E-Commerce: Digital

Markets, Digital Goods

E-Business

Dr. Md. Rakibul Hoque

University of Dhaka
 Electronic business

 Electronic business, or e-business, refers to

the use of digital technology and the Internet
to execute the major business processes in
the enterprise. E-business includes activities
for the internal management of the firm and for
coordination with suppliers and other business
partners. It also includes electronic
commerce, or e-commerce.
 E-commerce

 E-commerce is the part of e-business that

deals with the buying and selling of goods and
services over the Internet. It also encompasses
activities supporting those market transactions,
such as advertising, marketing, customer
support, security, delivery, and payment.
 Online buying, selling and paying for product
and services is known as e-commerce.
 E-Commerce
E simply means anything done via the
internet and commerce means buying
and selling products, services and
information.
So, E Commerce refers to the process of
buying and selling or exchanging of
products, services, or information via
computer networks including internet.
 E-Commerce
E-commerce is associated with buying
and selling of information, products and
services via computer networks to-day
and in the future via any one of the
myriad of networks that make up the I-
way.
E-commerce concerns the processes for
buying and selling goods and services
electronically
 E-Commerce
Electronic commerce is the paperless
exchange of business information using
electronic data interchange (EDI), e-mail,
electronic bulletin boards, fax
transmissions and electronic fund
transfer. It refers to Internet shopping,
online stock and bond transactions, the
downloading and selling of “soft
merchandise” such as software,
documents, graphics, music etc (Business
town.com).
eCommerce Versus eBusiness
 Key Concepts in E-Commerce
 Digital goods
 Goods that can be delivered over a digital network
 For example: music tracks, video, software,
newspapers, books
 Cost of producing first unit is almost entire cost of
product
 Costs of delivery over the Internet very low
 Marketing costs remain the same; pricing highly
variable
 Industries with digital goods are undergoing
revolutionary changes (publishers, record labels,
etc.)
Key Concepts in E-Commerce

Digital market: In Digital market,

consumers and suppliers can ‘see’ the
prices being charged for goods, and in
that sense digital markets are said to
be more ‘transparent’ than traditional
market.
 Effect of the Internet on the marketplace

 Reduces information asymmetry

 Offers greater flexibility and efficiency because of:
 Reduced search costs and transaction costs
 Lower menu costs
 Greater price discrimination
 Dynamic pricing
 May reduce or increase switching costs
 May delay gratification: effects dependent on product
 Increased market segmentation
 Stronger network effects
 More disintermediation
The Benefits of Disintermediation to the Consumer

The typical distribution channel has several intermediary layers, each of which adds to the final cost
of a product, such as a sweater. Removing layers lowers the final cost to the consumer.
 The Growth of E-commerce

Retail e-commerce revenues grew 15–25 percent per year until the recession of 2008–2009, when they slowed
measurably. In 2014, e-commerce revenues are growing again at an estimated 12 percent annually.
Evolution of e-Commerce
 eCommerce: A Brief History

1995–2000: Innovation
 Key concepts developed

 Limited bandwidth and media

 Euphoric visions of Friction-free commerce

 Lowered search costs, disintermediation,

price transparency, elimination of unfair
competitive advantage
 First-mover advantages

 Network profits

 Dot-com crash of 2000

 eCommerce: A Brief History
 2001–2006: Consolidation
 Emphasis on business-driven approach
 Traditional large firms expand presence
 Start-up financing shrinks up
 More complex products and services sold
 Growth of search engine advertising
 Business Web presences expand to include
e-mail, display and search advertising, and
limited community feedback features
 eCommerce: A Brief History

