Electronic Commerce for the

Competence Examination
Dr. Basil Dudin

Definitions and Concepts

Electronic Commerce: The process of buying, selling,
or exchanging products, services, or information via
computer networks.
Electronic Business: A broader definition of EC that
includes not just the buying and selling of goods and
services, but also servicing customers, collaborating
with business partners, and conducting electronic
transactions within an organization.
Defined through the perspectives of communications,
business process, services, learning and collaboration.

Dimensions of Electronic Commerce

Organisations in E-Commerce
EC organizations
Brick-and-mortar organizations
Old-economy organizations (corporations) that perform
most of their business off-line, selling physical products by
means of physical agents
Virtual (pure-play) organizations
Organizations that conduct their business activities solely
online
Click-and-mortar (click-and-brick) organizations
Organizations that conduct some e-commerce activities, but
do their primary business in the physical world

Framework for Electronic Commerce

Major Business Pressures and Roles of

Electronic Commerce

Business Environment Drivers for ECommerce

Organizational response strategies
Strategic systems
Agile systems
Continuous improvement efforts and business
process restructuring
Customer relationship management
Business alliances
Electronic markets

Business Environment Drivers for ECommerce

Reductions in Cycle Time and Time-to-Market
cycle time reduction
Shortening the time it takes for a business to complete a
productive activity from its beginning to end
Empowerment of Employees
EC allows the decentralization of decision making and
authority via empowerment and distributed systems, but
simultaneously supports a centralized control
Supply Chain Improvements
EC can help reduce supply chain delays, reduce inventories,
and eliminate other inefficiencies

Business Environment Drivers for ECommerce

Mass Customization: Make-to-Order in Large
Quantities
mass customization
Production of large quantities of customized items
Intrabusiness: From Sales Force Automation to
Inventory Control
knowledge Management (KM)
The process of creating or capturing knowledge,
storing and protecting it, updating and maintaining
it, and using it

E-Commerce Business Models

Typical EC Business Models
Online direct marketing
Electronic tendering systems:
tendering (reverse auction)
Model in which a buyer requests would-be sellers to submit
bids; the lowest bidder wins

-Name-your-own-price model:
Model in which a buyer sets the price he or she is willing to
pay and invites sellers to supply the good or service at that
price

E-Commerce Business Models

Typical EC Business Models
Find the best price
affiliate marketing
An arrangement whereby a marketing partner (a business,
an organization, or even an individual) refers consumers to
the selling companys Web site
viral marketing
Word-of-mouth marketing in which customers promote a
product or service to friends or other people

E-Commerce Business Models

Typical EC Business Models
group purchasing
Quantity purchasing that enables groups of
purchasers to obtain a discount price on the
products purchased
SMEs
Small-to-medium enterprises
e-co-ops
Another name for online group purchasing
organizations

E-Commerce Business Models

Typical EC Business Models
Online auctions
Product and service customization
customization
Creation of a product or service according to the
buyers specifications
Electronic marketplaces and exchanges
Information brokers

E-Commerce Business Models

Typical EC Business Models

Bartering
Deep discounting
Value-chain integrators
Value-chain service providers
Supply chain improvers

Organisational Benefits
Global Reach
Cost Reduction
Supply Chain
Improvements
Extended Hours
Customization
New Business Models
Vendors Specialization
Rapid Time-to-Market

Lower Communication
Costs
Efficient Procurement
Improved Customer
Relations
Up-to-Date Company
Material
No City Business
Permits and Fees
Other Benefits

Consumer Benefits
Ubiquity
More Products and
Services
Customized Products
and Services
Cheaper Products and
Services

Instant Delivery
Information Availability
Participation in
Auctions
Electronic Communities
No Sales Tax

Societal Benefits

Telecommuting
Higher Standard of Living
Homeland Security
Hope for the Poor
Availability of Public Services

Electronic Marketplaces
Market space components
Customers
Sellers
Products and services
digital products
Goods that can be transformed into digital format
and delivered over the Internet
Infrastructure

Electronic Marketplaces
Market space components
front end
The portion of an e-sellers business processes through which
customers interact, including the sellers portal, electronic
catalogs, a shopping cart, a search engine, and a payment
gateway
back end
The activities that support online order-taking. It includes
fulfillment, inventory management, purchasing from
suppliers, payment processing, packaging, and delivery

