Chp 1 Introduction to Electronic Commerce

*Electronic Commerce and Electronic Business

• Electronic commerce

-Shopping on the Web

-Businesses trading with other businesses
-Internal company processes
-Broader term: electronic business (e-business)
-Includes all business activities using Internet technologies
-Internet and World Wide Web (Web)
-Wireless transmissions on mobile telephone networks

• Dot-com (pure dot-com)

-Businesses operating only online

*E-business, E-commerce and Social Commerce Defined

-E-business is the optimization of a company’s business activities using digital technology.
(whole). A broader definition of -business that includes not just the buying and selling of goods and
services, but also servicing customers, collaborating with business partners, and conducting electronic
transactions within an organization.

-E-commerce is the subset of e-business focused on transactions. It is the process of buying,

selling, or exchanging products, services, or information via computer. It also refers to both
financial and informational electronically mediated transactions.
-Social commerce
The e-commerce activities conducted in social networks and/or by using social software (i.e.,
Web 2.0 tools such as wikis, RSS feeds, blogs, microblogs i.e Twitter)

-E-marketing
Marketing plus technology that includes all marketing activities conducted by a bs online using
an electronic device / the internet.

E-business vs E-commerce
What is the difference between e-commerce and e-business?
E-Business
-E-business or digital business is similar to e-commerce but broader in scope and refers to using
digital technology to manage a range of business processes incorporating the sell-side and buy-
side e-commerce as well as other key supporting business processes including research and
development, marketing, manufacturing and inbound and outbound logistics.

E-Commerce
E-commerce also refers to both financial and informational electronically mediated
transactions between an organisation and any third party it deals with. Example: Online sales
transactions, inbound customer service enquiries and outbound email broadcasts

In simple terms
E-Business
-A broader definition of EC that includes not just the buying and selling of goods and services,
but also servicing customers, collaborating with business partners, and conducting electronic
transactions within an organization

E-Commerce
-The process of buying, selling, or exchanging products, services, or information via computer

Categories of Electronic Commerce

-Business-to-consumer (B2C)
-Consumer shopping on the Web

What are the two main categories of electronic commerce?

Business to consumer (B2C) - selling products/services directly to consumers. Example neflix is
an online platform that provides its services to mass-market consumers. Business to business
(B2B) - selling goods/services to other businesses. Example Samsung is one of Apple’s largest
suppliers in the production of the phone.

-Business-to-business (B2B)(bring more value): e-procurement

-Transactions conducted between Web businesses
-Supply management (procurement) departments
-Negotiate purchase transactions with suppliers
-Business processes
-Use of Internet technologies within the business

Business Processes
-Business activity is a task performed by a worker doing his or her job
-May or may not be related to a transaction
-Transaction is an exchange of value
-Purchase, sale, or conversion of raw materials into finished product
-Involves at least one business activity
-Business processes are groups of logical, related, sequential activities and transactions
-Web helps people work more effectively
 Elements of electronic commerce
Electronic Commerce Elements
-Consumer-to-consumer (C2C)
-Individuals buying and selling among themselves
-Web auction site
-C2C sales included in B2C category
-Seller acts as a business (for transaction purposes)
-Business-to-government (B2G)
-Business transactions with government agencies
-Paying taxes, filing required reports
-B2G transactions included in B2B discussions

Electronic commerce categories

Early Electronic Commerce

-Electronic Funds Transfers (EFTs)
-Wire transfers
-Electronic transmissions of account exchange information over private communications
networks
-Electronic Data Interchange (EDI)
-Business-to-business transmission of computer-readable data in standard format
-Standard transmitting formats benefits
 -Reduces errors, avoids printing and mailing costs and eliminates need to reenter data
-Trading partners
-Businesses engaging in EDI with each other
-EDI pioneers (example: Walmart) improved purchasing processes and supplier relationships
-Pioneers faced high implementation costs
-Value-added network (VAN)
-Independent firm offering EDI connection and transaction-forwarding services
-EDI continues to be a large portion of B2B electronic commerce

Business Models, Revenue Models, and Business Processes

-Business model
-Set of processes combined to achieve company goal

Briefly explain the difference between a business model and a revenue model.
Bs model is a set of processes combined to achieved company goal, is a portal also a contain
provider. Revenue Model is specific collection of business processes used to identify, market and
make sales to customers. Classifies revenue-generating activities for communication and analysis
purposes.

