What is Ecommerce?
Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.
Whereas e-business refers to all aspects of operating an online business, ecommerce refers specifically to the transaction of goods and services.
The history of ecommerce begins with the first ever online sale: on the August 11, 1994 a man sold a CD by the band Sting to his friend through his website NetMarket, an American retail platform. This is the first example of a consumer purchasing a product from a business through the World Wide Web—or “ecommerce” as we commonly know it today.
Since then, ecommerce has evolved to make products easier to discover and purchase through online retailers and marketplaces. Independent freelancers, small businesses, and large corporations have all benefited from ecommerce, which enables them to sell their goods and services at a scale that was not possible with traditional offline retail.
Global retail ecommerce sales are projected to reach $27 trillion by 2020.
Types of Ecommerce Models
There are four main types of ecommerce models that can describe almost every transaction that takes place between consumers and businesses.
1. Business to Consumer (B2C):
When a business sells a good or service to an individual consumer (e.g. You buy a pair of
shoes from an online retailer).
2. Business to Business (B2B):
When a business sells a good or service to another business (e.g. A business sells software-as-a-service for other businesses to use)
3. Consumer to Consumer (C2C):
When a consumer sells a good or service to another consumer (e.g. You sell your old furniture on eBay to another consumer).
4. Consumer to Business (C2B):
When a consumer sells their
own products or services to a business or organization (e.g. An influencer offers exposure to their online audience in exchange for a fee, or a photographer licenses their photo for a business to use).
Examples of Ecommerce
Ecommerce can take on a variety of forms involving different transactional relationships between businesses and consumers, as well as different objects being exchanged as part of these transactions.
1. Retail:
The sale of a product by a business directly to a customer without any intermediary.
2. Wholesale:
The sale of products in bulk, often to a retailer that then sells them directly to consumers.
3. Dropshipping:
The sale of a product, which is manufactured and shipped to the consumer by a third party.
4. Crowdfunding:
The collection of money from consumers in advance of a product being available in order to raise
the startup capital necessary to bring it to market.
5. Subscription:
The automatic recurring purchase of a product or service on a regular basis until the subscriber chooses to cancel.
6. Physical products:
Any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made.
7. Digital products:
Downloadable digital goods, templates, and courses, or media
that must be purchased for consumption or licensed for use.
8. Services:
A skill or set of skills provided in exchange for compensation. The service provider’s time can be purchased for a fee.
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what was the only stable form of commerce during the recession?
• E- commerce today: – Use of the Internet and Web to transact business; digitally enabled transactions – Began in 1995 and grew _________, still growing even in a recession – Companies that _____ the dot-com bubble burst and now thrive – E-commerce revolution is still in its _____ stages
exponentially survived early
_____ is about digitally enables commercial transactions between and among organizations and individuals
for the most part this means transactions that happen over the _______
most purchases still take place through ______ channels but _____ continues to grow rapidly and changes they way companies do business
Retail e-commerce revenues grew ___-___ percent per year until the recession of 2008
2009, when they ___ measurably. In 2010, e-commerce revenues grew again at an
estimated__ percent annually.
List the 8 unique features of e-commerce
Ubiquity Global reach universal standards richness interactivity information density personalization/ custom ability social technology
E-commerce is ___ meaning that it is available just about everywhere at all times
results in something called ____ - a market place extended beyond traditional boundaries and removed form a temporal and geographic location
enhance customer convenience and reduce shipping costs
from a consumers point of view ____ reduces ______
ubiquitous
marketspace
ubiquity
transaction cost
_____ - the costs of participating in a market
reduced by _________
don't have to spend time or money traveling to a market and much less mental effort is required to make a purchase
transaction costs
ubiquity
• ________ The technology reaches across national boundaries, around Earth Commerce enabled across cultural and national boundaries seamlessly and ________ modification Market space or the potential market size for commerce merchants is roughly equal to the size of the worlds _____ population
global reach
without
online
________
one strikingly unusual feature of e commerce technologies is that the technical ____ for the Internet and therefore the technical ____ for conducting e-commerce are ____________
universal standards
standards standards
universal standards
____________ – One set of technology standards: Internet standards • Disparate computer systems easily ________ with each other • Lower ________ —costs merchants must pay to bring goods/services to market • Lower consumers ’ _________ —effort required to find suitable products. (easily comparison shop)
universal
standards
communicate market entry search costs
____________:
lower ____ - the cost merchant must pay simply to bring their goods to market
Also lowers _____ (for consumers) - effort required to find suitable products
universal standards
