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1
Case
E-Business Transformation At Me-Online
E-Business and E-Commerce
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E-commerce
Describes the process of buying, selling, transferring,
or exchanging products, services, and/or information
via computer networks, including the Internet.
E-business
Refers to a broader definition of e-commerce, not just
the buying and selling of goods and services, but also
servicing customers, collaborating with business
partners, conducting e-learning, and processing
electronic transactions.
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Internet Technology
� Internet Technology- A commodity
� Economic Impact? Internet
Economics: Transaction cost
Theory, Agency Theory & Network
Economics Theory
� How it helps to Industry?
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• Direct communication between trading partners:
Disintermediation removes intermediate layers and
streamlines processes.
• Round the clock service: Web sites
• Extended distribution channels: Outlets created
for attracting customers who otherwise would not
patronize a firm
How Internet Helps?
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How Internet Helps?
Reduced transaction costs: Costs of
searching for buyers declines
� Changing Economics of Info: Decreases
Information asymmetry, Increases
richness: Depth, detail, and scope of
information, Increases reach
� New Business Models and Value
Propositions
� What is a business model?
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• Defines an enterprise
• Describes how the enterprise delivers a product
or service
• Shows how the enterprise creates wealth
Business Model
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• Virtual storefront: Sells goods or services online
(Amazon.com)
• Information broker: Provides information on
products or services (Edmunds.com)
• Transaction broker: Provides online transaction
facility (eTrade.com, Expedia.com)
• Online marketplace: Provides a trading platform
for individuals and firms (eBay.com)
Internet Business Models
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• Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com)
• Online service provider: Provides online services, including search service. (Google.com, Xdrive.com)
• Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com)
• Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)
Internet Business Models
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� Syndicator: Online content provider that aggregates information from several sources sold to other companies
� Auction/Reverse Auction: Products, prices, change in response to demand. Used in online marketplaces
� Dynamic pricing: real-time interactions between buyers and sellers determine worth of items
� Banner ad: Graphic display used for advertising, linked to the advertiser’s Web site
Internet Business Models
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Auctions and Bartering
The major mechanism for buying and selling on the Internet
is the electronic catalog. There are two common mechanisms
used in its implementation: electronic auctions and
bartering online.
Electronic Auctions (e-Auctions): A market mechanism
by which sellers place offers and buyers make sequential
bids.
Reverse auctions, have one buyer, usually an organization,
that wants to buy a product or a service. Suppliers are
invited to submit bids.
Auctions are used in B2C, B2B, C2B, e-government, and C2C commerce
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Auctions and Bartering (Continued)
Electronic bartering, the exchange of goods or
services without a monetary transaction.
Individual-to-individual bartering
Corporate e-bartering (e.g., barterbrokers.com)
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• Key concepts in E-Commerce
: Digital markets and digital goods
• Internet business models
• Communication and community
• Digital content, entertainment, and services
Internet Business Models
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E-Commerce
� EC can take several forms depending on the
degree of digitization
� Degree of digitization: Transformation from
physical to digital
� The degree of digitization relates to:
– the product (service) sold
– the process
– the delivery agent (or intermediary).
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E-Business – EC Organizations
� Brick-and-mortar (or old-economy) refer to pure
physical organizations (corporations).
� Virtual (or pure-play) organizations are
companies that are engaged only in EC .
� Click-and-mortar (or click-and-brick)
organizations are those that conduct some e-
commerce activities, yet their primary business is
done in the physical world.
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E-Business – Transaction Medium
Most e-commerce is done over the Internet.
But EC can also be conducted on private
networks, such as
-- value-added networks (VANs,
networks that add communication services to
existing common carriers),
-- on local area networks (LANs) or
-- wide area networks (WANs)
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Categories of Electronic Commerce
• Business-to-customer (B2C): Retailing of products and
services directly to individual customers (Wal-Mart.com)
• Business-to-business (B2B): Sales of goods and services to
other businesses (Grainger.com, Ariba.com)
• Consumer-to-consumer (C2C): Individuals using the Web for
private sales or exchange (eBay.com )
� Consumers-to-businesses (C2B): Consumers make known a
particular need for a product or service, and suppliers compete
to provide it.
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Consumer-to-consumer (C2C): Individuals sell products or
services to other individuals.
Intrabusiness (intraorganizational) commerce: An
organization uses EC internally to improve its operations. A
special case is known as B2E (business to its employees)
Government-to-citizens (G2C): A government provides
services to its citizens via EC technologies.
Mobile commerce (m-commerce): When e-commerce is
done in a wireless environment.
Categories of Electronic Commerce
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• M-Commerce services and applications
• Content and location-based services
• Banking and financial services
• Wireless advertising
• Games and entertainment
• Accessing information from the wireless Web
• M-Commerce challenges: Digital payment systems for m-commerce
M-Commerce
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� Electronic cash (e-cash) appears in three major forms:
stored-value cards, smart cards, and person-to-person
payments.
� Electronic Bill Presentment and Payments allow
customers to pay their recurring monthly bills, such as
telephone, utilities, credit cards, etc. online.
� E-wallets are mechanisms that provide security measures
to EC purchasing. The wallet stores the financial
information of the buyer, including credit card number,
shipping information, and more.
� Virtual credit cards are a service that allow you to shop
with an ID number and a password instead of with a credit
card number.
E-Commerce Support Services
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The Structure of E-Commerce