-In the first wave of electronic commerce, investors sought Internet-driven business models
-Expectations of rapid sales growth, market dominance
-Successful “dot-com” business models emulated
-Led to many business failures
-Michael Porter argued business models did not exist

-Instead of copying model, companies should examine their business elements

-Streamline, enhance, or replace with Internet technology driven processes
-Revenue model
-Specific collection of business processes used to identify, market and make sales to customers
-Classifies revenue-generating activities for communication and analysis purposes

Focus on Specific Business Processes

-Examples of business processes
-Purchasing raw materials or goods for resale
-Converting materials and labor into finished goods
-Managing transportation and logistics
-Hiring and training employees
-Managing business finances
-Identify processes that benefit from ecommerce technologies
-Not all processes can be improved with technology
-Firms can use it to help them adapt to change

Role of Merchandising
-Combination of store design, layout, and product display knowledge
-Salespeople have skills to identify customer needs and meet them
-Merchandising and personal selling skills can be difficult to practice remotely
-Companies must be able to transfer these skills to have Web site success
-Some products are easier to sell on the Internet than others

Product/Process Suitability to Electronic Commerce

-Some products good candidates for electronic commerce
-Customers do not need to experience physical characteristics before purchase
-Technology has made more processes suitable for electronic commerce
-Commodity items are standardized, well-known products only differentiated by price
-Must have attractive shipping profile to sell online
-Includes books, clothing, shoes, kitchen accessories and other small household items

Business process suitability to type of commerce

Product/Process Suitability to Electronic Commerce (cont’d.)

-Easier-to-sell products have:
-Strong brand reputation
-Appeal to small but geographically diverse groups

-Traditional commerce better for:

-Products relying on personal selling skills
-Transactions involving large amounts of money

-Combination of electronic and traditional commerce strategies best when:

 -Business process includes both commodity and personal inspection aspects

Opportunities for Electronic Commerce

-Electronic commerce can help increase profits and sales and decrease business costs
-Virtual community
-Gathering of people sharing a common interest
-E-commerce purchasing opportunities
-Identify new suppliers and business partners
-Efficiently obtain competitive bid information
-Increase speed, information exchange accuracy
-Wider range of choices available 24 hours a day

-Benefits extend to general society

-Lower costs to issue and secure
-Electronic payments of tax refunds
-Public retirement
-Welfare support

-Provides faster transmission

-Provides fraud, theft loss protection
-Electronic payments easier to audit and monitor
-Telecommuting reduces traffic, pollution
-Products and services available in remote areas

Electronic Commerce: Current Barriers

-Poor choices for electronic commerce
-Perishable foods and high-cost, unique items
-Four barriers
-Need for critical mass of customers with appropriate technology
-Unpredictability in costs and revenues
-Insufficient tools for hardware and software integration
-Cultural and legal barriers

Economic Forces and Electronic Commerce

-Economics
-Study how people allocate scarce resources
-Markets
-Potential sellers come into contact with buyers
-Medium of exchange available (currency or barter)
-Hierarchical business organizations
-Firms or companies
-Transaction costs
 -Motivation for moving economic activity to hierarchically structured firms

Transaction Costs
-Total costs a buyer and seller incur while gathering information and negotiating purchase-and-
sale transaction
-Costs include:
-Brokerage fees and sales commissions
-Cost of information search and acquisition
-Sweater dealer example (Figure 1-6)

FIGURE 1-6 Market form of economic

organization

Markets and Hierarchies

-Coase’s analysis of high transaction costs
-Hierarchical organizations replace market-negotiated transactions
-Supervision and worker-monitoring elements
-Vertical integration sweater example (Figure 1-7)
-Oliver Williamson (extended Coase’s analysis)
-Complex manufacturing, assembly operations
-Hierarchically organized, vertically integrated
-Manufacturing innovations increased monitoring activities’ efficiency and
effectiveness
FIGURE 1-7 Hierarchical form of economic organization

Markets and Hierarchies (cont’d.)

-Strategic business unit (business unit)
-Part of a company large enough to manage itself
-Small enough to quickly respond to business environment changes
-Exception to hierarchy trend
-Commodities

Using Electronic Commerce to Reduce Transaction Costs

-Electronic commerce can
-Improve flow of information
-Increase coordination of actions
-Change attractiveness of vertical integration
-Example: employment transaction
-Telecommuting reduces or eliminates transaction costs

Network Economic Structures

-Neither market nor hierarchy
-Strategic alliances (strategic partnerships)
-Coordinate strategies, resources, skill sets by forming long-term relationships based
on shared purposes
-Strategic partners come together for specific projects

-Network organizations well suited to information-intensive technology industries

