04BC0424

E-Commerce
Module -1

1
MODULE # 1 CONTENT

• INTRODUCTION TO E COMMERCE
• Introduction to E-Commerce – History of E-commerce,
types of E-Commerce - Comparison of traditional
commerce and e-commerce. Business models under E-
commerce – Business to Business (B2B) - Business to
Customer model (B2C), Consumer-to-Consumer (C2C)
- Consumer-to-Business(C2B) model - Peer to-Peer
(P2P) model – emerging trends - Advantages and
Disadvantages of e-commerce - web auctions, - e-
business revenue generation models.

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 E-COMMERCE

Introduction to E-Commerce

E-Commerce-business, technology, society by Kenneth Laudon Chapter #1

BASICS

The cutting edge for business today is electronic

commerce(e-commerce).
Broadly defined, electronic commerce is a
modern business methodology that addresses
the needs of Organizations, Merchants and
Consumers to cut costs while improving the
quality of goods and services and increasing the
speed of service delivery.
BASICS

Our focus is e-commerce—the use of the Internet, the World

Wide Web (Web), and mobile apps to transact business.

More formally, we focus on digitally enabled commercial

transactions between and among organizations and individuals.

Each of these components of our working definition of e-

commerce is important.

Digitally enabled transactions include all transactions mediated

by digital technology.
BASICS

For the most part, this means transactions that occur over the Internet,
the Web, and/or via mobile apps.

Commercial transactions involve the exchange of value (e.g., money)

across organizational or individual boundaries in return for products
and services.
Exchange of value is important for understanding the limits of e-
commerce.

Without an exchange of value, no commerce occurs.

E-COMMERCE VS. E-
BUSINESS

There is a debate about the meaning and limitations of both e-

commerce and e-business.

Some argue that e-commerce encompasses the entire world of

electronically based organizational activities that support a firm’s
market exchanges—including a firm’s entire information system’s
infrastructure (Rayport and Jaworski, 2003).
Others argue, on the other hand, that e-business encompasses the
entire world of internal and external electronically based
activities, including e-commerce (Kalakota and Robinson,2003).
E-COMMERCE VS. E-
BUSINESS

It is important to make a working distinction between e-commerce

and e-business because they refer to different phenomena.

E-commerce is not “anything digital” that a firm does. For purposes

of this text, we will use the term e‑business to refer primarily to the
digital enabling of transactions and processes within a firm,
involving information systems under the control of the firm.
For the most part, in a view, e-business does not include
commercial transactions involving an exchange of value across
organizational boundaries.
E-COMMERCE VS. E-
BUSINESS

For example, a company’s online inventory control mechanisms

are a component of e-business, but such internal processes do
not directly generate revenue for the firm from outside
businesses or consumers, as e-commerce, by definition, does.

It is true, however, that a firm’s e-business infrastructure

provides support for online e-commerce exchanges; the same
infrastructure and skill sets are involved in both e-business and
e-commerce.
E-COMMERCE VS. E-
BUSINESS

E-commerce and e-business systems shape together at

the business firm boundary, at the point where internal
business systems link up with suppliers or customers.

E-business applications turn into e-commerce precisely

when an exchange of value occurs.
E-COMMERCE VS. E-
BUSINESS
WHY STUDY E-
COMMERCE?

Analysts estimate that by 2021, consumers will be

spending around $1.1 trillion and businesses around
$7.6 trillion in digital transactions.

It appears likely that e-commerce will eventually

impact nearly all commerce, and that most commerce
will be e-commerce by the year 2050, if not sooner.

Business fortunes are made—and lost—in periods of

extraordinary change such as this.
WHY STUDY E-
COMMERCE?

• The next five years hold exciting opportunities—as

well as risks—for new and traditional businesses to
exploit digital technology for market advantage.
• It is important to study e-commerce in order to be
able to perceive and understand the opportunities and
risks that lie ahead
FEATURES OF E-
COMMERCE

• Figure illustrates eight unique features of e-commerce

technology that both challenge traditional business
thinking and explain why we have so much interest in
e-commerce
FEATURES OF E-
COMMERCE
FEATURES OF E-
COMMERCE

• Ubiquity:

• In traditional commerce, a marketplace is a physical

place you visit in order to transact. For example,
television and radio typically motivate the consumer to
go someplace to make a purchase.

• E-commerce, in contrast, is characterized by its

ubiquity: it is available just about everywhere, at all
times.
FEATURES OF E-
COMMERCE

• Global Reach :

• E-commerce technology permits commercial

transactions to cross cultural, regional, and national
boundaries far more conveniently and cost-effectively
than is true in traditional commerce.

• As a result, the potential market size for e-commerce

merchants is roughly equal to the size of the world’s
online population
FEATURES OF E-
COMMERCE
• Universal Standards:

• One strikingly unusual feature of e-commerce technologies is that

the technical standards of the Internet, and therefore the technical
standards for conducting e-commerce, are universal standards—
they are shared by all nations around the world.

• In contrast, most traditional commerce technologies differ from one

nation to the next.

• For instance, television and radio standards differ around the world,
as does cell phone technology.
FEATURES OF E-
COMMERCE

• The universal technical standards of the Internet and

e-commerce greatly lower market entry costs—the
cost merchants must pay just to bring their goods to
market.

• At the same time, for consumers, universal standards

reduce search costs—the effort required to find
suitable products.
FEATURES OF E-
COMMERCE

• Richness:

• Information richness refers to the complexity and content of

a message (Evans and Wurster, 1999). Traditional markets,
national sales forces, and small retail stores have great
richness: they are able to provide personal, face-to-face
service using aural and visual cues when making a sale.