 2007–Present: Reinvention
 Rapid growth of: Online social networks,
Mobile platform, Local commerce
 Entertainment content develops as source of
revenues
 Transformation of marketing Coordinated
marketing on social, mobile, local platforms
 Analytic technologies
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Ubiquity
 Global reach
 Universal standards
 Richness
 Interactivity
 Information density
 Personalization/customization
 Social technology
Unique Features of E-commerce, Digital Markets,
and Digital Goods
 Ubiquity
 Internet/Web technology available everywhere:
work, home, and so on, anytime
 Effect:
 Marketplace removed from temporal, geographic
locations to become “marketspace”
 Enhanced customer convenience and reduced
shopping costs
 Reduces transaction costs
 Costs of participating in market
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Global reach
• The technology reaches across national boundaries,
around Earth
• Effect:
 Commerce enabled across cultural and national
boundaries seamlessly and without modification.
 Marketspace includes, potentially, billions of
consumers and millions of businesses worldwide.
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Universal standards
 One set of technology standards: Internet standards
 Effect:
 Disparate computer systems easily communicate with
one another
 Lower market entry costs—costs merchants must pay to
bring goods to market
 Lower consumers’ search costs—effort required to find
suitable products
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Richness
 Supports video, audio, and text messages
 Effect:
 Possible to deliver rich messages with text, audio, and
video simultaneously to large numbers of people.
 Video, audio, and text marketing messages can be
integrated into single marketing message and consumer
experience.
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Interactivity
 The technology works through interaction with the
user.
 Effect:
 Consumers engaged in dialog that dynamically adjusts
experience to the individual.
 Consumer becomes co-participant in process of
delivering goods to market.
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Information density
 Large increases in information density—the total
amount and quality of information available to all
market participants
 Effect:
 Greater price transparency
 Greater cost transparency
 Enables merchants to engage in price discrimination
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Personalization/Customization
 Technology permits modification of messages, goods
 Effect:
 Personalized messages can be sent to individuals as well
as groups.
 Products and services can be customized to individual
preferences.
Unique Features of E-commerce, Digital Markets,
and Digital Goods

 Social technology
 The technology promotes user content
generation and social networking
 Effect:
 New Internet social and business models enable
user content creation and distribution, support
social networks
 Many-to-many model
 Categories of E-Commerce

There are many ways in which e-commerce

can be classified. On the basis of the
nature of the participants, e-commerce are
three types. These are
 Business-to-consumer (B2C)
 Business-to-business (B2B)
 Consumer-to-consumer (C2C)
 Business-to-consumer (B2C)
 Business-to-customer(B2C): Selling or
retailing of products and services directly to
individual customers (Wal-Mart.com)
 It involves commercial interaction between a
business entity and an individual consumer,
where a business sells to a consumer – for
example, a customer buying a shirt from a
retailer through the Internet. Munshigi.com,
bengalcommerc.com, bajna.com and e-
bangla.com are the most popular B2C e-
commerce in Bangladesh.
 Business-to-consumer (B2C)

 Businesses typically sell products and

services to consumers at E-commerce
websites that provide attractive Web
pages, multimedia catalogs, interactive
order processing, secure electronic
payment systems, and online customer
support
 Business-to-Business (B2B)
 Business-to-business (B2B): Sales
of goods and services to other
businesses (Grainger.com,
Ariba.com)
 Business-to-business applications of E-
commerce involve electronic catalog,
exchange, and auction marketplaces that
use Internet, intranet, and extranet
websites and portals to unite buyers and
sellers.
Categories of E-Commerce
 Business-to-Business (B2B)

 It involves online commercial interaction

between two business entities – for
example, a wholesale buyer doing
business negotiations with a garments
manufacturer over the Internet. B2B
application already exists in the export
sector of Bangladesh, especially in the
Ready Made Garments (RMG) industry.
 Business-to-Business
 Three main types of B2B e-commerce:
 Supplier-oriented marketplace – supplier
company provides e-commerce capabilities for
other businesses to order its products.
 Buyer-oriented marketplace – buyer requests

quotations or bids from other companies

electronically.
 Intermediary-oriented marketplace – acts as

an intermediary between buyer and seller.