-Electronic commerce makes networks easier to construct and maintain
-Castells predicts economic networks will become the organizing structure for social
interactions
 Network form of economic organization

Network Effects
-Law of diminishing returns
-Activities yield less value as consumption amount increases
-Example: hamburger consumption
-Network effect
-Exception to law of diminishing returns
-As more people or organizations participate in network, the value to each participant
increases
-Examples: Landline phones, e-mail

Identifying Electronic Commerce Opportunities

-Focus on specific business processes
-Break business down
-Series of value-adding activities that combine to meet firm’s goals
-Business activities conducted by firms of all sizes
-Firm
-Multiple business units owned by a common set of shareholders
-Industry
-Multiple firms selling similar products to similar customers

SWOT Analysis: Evaluating Business Unit Opportunities

-Define SWOT (strengths, weaknesses, opportunities, and threats)
-First look into business unit
-Identify strengths and weaknesses
-Then review operating environment
-Identify opportunities and threats presented
-Take advantage of opportunities
-Build on strengths
-Avoid threats
-Compensate for weaknesses
 SWOT analysis Q

Results of Dell’s SWOT analysis

International Nature of Electronic Commerce

 Proportion of online B2C sales by geographic
region, 2014

Trust Issues on the Web

Language Issues
Cultural Issues

Culture and Government

Infrastructure Issues
 Parties involved in a typical international trade transaction

Many companies are combining their online business activities with an existing physical
presence. Explain which elements they are combining and what problems they are solving
by doing so.
In order to cut costs of operation, businesses are fusing their online commercial activities with
their current physical presence. When both of these factors are considered, labour costs are
reduced because the company only needs a small number of branches with an online presence,
inventory costs are decreased because additional inventories are not needed for each physical
outlet, and delivery costs are decreased because the company no longer needs to regularly supply
all of the outlets with goods.
Because most customers are hesitant to purchase from companies that only have an online store
and no physical locations, public trust is also increased. A business with both an online and
offline presence, such home delivery, offers value-added services.

Many customers who use mobile devices prefer to make purchases using a mobile app
instead of their devices’ Web browsers. It is less clear that these customers search for and
select specific products using only the merchant’s dedicated mobile app. Discuss the
advantages and disadvantages of using a specific merchant’s mobile app to select and
purchase products.
The existence of a merchant's mobile app has benefits and drawbacks from a technology
standpoint. One benefit of having a mobile app is that it was created specifically for a mobile
device, ensuring convenience, simple customer communication, and online use. The difficulty of
creating mobile apps, the cost of doing so, the cost of making them accessible to users, and the
requirement for updates and support are some of their drawbacks.

Explain how the Internet creates or enhances the network effect. Provide an example to
illustrate your answers.
More people were drawn to connect and transact business with one another as a result of website
development and enhancement. A network effect resulted from the internet offering more value
as traffic increased. Example Facebook, Amazon.
Social media – need ppl to communicate wth
Phones – need other ppl to hv a phone to call
E-commerce – need users to hv transactions.

Chp 2 Benefits and Limitations of E-Commerce

*The Benefits of EC
• Benefits to Organisations
-Expands 扩张 the marketplace to national and international markets
-Decreases the cost of creating, processing, distributing, storing and retrieving paper-based
information
-Allows reduced inventories and overhead by facilitating 管理费用 pull-type supply chain
management
-The pull-type processing allows for customisation of products and services which provides
competitive advantage to its implementers
-Reduces the time between the outlay of capital and the receipt of products and services
-Supports business processes reengineering (BPR) efforts
-Lowers telecommunications cost - the Internet is much cheaper than value added networks
(VANs)

Personalisation- Google Chrome (1 to 1)

Customisation---Florist – set A ,set B,set C. Set A got only flowers , B got flowers and bear

• *Benefits to consumers
-Enables consumers to shop or do other transactions 24 hours a day, all year round from almost
any location
-Provides consumers with more choices
-Provides consumers with less expensive products and services by allowing them to shop in
many places and conduct quick comparisons
-Allows quick delivery of products and services (in some cases) especially with digitized
products
-Consumers can receive relevant and detailed information in seconds, rather than in days or
weeks
-Makes it possible to participate in virtual auctions
-Allows consumers to interact with other consumers in electronic communities and exchange
ideas as well as compare experiences
-Facilitates competition, which results in substantial discounts
Exp of purchasing agent : price panda / hargapedia

• *Benefits to society
-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
-Allows some merchandise to be sold at lower prices, benefiting less affluent people
-Enables people in Third World countries and rural areas to enjoy products and services
which otherwise are not available to them
-Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or
improves quality

*The Limitations 限制条件 of EC

• 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

Chp 3 Differences between generic 通用的 business models for online businesses

* Business Models
-A method of doing business by which a company can generate revenue to sustain 维持 itself.
-Spells out where the company is positioned in the value chain.
-Business models are a component 组成 of a business plan or a business case.