• The richness of traditional markets makes them a powerful

selling or commercial environment.
FEATURES OF E-
COMMERCE

• Prior to the development of the Web, there was a

trade-off between richness and reach: the larger the
audience reached, the less rich the message.

• The Internet has the potential for offering

considerably more information richness than
traditional media such as printing presses, radio, and
television because it is interactive and can adjust the
message to individual users.
FEATURES OF E-
COMMERCE
• Interactivity:

• Unlike any of the commercial technologies of the twentieth

century, with the possible exception of the telephone, e-
commerce technologies allow for interactivity, meaning they
enable two-way communication between merchant and
consumer and among consumers.

• Traditional television, for instance, cannot ask viewers

questions or enter into conversations with them, or request
that customer information be entered into a form.
FEATURES OF E-
COMMERCE
• Information Density :

• E-commerce technologies vastly increase information density—

the total amount and quality of information available to all market
participants, consumers, and merchants alike.
• E-commerce technologies reduce information collection, storage,
processing, and communication costs. At the same time, these
technologies greatly increase the currency, accuracy, and
timeliness of information—making information more useful and
important than ever.
• As a result, information becomes more plentiful, less expensive,
and of higher quality.
FEATURES OF E-
COMMERCE

• Personalization/Customization :

• E-commerce technologies permit personalization:

merchants can target their marketing messages to
specific individuals by adjusting the message to a
person’s name, interests, and past purchases.

• Today this is achieved in a few milliseconds and

followed by an advertisement based on the consumer’s
profile.
FEATURES OF E-
COMMERCE
• Social Technology :

• Using these forms of communication, users are able to create

new social networks and strengthen existing ones.

• All previous mass media in modern history, including the

printing press, use a broadcast model (one-to-many) where
content is created in a central location by experts
(professional writers, editors, directors, actors, and
producers) and audiences are concentrated in huge aggregates
to consume a standardized product.
SUMMARY:
SUMMARY :
E-COMMERCE –
HISTORY AT A GLANCE
E-COMMERCE –
HISTORY AT A GLANCE
E-COMMERCE –
HISTORY AT A GLANCE
TRADITIONAL VS E-
COMMERCE

Ref:
https://accountlearning.com/14-differences-between-e-commerce-and-traditional-commerce/
COST EFFECTIVE

• E-commerce is very cost effective when compared to

traditional commerce. In traditional commerce, cost
has to be incurred for the role of middlemen to sell
the company’s product.

• The total overhead cost required to run e-business is

comparatively less, compared to traditional business.
COST EFFECTIVE

• For example, in running an e-business, only a head

office is required.
• Whereas in traditional method, a head office with
several branches are required to cater to the needs of
customers situated in different places.
• The cost incurred on labour, maintenance, office rent
can be substituted by hosting a website in e-business
method.
TIME SAVING

• It takes a lot of time to complete a transaction in

traditional commerce.
• E-commerce saves a lot of valuable time for both the
consumers and business.
• A product can be ordered and the transaction can be
completed in few minutes through internet.
CONVENIENCE

• E-commerce provides convenience to both the

customers and the business.
• Customers can browse through a whole directories of
catalogues, compare prices between products and
choose a desired product any time and anywhere in
the world.
CONVENIENCE

• E-commerce provides better connectivity for its

prospective and potential customers as the
organization’s website can be accessed virtually from
anywhere, any time through internet.
GEOGRAPHICAL
ACCESSIBILITY

• In traditional commerce, it may be hard to expand the

size of the market from regional to national level.
• Business organizations have to incur a lot of expenses
on investment to enter international market.
• In e-commerce it is easy to expand the size of the
market from regional to international level.
GEOGRAPHICAL
ACCESSIBILITY

• By hosting a website, by placing advertisements on

the internet and satisfying certain legal norms, a
business can penetrate into global market. It is quite
easy to attract customers from global markets at a
marginal cost.
INTRODUCTION OF
NEW PRODUCTS

• In traditional commerce, it takes a lot of time and

money to introduce a new product and analyze the
response of the customers. Initially, cost has to be
incurred to carry out pilot surveys to understand the
taste of the customers.
INTRODUCTION OF
NEW PRODUCTS

• In e-commerce, it is easy to introduce a product on

the website and get the immediate feedback of the
customers. Based on the response, the products can
be redefined and modified for a successful launch.
PROFIT

• E-commerce helps to increase the sales of the

organization.

• It helps the organization to enjoy greater profits by

increasing sales, cutting cost and streamlining
operating processes.

• The cost incurred on the middlemen, overhead,

inventory and limited sales pulls down the profit of the
organization in traditional commerce.
PHYSICAL
INSPECTION

• E-commerce does not allow physical inspection of

goods.
• In purchasing goods in e-commerce, customers have
to rely on electronic images whereas in traditional
commerce, it is possible to physically inspect the
goods before the purchase.
TIME ACCESSIBILITY

• Business is open only for a limited time in traditional

commerce.
• Round the clock (24 x 7) service is available in e-
commerce.
PRODUCT
SUITABILITY

• E-commerce is not suitable for perishable goods and

high valuable items such as jewellery and antiques.
• It is mostly suitable for purchasing tickets, books,
music and software.
• Traditional commerce is suitable for perishables and
touch and feel items.
HUMAN RESOURCE

• To operate in electronic environment, an organization

requires technically qualified staff with an aptitude to
update themselves in the ever changing world.

