10-1 What are the unique features of e-commerce, digital markets, and digital goods? ● Name
and describe four business trends and three technology trends shaping e- commerce today.
E-commerce is the practice of conducting business through the web and the Internet.
Compared to physical retail outlets, services, and entertainment, e-commerce is quickly
overtaking them as the type of commerce with the greatest growth potential.
The first business trend shaping e-commerce today is approaching social networking. The
prominence of social media sites like Facebook, Instagram, and Twitter has made it easier
for huge for-profit corporations to market their products or services to a wider online
audience. Due to the fact that young people spend the majority of their time on these social
networking sites, large corporations are taking advantage of them to market their goods.
The second business trend is online advertising. E-commerce businesses are putting more
emphasis on online advertising because they understand that customers are more likely to
notice the advertisement when they access the website on their phone or computer than if it
were in print. Large e-commerce enterprises like to market their items online since it is
considerably more affordable and accessible to a wider audience.
Online entertainment business model is the third business trend. Instead of streaming
their content on cable television, companies like Netflix and Amazon are making their books
and movies available online. This is the rationale behind why most individuals these days
like watching movies on their tablets, smartphones, or computers over television. People
prefer watching entertainment material on their mobile phones, tablets, and PCs because they are convenient.
The last business trend is online news. The majority of major media outlets and publishing
companies have begun to make their news material, including newspapers and television
programs, available online for viewers. This is demonstrated by the fact that major media
organizations like the BBC and Al-Jazeera stream their primetime programming online.
Online news has gained enormous popularity recently since people no longer want to stay
glued to their TVs to watch the news; instead, they prefer to see it while on the go.
Currently, the following technology advancements have the most impact on the e-commerce sector:
Mobility: A report indicates that 125 million people in the US alone use cellphones.
According to recent polls, cellphones are now the primary tool used to find, research, and
buy goods and services. These findings support the claim that mobile devices are no longer
the wave of the future for online shopping.
E-wallet Technology: The simplicity of payments offered by e-wallets is transforming the e-
commerce sector as a whole. People prefer utilizing these e-wallets to make online
payments since they are easier and safer. It benefits both the buyer and the seller since it
gives the user an immersive atmosphere and a better user experience, which enables the vendor to boost sales.
Augmented and virtual reality: Product visualization is one of the major worldwide trends
in e-commerce at the present. The way items are depicted has altered because of the
transition from tiny, difficult-to-view graphics to more recent technology breakthroughs in 3D,
augmented reality, and virtual reality. This enhances the user's ability to learn more about the
physical characteristics of the goods, which improves the customer experience and ultimately helps the vendor. ●
List and describe the eight unique features of e-commerce.
The following unique qualities of e-commerce technology:
1. Ubiquity: A typical business market is a physical location that provides access to care
through the circulation of documents. For instance, clothing and footwear are frequently
used to persuade clients to visit a store and make a purchase. E-commerce is pervasive,
which means it may be found wherever. The world's lowest needed cognitive energy for task
completion is found in e-commerce.
2. Global Reach: When compared to conventional commerce, e-commerce enables cross-
border commercial transactions that are more efficient and convenient. The potential market
size for e-commerce enterprises is about comparable to a network the size of the entire world's population.
3. Universal Standards: E-commerce technologies have an uncommon property in that
they adhere to Internet technical standards. As a result, every nation in the world uses these
standards to conduct e-commerce. Standards can have a significant impact on market
entrance costs and market product prices. The standard may make it easier for technology
businesses to exist, which can lower prices and the methodology of indirect costs. In
addition, it can set the monthly fee for an e-commerce website at $100.
4. Information richness: Branding and advertising have a big role in trade. Among other
things, e-commerce may transmit music, video, animation, billboards, and signage. But the
technology is just about as advanced as television.
5. Interactivity: Electronic commerce business technology from the 20th century is referred
to as interactive since it enables two-way connection between companies and customers.
6. Information Density: As long as the total number and all markets, consumers, and
companies’ quality information, the density of information on the Internet has significantly
improved. The cost of information gathering, storing, communicating, and processing is
decreased through electronic commerce technologies. Information is more significant and
helpful than ever at the same time as information technology is becoming much more accurate and timelier.
7. Customization: Technology used in e-commerce enables customization. A name, a
person's hobbies, prior purchases, and marketing messages tailored to a specific individual
may all be altered in business. The technology also enables customization. Depending on
customer preferences or past behavior, merchants may alter the product or service.
8. Social media: If you want to sell a product, you may post details about it on a social
media platform. You only need to copy and paste the page's link where the product
description is located. However, in order to post this on a social networking website, you
must copy the URL. There isn't a button on the website for sharing a product on social media. ●
Define a digital market and digital goods and describe their distinguishing features.