*Structure 结构 of Business Models

- All business models must specify their revenue model (the description of how the company or
an EC project will earn revenue).

-Revenue resources
- Transaction fees (service charge like using platform)
- Service fee charged based on transaction number or size
-Web site offers visitor transaction information and services formerly provided by a human
agent
-Disintermediation occurs when an intermediary (human agent) is removed from the value
chain
-Reintermediation is the introduction of a new intermediary (fee-for-transaction Web site)
into a value chain
The e-commerce firm generates revenue by charging a fee for facilitating a transaction between
two parties. Examples: eBay which generates revenue by charging a fee for facilitating
transactions between buyers and sellers on its platform.

- Subscription fees (exp:Netflix, spotify)

The e-commerce firm generates revenue by charging customers a subscription fee for access to
premium content, services, or products. Examples:Netflix which generates revenue by charging
customers a monthly subscription fee for access to its online streaming services.

- Advertisement fees (allowing people advertise in FB)---- Earning revenue

The e-commerce firm generates revenue by displaying advertisements to customers. The revenue
is generated by charging advertisers for ad placement on the platform. Examples: Facebook
which generates revenue by displaying targeted advertisements to its users.
W2:Twitter Story
Describe the main revenue model for Twitter with an example.
Main Revenue Model: Advertisement Fees
• generate income from advertising sales, allow advertisers to place ads on their websites or apps in exchange
for payment.
•Twitter sell ad products such as promoted Tweets, promoted trends, and promoted accounts.
•Advertisers can target specific audiences based on demographics, interests, and keywords, which is a valuable
feature for businesses looking to reach a specific target market.
•For example, a fashion brand can use promoted tweets showcasing their new collections to a targeted
audience who are interested in fashion.
Using a different revenue model, further explain how Twitter can make more money.
Twitter Shop
Example: users can release merchandises on the platform for others to purchase and Twitter can earn
commissions from the listings
•Revenue Model: Transaction Fees.
•Twitter could partner with retailers and brands to allow users to make purchases directly on the platform. This
would provide a convenient way for users to shop and could create an additional revenue stream for Twitter
through transaction fees or commissions.
•After a customer purchased an item from the platform, Twitter can surcharge the sellers a sum of % as
commission.
•Able to provide a seamless shopping experience for users and could generate additional revenue for Twitter
beyond advertising.

- Affiliate fees (collecting , commission—amazon will pay u commission, contract---suppliers

and promotor)
The e-commerce firm generates revenue by referring customers to other businesses and earning a
commission on any resulting sales. Examples: Amazon Associates which allows website owners
to earn a commission by promotine Amazon products on their websites.
-Sales
Most common revenue model. The e-commerce firm generates revenue by selling goods or
services directly to customers. The revenue is generated by the mark-up on the cost of goods
sold. Examples: Amazon which generates revenue by selling products directly to customers
through its online platform.

-Other models

- Value proposition is the description of the benefits a company can derive 衍生 from using EC.

Chp 4 Broad Identification of B2C and B2B extended business models

*E-Commerce Business Models

-Business model
- Set of planned activities designed to result in a profit in a marketplace
-Business plan
-Describes a firm’s business model
-E-commerce business model
-Uses/leverages unique qualities of Internet and Web
Identify and describe the business model element that specifies how the company’s product will fulfill the
needs of its customers.
The value proposition is a component of the business model that describes how the company's
product will meet the needs of its customers. It is a declaration of the special advantages and
value that a business's product or service will offer to its clients. The problem that the product or
service solves for the consumer, the advantages that the customer will experience, and how it
differs from the competitors should all be clearly stated in the value proposition. A corporation
must create a compelling value offer if it wants to draw in and keep customers.

*8 Key elements of Business Model

1. Value proposition
-“Why should the customer buy from you?”
-Successful e-commerce value propositions:
-Personalization/customization
-Reduction of product search, price discovery costs价格发现成本
-Facilitation of transactions by managing product delivery通过对产品的管理，为交易提供便利

Defines how a company’s product or service fulfills the needs of customers

Amazon –selling books , Amazon prime...

