IB Business Management Unit 4/Section 4.8 E-commerce

4.8 e-commerce On completing this chapter you should be able to Describe the features of e-commerce. Analyze the effects of e-commerce on the marketing mix. Distinguish between the three types of e-commerce.

E-commerce E-commerce (electronic commerce) is the trading of goods and services using electronic system. This online trading take place mainly by the use of computers via the Internet, but smartphones can also be used. E-Commerce is not only about buying and selling of goods. Many organizations also use it for information and advertising on their websites.    

Effects of e-commerce on the marketing mix Price: Prices can be adjusted and updated regularly. Prices can be reduced because the Internet allows businesses to cut out wholesalers and retailers and sell directly to customer. Firms have to charge cheaper prices to provide for transport costs to be incurred by customers. Place: The head office of an e-business can be anywhere because the point of contact is the internet. However, there is still the logistic of ensuring that the goods reach the customers. There is no need of intermediaries such as wholesalers to distribute the goods. Product: A wider product range can be displayed online than in a physical outlet. More information can be provided on the products. However, customers cannot examine or test the products. Promotion: Customers can take their time when browsing information about a product which is not possible in conventional advertising. Promotional costs can be cheaper

E-commerce classification Business-to-Business (B2B):Refers to e-commerce which caters for the needs of other businesses. It is well established and a lot of purchase orders and payments are now made electronically. Examples include banking services, insurance, advertising agency services. Business to consumer (B2C):Refers to e-commerce which caters directly for the needs of the final consumer. Examples include Amazon, Google. Consumer-to-consumer (C2C):Refers to e-commerce that allows for transactions from one customer to another. Examples are Ebay and Craigslist.