Electronic or e-Commerce Unit 4.8

E-commerce Is the trading of goods and services via the internet, which has come a very long way since it began back in August 1991 It allows businesses to operate 24-hours a day with an international reach Takes place with the use of computer linked to an internet Examples: Financial Services Utility Services Motor Vehicles Retailing

Classification of e-commerce Business to Business (B2B) Caters to the needs of other businesses Business to Consumer (B2C) Caters directly to the end-users (ie. the consumers) Consumer to Consumer (C2C) Enables consumers to trade with each other

Advantages Another source of revenue Another channel of distribution Provides greater flexibility for organizations to respond to competitors more quickly Excessive packaging can be reduced Reduce overheads such as rent, storage, insurance and staffing costs Operating costs are reduced Customers have more choice and convenience

Disadvantages Set-up costs can be high Higher prices or lower profit margins for credit card companies finance charges for using their services Fraudulent trade Spam and unethical marketing opportunities Customers may find browsing online time consuming Websites and web pages have too much information or too many high-resolution graphics & pictures, so loading time is very slow Reliant on advanced technology that may not be available to all businesses or in all countries Internet is prone to hackers and breakdowns May result in job losses

E-commerce & Price Prices all over the world can be researched and compared very quickly and easily. This intensifies competition. Internet increases price transparency to the advantage of the customer who is able to gain a better knowledge of price comparisons in an instant.

E-commerce and place The internet provides a low cost alternative to traditional retail channels. Shortens the channel of distribution Often more convenient for customers Different languages can be used to capture an even larger audience Physical outlets may still be essential: to give consumers the confidence to buy over a businesses’ website to provide non-internet subscribers the opportunity to buy the product. with some products, customers may want to inspect first before buying

E-commerce and PRODUCT Products can be tailored to the specific needs of the customer (ex. Dell computers). This results in higher sales and profits Packaging will be less of an issue Additional detailed information and product updates can be placed on the firm’s website

E-commerce and PRomotion PROMOTION can be spread very quickly and cheaply through: Banner ads - the most common. The largest appear as elongated boxes at the bottom of the screen, covering about 2/3 of the screen width, hence the name. Interstitial ads - the ads that flash on the screen during the time your request is being handled. Pop-up ads - the ads that appear once a site has been loaded, but before you get access. They usually contain messages from the site company, but are increasingly being sold to independent entrepreneurs who want to take advantage of a popular site. Rich media ads - ads that move, talk, beep, or flash.

Read organization objectives and the CUEGIS concepts Pages 469-470

Key Terms REVIEW

B2B (business to business) Refers to e-commerce conducted directly for business customers rather than the end user (consumer), e.g. Amazon.com supplies books to retailers such as Barnes & Nobles.

B2C (business to consumer) Refers to e-commerce business conducted directly for the end-user (the consumer), e.g. Amazon.com selling books directly to private individual.

C2C (consumer to consumer) Is an e-commerce platform, such as eBay, that enables customers to trade with each other.

E-commerce (electronic commerce) Is the trading of goods and services via the internet, electronic systems and computer networks.

E-tailers Are businesses that operate predominantly online, such as Alibaba.com, eBay, Facebook and Google. They are different from retailers that operate physical stores and outlets.

Price transperancy Refers to the openness in communication about prices being charged by businesses. E-commerce allows customers to access price comparisons quite easily.

Spam Refers to unsolicited and superfluous marketing messages via email or pop-up advertisements. The common purpose of ‘spamming’ is to advertise a firm’s products, such as financial services or computer software.

Viral Marketing Is a promotional technique that relies on the use of online social networks, such as email, blogs, Twitter and YouTube.