2.Revenue model
-How will you earn money?”
-Major types of revenue models:
-Advertising revenue model
-Subscription revenue model
-Freemium strategy
-Transaction fee revenue model
-Sales revenue model
-Affiliate revenue model

Describes how the firm will earn revenue, product profits, and produce a superior return on
invested capital

3.Market opportunity
-“What marketspace市场空间 do you intend to serve and what is its size?”
-Marketspace: Area of actual or potential commercial value in which company intends to
operate
-Realistic market opportunity: Defined by revenue potential in each market niche in which
company hopes to compete
-Market opportunity typically divided into smaller niches利基

Refers to the company’s intended marketplace and the overall potential financial opportunities
available to the firm in that marketspace

4.Competitive environment
-“Who else occupies占据 your intended预定 marketspace?”
-Other companies selling similar products in the same marketspace
-Includes both direct(starbucks –coffee bean) and indirect competitors
-Influenced by:
-Number and size of active competitors
-Each competitor’s market share
-Competitors’ profitability
-Competitors’ pricing

Refers to the other companies operating in the same marketplace selling similar products

5.Competitive advantage
-“What special advantages does your firm bring to the marketspace?”
-Is your product superior to or cheaper to produce than your competitors’?
-Important concepts:
-Asymmetries不对称性 – exist whenever one participant in a market has more resources
(financial backing, knowledge, information and or power) than other participants
-First-mover advantage, complementary resources资源互补
-Unfair competitive advantage
-Leverage
-Perfect markets

6.Market strategy
-“How do you plan to promote your products or services to attract your target audience?”
-Details how a company intends to enter market and attract customers
-Best business concepts will fail if not properly marketed to potential customers

The plan you put together that details exactly how you intend to enter a new market and attract
new customers

7.Organizational development

-“What types of organizational structures within the firm are necessary to carry out the business
plan?”
-Describes how firm will organize work
-Typically, divided into functional departments
-As company grows, hiring moves from generalists to specialists

The plan that describes how the company will organise the work that needs to be accomplished

8.Management team
-“What kind of backgrounds should the company’s leaders have?”
-A strong management team:
-Can make the business model work
 -Can give credibility to outside investors
-Has market-specific knowledge
-Has experience in implementing执行 business plans

Employees of the company responsible for making the business model work

Raising Capital
-Seed Capital
-Elevator pitch (short two-to-three minute presentation aimed at convincing investors to invest)
Key elements include Introduction, Background, Industry size/market opportunity, Revenue
model/numbers/growth metrics, Funding and Exit strategy )
-Traditional sources
-Incubators, angel investors
-Commercial banks, venture capital firms
-Strategic partners
-Crowdfunding (involves using the Internet to enable individuals to collectively contribute
money to support a project )
-J O B S Act

Tutorial
5. Discuss the importance of raising capital for a start-up business. Identify and discuss any
FOUR (4) ways of raising capital for the business.
Ways to raise capital for businesses:
1. SEED Capital: the initial amount of money an entrepreneur uses to start a business. Often, this money
comes from family, friends, early shareholders or angel investors.
2. Elevator Pitch: an entrepreneur's attempt to convince a venture capitalist that a business idea is worth
investing in. Brief, persuasive speech to spark interest in what the business does.
3. Traditional sources - Angel investors: Angel investors are typically high-net-worth individuals who funds
startups at the early stages, often with their own money. They would often provide specialized knowledge to
assist the business in achieving its goals. For example, angel investor Paul Buchheit had invested in around 61
companies such as Reddit, Dropbox and Airbnb.
Crowdfunding: Crowdfunding involves raising small amounts of money from a large number of people,
typically through online platforms. This can include reward-based crowdfunding, where backers receive a
product or service in exchange for their investment, or equity-based crowdfunding, where backers receive
ownership in the company.

B2C Business 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
-Community provider (social network)

• 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

-Content provider

• Digital content on the Web:

-News, music, video, text, artwork
• Revenue models:
-Use variety of models, including advertising, subscription; sales of digital goods
-Key to success is typically owning the content
• Variations:
-Syndication: allows you to take the content that you’ve written, and push it to other sites,
services and mediums. Everything from text messages, tweets, Facebook notes, LinkedIn
status updates to pushing your content to other sites can be accomplished automatically
with syndication.

-Aggregators (they do not own but aggregate and distribute the contents produced by
others): allows you to collect content from other sites and display them in yours. They
could be from a blog, news feed, twitterfeed, or even Facebook comments. Aggregation
can be a great tool to use to always keep your page content fresh and pull in other
relevant content. Search engines like sites that are relevant and frequently updated…
aggregating content can help you improve your site’s rankings and the interaction of
visitors… and it’s automated so you don’t even need to raise a finger!

