Ch. 1 Key Concept

Chapter 1 Intro to E-commerce

Revenue model: sales aspect, bringing money into the company; creating one channel to bring in sales and take advantage of the opportunities. Identifying customers, marketing to customers, value added merchandising
Business model: focused on all the strategic elements of your business and what it does; bottom line driven. Terms to know --> Globalization versus localization; translation

Sound bites:
-dot comes and dot bombs (ex: e-toys, flooz, kozmo.com, pets.com, webvan)
-fortunes have been made and lost
-still riding the learning curve on what works and what doesn't (trial and error especially true for early adopters)
-being first to market isn't that important anymore
-EDI and EFT have been around since the 1960s***
-60% of Internet content is in English; more than 50% of internet users don't read English, more than 75% of internet users live outside of the US

E-commerce defined:
· E-commerce is the exchange of info across electronic networks at ANY STAGE IN THE SUPPLY CHAIN whether within an organization, between businesses, between business and consumers, or between public and private sectors whether paid or unpaid
· Ecommerce is commerce but it is accelerated and enhanced by IT
· More important part of supply chain à exchange of info
· TRANSACTIONS

E-business:
· Transformation of key business processes through the use of internet technologies
· It includes e-commerce à includes the front and back office applications that form the engine for modern business.
· It’s not just about e-commerce transactions but about redefining old business models with the aid of technology to max value to customers
· SUPPORTING PROCESSES - All supporting infrastructure

E-commerce and e-business (views)
1. Some degree of overlap
2. They are the same
3. E-commerce is a subset of e-business (ex: IBM’s vision as explained above)
**tends to vary based on size of firm**

E-commerce categories
1. B2B (supply chain, value chain, ex: dell)
2. C2B (demand aggregation, ex: consumer groups-consumers get together and join together and approach a vender to get volume discounts)
3. B2C (commerce over the net, ex: Amazon)
4. C2C (community groups, ex: eBay)

B2B-growth in markets online (electronic market places in which companies (including competitors) working together. Ex: Ford’s auto-xchange. Disintermediation is getting rid of the middle man. Competitors using the same suppliers and using the same materials

First Wave Characteristics
-dominant influence of US
-extensive use of English
-many new companies started out with outside investor money
-piracy, hacking, and security troubles
-over emphasis on advertising as a revenue source
Second Wave Characteristics
-global enterprises (multi culture and lingual)
-established companies fund electronic commerce initiatives with own capital
-integration with key business processes
-many customers are linking to broadband

Product/process suitability for online purchasing and selling
Commodity item - hard to distinguish from rivals products/services
Shipping profile - how easily can a product be packaged and delivered
High value to weight ratio - what is the ratio of shipping costs to the selling price
Digital products

Advantages of e-commerce
1. Increase sales through enhanced customer services
2. Decrease costs of handling inquiries and transactions
3. Reach potential customers in very country
4. Increase purchasing opportunities/options for buyers
5. Can make negotiating price and delivery terms easier
6. All transactions easier, quicker, with an audit trail ****
7. Reach ***
Disadvantages
1. Perishable products are harder to sell online
2. Difficult to calculate ROI
3. Companies become myopic and are sucked into the concept that their business is centered around e-commerce (the excitement) versus whether they are actually making money

Global Nature of e-commerce
1. Trust issues – use brand recognition and image to connect to customers
2. Language issues – focus on localization which considers multiple elements of the local environment. **Translation is word by word whereas localization considers customs and values, etc.
3. Cultural issues (expectations of parties and how each will react-values/customs)
4. Infrastructure issues