market entry
search costs
traditional markets, national sales forces and small retail stores have great _____ - refers to the complexity and content of a message
but there was a trade off between _____ and ______
The web makes it possible to deliver ____ messages with text, audio and video simultaneously to ____ numbers of people
richness
richness and reach
rich
large
___________ – Supports video, audio, and text messages • Traditional markets offers ______ shopping experiences. • Possible to deliver rich messages with text, audio, and video simultaneously to large numbers of people • Video, audio, and text marketing messages can be integrated into_____ marketing message and consumer experience
E-commerce technologies are _____ meaning they allow for two way
communication between the merchant and the consumer
TV cannot ask viewers nay questions or enter into conversations with them and it cannot request that customer information be entered int a form
BUT all these activities are possible on a commerce website
• ____________ – The technology works through _______ with the user • Consumers engaged in dialog that dynamically _____ experience to the individual • _______ becomes co-participant in process of delivering goods to market • Two-way interactions (example of one-way: TV commercial)
Interactivity Interaction adjusts consumer
Interactivity allows an online merchant to engage a consumer in ways similar to __________ experience but on a massive global scale
The Internet and web vastly increases _________ - the total amount and quality of information available to all market participants consumers and merchants alike
E-commerce technologies decrease information _____, _______, ________, and _______ costs while greatly increasing the ______, _______ and ______ of information
information density
collection storage processing and
communication
currency accuracy timeliness
–E-commerce largely increases in ___________—the total amount and quality of information available to all market participants • Greater ________ (comparison shopping) • Greater _________ • Enables merchants to engage in __________
information density
price transparency cost transparency
price discrimination
____________ in E-commerce leads to _________ - refers to the ease with which consumers can find out a variety of prices in a market
Information Density
Price transparency
__________ in E-commerce leads to ______ - refers to the ability of consumers to discover the actual costs merchants pay for products
Information density
cost transparency
Information density in E-commerce leads to benefits for _____ as well.
Online _____ can discover much more about consumers than in the past
leads to ______ - selling the same goods, or nearly the
same goods to different targeted groups at different prices Information density also allows sellers differentiate products in terms of ______, ______ and _____
sellers merchants
price discrimination
cost brand quality
E-commerce technologies permit ____ - merchants can target heir marketing messages to specific individual by adjusting the message o a persons name interest and past purchases
E-commerce technologies alos permits _____ - changing the delivered product or service based on a users preferences or prior behavior
E-commerce leads to __________– The technology promotes user content generation and social networking • New Internet social and business models enable user content creation and distribution, and support social networks • Large data generation source • ______ are tools
social technology
consumers
All previous mass media in modern history use a ____ model where content is created in a central location by experts and audiences are concentrated in huge numbers to consume a standardized product
the new internet
and e-commmerce empower users to create and distribute content on a large scale and permit users to program their own content consumption. The Internet provides a unique __________ model of mass communication
broadcast (one to many)
many to many
The internet reduces _____ - exists when one party in a transaction has more information that is
important for the transaction than the other party
in digital marktes consumers and suppliers can see the price being charged for goods and in that sense digital markets are said to be more _______ than traditional markets
in short the internet as reduced ________
information asymmetry
transparant
information asymmetry
Digital markets reduce: 1.) 2.) 3.) 4.) Digital markets enable: 1.) 2.) 3.) 4.)
Transaction costs search costs menu costs information asymmetry
price discrimination dynamic pricing disintermediation
Markets are very efficient and flexible because they operate with reduced _____ and __________ costs, lower ____ costs, greater price ________ and the ability to change prices ______ based on market conditions
search transaction menue discrimination dynamically
_______ - one party in a transaction having more information related to the transaction. (transparency, ex. Cars) - reduced
______ - merchants costs of changing prices - reduced
information asymmetry
menu costs
_________- price of a product varies depending on demand characteristics of the customer or supply situation of seller. - increased
_____ - the removal of organizations or business process layers responsible for intermediary steps in the value chain - increased
Dynamic pricing
disintermeidation
______ - the price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller
dynamic pricing
(think of it as a dynamic between the seller and buyer that creates to a price)
Digital markets may either reduce or increase _____ costs depending on the nature of the product or service being sold and they may cause some extra delay in gratification
unlike a physical market you can to immediately ____ the product (for most products, unless its a digital product) purchased over the web.