-Portal

• Search plus an integrated package of content and services

• Revenue models:
-Advertising, referral fees, transaction fees, subscriptions for premium services
• Variations:
-Horizontal/general
-Vertical/specialized (vortal)
-Search

-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

-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
• On-demand service companies (sharing economy companies): platforms that allow
people to sell services
-Examples: Uber, Airbnb

-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

Explain disruptive technology and sustaining technology 颠覆性技术和维持性技术

Disruptive technology or innovation is all about change, novelty, and difference. Disruptive
innovation creates new products and new markets and demonstrates a new value for something
consumers didn’t know they needed, wanted, or were missing.

Disruptive technology is not created within an existing framework but rather identifies new
opportunities and changes the conversation around tech and innovation.

A great example of disruptive innovation is Apple in the early 2000s. Apple combined excellent
and ground-breaking new technology in the form of the iPod, with innovation in the form of
iTunes massively simplifying the ability to download digital music.

Sustaining technology and innovation is about development and improvement, working within
established markets and with pre-existing products and ideas, but enhancing, improving
performance, and making things better.

Sustaining technology is essentially companies improving their products and competing with
other organizations providing similar services in a race about who has the best tech.
A great example of sustaining innovation is the current smartphone market. Every year big
companies bring out new, improved products and identify extra features, new ways of doing
things, and incremental (or huge) improvements in performance that give their product the edge.

What is a disruptive technology, and how does it differ from a sustaining technology?
Disruptive technology
- Also referred as disruptive innovation,
- a new technology or innovation that disrupts an existing market or industry by creating a new market and
value network.
Sustaining technologies
- improve existing products or services and enable incremental improvements to a market or industry.
- These technologies generally maintain the status quo and reinforce existing market positions.
The main difference between disruptive and sustaining technologies is that disruptive

Lecture 5: E-Tailing Business Model

Tutorial Ans:
Virtual merchant 虚拟商户
-Refers to e-tailers that operate solely online, without a physical retail store presence
-Online stores that sell goods and services to the public via online transactions with debit and
credit card processing
-Does not involve any physical storefronts or brick-and-mortar locations. Instead, all sales are
conducted virtually, with customers browsing and purchasing products or services through the
merchant's website.
-Focus on providing a seamless and convenient online shopping experience, handling everything
from product selection and inventory management to payment processing and order fulfillment.
专注于提供无缝和便利的网上购物体验，处理从产品选择和库存管理到付款处理和订单执
行的所有事宜。
-E.g. Amazon

Omni-channel merchant
-Provides customers with a seamless shopping experience across multiple channels, including
physical stores, online marketplaces, and mobile applications.
-For example, a customer might browse a retailer's website on their phone during their commute,
then visit a physical store to try on the product, and finally purchase it on their tablet from the
comfort of their own home.
-An omnichannel merchant ensures that the customer can seamlessly move between these
channels without feeling like they are interacting with different companies or facing other
barriers.
-One of the examples is Starbucks - Through its mobile rewards app. Starbucks is able to better
integrate the mobile experience with the in-store one to put consumer convenience first. Users
can reload their cards from their phones or desktop computer. By using the app to pay, they are
rewarded with points that can be applied to a free coffee. Additionally, they can skip the morning
line by ordering in advance
-Eg: Walmart, Target

Advantages
1. A better user experience - Omnichannel focuses on the individual experience across devices
instead of the channel, thus the customer experience is better. By focusing on the customer
instead of the platform, companies can drive more sales and better retention rates.

2. Increased Revenue - An omnichannel approach encourages customers to engage with a brand

across multiple touchpoints and channels. These increased, diverse engagements at each stage of
the buyer's journey can help increase revenue. This more targeted messaging also builds loyalty,
making it more likely a customer will purchase from your brand again.
3. Better Attribution Data - By tracking engagements across channels, brands get a better
understanding of what the customer journey looks like, when and where consumers prefer to
engage, and which campaigns have created the most value. All of this data can be put back into
your strategy to build more targeted campaigns and optimize media spending.
Challenges
1. Connecting online and offline data - One of the most common challenges when trying to unify
multiple channels comes in integrating information from digital and non-digital channels. For a
retailer, this could mean in-store (offline) and online sales data. Generally, it's easier to monitor
the success of online marketing campaigns because there's ample technology to track online
channels.

2. Poor order fulfillment process - Order fulfillment becomes complicated when a single store or
warehouse fulfills multiple types of orders. For example, a single warehouse may try to fulfill
large wholesale orders and also package hundreds of much smaller orders for consumers in the
same day. Employees in a store backroom have to try and replenish shelves and fulfill online
orders for nearby customers without a warehouse management system.

