Chapter 5Electronic Commerce: Strategies for the New Economy

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

STUDENT LEARNING OUTCOMES1. Define and describe the 9 major e-

commerce business models.

2. Identify the differences and similarities among customers and their perception of value in B2B and B2C e-commerce.

3. Compare and contrast developing a marketing mix in B2B and B2C e-commerce.

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STUDENT LEARNING OUTCOMES4. Summarize ways of moving money in e-

commerce and related issues.

5. Discuss major trends that are impacting both the e-commerce world and society in general.

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WHAT’S REPLACING THE DAY AFTER THANKSGIVING FOR SHOPPING SALES? Black Friday is traditionally a big day for

retailers It’s when Christmas shoppers spend a lot of

money, moving retailers out of the red and into the black

But Black Friday may soon be replaced by Cyber Monday

Cyber Monday is the Monday after Thanksgiving when people go back to work and buy products online

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WHAT’S REPLACING THE DAY AFTER THANKSGIVING FOR SHOPPING SALES? The “e” in e-commerce changes a lot of

things For example, Black Friday is a brick-and-

mortar concept; Cyber Monday is an “e” (electronic) concept

No matter, any kind of commerce is still just commerce

And all businesses must execute well to survive and thrive

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WHAT’S REPLACING THE DAY AFTER THANKSGIVING FOR SHOPPING SALES?1. Do you shop for gifts online? If so, at what

sites and for what occasions?

2. What’s your take on people spending time at work to shop for personal items?

3. How can brick-and-mortar retailers take advantage of Cyber Monday?

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INTRODUCTION

E-commerce is changing everything Electronic commerce (e-commerce)

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INTRODUCTION

But e-commerce is still commerce

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CHAPTER ORGANIZATION

1. E-Commerce Business Models Learning outcome #1

2. Understand Your Business, Products, Services, and Customers

Learning outcome #2

3. Find Customers and Establish Relationships Learning outcome #3

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CHAPTER ORGANIZATION

4. Move Money Easily and Securely Learning outcome #4

5. E-Business Trends Learning outcome #5

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E-COMMERCE BUSINESS MODELS

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B2B E-Commerce

Business to Business (B2B) e-commerce

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B2C E-Commerce

Business to Consumer (B2C) e-commerce

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C2B E-Commerce

Consumer to Business (C2B) e-commerce

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C2C E-Commerce

Consumer to Consumer (C2C) e-commerce

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B2G E-Commerce

Business to Government (B2G) e-commerce

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C2G E-Commerce

Consumer to Government (C2G) e-commerce

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G2B E-Commerce

Government to Business (G2B) e-commerce

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G2C E-Commerce

Government to Consumer (G2C) e-commerce

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G2G E-Commerce

Government to Government (G2G) e-commerce

Vertical govt integration

Horizontal govt integration

)

Mainly about information sharing, not commerce

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UNDERSTAND YOUR BUSINESS, PRODUCTS, SERVICES, & CUSTOMERS To be successful, you must…

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Who Are Your Customers?

Business to Business Other businesses

Business to Consumer Individuals

Each is different and has different needs and wants

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Customer Product and Service Value Perception

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B2C: Convenience Versus Specialty Convenience

Specialty

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B2C: Commoditylike and Digital

Commoditylike

Digital

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B2C: Mass Customization

Mass customization

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B2B: MRO Versus Direct

Maintenance, repair, and operations (MRO) materials (indirect materials)

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MRO Materials

Buyers in B2B make large purchases Can then demand a discount (not true in

B2C) Can team up with other buyers to create

demand aggregation Demand aggregation

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Direct Materials

Direct materials

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Direct Materials

Buyers can participate in reverse auctions for direct materials

Reverse auction

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B2B: Horizontal Versus Vertical

B2B e-commerce takes advantage of e-marketplaces

Electronic marketplace (e-marketplace)

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E-Marketplaces

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Horizontal E-Marketplace

Horizontal e-marketplace

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Vertical E-Marketplace

Vertical e-marketplace

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To Summarize

B2C

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To Summarize

B2B

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FIND CUSTOMERS AND ESTABLISH RELATIONSHIPS

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Business to Consumer

Need to determine your marketing mix Marketing mix

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B2C Marketing Mix Tools

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Registering with Search Engines

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Online Ads

Online ads (banner ads)

Two variations are: Pop-up ad

Pop-under ad

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Online Ads

Banner ad Banner ad for a loan for a loan lending lending servicesservices

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Viral Marketing

Viral marketing

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Affiliate Programs

Affiliate program

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Affiliate Programs

Click-throughs and conversion rates are important

Click-through

Conversion rate

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Affiliate Programs

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Business to Business Marketing

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Business to Business Marketing

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To Summarize

B2C

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To Summarize

B2B

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MOVE MONEY EASILY & SECURELY

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B2C Payment Systems

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Financial Cybermediaries

Financial cybermediary

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Financial Cybermediaries

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Electronic Checks

Electronic check

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Electronic Bill Presentment & Payment Electronic Bill Presentment and Payment

(EBPP)

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Smart Cards

Smart card

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B2C Payment Systems

Must move money and other information such as shipping address

Digital wallets can help Digital wallet

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Digital Wallets

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B2B Payment Systems

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EDI

Electronic data interchange (EDI)

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EDI and a VAN

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Financial EDI

Financial EDI

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Security: The Pervading Concern

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Encryption

Encryption

Often through public key encryption (PKE)

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Public Key Encryption

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Secure Sockets Layers

Secure Sockets Layer (SSL)…

Denoted by lock icon on browser or https:// (notice the “s”)

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Secure Sockets Layers

The “s” in The “s” in https and https and

the padlockthe padlock

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Secure Electronic Transactions

Secure Electronic Transaction (SET)

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To Summarize

B2C

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To Summarize

B2B

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To Summarize

B2C and B2B – security… Overriding concern Encryption, SSLs, SET, and others

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E-BUSINESS TRENDS

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E-Business Trend - Youth

Screenager

Digital native

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E-Business Trend – M-Commerce

Mobile computing

M-commerce

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E-Business Trend – Long Tail

Long Tail

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E-Business Trend – Long Tail

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E-Business Trend – Long Tail

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