The Nature of E-Commerce Characterizing E-Commerce in Business Conducting Business on the Web 1 The Nature of E-Commerce Section 2-1 Section 2-2 Chapter 2

The Nature of E-Commerce Section 2-1 Why It’s Important E-commerce has impacted the economy in countless ways. Successful e-commerce entrepreneurs are aware of the specific advantages and disadvantages of conduction business online and plan accordingly. 2Section 2-1

The Nature of E-Commerce Section 2-1 Key Terms e-business brand loyalty mass customization value chain elastic demand 3Section 2-1

The Nature of E-Commerce E-Commerce Environment Business in the old economy focused almost exclusively on manufacturing physical goods. Today, in the new, electronic economy, knowledge production is the primary business driver. 4Section 2-1

The Nature of E-Commerce E-Commerce versus E-Business In Chapter 1 you learned that e-commerce is business conducted via electronic methods. E-commerce also refers to electronic transactions involving the transferring of ownership of goods or services. The buyer and seller have to agree on an exchange, whether monetary or non-monetary. 5Section 2-1

The Nature of E-Commerce E-Commerce versus E-Business Government, not-for-profit organizations, and corporations all conduct e-business. e-business any process a business conducts over a computer network 6Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce In the era of e-commerce, the number of potential buyers is limitless. 7Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce The electronic marketplace is open 24 hours a day, 7 days a week. In this respect, it has made the retail marketplace more customer-focused. All-hours e-commerce poses various challenges to businesses, which must now be able to operate effectively at any time. 8Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce E-commerce offers businesses a multitude of effective and inexpensive ways to reach new and existing customers. 9Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce Web sites enable businesses to track customers’ purchasing habits. 10Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce If a customer will not accept a substitute, even when there are many other comparable products available, he or she is demonstrating brand loyalty. brand loyalty refers to a customer’s preference for a particular product 11Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce Online retailers may be able to bypass many difficult decisions regarding inventory. Customers can not shoplift from a virtual store. 12Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce With e-commerce, there is a trend toward mass customization. mass customization the production of goods that offer specialized choices to mainstream buyers 13Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce Mass customization influences all aspects of the value chain. value chain the sequence of design, production, and marketing efforts a business conducts to deliver its products at the right price and time 14Section 2-1 When a company streamlines its value chain, productivity and profitability generally increase.

The Nature of E-Commerce Benefits and Characteristics of E-Commerce A virtual storefront is much faster, easier, and cheaper to set up than a bricks-and-mortar store. Online businesses can also be grown quickly, whether through alliances with other e-businesses or by offering additional goods and services. 15Section 2-1

The Nature of E-Commerce Benefits and Characteristics of E-Commerce The e-commerce environment fosters elastic demand. elastic demand when pricing changes create a change in the amount of goods or services consumers are willing to buy at a certain price 16Section 2-1

The Nature of E-Commerce Section 2-1 Review What does it mean for a company to “manage” its inventory? How is an online company’s inventory easier to manage than that of a bricks-and-mortar business? How can a company streamline its value chain? Why is it difficult to charge a higher price for an item than your competitors in the e-commerce marketplace? Section 2-1

The Nature of E-Commerce Section 2-2 Why It’s Important There are a variety of business models available for online businesses to follow. You can maximize your chances for e-commerce success by familiarizing yourself with the models and using them to your advantage. Section 2-218

The Nature of E-Commerce Section 2-2 Key Terms business model business-to-business business-to-consumer consumer-to-consumer consumer-to-business business-to-government government-to-consumer Section 2-219

The Nature of E-Commerce The Process of Buying and Selling Online The rest of this chapter explores the different types of business models common in e-commerce. 20Section 2-2

The Nature of E-Commerce E-Commerce Business Models If you plan to launch a business on the Web, you’ll want to pay close attention and select the best business model for your e-commerce venture. business model a system of policies, operations, resources, and technologies used to generate revenue 21Section 2-2

E-Commerce Business Models 22Section 2-2 Common Busines s Models business-to- business (B2B) business-to- consumer (B2C) intermediary hub consumer-to- consumer (C2C) government-to- consumer (G2C) consumer-to- business (C2B) business-to- government (B2G)

The Nature of E-Commerce E-Commerce Business Models The oldest and fastest- growing form of e-commerce, business-to- business (B2B) allows e- business to collaborate, partner, and share research and complex data with other businesses. business-to-business (B2B) business model that applies when a business transacts information, goods, or services with another business 23Section 2-2

The Nature of E-Commerce E-Commerce Business Models Turning browsers into buyers, building customer loyalty, and fulfilling customer orders in a timely and satisfactory way are all concerns for business-to- consumer (B2C) sites. business-to-consumer (B2C) business model that applies to any business or organization that uses the Internet to sell its products or services to consumers 24Section 2-2

The Nature of E-Commerce E-Commerce Business Models Online auctions are the most common forum for consumer-to-consumer (C2C) e-commerce. consumer-to-consumer (C2C) business model that allows consumers to interact with one another online to transact goods and services 25Section 2-2

The Nature of E-Commerce E-Commerce Business Models A consumer-to-business (C2B) model uses a reverse-auction scenario: The business responds to the consumer’s requested product and its price. consumer-to-business (C2B) business model in which the customer initiates the transaction, posting an intent or desire to buy a certain product at a certain price 26Section 2-2

The Nature of E-Commerce E-Commerce Business Models Businesses that bid on government contracts use the business-to- government (B2G) business model. business-to- government (B2G) business model that connects the private sector to the government marketplace 27Section 2-2

The Nature of E-Commerce E-Commerce Business Models The government-to- consumer (G2C) business model allows citizens to interact with government agencies online. government-to- consumer (G2C) business model that allows consumers to easily access relevant information from government agencies 28Section 2-2

The Nature of E-Commerce E-Commerce Business Models Some businesses don’t buy or sell products or purchase services themselves. Instead they act as an intermediary, bringing buyers and sellers together. An intermediary hub is a business that acts as a third party or go-between in moving products from the manufacturer to the end user. Section 2-229

The Nature of E-Commerce Section 2-2 Review Why do e-commerce businesses strive to keep potential customers on their sites as long as possible? What are some key challenges facing the B2C model? How might the G2C model be helpful to the average consumer? Section 2-2