McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 5 Electronic Commerce: Strategies for the New Economy

5-2 INTRODUCTION  E-commerce is changing everything  Electronic commerce (e- commerce) – commerce, but it is commerce accelerated and enhanced by IT  Build powerful relationships with customers  Build powerful relationships with suppliers  Build powerful relationships with partners

5-3 E-COMMERCE BUSINESS MODELS

5-4 B2B & B2C E-Commerce  B2B e-commerce – business sells products and services to customers who are primarily other businesses  Where all the e-commerce money is  B2C)e-commerce – business sells products and services to customers who are primarily individuals  B2C is the glitzy e-commerce like iTunes, eBay, etc

5-5 UNDERSTAND YOUR BUSINESS, PRODUCTS, SERVICES, & CUSTOMERS  To be successful, you must…  Define your products and services  Define your target customers  B2B (other businesses)  B2C (individuals)  Define your customers perception of the value of your products and services

5-6 B2C: Convenience Versus Specialty  Convenience vs. specialty  Lower vs. high priced  Frequency of purchase  Food items vs. stereos and computers  Commoditylike and digital  Same no matter where you purchase it  Delivered over the Internet  Best product types for B2C e-commerce

5-7 B2B: Horizontal Versus Vertical E-Marketplaces  Electronic marketplace (e- marketplace) – interactive business providing a central market where multiple buyers and sellers can engage in e-commerce

5-8 FIND CUSTOMERS AND ESTABLISH RELATIONSHIPS  You must first find customers  Then establish relationships  Otherwise, you can’t make a sale  B2C and B2B techniques are very different

5-9 Business to Consumer  Determine your marketing mix - set of marketing tools your organization will use to pursue its marketing objectives in reaching and attracting potential customers  Search engines  Online ads  Viral marketing  Affiliate programs

5-10 Business to Business Marketing  Much more personal  Not usually done with generic ads designed for mass distribution  Often take place in e-marketplaces

5-11 MOVE MONEY EASILY & SECURELY  In e-commerce, security becomes very important  B2C  Credit cards, financial cybermediaries, electronic checks, EBPP, & smart cards  B2B  Electronic data interchange (EDI)  Value-added networks (VANs)  Financial EDI

5-12 E-BUSINESS TREND – LONG TAIL  Long Tail – first offered by Chris Anderson; explains e- commerce profitability in terms of a sales curve

5-13 E-BUSINESS TREND - CROWDSOURCING  Crowdsourcing – when businesses provide enabling technologies that allow people – instead of designated employees – to create, modify, and oversee the development of a product or service.  Netflix – gave a million $$ to improve its recommendation engine by 10%  eBay, Facebook, Twitter, YouTube

5-14 E-BUSINESS TREND – VIRTUAL GOODS  Virtual good – nonphysical object  Music  E-cards  Toys, weapons, clothes, and accessories you buy in online communities like Farmville and World of Warcraft  $2.1 billion  $7.3 billion (245% increase)  $14 billion (projected)

5-15 E-BUSINESS TREND – MOBILE COMMERCE  Mobile commerce – electronic commerce transactions conducted over a wireless device such as a smartphone, laptop, or tablet PC.