IB Business Management 4.8 Electronic Commerce (E-commerce)

Learning Outcomes To have knowledge of the Features of e-commerce (A01) To understand and be able to apply the effects of changing technology and e-commerce on the marketing mix (A02) To Understand the differences between the following types of e-commerce: • business to business (B2B) • business to consumer (B2C) • consumer to consumer (C2C) (A02) To evaluate the costs and benefits of e-commerce to firms and consumers (A03)

Will physical shops exist in the future? Essential Question Will physical shops exist in the future?

E-commerce Trading of goods & services via the internet Began August 1991 Existing companies have taken opportunities to trade online and Ecommerce has provided opportunities for many new business startups Examples of e-markets include: Financial services Gaming Retailing (books, DVD’s, music, clothes?)

Watch the Video on E-Commerce What are the key features of an e-commerce business? Are there any advantages or disadvantages? Is it a suitable approach for all businesses or is it more suited to particular industries?

Industries Embracing E-commerce

Ecommerce and the marketing mix

E-commerce & Price Internet increases price transparency Internet cuts out the middleman Prices can be adjusted instantly

E-commerce & Place Global customer base possible Wider customer base Can shop at any time More competition More shipping costs Lower costs because fewer facilities needed No retail stores needed Can locate warehouse in cheapest rental areas

E-commerce & Product Options can be viewed online Company does not have to stock every item Just provide the option and supply as-needed Possibilities for interactive, personalized shopping Change a product online and view your changes Information on product can be stored online User manual, specs, etc.

E-commerce & Promotion Preferred language on websites FAQs Opportunity to make money from advertising revenue from other firms New opportunities on the internet: More detailed ads Online video, audio, photos http://www.360house.com/ Viral marketing Also traditional promotion tailored for internet E.g., contests, discounts, coupons

ThE DIFFERENT TYPES OF E-commerce

Business to Business (B2B) versus Business to Consumer (B2C) E-commerce catered to needs of other businesses Corporate banking Suppliers Advertising Shipping Often to facilitate business transactions rather than to increase sales B2C E-commerce directly catered to the end user, i.e. the consumer Some businesses do both

Task Read the article ‘Even Faster Food’ and consider the questions below What are the benefits of ecommerce for: Businesses? Customers?

Benefits of E-commerce for Companies Another source of revenue Growing industry Can be updated very quickly Easy for customers to search for Direct channel of distribution = higher profit margins Enables more rapid response to competition Target wider range of customers Improves customer service Options for instant download/e-ticketing reduce costs Cheaper than printing catalogues Can be used as an opportunity for promotion Reduces packaging costs User manuals & software downloads available online Reduces overhead costs Less rent, staffing, insurance, etc.

Benefits of E-commerce for Customers Customers can compare competitors more easily More choice more convenient Lots of information can be made available Customers have lower costs Customers can find products rapidly Can shop 24 hours a day Can make decisions without hassle from sales staff However, What are the potential difficulties/problems with Ecommerce from customers perspectives?

Disadvantages of E-commerce - customers Not all customers have access to internet Slow internet speed makes some websites difficult to navigate Some customers worry about security of online payments Information overload No chance to see and try products before you buy Time delay between ordering and receiving What might the difficulties of ecommerce be for businesses?

Disadvantages of E-commerce - businesses Set up and maintenance costs can be high Not appropriate for all goods Information overload Too much data Too many pages Some customers do NOT have access Internet prone to hackers & breakdowns Customers normally pay with credit card, therefore finance charges Potential for Fraud

Issues and decisions with E-commerce Payment systems Security Distribution methods Maintenance and updating of the site International Issues After sales service Legal issues

Task – Investigate an Ecommerce Business Evaluate the decisions has the business you have chosen made with regards to the following issues Payment systems Distribution methods Lead Times Delivery costs to customers Geographical scope of operations After sales service

Suggested businesses ASOS.com Sherpas Amazon CityShop Tesco Marks and Spencer Ctrip

E-Commerce – CUEGIS? CONCEPT RELEVANCE TO INTERNATIONAL MARKETING THEORY CHANGE CULTURE ETHICS GLOBALISATION INNOVATION STRAETEGY