• E-commerce the use of the Internet, the Web, and mobile apps and browsers running on mobile devices to
transact business. e-commerce encompasses the entire world of electronically based organizational activities
that support a firm’s market exchanges.
• E-business the digital enabling of transactions and processes within a firm, involving information systems under
the control of the firm. E-business applications turn into e-commerce precisely when an exchange of value
occurs.
• E-commerce primarily involves transactions that cross firm boundaries. E-business primarily involves the
application of digital technologies to business processes within the firm.
Eight Unique Features of E-commerce Technology
1- Ubiquity
E-commerce is characterized by its ubiquity: it is available just about everywhere, at all times.
2- Global Reach
E-commerce technology permits commercial transactions to cross cultural, regional and national boundaries far
more conveniently and cost-effectively than in traditional commerce.
3- Universal Standards
Technical standards for conducting e-commerce are universal standards, they are shared by all nations around the
world.
4-Richness
The internet has the potential for offering considerably more information richness than traditional media such as
printing presses, radio and television because it is interactive and can adjust the message to individual users.
5- Interactivity
E-commerce technologies allow for interactivity, they enable two-way communication between merchant and
consumer and among consumers.
6- Information density
E-commerce technologies vastly increase information density, by which the total amount and quality of information
available to all market participants, consumers and merchants alike. E-commerce technologies reduces information
collection, storage and communication costs. As a result, information becomes more plentiful, less expensive, and of
higher quality.
7- Personalization/Customization
E-commerce technologies permits personalization, by which merchants can target their marketing messages to
individuals by adjusting the message to a person’s name, interests, and past purchases.
E-commerce technologies also permits customization and changing the delivered product or service based on a user’s
preferences or prior behavior.
8- Social Technology
E-commerce technologies have evolved to be much more social by allowing users to create and share content with a
worldwide community (User-generated content).
Eight Key Elements of a Business Model
1. Value proposition
“Why should the customer buy from you?”
Successful e-commerce value propositions:
o Personalization/customization
o Reduction of product search, price discovery costs
o Facilitation of transactions by managing product delivery
2. Revenue model
“How will you earn money?”
Major types of revenue models:
o Advertising revenue model
o Subscription revenue model
Freemium strategy
o Transaction fee revenue model
o Sales revenue model
o Affiliate revenue model
3. Market opportunity:
“What marketspace do you intend to serve and what is its size?”
o Marketspace: Area of actual or potential commercial value in which company intends to operate
o Realistic market opportunity: Defined by revenue potential in each market niche in which company
hopes to compete
Market opportunity typically divided into smaller niches
4. Competitive environment
“Who else occupies your intended marketspace?”
o Other companies selling similar products in the same marketspace
o Includes both direct and indirect competitors
Influenced by:
o Number and size of active competitors
o Each competitor’s market share
o Competitors’ profitability
o Competitors’ pricing
5. Competitive advantage
“What special advantages does your firm bring to the marketspace?”
o Is your product superior to or cheaper to produce than your competitors’?
Important concepts:
o Asymmetries
o First-mover advantage, complementary resources
o Unfair competitive advantage
o Leverage
o Perfect markets
6. Market strategy
“How do you plan to promote your products or services to attract your target audience?”
o Details how a company intends to enter market and attract customers
o Best business concepts will fail if not properly marketed to potential customers
7. Organizational development
“What types of organizational structures within the firm are necessary to carry out the business plan?”
Describes how firm will organize work
o Typically, divided into functional departments
o As company grows, hiring moves from generalists to specialists
8. Management team
“What kind of backgrounds should the company’s leaders have?”
A strong management team:
o Can make the business model work
o Can give credibility to outside investors
o Has market-specific knowledge
o Has experience in implementing business plans
B2B E-BUSINESS MODELS
• Private industrial network
• Net marketplaces
– Industry consortium
– E-distributor
• Version of retail and wholesale store, M R O goods, and indirect goods
• Owned by one company seeking to serve many customers
• Revenue model: Sales of goods
• Example: Grainger
– E-procurement
• Creates digital markets where participants transact for indirect goods
• B2B service providers, SaaS and PaaS providers
• Scale economies
• Revenue model:
• Service fees, supply-chain management, fulfillment services
• Example: Ariba
– Exchange
• Independently owned vertical digital marketplace for direct inputs
• Revenue model: Transaction, commission fees
• Create powerful competition between suppliers
• Tend to force suppliers into powerful price competition; number of exchanges has dropped
dramatically
• Example: Go2Paper