• E-business has difficulty in recruiting and retaining

talented people.

• Traditional commerce does not have such problems

associated with human resource in non electronic
environment.
CUSTOMER
INTERACTION

• In traditional commerce, the interaction between the

business and the consumer is a “face-to-face”.

• In electronic commerce, the interaction between the

business and the consumer is “screen-to-face”.

• Since there is no personal touch in e-business,

companies need to have intimate relationship with
customers to win over their loyalty.
PROCESS

• There is an automated processing of business

transactions in electronic commerce. It helps to
minimize the clerical errors.

• There is manual processing of business transactions

in traditional commerce. There are chances of clerical
errors to occur as human intervention takes place.
BUSINESS
RELATIONSHIP

• The business relationship in traditional commerce is

vertical or linear, whereas in electronic commerce the
business relationship is characterized by end-to-end.
FRAUD

• Lot of cyber frauds take place in electronic commerce

transactions.
• People generally fear to give credit card information.
• Lack of physical presence in markets and unclear
legal issues give loopholes for frauds to take place in
e-business transactions.
• Fraud in traditional commerce is comparatively less
as there is personal interaction between the buyer and
the seller.
COMPARISON OF
TRADITIONAL COMMERCE
AND E-COMMERCE
BASIS FOR TRADITIONAL E-COMMERCE
COMPARISON COMMERCE

Meaning Traditional commerce is a e-Commerce means carrying

branch of business which out commercial transactions
focuses on the exchange of or exchange of information,
products and services, and electronically on the internet.
includes all those activities
which encourages exchange,
in some way or the other.

Processing of Transactions Manual Automatic

Accessibility Limited Time 24×7×365

Physical inspection of goods Goods can be inspected Goods cannot be inspected

physically before purchase. physically before purchase.
51
Customer interaction Face-to-face Screen-to-face

Scope of business Limited to particular area. Worldwide reach

Information exchange No uniform platform for Provides a uniform platform

exchange of information. for information exchange.

Resource focus Supply side Demand side

Marketing One way marketing/mass One-to-one marketing

marketing
Payment Cash is preferred generally. Credit card, fund transfer etc.

Delivery of Goods Instantly Takes time

52
TYPES OF E-
COMMERCE

• There are several different types of e-commerce and

many different ways to characterize them.
• Table lists the major types of e-commerce to be
discussed.
• For the most part, we distinguish different types of e-
commerce by the nature of the market relationship—
who is selling to whom.
• Social, mobile, and local e-commerce can be looked
at as subsets of these types of e-commerce.
TYPES OF E-
COMMERCE
TYPES OF E-
COMMERCE
E-COMMERCE
BUSINESS MODELS

• A business model is a set of planned activities

(sometimes referred to as business processes)
designed to result in a profit in a marketplace.
• A business model is not always the same as a
business strategy, although in some cases they are
very close in so far as the business model explicitly
takes into account the competitive environment.
• The business model is at the center of the business
plan.
E-COMMERCE
BUSINESS MODELS

• A business plan is a document that describes a firm’s

business model.
• A business plan always takes into account the
competitive environment.
• An e-commerce business model aims to use and
leverage the unique qualities of the Internet, the Web,
and the mobile platform.
EIGHT KEY ELEMENTS
OF A BUSINESS MODEL

• If you hope to develop a successful business model in

any arena, not just e-commerce, you must make sure
that the model effectively addresses the eight
elements listed.
EIGHT KEY ELEMENTS
OF A BUSINESS MODEL
VALUE PROPOSITION

• A company’s value proposition is at the heart of its

business model.

• A value proposition defines how a company’s product or

service fulfills the needs of customers.

• To develop and/or analyze a firm’s value proposition, you

need to understand why customers will choose to do
business with the firm instead of another company and
what the firm provides that other firms do not and cannot.
VALUE PROPOSITION

• From the consumer point of view, successful e-

commerce value propositions include
personalization and customization of product
offerings, reduction of product search costs,
reduction of price discovery costs, and facilitation
of transactions by managing product delivery.
REVENUE MODEL

• A firm’s revenue model describes how the firm will

earn revenue, generate profits, and produce a superior
return on invested capital.
• We use the terms revenue model and financial model
interchangeably.
• The function of business organizations is both to
generate profits and to produce returns on invested
capital that exceed alternative investments.
REVENUE MODEL

• Profits alone are not sufficient to make a company

“successful”.
• In order to be considered successful, a firm must
produce returns greater than alternative investments.
• Firms that fail this test go out of existence.
REVENUE MODEL

• Although there are many different e-commerce

revenue models that have been developed, most
companies rely on one, or some combination, of the
following major revenue models:
– The advertising model,
– The subscription model,
– The transaction fee model,
– The sales model, and
– The affiliate model.
REVENUE MODEL
MARKET OPPORTUNITY

• The term market opportunity refers to the company’s

intended marketspace (i.e., an area of actual or potential
commercial value) and the overall potential financial
opportunities available to the firm in that marketspace.

• The market opportunity is usually divided into smaller

market niches.

• The realistic market opportunity is defined by the revenue

potential in each of the market niches where you hope to
compete.
MARKET OPPORTUNITY
COMPETITIVE
ENVIRONMENT

• A firm’s competitive environment refers to the other

companies selling similar products and operating in
the same marketspace.

• It also refers to the presence of substitute products

and potential new entrants to the market, as well as
the power of customers and suppliers over your
business.
COMPETITIVE
ADVANTAGE

• Firms achieve a competitive advantage when they can

produce a superior product and/or bring the product
to market at a lower price than most, or all, of their
competitors.