Distinctive characteristics of the digital market
A marketplace known as the "digital market" was developed using computer and
communication technologies to bring together numerous customers and vendors. Millions of
individuals may now communicate information instantly and directly thanks to the expansion
of web-based commerce. The Internet's ability to lessen information asymmetry means that
there is less chance for one party in a transaction to obtain knowledge that the other side
needs for the transaction. This is one aspect of the digital market. Digital marketplaces also
cut down on menu expenses, which are what retailers pay to change their pricing. It also
takes into account dynamic pricing, in which a product's price changes in response to client requests.
Differentiating characteristics of digital goods
Products that can be distributed through a digital network are referred to as digital goods,
and examples include movies, software, reading materials, music audio and video files, and
movies. Digital goods are a quicker and occasionally less expensive option to buying the
physical copy. One advantage of digital goods is that duplicating a file is cheap and simple,
making the cost of generating another item almost nonexistent. The cost of creating the
original file, which might be rather significant, is the only negative.
10-2 What are the principal e-commerce business and revenue models? ●
Name and describe the principal e-commerce business models. Portal
Portals are gateways to the web and are often defined as search engines that users set as
their home page such as Google and Bing. In addition, the portal business model such as
Yahoo and Facebook currently provides a destination site where users start their web
searching as well as longer to read news, find entertainment, meet other people, and
obviously be exposed to advertising. E-tailer
E-tailer operate only in the virtual world which sells physical products directly to consumers
or to individual businesses. The value proposition of e-tailers is to provide convenient, low-
cost shopping 24/7, large selections, and consumer choice. The representative e-tailer
business model is Amazon. By implementing this model, Amazon with 2017 retail sales
revenues of more than $178 billion to tiny local stores that have a website, and it is expected
to continuously grow in the future. Content provider
Content providers distribute information content and create revenue by providing digital
content, such as news, music, photos, or video, over the web. The value proposition of
online content providers is that consumers can conveniently find a wide range of content
online and purchase this content inexpensively to be viewed on multiple electronic devices.
For instance, the revenue may be generated by selling music tracks through Apple’s iTune Store. Transaction broker
Transaction broker is the site that processes transactions for consumers normally handled in
person, by phone, or by mail. The largest industries using this model are financial services
and travel services. The online transaction broker’s primary value propositions are saving
users money and time and generating less fee each time a transaction occurs. Market creator
Market creators build a digital environment in which buyers and sellers can meet, display
products, search for products, and establish prices. The value proposition of online market
creators is that they provide a platform where sellers can easily display their wares and
purchasers can buy directly from sellers. Online auction markets such as eBay and Priceline
are good examples of the market creator business model. Service provider
Service provider provides applications such as photo sharing, video sharing, user-generated
content as services, online data storage, and backup. Google has led the way in developing
online software service applications such as Google Docs, Gmail, and online data storage service. Community provider
Community providers are sites that create a digital online environment where people with
similar interests can transact, share photos and videos, communicate with like-minded
people, receive interest-related information, and even adopt online personalities called
avatars. Social networking sites Facebook, Instagram, LinkedIn all offer users community-
building tools and services. ●
Name and describe the e-commerce revenue models.
Several forms of income models include. Advertising Revenue
By bringing in a sizable number of visitors who are subsequently exposed to adverts, websites may earn money. Sales Revenue
The sales revenue model states that businesses make money by offering clients products, information, or services. Subscription Revenue
A website that offers content or services charges a recurring subscription fee for access to any or all of its offerings. Free/freemium Revenue
Businesses offer free basic services or content but charge for more sophisticated or special features. Transaction Fee Revenue
The transaction fee revenue model pays a company a charge for approving or carrying out a transaction. Affiliate Revenue
In exchange for a referral fee or a cut of any purchases generated as a consequence of the
recommendation, websites send users to other websites.
10-3 How has e-commerce transformed marketing? ● Explain
how social networking and the wisdom of crowds help companies improve their marketing.
All retailers now seek out efficient marketing strategies to connect with their most valuable
consumers, and e-commerce has made it possible for them to do so at a far lower cost
through pop-up ads on search engines or social media. The success of small businesses
and startups was largely attributed to word-of-mouth marketing and inventiveness. Data is
freely accessible for everyone to comprehend the product and associated services, and
businesses utilize this data to choose their marketing methods to draw customers by utilizing
client-friendly content. As a result, e-commerce has made a variety of marketing channels
available, including social networking sites with videos, text marketing, etc.
