E-Commerce

Chapter: 01
Overview of e-Commerce
Framework
Overview of E-Commerce Framework — Today’s Objective

Develop an understanding of the framework of e-commerce

Chapter 1
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
 Definition of E-Commerce

E-commerce is characterized by several specific attributes:

• It is about the exchange of digitalized information between parties
• It is technology-enabled
• It is technology-mediated
• It includes intra- and inter-organizational activities that support the exchange

E-commerce can be defined as technology-mediated exchange between parties

(individuals, organizations or both) as well as the electronically based intra- and inter-
organizational activities that facilitate such exchange
Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
 Table 1 — 1: Four Categories of E-Commerce

Four distinct categories of e-commerce can be defined, based on the business origination and
the customer type

Business originating from...

Business Consumers

Business B2B C2B

e.g., Freemarket,
Covisint e.g., Mercata.com
And selling
to...

Consumers B2C C2C

e.g., Amazon, e.g., Groupsgoogle.com,
Staples.com Monster.com
Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
How Is E-Commerce Different From Traditional Commerce?

1. Core Strategic Decisions Are Technology-Based

• Digital businesses cannot separate technology choices from the strategic decision-making process
1. Real-Time Competitive Responsiveness
• Speed is becoming increasingly important as a means to increase differentiation as well as to
compete with competitors
1. 24/7 Access
• Consumers expect to be able to constantly access a business’s online storefront, forcing
businesses to adjust their level of responsiveness (both strategic and tactical)
1. Technology-Based Consumer Interface
• “Screen-to-face” customer interaction has increased the importance of capturing and delivering a
positive customer experience
1. Customer in Control of the Interaction
• Technology-based interfaces limit the company’s influence on the buying process and give the
customer more control of the interaction
1. Increased Knowledge of Customer Behavior
• A technology-based interface, however, gives the company the opportunity to more accurately
track consumer behavior
1. Networked Economics and Positive Feedback
• Networked economics and positive feedback can allow “increasing returns”
Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
Exhibit 1 —2: Importance (Estimated Savings From E-Commerce)

E-commerce is important for the cost savings. it can generate as well as for its impact on
industry boundaries and on many aspects of the social life

• Cost savings from e-

commerce are expected
to exceed $1 trillion by
the end of year 2002
Importance

An article on ‘e-Commerce and e-Business’ has been attached to get to know the importance
of e-Commerce.
Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
E-Commerce Decision-Making Process

How do I How can I

communicate provide a
What unique with customers? compelling
benefits should I online
provide? experience?

How should I
Which structure the
customers organization?
should I target?
New E-Commerce
Business Who should be
my partners?

How will the

business create
shareholder
What metrics value?
should be used to
track
performance?
Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
Exhibit 1 — 3: Framework for E-Commerce

The E-commerce framework helps managers develop a sound E-commerce strategy

Develop Marketing
Frame the Market Select the Design Customer
Communication
Opportunity Business Model Interface
Strategies

• “Where will I play?” • “What is the value proposition?” • “What should the online • “How do I attract and
• The emphasis is • What products/services should interface look like?” retain customers?”
more on potential be offered? • Look and feel • Includes all offline and
business • What resources are necessary? • Content online methods to reach
partnerships • What financial model should be • Transaction capabilities customers
used? • Community building

Implement the Define Estimate

Strategy Metrics Market Value

• “How do we go to • “How are we doing?” • “What value are we

market?” • What metrics should be creating for
used to track the shareholders?”
business performance?
Exhibit 1 — 4: Where to Play Online and Offline
Many companies are combining both online and offline capabilities to serve customers. There
are different positions a company can hold when deciding where to play.

Online Offline
• Yahoo only plays online; it only
communicates with its customers
online

• Egghead also plays online only,

Customer Yahoo! but the Internet is used for both
Interface customer interface and back-

McDonalds
office systems
Egghead

• Amazon employs both online

BN.com and offline back-office resources,
but interacts with customers only
online

Fulfillment • McDonald’s interacts with

customers offline (mainly) and
Systems
online, but only uses offline back-
Amazon.com office systems

• BN.com plays in all four

quadrants
Exhibit 1 — 5: Market Infrastructure
Underlying each e-commerce decision is the industry environment or market infrastructure,
which is generally outside the company’s control and presents both opportunities and
constraints. This environment can be divided into two broad categories:

Network Infrastructure Media Infrastructure

• Basic, underlying group of electronic • All the various communication

devices and connecting circuitry
designed as a system to share
information
• Devices: telephone, radio, cable TV,
computer, satellite, etc.
companies and their channel of
communication
• Media infrastructure refers to the
content of communication

• Companies: ISPs, hardware providers,

software companies etc.
 Exhibit 1 — 6: Media Convergence to a Digital Platform
Network and media infrastructure are independently converging due to the digitalization of
information, causing competition in the market to increase

• The network to deliver digitized • The major content players are

content has converged, leading to now competing to deliver content
cross-industry competition to the same target segments

Network
Network Media
Media
Infrastructure
Infrastructure Infrastructure
Infrastructure

Telephone/DSL Print
(Newspapers and Magazines)
Cable
Television
Broadcast Radio & TV
Digital
Digital Radio
Satellite Convergence
Convergence Music

Wireless Motion Pictures

Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
Exhibit 1 — 7: A Framework for E-Commerce

There are six interrelated, sequential decisions to make to implement an e-commerce

strategy. These decisions are made in the context of a changing market-level infrastructure

• Vertical boxes are analyses and decisions that are “controllable” by the firm
• Horizontal boxes represent forces that are “non-controllable” by the firm

Framing the Business Customer Market Implemen- Evaluation:

E-Commerce
Market Model Interface Communica- tation Metrics and
Strategy
Opportunity tions and Valuation
Branding

Network Infrastructure

Media Infrastructure Market

Infrastructure

Publics and Politics

Chapter 1:
Overview of E-Commerce Framework

 Definition of e-commerce

 Distinct categories of e-commerce

 E-commerce vs. traditional commerce

 The importance of e-commerce

 Decision-making in e-commerce

 A framework for e-commerce

 What is to come?

 Conclusion
E-Commerce Framework Overview — Conclusion

After today’s lesson, you should be able to answer the following questions:

1. What is the definition of e-commerce?

2. What are the distinct categories of e-commerce?

3. What are the key characteristics of e-commerce that make it different from
traditional commerce?

4. Why is understanding e-commerce so critical?

5. What is the e-commerce framework? What are its main components?

Which of them are “controllable” and which are “non-controllable”?