Lesson: 07
Lecture Topic: E-Commerce: Digital Market, Digital Goods
Course Teacher: Proshanta Kumar Podder
E-Commerce and the Internet
E-commerce:
Use of the Internet and Web to transact business.
• Digitally enabled transaction.
• Began in 1995 and grew exponentially; still stable even in a recession.
• Companies that survived the dot-com bubble burst and now thrive.
• E-commerce revolution is still in its early stages.
Growth of E-commerce
Eight unique features of Internet and Web as commercial medium
– Ubiquity
– Global reach
– Universal standards
– Richness
– Interactivity
– Information density
– Personalization/customization
– Social technology
1. Ubiquity
• Internet/Web technology available everywhere: work, home, and so on,
anytime.
• Effect:
– Marketplace removed from temporal, geographic locations to
become “marketspace”
– Enhanced customer convenience and reduced shopping costs
• Reduces transaction costs
– Costs of participating in market
2. Global reach
• The technology reaches across national boundaries, around Earth
• Effect:
-Commerce enabled across cultural and national boundaries seamlessly and
without modification.
-Marketspace includes, potentially, billions of consumers and millions of
businesses worldwide.
3. Universal standards
• One set of technology standards: Internet standards
• Effect:
-Disparate computer systems easily communicate with one another
-Lower market entry costs—costs merchants must pay to bring goods to
market
• Lower consumers’ search costs—effort required to find suitable products
4. Richness
• Supports video, audio, and text messages
• Effect:
-Possible to deliver rich messages with text, audio, and video
simultaneously to large numbers of people.
-Video, audio, and text marketing messages can be integrated into single
marketing message and consumer experience.
5. Interactivity
• The technology works through interaction with the user.
• Effect:
-Consumers engaged in dialog that dynamically adjusts experience to the
individual.
-Consumer becomes co-participant in process of delivering goods to
market.
6. Information density
• Large increases in information density—the total amount and quality of
information available to all market participants
• Effect:
-Greater price transparency
-Greater cost transparency
-Enables merchants to engage in price discrimination
7. Personalization/Customization
• Technology permits modification of messages, goods
• Effect:
-Personalized messages can be sent to individuals as well as groups.
-Products and services can be customized to individual preferences.
8. Social technology
• The technology promotes user content generation and social networking
• Effect:
-New Internet social and business models enable user content creation and
distribution, support social networks
-Many-to-many model
Key Concepts in E-commerce: Digital Markets and Digital Goods
• Digital goods: delivered over a digital network
• Internet business models (pure-play, clicks-and-mortar)
• Communication and community (banner ads, pop-up ads, social networking sites)
• Digital content, entertainment, and services (podcasting, syndicators)
The Benefits of Disintermediation to the Consumer
Digital goods
– Goods that can be delivered over a digital network
• For example: music tracks, video, software, newspapers, books
– Cost of producing first unit is almost entire cost of product
– Costs of delivery over the Internet very low
– Marketing costs remain the same; pricing highly variable
– Industries with digital goods are undergoing revolutionary changes (publishers,
record labels, etc.)
E-Commerce: Business and Technology
Categories of Electronic Commerce
• Business-to-consumer (B2C)
• Business-to-business (B2B)
• Consumer-to-consumer (C2C)
• Mobile commerce (m-commerce)
E-commerce business models
– E-tailer
– Transaction broker
– Market creator
– Content provider
– Community provider
– Portal
– Service provider
E-commerce revenue models
– Advertising
– Sales
– Subscription
– Free/Freemium
– Transaction fee
– Affiliate
Business-to-Business Electronic Commerce: New Efficiencies and Relationships
• Electronic data interchange (EDI)
• Procurement/E-procurement
• Private industrial networks
• Private exchanges
• Net marketplaces
• Exchanges
The Mobile Digital Platform and Mobile E-commerce
M-commerce
– In 2012 is 10% of all e-commerce
– Fastest growing form of e-commerce
• Some areas growing at 50%
– Four billion mobile phone users worldwide
– Main areas of growth
• Retail sales at top Mobile 400 (Amazon, eBay, etc.)
• Sales of digital content (music, TV, etc.)
• Local search for restaurants, museums, stores
M-Commerce Services and Applications
• Mobile bill payment
• Content and products
• Banking and financial services
• Wireless advertising
• Location-based services
• Games and entertainment
Location-based services
– Used by 74% of smartphone owners
– Based on GPS map services
– Types
• Geosocial services
– Where friends are
• Geo advertising
– What shops are nearby
• Geo information services
– Price of house you are passing
Other mobile commerce services
– Banks, credit card companies provide account management apps
– Mobile display advertising
• I Ad, Ad Mob, Facebook
– Games and entertainment
• Downloadable and stream able services
• Games
• Video, short films, movies, TV shows
• Music and ring tones
Electronic Commerce Payment Systems
Types of Electronic Payment System
• Digital credit card payment systems
• Digital wallet
• Micropayment
• Accumulated balance digital payment systems
• Stored value payment systems
• Digital cash
• Peer-to-peer payment systems
• Digital checking payment systems
• Electronic billing presentment and payment systems
Digital Payment Systems for M-Commerce
• M-commerce purchases are often micropayments
• Micropayment systems successful in Europe, Asia
• “Walled garden” model
• Interoperability
• Universal m-commerce payment system
| Thank You |