Millions of individuals use social networking sites to engage with one another every day, and
this is advantageous for the business community since it makes it simple for them to reach
potential clients and market new products and services. Based on customer behavior and
their choices about a range of items, product lines, services, places, etc., this aids in learning
about the likes and dislikes regarding the product or service. As a result, "wisdom of crowds"
assists in learning more often about opinions and views about businesses and their goods
through messages or comments on social networking websites. This aids in improvements
and provides customers or end users with high-quality goods or services. Additionally,
business representatives establish trust by contacting potential clients and delivering them
individual communications that highlight their significance to the firm and their value.
For instance, Amazon India promotes a number of product specials based on client
purchasing trends, which occasionally appear as text advertising in the browser or on
various Facebook sites. In accordance with the selections, it directs the user to read the
section on customer reviews and also suggests goods base3d on the user's prior purchases
or browsing patterns. As another instance, if someone posts a review of an LG product on
Twitter or Facebook, it has been shown that customer service professionals quickly respond
to the user to address any faults and solicit feedback for potential future improvements. ● Define
behavioral targeting and explain how it works at individual websites and on advertising networks.
Online advertisers utilize behavioral techniques to target audiences based on data from
people's web surfing habits. Their campaigns become more effective as a result of this.
Imagine someone searching for a product like a television on a certain website, say
amazon.com. The search cookie now communicates with the main server and logs the
activity. Now, based on the user's activity, advertisements for the discount Amazon is offering
on television appear when the user accesses Facebook. Many websites feature pop-up ads
in ad networks. Additionally, they track user activity and present advertising for related
content. When you search for a television, offers from Amazon and other websites for related products will appear. ●
Define the social graph and explain how it is used in e-commerce marketing.
A social graph is a depiction of all the people you know and all the people they know. A
digital social graph is a mapping of all significant online social relationships. It’s synonymous
with the idea of a “social network” used to describe offline relationships. The small world
theory believes any person is only six links away from any other person on earth.
The products and services you buy will influence the decisions of your friends, and their
decisions will in turn influence you. It’s the “word of mouth is the best advertising” theory in
digital format. Marketers’ target audience is not the one isolated individual but millions of
connected people all talking to each other and swapping information. Marketers will spend
over $3 billion on social network marketing in 2012. That’s twice the amount of money spent
in 2010 and about nine percent of all online marketing.
10-4 How has e-commerce affected business-to business transactions? ●
Explain how Internet technology supports business-to-business electronic commerce.
Business-to-business transactions can occur via a company website, net marketplace, or
private exchange. Web sites make it easy to sell and buy direct and indirect goods over the
Internet, compare suppliers, products, and prices, and even find out how others feel about
the product. Further, supply chain linkages through intranets and extranets can support JIT,
reduce cycle times, and other practices of continuous improvement. Because of the ease
and efficiency brought by the Internet, business-to-business participants can save a
significant amount of money and time. ● Define
and describe Net marketplaces and explain how they differ from private industrial networks (private exchanges).
A net marketplace is a single digital marketplace based on Internet technology linking many
buyers to many sellers. The net marketplace is an important business model for B2B e-
commerce because some net marketplaces serve vertical markets for specific industries and
other net marketplaces serve horizontal markets, selling goods that are available in many
different industries. Also, net marketplaces can sell either direct goods or indirect goods. Net
marketplaces are more transaction-oriented and less relationship-oriented than private industrial networks.
10-5 What is the role of m-commerce in business, and what are the most important m- commerce applications? ●
List and describe important types of m-commerce services and applications.
❖ Location-based services: users are able to locate the services or products they wants
❖ Banking and financial services: users can manage their bank accounts using their cell phones
❖ Wireless advertising: cell phone service providers can sell advertising on phones
❖ Games and entertainment: users can download video clips and short films designed to play on mobile phones
❖ Personalized services: services anticipate what a customer wants based on a
person's location or data profile
10-6 What issues must be addressed when building an e-commerce presence? ●
List and describe the four types of e-commerce presence.
Management challenge: Developing clear understanding of business objectives and knowing
how to choose the right technology to achieve those objectives.
The 4 types of e-commerce presence: web sites, e-mail, social media, offline media
❖ Web sites: traditional, mobile, and/or tablet platforms with search, display, apps,
affiliates, sponsorships as possible activities
❖ E-mail: internal lists and/or purchased lists as a platform with newsletters, updates,
and sales as possible activities
❖ Social media: Facebook, Twitter, and/or blogs as a platform with conversation,
engagement, sharing, and/or advice as possible activities
❖ Offline media: print and or TV and radio as the platform with education, exposure,
and/or branding as possible activities