• Firms also compete on scope. Some firms can

develop global markets, while other firms can
develop only a national or regional market. Firms that
can provide superior products at the lowest cost on a
global basis are truly advantaged.
MARKETING
STRATEGY

• No matter how tremendous a firm’s qualities, its marketing

strategy and execution are often just as important.
• The best business concept, or idea, will fail if it is not
properly marketed to potential customers.
• Everything you do to promote your company’s products
and services to potential customers is known as marketing.
• Market strategy is the plan you put together that details
exactly how you intend to enter a new market and attract
new customers.
MARKETING
STRATEGY

• For instance, Twitter, YouTube, and Pinterest have a

social network marketing strategy that encourages
users to post their content on the sites for free, build
personal profile pages, contact their friends, and build
a community.
• In these cases, the customer becomes part of the
marketing staff!
ORGANIZATIONAL
DEVELOPMENT

• Companies that hope to grow and thrive need to have

a plan for organizational development that
describes how the company will organize the work
that needs to be accomplished.
MANAGEMENT TEAM

• The single most important element of a business

model is the management team responsible for
making the model work
SUMMARY
B2C BUSINESS
MODELS

• Business-to-consumer (B2C) e-commerce, in which

online businesses seek to reach individual consumers, is
the most well-known and familiar type of e-commerce.
– E-Tailers
– Community Providers
– Content Provider
– Portal
– Transaction Broker
– Market Creator
– Service Provider
E-TAILERS

• Online retail stores, often called e-tailers, come in all sizes,

from giant Amazon to tiny local stores that have Web sites.

• E-tailers are similar to the typical bricks-and-mortar

storefront, except that customers only have to connect to
the Internet or use their smartphone to place an order.

• Some e-tailers, which are referred to as “bricks-and

clicks,” are subsidiaries or divisions of existing physical
stores and carry the same products.
COMMUNITY
PROVIDER

• Although community providers are not a new

phenomenon, the Internet has made such sites for like-
minded individuals to meet and converse much easier,
without the limitations of geography and time to hinder
participation.
• Community providers create an online environment where
people with similar interests can transact (buy and sell
goods); share interests, photos, videos; communicate with
like-minded people; receive interest-related information;
and even play out fantasies by adopting online
personalities called avatars.
CONTENT PROVIDER

• Content providers distribute information content, such

as digital video, music, photos, text, and artwork.

• Content providers make money by charging a

subscription fee.

• For instance, in the case of Rhapsody.com, a monthly

subscription fee provides users with access to
thousands of music tracks.
PORTAL

• Portals such as Yahoo, MSN, and AOL offer users

powerful search tools as well as an integrated
package of content and services, such as news, e-
mail, instant messaging, calendars, shopping, music
downloads, video streaming, and more, all in one
place.
• Initially, portals sought to be viewed as “gateways” to
the Internet.
• Today, however, the portal business model is to be a
destination site.
TRANSACTION
BROKER

• Companies that process transactions for consumers

normally handled in person, by phone, or by mail are
transaction brokers.
• The largest industries using this model are financial
services, travel services, and job placement services.
• The online transaction broker’s primary value
propositions are savings of money and time.
MARKET CREATOR

• Market creators build a digital environment in which

buyers and sellers can meet, display products, search
for products, and establish prices.

• Prior to the Internet and the Web, market creators

relied on physical places to establish a market
SERVICE PROVIDER

• While e-tailers sell products online, service providers

offer services online.

• Google has led the way in developing online

applications such as Google Maps, Google Docs, and
Gmail.
B2C E-COMMERCE

• The most commonly discussed type of e-commerce is

business-to-consumer (B2C) e-commerce.
• in which online businesses attempt to reach individual
consumers.
• B2C commerce includes purchases of retail goods,
travel services, and online content.
• Even though B2C is comparatively small, it has
grown exponentially since 1995, and is the type of
e-commerce that most consumers are likely to
encounter
B2C E-COMMERCE
B2B BUSINESS MODELS

• B2B e-commerce relies overwhelmingly on a

technology called electronic data interchange (EDI).
• EDI is useful for one-to-one relationships between a
single supplier and a single purchaser, and originally
was designed for proprietary networks, although it is
migrating rapidly to the Internet.
MODELS IN B2B

• Models under B2B E-Commerce

1. Net Marketplace
- E-Distributor
- E-Marketplace
- Exchange
- Industry Consortium
2. Private Industrial Network
E-DISTRIBUTOR

• Companies that supply products and services directly

to individual businesses are e-distributors.

• E-distributors are owned by one company seeking to

serve many customers.

• Example: Cisco Systems

E-PROCUREMENT

• Just as e-distributors provide products to other

companies, e-procurement firms create and sell
access to digital electronic markets.

• Firms such as Ariba(SAP), for instance, have created

software that helps large firms organize their
procurement process by creating mini-digital markets
for a single firm.
EXCHANGES

• An exchange is an independent digital electronic

marketplace where hundreds of suppliers meet a
smaller number of very large commercial purchasers.

• Exchanges are owned by independent, usually

entrepreneurial start-up firms whose business is
making a market, and they generate revenue by
charging a commission or fee based on the size of the
transactions conducted among trading parties.
INDUSTRY CONSORTIA

• Industry consortia are industry-owned vertical

marketplaces that serve specific industries, such as
the automobile, aerospace, chemical, floral, or
logging industries.

