – for
example, a wholesale buyer doing
business negotiations with a garments
manufacturer over the Internet. B2B
application already exists in the export
sector of Bangladesh, especially in the
Ready Made Garments (RMG) industry.
 Consumer-to-consumer (C2C)
 Consumer-to-consumer (C2C):
Individuals using the Web for private sales or
exchange. Consumer selling directly to
consumer (eBay.com).
 It involves commercial interaction between
two private individuals –for example, auction
sites. If a person wants something to sale,
then he can get it listed at an auction site, and
others can bid for it.
Other types of e-commerce

 Other types of e-commerce are

 Consumer-to-government (C2G)
 Business-to-government(B2G)
 Government-to-government(G2G)
 Clicks and Bricks
Bricks-and-clicks is a business model by which
a company integrates both offline (bricks
) and online (clicks) presences. It is also known
as click-and-mortar or clicks-and-bricks, as
well as bricks, clicks and flips, flips referring to
catalogs. For example, an electronics store may
allow the user to order online, but pick up their
order immediately at a local store, which the
user finds using locator software. Conversely, a
furniture store may have displays at a local store
from which a customer can order an item
electronically for delivery.
 Social e-Commerce

 Social e-commerce: Social e-commerce is a

subset of electronic commerce that involves
social media, online media that supports
social interaction, and user contributions to
assist online buying and selling of products
and services. More succinctly, social
commerce is the use of social network(s) in
the context of e-commerce transactions.
 Social e-Commerce

 Social media:
 Fastest growing media for branding and marketing
 Social network marketing:
 Seeks to leverage individuals influence over others in
social graph
 The target is a social network of people sharing
interests and advice
 Social networks have huge audiences
 Facebook: 137 million U.S. visitors monthly
 E-commerce and Business-to-Business Transactions

 Electronic data interchange (EDI)

 Computer-to-computer exchange of standard
transactions such as invoices, purchase orders.
 Major industries have EDI standards that define
structure and information fields of electronic
documents.
 More companies are increasingly moving toward private
networks that allow them to link to a wider variety of
firms than EDI allows and share a wider range of
information in a single system.
 Electronic Data Interchange

Companies use EDI to automate transactions for B2B e-commerce and continuous inventory
replenishment. Suppliers can automatically send data about shipments to purchasing firms. The
purchasing firms can use EDI to provide production and inventory requirements and payment data to
suppliers.
 M-commerce and M-commerce Applications

 M-commerce
 In 2014 is 19 percent of all e-commerce
 Fastest growing form of e-commerce
 Some areas growing at 50 percent or more

 Main areas of growth (exclusive of location-based

services)
 Retail sales at top Mobile 400 (Amazon, eBay,
etc.)
 Sales of digital content (music, TV, etc.)
 Consolidated Mobile Commerce Revenues

Mobile e-commerce is the fastest growing type of B2C e-commerce and represents about 19 percent
of all e-commerce in 2014.
 M-commerce and M-commerce Applications

 Location-based services
 Used by 74 percent of smartphone owners
 Based on GPS map services
 Types
 Geosocial services
 Where friends are
 Geoadvertising
 What shops are nearby
 Geoinformation services
 Price of house you are passing
 M-commerce and M-commerce Applications

 Other mobile commerce services

 Banks, credit card companies provide account
management apps
 Mobile display advertising
 iAd, AdMob, Millenial Media, Facebook
 Ads embedded in games, videos, and mobile
apps
 55 percent of online retailers have m-commerce
Web sites
 Building an E-commerce Presence

E-commerce Presence Map

An e-commerce presence requires firms

to consider the four different types of
presence, with specific platforms and
activities associated with each.
Thanks
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