DEFINITION OF COMMERCE

The exchange of goods and services for money Consists of:

Buyers - these are people with money who want to purchase a good or service. Sellers - these are the people who offer goods and services to buyers.

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ELEMENTS OF COMMERCE You need a Product or service to sell You need a Place from which to sell the

products You need to figure out a way to get people to

come to your place. You need a way to accept orders. You also need a way to accept money. You need a way to deliver the product or

service, often known as fulfillment. Sometimes customers do not like what they

buy, so you need a way to accept returns. You need a customer service and technical

support department to assist customers with products.

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WHAT IS E-COMMERCE Distributing, buying, selling and marketing

products and services over electronic systems E-business for commercial transactions Involves supply chain management, e-

marketing, online marketing, EDI Uses electronic technology such as: - Internet - Extranet/Intranet - Protocols

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E-COMMERCE TODAY The Internet allows big businesses to act like

small ones and small businesses to act big. The challenge to businesses is to make

transactions not just cheaper and easier for themselves but also easier and more convenient for customers and suppliers.

It’s more than just posting a nice looking Web site with lots of cute animations and expecting customers and suppliers to figure it out

Web-based solutions must be easier to use and more convenient than traditional methods if a company hopes to attract and keep customers.

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Four Categories of E-Commerce

B2B

B2C

C2B

C2CConsumers

Business

And selling to...

Business originating from...

Business Consumers

DISTINCT CATEGORIES OF E-COMMERCE

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Business to Business (B2B) refers to the full spectrum of e-commerce that can occur between two organizations.

This includes purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management &service and support.

Examples: FreeMarkets, Dell and General Electric Business to Consumer (B2C) refers to exchanges between

business and consumers, activities tracked are consumer search, frequently asked questions and service and support.

Examples: Amazon, Yahoo and Charles Schwab & Co

DISTINCT CATEGORIES OF E-COMMERCE (CONT’D)

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Peer to Peer (C2C) exchanges involve transactions between and among consumers. These can include third party involvement, as in the case of the auction website Ebay.

Examples: Owners.com, Craiglist, Monster

Consumer to Business (C2B) involves when consumers band together to present themselves as a buyer in group.

Example: www.planetfeedback.com

CONVERGENCE OF E-COMMERCE CATEGORIES

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Business originating from…

Business Consumers

An

d S

elli

ng

to…

Con

sum

ers

Bu

sin

ess

Publishers order paper supplies from

paper companies

Amazon orders from publishers

Consumers search out sellers, offers

and initiate purchases from

Amazon

Consumers resell copies on eBay

Consumers buy thousands of Harry Potter books from

Amazon

APPEAL OF E-COMMERCE Lower transaction costs - if an e-commerce

site is implemented well, the web can significantly lower both order-taking costs up front and customer service costs

Larger purchases per transaction - Amazon offers a feature that no normal store offers

Integration into the business cycle People can shop in different ways. The ability to

build an order over several days The ability to configure products and see

actual prices The ability to easily build complicated custom

orders The ability to compare prices between

multiple vendors easily The ability to search large catalogs easily

Larger catalogs Improved customer interactions - company.

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LIMITATIONS OF E-COMMERCE

To organizations: lack of security, reliability, standards, changing technology, pressure to innovate, competition, old vs. new technology

To consumers: equipment costs, access costs, knowledge, lack of privacy for personal data, relationship replacement

To society: less human interaction, social division, reliance on technology, wasted resources, JIT manufacturing

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TECHNICAL LIMITATIONS

There is a lack of universally accepted standards for quality, security, and reliability

The telecommunications bandwidth is insufficient

Software development tools are still evolving There are difficulties in integrating the Internet

and EC software with some existing (especially legacy) applications and databases.

Special Web servers in addition to the network servers are needed (added cost).

Internet accessibility is still expensive and/or inconvenient

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BENEFITS AND CHALLENGES OF E-COMMERCE

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BenefitsBenefits

Persistent connection with customers

New value for customers

Access to new customers

Scalability

Persistent connection with customers

New value for customers

Access to new customers

Scalability

ChallengesChallenges

Cannibalization

Channel conflict

Customer confusion

Investor confusion

Cannibalization

Channel conflict

Customer confusion

Investor confusion

CONDUCTING E-COMMERCE

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ContextContentCommunity

CommunicationConnectionCommerce

Seven C’s of Website DesignSeven C’s of Website Design

Customization

BENEFITS OF E-COMMERCE

To consumers: 24/7 access, more choices, price comparisons, improved delivery, competition

To organizations: International marketplace (global reach), cost savings, customization, reduced inventories, digitization of products/services

To society: flexible working practices, connects people, delivery of public services

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BENEFITS TO CONSUMERS

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Convenience

Buying is easy and private

Provides greater product access and selection

Provides access to comparative information

Buying is interactive and immediate

BENEFITS TO ORGANIZATIONS

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Powerful tool for building customer relationships

Can reduce costs

Can increase speed and efficiency

Offers greater flexibility in offers and programs

Is a truly global medium

BENEFITS TO SOCIETY

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More individuals can work from home

Third world countries gain access

Facilitates delivery of public services

SEVEN DIMENSIONS OF E-COMMERCE STRATEGY

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Four positional factorsFour positional factors

•Technology: goal must be understood within its’ market and industry

•Market: must determine its’ target market and whether it is still open to new entrants

•Service: must know its’ customer’s expectations

•Brand: must understand if it has the ability to create a strong brand

•Technology: goal must be understood within its’ market and industry

•Market: must determine its’ target market and whether it is still open to new entrants

•Service: must know its’ customer’s expectations

•Brand: must understand if it has the ability to create a strong brand

Three bonding factorsThree bonding factors

•Leadership: vision of CEO for e-commerce

•Infrastructure: technology support for new model of business

•Organizational Learning: does the organization support internal learning

•Leadership: vision of CEO for e-commerce

•Infrastructure: technology support for new model of business

•Organizational Learning: does the organization support internal learning

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