• In contrast, horizontal marketplaces sell specific

products and services to a wide range of companies.
INDUSTRY CONSORTIA

• For example, Exostar is an online trading exchange

for the aerospace and defense industry, founded by
BAE Systems, Boeing, Lockheed Martin, Raytheon,
and Rolls-Royce in 2000.

• Exostar connects with more than 300 procurement

systems and has registered more than 70,000 trading
partners in 95 countries around the world.
PRIVATE INDUSTRIAL
NETWORKS

• Private industrial networks constitute about 75% of

all B2B expenditures by large firms and far exceed
the expenditures for all forms of Net marketplaces.
• A private industrial network is a digital network
(often but not always Internet-based) designed to
coordinate the flow of communications among firms
engaged in business together.
• Example: Chrysler
B2B E-COMMERCE

• Business-to-business (B2B) e-commerce, in which

businesses focus on selling to other businesses.
• It is the largest form of e-commerce, with about $6
trillion in transactions in the United States in 2017.
• There is an estimated $12.9 trillion in business-to-
business exchanges of all kinds, online and offline,
suggesting that B2B e-commerce has significant
growth potential.
B2B E-COMMERCE
C2C MODEL

• Customer to customer (C2C) is a business

model whereby customers can trade with each other,
typically in an online environment. 
• Two implementations of C2C markets are auctions
and classified advertisements. C2C marketing has
soared in popularity with the arrival of the Internet
and companies such as eBay, Etsy, and Craigslist.
C2C E-COMMERCE

• Consumer-to-consumer (C2C) e-commerce provides

a way for consumers to sell to each other, with the
help of an online market maker such as eBay or Etsy
or the classifieds site Craigslist.
• Given that, eBay is likely to generate around $84
billion in gross merchandise volume around the
world, it is probably safe to estimate that the size of
the global C2C market is more than $1 trillion.
C2C E-COMMERCE

• In C2C e-commerce, the consumer prepares the

product for market, places the product for auction or
sale, and relies on the market maker to provide
catalog, search engine, and transaction-clearing
capabilities so that products can be easily displayed,
discovered, and paid for.
C2B MODEL

• A consumer-to-business model, or C2B, is a type of

commerce where a consumer or end user provides a product
or service to an organization.
• the distinguishing feature of C2B is that customers bring
value to the company.
• "This could involve consumers co-creating ideas,
product/service concepts and solutions with a company
through social media.
• C2B can also mean that a business brings consumer insights
and consumer-centric solutions to another business as its
primary service or value-added offering,
• C2B business models include reverse auctions, in which
customers name the price for a product or service they wish
to buy.
• Another form of C2B occurs when a consumer provides a
business with a fee-based opportunity to market the
business's products on the consumer's blog.
• For example, food companies may ask food bloggers to
include a new product in a recipe and review it for readers
of their blogs.
• YouTube reviews may be incentivized by free products or
direct payment.
P2P MODEL

• The largest peer to peer business model known in e-

commerce is eBay.
• eBay is an e-commerce marketplace were both businesses
and individuals can sell goods to each other.
• Peer to Peer business models depend mostly on attracting
both the customers and the vendors or sellers.
• Peer to Peer business model in e-commerce is not a new
thing. The person-to-person model is even in the modern
transaction methods of e-commerce.
• E-commerce depends a lot of transactions that are completed
from person to person rather than business to business.
1) EMBRACE
BLOCKCHAIN
• Blockchain technology is a wonderful innovation that
enables users to enter time-stamped transactions into
an immutable digital ledger that is part of a vast
digital network managed by clusters of computers.
There is no central authority. The said ledger is
digitally shared, enabling everyone with access to see
all the information within while being unable to alter
the details.
• Other possible uses of blockchain technology in e-
Commerce include chargeback fraud protection and
prevention, simplified and accelerated card payments,
and the decentralization of border trade among many
others.
2) DEPLOY CHATBOTS

• As advances in artificial intelligence and natural

language processing technology continue, chatbots
become smarter and more capable in handling even
complex customer interactions. They engage
customers in seamless live chat and can provide
customer service 24/7.
• As chatbots are deployed to resolve simple concerns
and answer basic questions, companies save on
manpower, resources, and time. All these can be
channeled to other pressing priorities, thus increasing
overall efficiency and productivity.
3) PERSONALIZE SHOPPING
EXPERIENCE WITH AI

• Artificial Intelligence can also be utilized to create a

personalized shopping experience for your buyers.
Whenever someone visits your online store, AI bot
looks into your customer’s profile and information,
looking quickly and furiously deep into the data to
find relevant insights that can help shape his or her
shopping journey.
• The AI checks for previous transactions, browsing
history, website interactions, and location to
determine which of your products are relevant. It then
creates and delivers product suggestions via widgets,
pop-ups, and embedded ads. All these are done in
seconds, ensuring that your visitors are immediately
provided a personalized experience from the time
they set foot in your website or eCommerce store.
4) SHOP WITH VR
 
• The future of eCommerce definitely includes virtual
reality (VR), augmented reality (AR), and immersive
technology. While the POS system is the heart of your
company and is the platform that unifies your
eCommerce enterprise, you should also give VR a look.

• While many consider VR-based marketing and selling

as futuristic and more of a novelty than a necessity,
business and technology experts agree that VR for
business use is going to take off in the near future. 
• In fact, a few companies are now offering VR product
demonstration and VR shopping to further enhance the
shopping experience of their customers. Digital retail kiosks
by Amazon and immersive digital driving by toyota are some
of the most notable cases of VR use in eCommerce.