digital markets provide opportunities to sell ____ to the consumer
switching
consume
directly
eliminating intermediaries in the distribution channel can significantly lower purchase _____ costs
the removal of organizations or business process layers responsible for intermediary steps in a value chain is called _______
also affects markets for ____. Airlines and notes operating their own reservation sites online earn more per
ticket because they have eliminated travel agents as intermediaries
disintermediation
services
_____ - goods that can be delivered over a digital network
Music, tracks, video, hollywood movies, software, newspapers, magazines and books can all be expressed stored delivered and sold as purely _____ products
however currently, most of the products are sold as _____ as well , CDs, DVDs, newspapers and hard copy books
in general, for digital goods, the _____ cost of producing another unit is about ____ (it costs nothing to make a copy of a music file)
however the cost of producing the original first unit is relatively _______. In fact it is about the _____ cost of the product (there is very little other costs of inventory and distribution)
1.) Marginal cost for digital goods/ traditional goods 2.) cost of production digital good/ traditional goods 3.) Copying cost digital goods/ traditional goods 4.) Distribution Delivery costs digital/ traditional
1.) digital = 0 traditional = high >0 2.) digital = high (most of cost) traditional = variable 3.) digital = 0 traditional = high >0 4.) digital = 0 traditional = high
5.) Inventory costs digital/ traditional 6.)Marketing costs digital/ traditional 7.) pricing digital/ traditional
5.) digital = low traditional = high 6.) digital = variable traditional = variable 7.) more variable traditional = fixed based on unit costs
because of digital goods, businesses dependent on _______ products for sale face the possibility of declining sales and even destruction of their business
many ways to classify electronic commerce transactions.
1.) looking at the nature of the ______ in the electronic commerce transaction
2.) another way is in terms of the _____ used by participants in a transaction
participants (i.e. B2B)
platforms (e-commerce)
______ - electronic commerce involves retailing products and services to individual shoppers.
is barnes and noble
_____ - electronic commerce involves sales of goods and services among businesses.
Chem connects web site for buying and selling chemicals and plastics is an
example
________ - electronic commerce involves consumers selling directly to consumers.
ebay, craigslist
the use of handled wireless devices for purchasing goods and services form any location is termed ______
both _____, _____ and ____ e-commerce transactions can take place using m-commerce technology
mobile commerce (m-commerce)
b2c b2b C2C
• E-commerce business models –_______ : physical products -> consumer – ________ broker: – ________: online market place; craiglsist – ________: uploads content consumers purchase – _________: craigslist – _________: search engines – __________: web 2.0 applications, social networking
e-retailer transaction broker market creator content provider community provider portal service provider
______ - offer powerful web search tools as well as an integrated package of content and services such as news, email, instant messaging, maps, calendars, shopping, music, downloads video streaming and more
initially _____ were the gateways to the internet. Now provides a destination
sites where users start their web searching linger to read news find entertainment and meet other people and be exposed to advertising
one of the e-commerce _____ models
_____ - provides initial point of entry to the web along with specialized content band other services
bing yahooo google
generate revenue primarily by attracting very _____ audiences, charging advertisers for _____ placement,
collecting ______ fees for steering customers to other sites and charging for _____ services
on of the e-commerce _____ models
portals
large ad referral premium
business
_____ - sells physical products directly to consumers or to individual businesses
amazon, redenvelope
similar to _______ storefront except that
customers only need to connect to the internet to check their inventory and place an order online
one of the e-commerce _____ models
e-tailer
brick and mortar
business
______ - creates revenue by providing digital content such as news music photos or video over the web. the customer may pay to to access content or revenue may be
germinated by selling advertising space itunes, games.com ____ - includes all forms of intellectual property ____ proposition of online content providers is that consumers can find a wide range of content online, conveniently and purchase this content inexpensively to be played or viewed on multiple computers or smartphones
one of the e-commerce _____ models
content provider content
value
business
Content provider:
content is defined broadly to include all forms of ________
_____ - refers to all forms of human expression that can be put into a tangible medium such as text, CD's, DVD's or stored on any digital mdi a including the web
one of the e-commerce _____ models
intellectual property
intellectual property
business
Content providers ___ have to be creators of content (but sometimes are)
_______ - is a method of publishing audio or video broadcasts via the Internet allowing subscribing users to download auto or video files not their personal computers or portable music players
_________ - is publishing method for music and video files that flows a continuos stream of content to a users devise without being stored locally on the device
Sits that process transactions for consumers normally handled in person by phone or by mail are __________
primary value proposition are saving of ______ and _____ as well as providing an extraordinary inventory of finical products and travel packages in a single location
one of the e-commerce _____ models
transaction broker
time and money
business
_____ - saves user money and time by processing online sales truncation and gearing a fee each time a transaction occurs
one of the e-commerce _____ models
transaction broker
business
______ - build a digital environment in which buyers and sellers can
meet display products search for products and establish prices value proposition is that it provides a platform where sellers can easily display their wares and where purchasers can buy directly from sellers
can serve consumers or B2B commerce generating revenue from transaction fees
one of the e-commerce _____ models
______ sell products online and _____ offer services on line
both are
one of the e-commerce _____ models
e-retailer
service provider
_____- provides web 2.0 applications such as photo sharing, video sharing and user generated content as services. Provides other services such as online data storage and back up
google apps photbucket
one of the e-commerce _____ models
service provider
business
_______ - are sites that create a digital online environment where people with similar interests can interact (buy and sell goods), share interests, communicate with like minded people, receive interest related information and even play out fantasies by adopting online personalities and avatars
facebook, my space, twitter
one of the e-commerce _____ models
community providers
busienss
_____ web sites are the fastest growing web sites in recent years often doubling their audience
but they are struggling to achieve __________
social media
profitability
a firm's ________ describes how the firm will earn revenue, generate profits, and produce superior return on investment
what are the six revenue models?
