Week3 lect notes. E-Commerce: Digital Markets, Digital Goods 3.

1 Electronic Commerce and the Internet E-commerce today - Ecommerce is about digitally enabled commercial transactions b/w and among organisations and individuals. - Dot.com market bubble burst in 2001 but by 2006 ecommerce revenues returned to solid growth again. Why ecommerce is different? - Ubiquity: Ecommerce is ubiquitous meaning ->available just about everywhere, at all times. marketspace: marketplace extended beyond traditional boundaries. decrease transaction cost: time n travel cost. - Global reach: cross cultural n national boundaries convenient n cost effective. - Universal standards: technical standards for conducting ecommerce are universal. ->lower market entry cost and also searching cost. - Information richness: complexity and content of a message Richness and reachWeb makes it possible to deliver rich messages with text, audio, and video simultaneously to large no of ppl. - Interactivity: two way communication - Information density: total amt n quality of info increase with lesser cost. Also creates price transparency and cost transparency (actual cost merchants pay for it). Allows merchants to engage in price discrimination as he knows more bout consumers than in the past (who is willing to pay more or less) and also diff the products in terms of cost, brand n quality. - Personalisationtarget specific individual by adjusting message automatically to a persons name, interest and past purchases. Customisation changing g/s based on users preferences or prior behaviour. (e.g selecting the type of news preferred) - Social technology many-to-many model of mass communication as compared to broadcast model (one-to-many) Key concepts in e-commerce: Digital Markets and Digital Goods in a Global Marketplace. - Digital Market: operate w reduced search n transaction costs, lower menu cost, price discrimination and dynamic pricingflexible n efficient. But may cause extra delay in gratification. Allows selling directly to customersbypass intermediaries (disintermediation) lower transaction costs. Internet shrinks information asymmetry (one party in a transaction has more info that is impt for the transaction than the other party) determines bargaining power. - Digital goods: can be delivered over a digital network. Marginal cost of producing anthr unit is bout 0 but 1st unit is high (nearly total cost of product) Delivery cost by internet is low, marketing cost remains the same and pricing can be highly variable Internet Business model Category Description Virtual storefront Sell physical goods directly to cust or indv.businesses Information broker Generates rev frm ad or from directing buyers to sellers Transaction broker Process online sales transactions with a fee. Also provides info on rates n terms. Online marketplace Provides digital environment. B2C or B2B, rev from transaction fees. Content provider Providing digital content (news, music or video) Cust may pay to access content or get revenue from ad. Social network Provide online meeting place. Rev by ad. Portal Provides initial pt of entry to Web along w specialised content n other services. Rev by ad. Service provider Provides Web 2.0 applications such as photo sharing n video sharing as services. Also online data storage n backup.

Examples Amazon.com Realtor.com Etrade.com Expedia.com Ebay.com Priceline.com Itunes.com Games.com Myspace.com Yahoo.com Google.com? Youtube.com Photobucket.com

Subscription or ad rev model. Digital Content, Entertainment, and Services - TV, movies, music, radio, and text content Web provides new medium, possible to access from everywhere, display full length films, discuss show as it is being broadcast. Podcasting: mtd of publishing audio broadcasts via internet. Vcast. - Online syndicators: aggregate content frm multiple sources, package n resell to 3rd party Web. - Hybrid clicks-and-mortar 3.2 Electronic Commerce Types of electronic commerce - B2C - B2B - C2C - M-commerce Achieving Customer Intimacy: Interactive Marketing, Personalisation, and Self-Service - Interactive Marketing and Personalisation: tailor products to individual specifications (e.g Nike athletes shoes), tailor promotions, products, services, pricing and Web pages presented to each customer (by visitor registering or tools that track the activities of Web site visitors like clickstream tracking tools). - Blogs and Wikis - Customer Self Service: e.g UPS tracking system, flight info n buying online and call center. B2B E-commerce: New Efficiencies and relationships - Electronic data interchange (EDI); enables comp to comp exchange b/w 2 firms of standard transactions such as invoices, bills of lading, shipment schedules, or purchase orders eliminate printing. EDI is increasingly Web-enable flexible n lower cost n not limited to partners linked by EDI private network. - Private exchange. - Net marketspaces 3.3 M-Commerce Services and Applications - Location-Based Services - Banking n Financial Services - Wireless Advertising - Games n entertainment Accessing Info from the Wireless Web - Wireless portals 3.4 Electronic Commerce Payment Systems Payment System Credit Card Protect info transmitted among users, merchant sites, n processing banks. Digital Wallet Software that stores credit card n other info to facilitate form completion n payment for goods on Web Accum bal digital Accumulates micropayment purchases as a debit bal payment systems that must be paid periodically on credit card or telp bills Store value Enable cust to make instant payments based on value payment system stored in digital a/cs. Digital checking Provides electronic checks w secured digital signature Electronic billing Support electronic payments for ol n physical store Presentment n purchases of g/s after the purchase have taken place.

Commercial e.g Visa MasterCard Google Checkout Clickshare Paypal PayByCheck Yahoo! Bill Pay

payment system