• Shopping by virtual reality may not be a popular notion today

but seeing how eCommerce and virtual reality are closely
intertwined, it is certainly not a fad. It is the future of online
shopping and retail. With just a few tweaks and improvements,
VR will be a staple tool for many eCommerce businesses in
the future.
5) INVEST IN THE INTERNET
OF THINGS (IOT)
 

• The Internet of Things (IoT) has allowed devices to

communicate with each other, from sharing information to
relaying commands to providing coordinates for tracking.
Devices can be simple and complex, large and small.

• For instance, an IoT-enabled car can be configured to start

automatically once it detects the owner within a preset
proximity range. An unlocked smart home will automatically
engage the locks and activate its security system when it
senses no one is in the house after a while. A modern air
conditioning system automatically adjusts its thermostat based
on the temperature of the room or even the entire house.
SOCIAL E-COMMERCE

• Social e-commerce is e-commerce that is enabled by

social networks and online social relationships.
• It is sometimes also referred to as Facebook
commerce, but in actuality is a much larger
phenomenon that extends beyond just Facebook.
SOCIAL E-COMMERCE

• The growth of social e-commerce is being driven by a

number of factors, including the
– increasing popularity of social sign-on (signing onto Web sites
using your Facebook or other social network ID),
– network notification (the sharing of approval or disapproval of
products, services, and content via Facebook’s Like button or
Twitter tweets),
– online collaborative shopping tools, and social search
(recommendations from online trusted friends).
• Social e-commerce is still in its infancy but is estimated to
generate about $20 billion in the United States in 2020, and
about $15 billion in the rest of the world.
MOBILE E-COMMERCE

• Mobile e-commerce, or m-commerce, refers to the use of

mobile devices to enable online transactions.
• m-commerce involves the use of cellular and wireless
networks to connect laptops, smartphones such as the
iPhone, Android, and BlackBerry, and tablet computers
such as the iPad to the Internet.
• Once connected, mobile consumers can conduct
transactions, including stock trades, in-store price
comparisons, banking, travel reservations, and more.
• Mobile retail purchases are expected to reach almost $500
billion in 2021
LOCAL E-COMMERCE

• Local e-commerce, as its name suggests, is a form of

e-commerce that is focused on engaging the
consumer based on his or her current geographic
location.
• Local merchants use a variety of online marketing
techniques to drive consumers to their stores.
• Local e-commerce is the third prong of the social,
mobile, local e-commerce wave, and is expected to
grow in the United States from $80 billion in 2017.
RELATIVE SIZE OF
DIFFERENT E-
COMMERCE
ADVANTAGES OF
E-COMMERCE

Faster buying/selling procedure, as well as easy to find products.

Buying/selling 24/7.

More reach to customers, there is no theoretical geographic limitations.

Low operational costs and better quality of services.

No need of physical company set-ups.

Easy to start and manage a business.

Customers can easily select products from different providers without moving around physically.
DISADVANTAGES OF
E-COMMERCE

• Unable to examine products personally

• Not everyone is connected to the Internet
• There is the possibility of credit card number theft
• Mechanical failures can cause unpredictable effects
on the total processes.
BENEFITS OF E-
COMMERCE

• Benefits to Organizations:

• Electronic commerce expands the market lace to

national and international market with minimal
capital outlay, a company can easily and quickly
locate more customers, the best suppliers, and the
most suitable business partners worldwide.
BENEFITS OF E-
COMMERCE

• Electronic commerce decreases the cost of creating,

processing, distributing, storing, and retrieving paper-
based information. For example, by introducing an
electronic procurement system, companies can cut the
purchasing administrative costs by as much as 85
percent.

• Ability for creating highly specialized businesses.

BENEFITS OF E-
COMMERCE

• Electronic commerce allows reduced inventories and

overhead by facilitating “pull” type supply chain
management. In a pull-type system the process starts
from customer orders and uses just-in-time
manufacturing.

• The pull-type processing enables expensive

customization of products and services which
provides competitive advantage to its implementers.
BENEFITS OF E-
COMMERCE

• Benefits to Consumers

• Electronic commerce enables customers to shop or do

other transactions 24 hours a day, all year round, from
almost any location.

• Electronic commerce provides customer with more

choices; they can select from many vendors and from
many more products.
BENEFITS OF E-
COMMERCE

• Electronic commerce frequently provides customers

with less expensive products and services by allowing
them to shop in many places and conduct quick
comparisons.

• In some cases, especially with digitized products, E-

Commerce allows quick delivery.

• Customers can receive relevant and detailed

information in seconds, rather than days or weeks.
BENEFITS OF E-
COMMERCE

• Electronic commerce makes it possible to participate

ate in virtual auctions.

• Electronic commerce allow customers to interact with

other customers in electronic communities and
exchange ideas as well as compare experiences.

• E-commerce facilitates competition, which results in

substantial discounts..
BENEFITS OF E-
COMMERCE

• Benefits to Society

• Electronic commerce enables more individuals to work

at home and to do less traveling for shopping, resulting
in less traffic on the roads and lower air pollution.

• Electronic commerce allows some merchandise to be

sold at lowest prices, so less affluent people can buy
more and increase their standard of living.
BENEFITS OF E-
COMMERCE

• Electronic commerce enables people in third world

countries and rural areas to enjoy products and
services that otherwise are not available to them.