Electronic Marketplaces
Market space components
intermediary
A third party that operates between sellers and
buyers.
Other business partners
Support services

Types of Electronic Marketplaces

Electronic Storefronts
storefront
A single companys Web site where products or
services are sold

Most common mechanisms are a(n):

electronic catalog
search engine
electronic cart
e-auction facilities
payment gateway

Types of Electronic Marketplaces

e-mall (online mall)
An online shopping center where many online
stores are located

Types of Stores and Malls

General stores/malls
Specialized stores/malls
Regional versus global stores
Pure online organizations versus click-and-mortar
stores

Types of Electronic Marketplaces

e-mall (online mall)
An online shopping center where many online
stores are located

Types of Stores and Malls

General stores/malls
Specialized stores/malls
Regional versus global stores
Pure online organizations versus click-and-mortar
stores

Types of Electronic Marketplaces

Types of E-Marketplaces
e-marketplace
An online market, usually B2B, in which buyers
and sellers exchange goods or services; the three
types of e-marketplaces are private, public, and
consortia
private e-marketplaces
Online markets owned by a single company; may
be either sell-side or buy-side e-marketplaces

Types of Electronic Marketplaces

Types of E-Marketplaces
sell-side e-marketplace
A private e-marketplace in which a company sells
either standard or customized products to qualified
companies
buy-side e-marketplace
A private e-marketplace in which a company
makes purchases from invited suppliers

Types of Electronic Marketplaces

public e-marketplaces
B2B marketplaces, usually owned and/or
managed by an independent third party, that
include many sellers
and many buyers; also
known as exchanges

information portal
A single point of access through a Web browser
to business information inside and/or outside an
organization

Types of Electronic Marketplaces

Six major types of portals

Commercial (public) portals

Corporate portals
Publishing portals
Personal portals
Mobile portals
Voice portals

Types of Electronic Marketplaces

mobile portal
A portal accessible via a mobile device

voice portal
A portal accessed by telephone or cell phone

Intermediation in Electronic
Commerce
infomediaries
Electronic intermediaries that control information flow in cyberspace, often
aggregating information and selling it to others

Five limitations of direct interaction

Search costs
Lack of privacy
Incomplete information
Contract risk
Pricing inefficiencies

e-distributor
An e-commerce intermediary that connects manufacturers (suppliers)
with business buyers by aggregating the catalogs of many suppliers in
one placethe intermediarys Web site

Intermediation in Electronic
Commerce
disintermediation
Elimination of intermediaries between sellers and
buyers
reintermediation
Establishment of new intermediary roles for
traditional intermediaries that have been
disintermediated

Electronic Retailing
Overview of Electronic Retailing
electronic retailing (e-tailing)
Retailing conducted online, over the Internet

e-tailers
Retailers who sell over the Internet

Electronic Retailing
Characteristics of Successful E-Tailing
High brand recognition
A guarantee provided by highly reliable or well-known
vendors
Digitized format
Relatively inexpensive items
Frequently purchased items
Commodities with standard specifications
Well-known packaged items that cannot be opened even in
a traditional store

Electronic Retailing Business Models

Classification by Distribution Channel
1.
2.
3.
4.
5.

Mail-order retailers that go online

Direct marketing from manufacturers
Pure-play e-tailers
Click-and-mortar retailers
Internet (online) malls

Electronic Retailing Business Models

direct marketing
Broadly, marketing that takes place without
intermediaries between manufacturers and
buyers; in the context of this book, marketing
done online between any seller and buyer

Electronic Retailing Business Models

virtual (pure-play) e-tailers
Firms that sell directly to consumers over the
Internet without maintaining a physical sales
channel

click-and-mortar retailers
Brick-and-mortar retailers that offer a transactional
Web site from which to conduct business

Electronic Retailing Business Models

brick-and-mortar retailers
Retailers who do business in the nonInternet, physical world in traditional brickand-mortar stores

multichannel business model

A business model where a company sells in
multiple marketing channels simultaneously
(e.g., both physical and online stores)

Electronic Retailing Business Models

Retailing in Online Malls

Referring Directories
Malls with Shared Services

Representative B2C Services

Postal Services
Services and Products for Adults
Wedding Channels
Gift Registries