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E-Commerce and E-Business

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Commerce
• Commerce is a division of trade or production which
deals with the exchange of goods and services from
producer to final consumer.

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Question?
• The Internet provide a better Opportunity for doing business

• Large firms
• Small firms
• Equally for both

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E-Commerce and E-Business

• People mean different things when talk about e-commerce.

• You must define what YOU are talking or writing about!.

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Definition for e-commerce

• A universally accepted definition does not exist.

• The following definition is appropriate:

• Exchange goods and services over the internet.

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Definition for e-business

• E-business involves
• Digital enablement of transactions and processes within a firm, involving
information systems under the control of the firm.

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Electronic Commerce
• Is it just a technology?

• Is it just a methodology?

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Electronic Commerce
• Technology (Tools) that enable Methodology (Processes).

• Tools like WWW , Java , ASP , PHP , Web Service

• Processes Like Supply chain integration , Just time inventory , electronic markets.

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History of e-commerce
• Doing business electronically existed before the Internet burst onto the business scene.

• EDI (electronic data Interchange) preceded e-commerce

• EDI is the electronic exchange of structured document between trading partners
across private networks.

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Impact of the Internet

• The internet is ubiquitous because it is affordable technology and it’s widely accepted
standards.

• Easy , spreading and publish.

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E-commerce: A Brief History

• 1995–2000: Innovation
• Key concepts developed
• Dot-coms; heavy venture capital investment
• 2001–2006: Consolidation
• Emphasis on business-driven approach
• 2006–Present: Reinvention
• Extension of technologies
• New models based on user-generated content, social networking, services

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Why e-commerce?
• It is the achievement of COMPTITIVE ADVANTAGE Which lies at the core of Strategic
management.

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The process of E-commerce

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Types of E-commerce
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Business-to-government (B2G)
• Government to consumer (G2C)
• Government-to-business (G2B)

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What is C2C ecommerce?

• Consumer-to-consumer e-commerce or C2C is simply commerce between private
individuals or consumers

• Concern the consumers who run negotiations with other consumers sometimes utilizing
as intermediary a company
• Examples:
• Ebay.
• Selling a car to my neighbor

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What is B2C ecommerce?

• Business-to-consumer e-commerce, or commerce between companies and consumers,
involves customers gathering information; purchasing physical goods or receiving
products over an electronic network.

• Offer directly to customer through an interface

• Example:
• Booking and purchase of airline tickets.
• Online book store (Amazone.com)
• Dell selling me a laptop

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B2C Business Models

• E-tailer
• Community provider (social network)
• Content provider
• Portal
• Transaction broker
• Market creator
• Service provider

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B2C Models: E-tailer

• Online version of traditional retailer
• Revenue model: Sales
• Variations:
• Virtual merchant
• Bricks-and-clicks
• Catalog merchant
• Manufacturer-direct
• Low barriers to entry

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B2C Models: Community Provider

• Provide online environment (social network) where people with similar interests can
transact, share content, and communicate
• Examples: Facebook, LinkedIn, Twitter, Pinterest
• Revenue models:
• Typically hybrid, combining advertising, subscriptions, sales, transaction fees, and so
on

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B2C Models: Content Provider

• Digital content on the Web:
• News, music, video, text, artwork
• Revenue models:
• Subscription; pay per download (micropayment); advertising; affiliate referral
• Variations:
• Syndication
• Web aggregators

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B2C Business Models: Portal

• Search plus an integrated package of content and services
• Revenue models:
• Advertising, referral fees, transaction fees, subscriptions
• Variations:
• Horizontal/general
• Vertical/specialized (vortal)
• Search

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B2C Models: Transaction Broker

• Process online transactions for consumers
• Primary value proposition—saving time and money
• Revenue model:
• Transaction fees
• Industries using this model:
• Financial services
• Travel services
• Job placement services

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B2C Models: Market Creator

• Create digital environment where buyers and sellers can meet and transact
• Examples:
• Priceline
• eBay
• Revenue model: Transaction fees, fees to merchants for access

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B2C Models: Service Provider

• Online services
• Example: Google—Google Maps, Gmail, and so on
• Value proposition
• Valuable, convenient, time-saving, low-cost alternatives to traditional service
providers
• Revenue models:
• Sales of services, subscription fees, advertising, sales of marketing data

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What is B2B e-commerce?