• Electronic commerce facilitates delivery of public

services, such as health care, education, and
distribution of government social services at a
reduced cost and/or improved quality. Health care
services, e.g., can reach patients in rural areas.
LIMITATIONS OF E-
COMMERCE

• The limitations of E-Commerce can be grouped into

two categories which are:

• Technical limitations and

• Non-technical limitations
TECHNICAL
LIMITATIONS

• There is a lack of system security, reliability,

standards and communication protocols.
• There is insufficient telecommunication bandwidth.
• The software development tools are still evolving and
changing rapidly.
• It is difficult to integrate the Internet and E-
Commerce software with some existing applications
and databases.
TECHNICAL
LIMITATIONS

• Vendors may need special Web servers and other

infrastructures in addition to the network servers.

• Some E-Commerce software might not fit with some

hardware or may be incompatible with some
operating systems or other components.
 NON-TECHNICAL
LIMITATIONS
Lack of Lack of Lack of Skeptic
Awareness Infrastructure Confidence Attitude

Credit Cards Absence of Cyber Stock

Frauds Tax Laws Laws Dilemma

Lack of Skills Internet No Emphasis on

Commercial
Infant
and Expertise Outrage Exploration Stages
Dynamic Trading: E-Auctions,
Bartering, and Negotiations
FUNDAMENTALS OF
DYNAMIC PRICING AND E-
AUCTIONS

• auction
Market mechanism by which buyers make bids and
sellers place offers; characterized by the competitive
and dynamic nature by which the final price is
reached
• electronic auctions (e-auctions)
Auctions conducted online
FUNDAMENTALS OF
DYNAMIC PRICING AND E-
AUCTIONS

• dynamic pricing
Fluctuating prices that are determined based on
supply and demand relationships at any given time
 FUNDAMENTALS OF
DYNAMIC PRICING AND E-AUCTIONS
FUNDAMENTALS OF
DYNAMIC PRICING AND E-
AUCTIONS

• One Buyer, One Seller

• One Seller, Many Potential Buyers
– forward auction
An auction in which a seller offers a product to many
potential buyers
– sealed-bid auction
Auction in which each bidder bids only once; a silent
auction, in which bidders do not know who is placing bids
or what the bid prices are
– Vickrey auction
Auction in which the highest bidder wins but pays only the
second highest bid
FUNDAMENTALS OF
DYNAMIC PRICING AND E-
AUCTIONS

• One Buyer, Many Potential Sellers

– reverse auction
Auction in which the buyer places an item for bid (tender)
on a request for quote (RFQ) system; potential suppliers
bid on the job, with bid price reducing sequentially, and the
lowest bid wins; used mainly in B2B and G2B e-commerce
FUNDAMENTALS OF
DYNAMIC PRICING AND E-
AUCTIONS

– B2B reverse auctions

– C2C reverse auctions
– “name-your-own-price” model
Auction model in which would-be buyers specify the price
(and other terms) they are willing to pay to any willing
seller; a C2B model pioneered by Priceline.com
FUNDAMENTALS OF
DYNAMIC PRICING AND E-
AUCTIONS

• Many Sellers, Many Buyers

– vertical auction
Auction that takes place between sellers and buyers in one
industry or for one commodity
– auction vortals
Another name for a vertical auction vertical portal
BENEFITS, LIMITATIONS,
AND STRATEGIC USES OF E-
AUCTIONS

• Benefits of E-Auctions
– Benefits to sellers
• Larger reach and increased revenues
• Optimal price setting
• Removal of expensive intermediaries
• Liquidation
• Lower transaction costs
• Lower administrative costs
• Better customer relationships
BENEFITS, LIMITATIONS,
AND STRATEGIC USES OF E-
AUCTIONS

– Benefits to buyers
• Opportunities to Find Unique Items and Collectibles
• Lower prices
• Anonymity
• Convenience
• Entertainment
– Benefits to E-Auctioneers
• Higher repeat purchases
• A stickier Web site
• Expansion of the auction business
BENEFITS, LIMITATIONS,
AND STRATEGIC USES OF E-
AUCTIONS

• Limitations of E-Auctions
– Possibility of fraud
– Limited participation
– Security
– Auction software
– Long cycle time
– Monitoring time
BENEFITS, LIMITATIONS,
AND STRATEGIC USES OF E-
AUCTIONS

• Strategic Uses of Auctions and Pricing

Mechanisms
– Through dynamic pricing, buyers and sellers are able to
adjust pricing strategies and optimize product inventory
levels very quickly
• Auctions for Publicity
– Auctions can be used to attract attention
THE “NAME-YOUR-OWN-PRICE” C2B MODEL

• One of the most interesting e-commerce models is the

“name-your-own-price” model
• This model enables consumers to achieve significant
savings by naming their own price for goods and
services
• The concept is that of a C2B reverse auction, in
which vendors bid on a job by submitting offers and
the lowest-priced vendor or the one that meets the
buyer’s requirements gets the job
THE FORWARD E-AUCTION PROCESS
AND SOFTWARE SUPPORT
THE FORWARD E-AUCTION PROCESS
AND SOFTWARE SUPPORT

• Phase 1: Searching and Comparing

– Auction aggregators and notification
• auction aggregators
Companies that use software agents to visit Web auction sites, find
information, summarize it, and deliver it to users
– Browsing site categories
– Basic and advanced searching
THE FORWARD E-AUCTION PROCESS
AND SOFTWARE SUPPORT

• Phase 2: Getting Started at an Auction

– Registration and participants’ profiles
– Listing and promoting
– Pricing
THE FORWARD E-AUCTION PROCESS
AND SOFTWARE SUPPORT