 Consumer-to-consumer (C2C)
 Consumer-to-consumer (C2C):
Individuals using the Web for private sales or
exchange. Consumer selling directly to
consumer (eBay.com).
 It involves commercial interaction between
two private individuals –for example, auction
sites. If a person wants something to sale,
then he can get it listed at an auction site, and
others can bid for it.
Other types of e-commerce

 Other types of e-commerce are

 Consumer-to-government (C2G)
 Business-to-government(B2G)
 Government-to-government(G2G)
 Clicks and Bricks
Bricks-and-clicks is a business model by which
a company integrates both offline (bricks) and
online (clicks) presences. It is also known as
click-and-mortar or clicks-and-bricks, as well
as bricks, clicks and flips, flips referring to
catalogs. For example, an electronics store may
allow the user to order online, but pick up their
order immediately at a local store, which the
user finds using locator software. Conversely, a
furniture store may have displays at a local store
from which a customer can order an item
electronically for delivery.
E-commerce Business and Revenue Models
 E-commerce business models
 Portal: Portals are gateways to the Web and are often
defined as those sites which users set their home
page. Google, Yahoo.
 E-tailer: Online retails stores, often called e-tailers,
come in all sizes, from giant Amazon to tiny local
stores that have Web stores.
 Content provider: Content is defined broadly to
include all forms of intellectual property. Disney.com
 Transaction broker: Sites that process transactions for
consumers normally handled inperson, by phone, or
by e-mail. Expedia
 E-commerce Business and Revenue Models
 E-commerce business models
 Market creator: Market creators build a digital
environment in which buyers and sellers can meet, display
products, search for products, and establish prices. Uber
 Service provider: While e-tailers sell products online,
service providers offer services online. Google Apps,
Google sites, salesforce.com
 Community provider: Community providers are sites that
create a digital online environment where people with
similar interests can transact; share interest, photos,
videos; communicate with like-minded people. Facebook,
Google+, Linkedin.
E-commerce Business and Revenue Models

 E-commerce revenue models

 Advertising
 Sales

 Subscription

 Free/Freemium

 Transaction fee

 Affiliate
 How Has E-commerce Transformed Marketing?

 E-commerce marketing
 Internet provides new ways to identify and
communicate with customers.
 Long tail marketing:
 Ability to reach a large audience inexpensively
 Internet advertising formats
 Behavioral targeting:
 Tracking online behavior of individuals on thousands of
Web sites and within apps
 Privacy concerns
 Web Site Visitor Tracking

E-commerce Web
sites have tools to
track a shopper's
every step through
an online store.
Close examination
of customer
behavior at a Web
site selling
women's clothing
shows what the
store might learn
at each step and
what actions it
could take to
increase sales.
 Web Site Personalization

Firms can create unique

personalized Web pages
that display content or ads
for products or services of
special interest to individual
users, improving the
customer experience and
creating additional value.
 How an Advertising Network Works

Advertising networks and

their use of tracking
programs have become
controversial among privacy
advocates because of their
ability to track individual
consumers across the
Internet.
 Social e-Commerce
 Social e-commerce: Social e-commerce is a
subset of electronic commerce that involves
social media, online media that supports
social interaction, and user contributions to
assist online buying and selling of products
and services. More succinctly, social
commerce is the use of social network(s) in
the context of e-commerce transactions.
 Based on digital social graph
 Social Commerce

 Features of social e-commerce driving its

growth
 Newsfeed
 Timelines
 Social sign-on
 Collaborative shopping
 Network notification
 Social search (recommendations)
 Social e-Commerce
 Social media:
 Fastest growing media for branding and marketing
 Social network marketing:
 Seeks to leverage individuals influence over others in
social graph
 The target is a social network of people sharing
interests and advice
 Facebook’s “Like button”
 Social networks have huge audiences
 Facebook: 137 million U.S. visitors monthly
 How Has E-commerce Transformed Marketing?

 Social shopping sites

 Wisdom of crowds
 Crowdsourcing
 Large numbers of people can make better decisions about
topics and products than a single person.
 Prediction markets
 Peer-to-peer betting markets on specific outcomes
(elections, sales figures, designs for new products)
 E-commerce and Business-to-Business
Transactions
 B2B e-commerce
 U.S. B2B trade in 2014 is $13.8 trillion
 U.S. B2B e-commerce in 2014 is $5.7 trillion
 Procurement requires significant overhead costs,
which Internet and networking helps automate
 Variety of Internet-enabled technologies used in B2B
 Electronic data interchange (EDI)
 Private industrial networks (private exchanges)
 Net marketplaces
 Exchanges
E-commerce and Business-to-Business Transactions

 Electronic data interchange (EDI)