3. Returns process flaws - logistics on return processes are highly manual being that companies
lose profitability when trying to fulfill returns thereby reducing the overall efficiency of the
process making it froublesome for companies to track and monitor returns from dissatisfied
consumers.

Catalog merchant
-A form of retailing where items are not displayed, customers select the products from printed
catalogs in the store and filled out an order form
-Markets and sells products through print or digital catalogs that are distributed to customers
-Catalog merchants often use direct mail or email marketing to distribute their catalogs to
potential customers. They may also use targeted advertising and search engine optimization
(SEO) to drive traffic to their e-commerce websites.
-E.g., CDW Corp., IKEA

Manufacturer-direct
-Manufacturers sell their products directly to consumers without intermediaries through their
own e-commerce websites or online marketplaces
-By selling directly to consumers, manufacturers can also reduce their costs and potentially
increase their profits by cutting out intermediaries such as wholesalers and retailers
-Manufacturers can maintain greater control over their sales and distribution channels, and
potentially increase their profits while providing a better shopping experience for their
customers.
-Eg: Apple, Sony

Lecture 6: Auction

BENEFITS OF E-AUCTIONS
Benefits to Sellers
Larger reach:
-E-auction enables sellers to reach a significantly larger audience compared to traditional
auctions held in a physical location. Online platforms have a global reach, allowing sellers to
attract buyers from various geographical locations. This expanded reach increases the
visibility 知名度of products or services, leading to a higher number of potential buyers and
increased competition.

Increase Revenue:
-By reaching a larger audience, e-auctions create a more competitive environment, driving up
bidding activity推动竞标活动 and potentially increasing the final sale price最终售价.
Increased competition among buyers can lead to higher bids, and consequently higher
revenue for seller.

Optimal price setting：

-E-auctions facilitate price discovery促进价格发现 by allowing buyers to competitively bid
on items. The open and transparent nature公开透明的特征 of e-auctions enables sellers to
achieve optimal prices based on market demand. This ensures that sellers receive fair value
for their products or services, eliminating the risk of underpricing or overpricing.

Removal of expensive intermediaries:

-E-auctions eliminate the need for intermediaries, such as auction houses or brokers,
拍卖行或经纪人who may charge substantial fees or commissions. By directly participating
in e-auctions, sellers can avoid these additional costs and have more control over the selling
process, including setting prices and managing transactions.

Lower transaction costs:

-E-auctions reduce transaction costs compared to traditional auctions. Sellers save on
expenses such as renting physical auction spaces, logistics, transportation, and catalog
production. The online format eliminates the need for costly physical infrastructure, resulting
in significant cost savings.
Better customer relationships:
-E-auctions provide sellers with valuable insights into buyer behaviour, preferences, and
purchasing patterns. This information can be utilised to tailor marketing strategies, improve
product offerings, and enhance customer engagement. Sellers can also gather feedback and
reviews from buyers, fostering a stronger relationship and allowing for continuous
improvement.

Benefits to Buyers
Opportunities to find unique items and collectibles
-Auctions provide a vast marketplace where buyers can discover unique and rare items that
may be challenging to find elsewhere. Auction platforms often feature a diverse range of
products, including antiques, art, vintage items, limited editions, and collectibles. Buyers can
explore a wide variety of offerings, expanding their options and potentially finding one-of-a-
kind treasures.
Lower prices
-E-auctions often provide buyers with the opportunity to purchase items at lower prices
compared to traditional retail channels. The competitive bidding process of e-auctions drives
prices down as buyers compete to secure the best deal. Buyers can often find discounted
products, surplus inventory, or second-hand items at more affordable prices through e-
auctions.
Anonymity
-Buyer Anonymity: In e-auctions, buyers have the option to remain anonymous during the
bidding process. Instead of revealing their identity, buyers are identified by a username or
unique identifier. This anonymity can provide a sense of privacy and security for buyers who
may prefer to keep their personal information undisclosed.
Convenience
-E-auctions offer buyers the convenience of shopping from anywhere and at any time.
Buyers can participate in auctions from the comfort of their homes, eliminating the need to
travel to physical auction locations. Online auction platforms are accessible 24/7, allowing
buyers to browse and bid on items according to their convenience. This flexibility and
accessibility make e-auctions a convenient option for buyers with busy schedules or those
located in different time zones.
Entertainment
-Participating in e-auctions can be an enjoyable and engaging experience for buyers. Bidding
against others and experiencing the thrill of competition can add an element of entertainment
to the shopping process. The real-time nature of e-auctions, along with features such as
countdown timers and bidding wars, can create excitement and make the buying process
more entertaining.