• Phase 3: Bidding
– Bid Watching and Multiple Bids
• sniping
Entering a bid during the very last seconds of an auction and
outbidding the highest bidder
• proxy bidding
Use of a software system to place bids on behalf of buyers; when
another bidder places a bid, the software (the proxy) will
automatically raise the bid to the next level until it reaches the
buyer’s predetermined maximum price
THE FORWARD E-AUCTION PROCESS
AND SOFTWARE SUPPORT

• Phase 4: Post auction Follow-Up

– Post auction activities
• Bidding notifications
• End-of-auction notices
• Seller notices
• Postcards and thank-you notes
– User communication
• Chat groups
• Mailing lists
• Message boards
THE FORWARD E-AUCTION PROCESS
AND SOFTWARE SUPPORT

– Feedback and ratings

– Invoicing and billing
– Payment methods
• P2P transfer service
• Escrow service
• Credit card payment
– Shipping and postage
DOUBLE AUCTIONS,
BUNDLE TRADING, AND PRICING ISSUES

• Double Auctions
– single auction
Auction in which at least one side of the market consists of
a single entity (a single buyer or a single seller)
– double auction
Auction in which multiple buyers and sellers may be
making bids and offers simultaneously; buyers and their
bidding prices and sellers and their asking prices are
matched, considering the quantities on both sides
DOUBLE AUCTIONS,
BUNDLE TRADING, AND PRICING ISSUES

• bundle trading
The selling of several related products and/or services
together
• Prices in Auctions: Higher or Lower?
– Pricing strategies in online auctions
E-AUCTION FRAUD AND ITS PREVENTION

• Types of E-Auction Fraud

– bid shielding
Having phantom bidders bid at a very high price when an
auction begins; they pull out at the last minute, and the real
bidder who bid a much lower price wins
– shilling
Placing fake bids on auction items to artificially jack up the
bidding price
E-AUCTION FRAUD AND ITS
PREVENTION

– Fake photos and misleading descriptions

– Improper grading techniques
– Bid siphoning
– Selling reproductions as originals
– Failure to pay
– Failure to pay the auction house
E-AUCTION FRAUD AND ITS
PREVENTION

– High shipping costs and handling fees

– Failure to ship merchandise
– Loss and damage claims
– Fake escrow services
– Switch and return
– Other frauds
E-AUCTION FRAUD AND ITS PREVENTION

Protecting against E-Auction Fraud

• User identity verification • Appraisal services

• Authentication service
• Grading services
• Feedback forum
• Insurance policy
• Escrow services
• Nonpayment punishment
• Physical inspection
• Item verification
• Buyer protections
• Spoof (fraudulent) Web
site protection
FEATURES OF WEB
AUCTIONS
 
• No time constraints
•  No geographical constraints
• Intensity of social interactions
•  Large number of bidders.
•  Large number of sellers
• Network economies
• Unique bid auction
• Highest Unique Bid
• Lowest Unique Bid
• Captures consumers' surplus

158
ONLINE POPULAR AUCTION
SITES

• Ebid
• Ebay
• Elance
• Swoopo
• Allegro
•  Apex auctions
•  Bidorbuy
•  Bidtopia
• The Debt Exchange
• Hobby Markets Online

159
REVENUE
GENERATION MODEL
• Advertising Revenue Model
• In the advertising revenue model, a company that offers
content, services, and/or products also provides a forum for
advertisements and receives fees from advertisers.

• Companies that are able to attract the greatest viewership or

that have a highly specialized, differentiated viewership and
are able to retain user attention (“stickiness”) are able to
charge higher advertising rates. Yahoo, for instance, derives a
significant amount of revenue from display and video
advertising.
SUBSCRIPTION
REVENUE MODEL

• In the subscription revenue model, a company that offers

content or services charges a subscription fee for access to
some or all of its offerings.

• Companies successfully offering content or services online

on a subscription basis include eHarmony (dating services),
Ancestry (genealogy research), Microsoft’s Xbox Live
(video games), Pandora, Spotify, and Apple Music (music),
Scribd and Amazon’s Kindle Unlimited program (e-books),
and Netflix and Hulu (television and movies).
• Recently, a number of companies have been
combining a subscription revenue model with a
freemium strategy. In a freemium strategy, the
companies give away a certain level of product or
services for free, but then charge a subscription fee
for premium levels of the product or service.
TRANSACTION FEE
REVENUE MODEL

• In the transaction fee revenue model, a company

receives a fee for enabling or executing a transaction.
• For example, eBay provides an auction marketplace
and receives a small transaction fee from a seller if
the seller is successful in selling the item.
• E*Trade, a financial services provider, receives
transaction fees each time it executes a stock
transaction on behalf of a customer.
SALES REVENUE
MODEL
• In the sales revenue model, companies derive revenue by selling
goods, content, or services to customers.
• Companies such as Amazon, L.L.Bean, and Gap all have sales
revenue models.
• A number of companies are also using a subscription-based sales
revenue model.
• Birchbox, which offers home delivery of beauty products for a
$10 monthly or $100 annual subscription price, is one example.
• Dollar Shave Club, which sells razor blades by subscription and
was recently acquired by Unilever for $1 billion, is another.
AFFILIATE REVENUE
MODEL

• In the affiliate revenue model, companies that steer

business to an “affiliate” receive a referral fee or
percentage of the revenue from any resulting sales.
• For example, MyPoints makes money by connecting
companies with potential customers by offering
special deals to its members.
• When they take advantage of an offer and make a
purchase, members earn “points” they can redeem for
freebies, and MyPoints receives a fee.
THANK YOU

166