advertising revenue model sales revenue model subscription revenue model fre/premium revenue model transaction fee revenue model affiliate revenue model
in the _______ revenue websites generates revenue by attracting a large audience of visitors who can be exposed to advertisements
websites with the largest viewership or that attract a highly specialized differentiated viewership are able to retina user attention are able to charge ______ _____ rates
advertising advertising rates
what is the mostly commonly used revenue model?
98% of googles revenue derives from selling ____ to advertisers in auction like market (adsense program)
advertising revenue model
key words
____ revenue model - companies derive revenue by selling goods information or services to
customers
amazon, llbean.com itunes ________ systems provide content providers with a cost effective method for processing high volumes of very small monitory transactions (anywhere from $.25 to $5.00) - apple pioneered this
______ revenue model - a web site offering content or services charges a subscription fee for access to some or all of its offerings on an ongoing basis
______ providers often
use this revenue model Neflix, wallstreet journal
subscription
content providers
____________ revenue model - firms offer basic services or content for free while charging a premium for advanced or special features
Pandora
the idea is to attract large audiences with free services and then convert some users to pay a subscription for premium services ( _____ to
convert from free loaders to premium content purchasers)
in the _______ revenue model, websites (called _____ websites) send visitors to there web sites in return for a referral fee or percentage or the revenue any resulting sales
yelp
affiliate revenue model
affiliate
Fastest growing area of commerce: _______
• Most popular Web 2.0 service: ________ – Users are able to “mine” for friends within the networks – Social networking sites sell banner ads, user preference information, and music, videos, etc. Social networking allows business firms to _____ to what social networkers are saying about their products and obtain valuable _____ from customers
web 2.0
social networking
listen
feedback
at ______ sites like Kaboodles you can swap shopping ideas with friends
online communities are ideal place to employ ____ marketing techniques. Similar to to traditional word of mouth marketing except that the world can spread across an online community at the speed of light and go much further geographically than a small network of friends
______ – Large numbers of people can make better decisions about topics and products than a single person. This is ____ always the case but it can happen in interesting ways This concept suggests firms should FIRST _______ with thousands of their customers as a way of establishing a______ with them and SECOND to better understand how their products and services are being _____ and appreciated (or rejected)
wisdom of crowds not
consult relationship used
Beyond merely soliciting advice firms can be actively helped in socking business problems using what is called _____
i.e. Netflix
Firms can also use the wisdom of crowds in the form of ______
_____- are established as peer to peer betting markets where participants make bets on
specific outcomes of say quarterly sales of a new product, design for new products or political elections. can set up these bets on anything
– Largest impact of e-commerce on ______ industry. – Internet provides _______ with new ways of identifying and communicating with customers, reaching large audiences
– __________ : Ability to market goods and services to very small online
audiences, due to reduced costs of reaching those small market segments. (tails of a bell curve)
Before the Internet reaching large audience was very expensive and marketers had to focus on attracting the larges number of consumers with popular hits products. In contrast the Internet allows marketers to inexpensively find potential customers for which demand is very _______
________ - refers to tracking
the click streams of individuals on thousands of web sites for the purpose of understand their internists and intentions and exposing them to advertisements that are uniquely suited to their behavior
Proponents believe more precise understand of the customer leads to more efficient _____ and larger revenues and sales Also leads to invasion of _______ which hurts trust and sales
Behavioral Targeting
marketing
privacy
Behavioral targeting takes place at 2 levels 1.) ______ 2.) various advertising ______ that track users across thousands of websites gather tons of info ( site previously visited, where users go after leaving, type of operating system used, browser info and even location data. and more Use this data to understand how well their website is ________, create unique personalized web ___ that display content or ads for products or services of special interest to each user, improve the customers _____,and create additional value through better _________ of shopper
individual web sites networks working experience understanding
Through behavioral targeting marketers achieve some of the benefits of using individual sales _____ at drastically lower cost
Advertising ______ create
networks of several thousands of the most popular web site visited by millions of people tracking the behavior of these users across the entire network building profiles of each user and the selling these profiles to advertisers