 Computer-to-computer exchange of standard
transactions such as invoices, purchase orders.
 Major industries have EDI standards that define
structure and information fields of electronic
documents.
 More companies are increasingly moving toward private
networks that allow them to link to a wider variety of
firms than EDI allows and share a wider range of
information in a single system.
 Electronic Data Interchange

Companies use EDI to automate transactions for B2B e-commerce and continuous inventory
replenishment. Suppliers can automatically send data about shipments to purchasing firms. The
purchasing firms can use EDI to provide production and inventory requirements and payment data to
suppliers.
E-commerce and Business-to-Business Transactions

 Private industrial network (private exchange)

 Large firm using extranet to link to its suppliers,
distributors, and other key business partners
 Owned by buyer
 Permits sharing of:
 Product design and development
 Marketing
 Production scheduling and inventory management
 Unstructured communication (graphics and e-mail)
 A Private Industrial Network

A private industrial network,

also known as a private
exchange, links a firm to its
suppliers, distributors, and
other key business partners
for efficient supply chain
management and other
collaborative commerce
activities.
E-commerce and Business-to-Business Transactions

 Net marketplaces (e-hubs)

 Single market for many buyers and sellers
 Industry-owned or owned by independent
intermediary
 Generate revenue from transaction fees, other
services
 Use prices established through negotiation, auction,
RFQs, or fixed prices
 May focus on direct or indirect goods
 May be vertical or horizontal marketplaces
 A Net Marketplace

Net marketplaces are online

marketplaces where multiple
buyers can purchase from
multiple sellers.
 E-commerce and Business-to-Business Transactions

 Exchanges
• Independently owned third-party Net marketplaces
• Connect thousands of suppliers and buyers for spot purchasing
• Typically provide vertical markets for direct goods for single
industry (food, electronics)
• Proliferated during early years of e-commerce; many have
failed
 Competitive bidding drove prices down and did not offer long-term
relationships with buyers or services to make lowering prices
worthwhile.
 M-commerce and M-commerce Applications

 M-commerce
 In 2014 is 19 percent of all e-commerce
 Fastest growing form of e-commerce
 Some areas growing at 50 percent or more

 Main areas of growth (exclusive of location-based

services)
 Retail sales at top Mobile 400 (Amazon, eBay,
etc.)
 Sales of digital content (music, TV, etc.)
 Consolidated Mobile Commerce Revenues

Mobile e-commerce is the fastest growing type of B2C e-commerce and represents about 19 percent
of all e-commerce in 2014.
 M-commerce and M-commerce Applications

 Location-based services
 Used by 74 percent of smartphone owners
 Based on GPS map services
 Types
 Geosocial services
 Where friends are
 Geoadvertising
 What shops are nearby
 Geoinformation services
 Price of house you are passing
 M-commerce and M-commerce Applications

 Other mobile commerce services

 Banks, credit card companies provide account
management apps
 Mobile display advertising
 iAd, AdMob, Millenial Media, Facebook
 Ads embedded in games, videos, and mobile
apps
 55 percent of online retailers have m-commerce
Web sites
 Building an E-commerce Presence

 Most important management challenges

 Developing clear understanding of business
objectives
 Knowing how to choose the right technology to
achieve those objectives
 Develop an e-commerce presence map
 Four areas: Web sites, e-mail, social media, offline
media
 Develop a timeline: milestones
 Breaking a project into discrete phases
 Building an E-commerce Presence

E-commerce Presence Map

An e-commerce presence requires firms

to consider the four different types of
presence, with specific platforms and
activities associated with each.
 Building an E-commerce Presence

E-commerce Presence Timeline

Phase Activity Milestone
Phase 1: Planning Envision Web presence; determine personnel Web mission statement

Phase 2: Web site Acquire content; develop a site design; arrange Web site plan
development for hosting the site
Phase 3: Web Develop keywords and metatags; focus on A functional Web site
Implementation search engine optimization; identify potential
sponsors
Phase 4: Social media Identify appropriate social platforms and content A social media plan
plan for your products and services
Phase 5: Social media Develop Facebook, Twitter, and Pinterest Functioning social media
implementation presence presence
Phase 6: Mobile plan Develop a mobile plan; consider A mobile media plan
options for porting your Web site
to smartphones
Thanks
You