Benefits to E-Auctioneers
Higher repeat purchases
E-auctions can encourage higher repeat purchases from buyers. By providing an engaging
and convenient online auction platform, e-auctioneers can foster customer loyalty. Satisfied
buyers are more likely to return to the same platform for future auction events, increasing the
potential for repeat purchases. Building a base of loyal customers helps e-auctioneers sustain
business growth and generate consistent revenue.
A stickier Web site
-The term "stickiness" refers to the ability of a website to attract and retain visitors for
extended periods, increasing user engagement and interaction. -E-auctioneers can benefit
from a stickier website through e-auctions by implementing features and functionalities that
encourage users to stay on their platform for longer periods.
-E-auctioneers can enhance website stickiness by incorporating interactive bidding
interfaces, providing real-time updates on auctions, offering personalized recommendations,
enabling social interactions among buyers, and implementing gamification elements such as
leaderboards or rewards. These strategies encourage buyers to spend more time on the
website, increasing their likelihood of participation in auctions and enhancing overall user
engagement.
Expansion of the auction business
-E-auctions open up opportunities for e-auctioneers to expand their auction business. By
leveraging the advantages of online platforms, e-auctioneers can reach a broader audience,
expand their geographical reach, and tap into new markets.

LIMITATIONS OF E-AUCTIONS

• Possibility of fraud

-E-auctions can be susceptible to fraud due to the virtual nature of the transactions and the
potential anonymity of participants. Fraudulent activities can include fake listings,
misrepresentation of products or services, non-delivery of items after payment, or
manipulation of bidding processes.
-To mitigate the risk of fraud, e-auction platforms typically implement security measures
such as user verification processes, reputation systems, escrow services, and dispute
resolution mechanisms. However, it's important for participants to exercise caution, conduct
due diligence, and be vigilant while engaging in e-auctions to minimize the possibility of
falling victim to fraud

• Limited participation

-Although e-auctions have the potential for reaching a larger audience, there may still be
limitations on participation. Factors such as technological barriers, internet connectivity
issues, access to digital devices, and lack of familiarity with online auction platforms can
restrict the number of potential participants.
-E-auctioneers should be aware of these limitations and take steps to promote inclusivity and
accessibility. This can include providing user-friendly interfaces, offering customer support,
ensuring mobile compatibility, and considering alternative bidding methods such as
telephone bidding or proxy bidding for those unable to participate directly through the online
platform.
-Security concerns are a significant limitation in e-auctions. The online environment is
vulnerable to various cyber threats, including data breaches, hacking attempts, and
unauthorized access to personal or financial information. Malicious actors may target e-
auction platforms or individual buyers/sellers to exploit vulnerabilities and compromise the
security of the auction process.
-To address security challenges, e-auction platforms should prioritize robust security
measures, including encryption of sensitive data, secure payment gateways, regular system
updates, and adherence to industry best practices for information security. Buyers and sellers
should also exercise caution by using secure networks, practicing good password hygiene,
and verifying the legitimacy of the auction platform before participating.

• Auction software
• Long cycle time
• Equipment for buyers

Lectures 10 & 11: – Electronic Commerce Security

Differences between physical and logical security

Differences Physical Security Logical Security

Focus: Primarily deals with Logical security focuses on

protecting the physical assets, safeguarding digital
people and infracture of an information, systems,
organization. Aims to prevent networks, and data from
unauthorised access, theft, unauthorized access,
damage or loss of physical alteration, theft, or
resources. destruction. It involves
protecting the virtual or
logical aspects of an
organization's assets.

Measure: Physical security involves Logical security involves

implementing tangible implementing measures such
security measures such as as authentication protocols,
security guards, and physical encryption, firewalls,
barriers to detect intrusion detection and
unauthorized access prevention systems (IDPS),
antivirus software, access
controls, and security policies
 and procedures to safeguard
data and systems from cyber
threats.

Scope: Physical security covers the Logical security covers

physical premises, buildings, computer networks, servers,
equipments, serves and other databases, software
physical resources of an applications, user accounts,
organization. authentication mechanisms,
and other digital assets.

Examples: -Installing security camera Logical security covers

-Implementing perimeter computer networks, servers,
security systems databases, software
-Utillizing secure storage applications, user accounts,
solutions authentication mechanisms,
and other digital assets.

Tutorial:

Understand the elements/requirements for a secure electronic commerce