• Aims at integrating business processes between two or more enterprise.
• B2B e-commerce is simply defined as ecommerce between companies. About 80% of e-
commerce is of this type.

• Example:
• Linking requested orders (from company A, the seller) to company B (the shipping
company)
• Intel selling microprocessor to Dell
• Heinz selling ketchup to Mc Donalds

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B2B Business Models

• Net marketplaces
• E-distributor
• E-procurement
• Exchange
• Industry consortium
• Private industrial network

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B2B Models: E-distributor

• Version of retail and wholesale store, MRO goods, and indirect goods
• Owned by one company seeking to serve many customers
• Revenue model: Sales of goods
• Example: Cisco

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B2B Models: E-procurement

• Creates digital markets where participants transact for indirect goods
• B2B service providers, application service providers (ASPs)
• Revenue model:
• Service fees, supply-chain management, fulfillment services
• Example: Google Service

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B2B Models: Digital Exchanges

• Independently owned vertical digital marketplace for direct inputs
• Revenue model: Transaction, commission fees
• Create powerful competition between suppliers
• Tend to force suppliers into powerful price competition; number of exchanges has
dropped dramatically

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B2B Models: Industry Consortia

• Industry-owned vertical digital marketplace open to select suppliers
• More successful than exchanges
• Sponsored by powerful industry players
• Strengthen traditional purchasing behavior
• Revenue model: Transaction, commission fees
• Example: Global Healthcare Exchange- Medical Service and Supplies

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What is B2G ecommerce?

• Business-to-government e-commerce or B2G is generally defined as commerce between
companies and the public sector. It refers to the use of the Internet for public
procurement, licensing procedures, and other government-related operations
• Example:
– Business pay taxes, file reports, or sell goods and services to Govt. agencies.

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G2C E-commerce

• This Model is also a part of e-governance.

• The objective of this model is to provide good and effective services to each citizen.
• The Government provides the following facilities to the citizens through website.
• Information of all government departments,
• Different application forms to be used by the citizens.

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G2B E-commerce

• Government-to-business (G2B) is a business model that refers to government providing

services or information to business organization.
• Government uses B2G model website to approach business organizations.
• Such websites support auctions, tenders and application submission functionalities.

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Private Industrial Networks

• Digital network used to coordinate among firms engaged in business together
• Typically evolve out of company’s internal enterprise system
• Example: Walmart’s network for suppliers
• Cost absorbed by network owner and recovered through production and distribution
efficiencies

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E-commerce Enablers:
The Gold Rush Model
• E-commerce infrastructure companies have profited the most:
• Hardware, software, networking, security
• E-commerce software systems, payment systems
• Media solutions, performance enhancement
• CRM software
• Databases
• Hosting services, and so on

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How E-commerce Changes Business

• E-commerce changes industry structure by changing:
• Rivalry among existing competitors
• Barriers to entry
• Threat of new substitute products
• Strength of suppliers
• Bargaining power of buyers

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Industry Value Chains

• Set of activities performed by suppliers, manufacturers, transporters, distributors, and
retailers that transform raw inputs into final products and services
• Internet reduces cost of information and other transactional costs
• Leads to greater operational efficiencies, lowering cost, prices, adding value for
customers

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E-commerce and Industry Value Chains

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Firm Value Chains

• Activities that a firm engages in to create final products from raw inputs
• Each step adds value
• Effect of Internet:
• Increases operational efficiency
• Enables product differentiation
• Enables precise coordination of steps in chain

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E-commerce and Firm Value Chains

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Firm Value Webs

• Networked business ecosystem
• Uses Internet technology to coordinate the value chains of business partners
• Coordinates a firm’s suppliers with its own production needs using an Internet-based
supply chain management system

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Internet-enabled Value Web

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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.
• No need of physical company set-ups.
• Customers can easily select products from different providers without moving around
physically.

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E-commerce Problems
• Privacy
• Authenticity
• Security

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