E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

Chapter 1: Overview of E-commerce

 E-commerce, or electronic commerce, refers to the buying and selling of goods and services
over the internet. It encompasses a wide range of online business activities, including retail
shopping, auctions, and payment processing.
 E-commerce continues to evolve, driven by technological advancements, changing consumer
behaviors, and emerging market trends.
 E-Commerce or Electronics Commerce is a methodology of modern business, which
addresses the need of business organizations, vendors and customers to reduce costs and
improve the quality of goods and services while increasing the speed of delivery.
 E-commerce refers to the paperless exchange of business information using the following
ways:
 Electronic Data Exchange (EDI)
 Electronic Mail (e-mail)
 Electronic Bulletin Boards
 Electronic Fund Transfer (EFT)
 Other Network-based technologies
Types of E-Commerce
1. Business-to-Consumer (B2C): Transactions between businesses and individual consumers.
This is the most common form, with examples like Amazon, eBay, and online retailers.
2. Business-to-Business (B2B): Transactions between businesses. Companies sell products or
services to other companies, often in bulk. Examples include Alibaba and various wholesale
distributors.
3. Consumer-to-Consumer (C2C): Transactions between individual consumers, often
facilitated by third-party platforms. eBay, Craigslist, and Facebook Marketplace are
examples.
4. Consumer-to-Business (C2B): Individuals sell products or services to businesses.
Examples include freelance platforms like Upwork or Fiverr.
5. Government-to-Business (G2B): Transactions between government entities and
businesses, often involving procurement and regulatory compliance.

Combiled by : Minale . D, Lecturer at Injibara University,1Department of Marketing Management

E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

6. Mobile Commerce (m-commerce): Shopping and transactions conducted through mobile

devices, such as smartphones and tablets.

Key Components of E-Commerce

1. Online Storefront: A website or app where products or services are displayed for
consumers to browse and purchase.

2. Payment Processing: Systems that facilitate online payments, such as credit card
processing, digital wallets (e.g., PayPal, Apple Pay), and cryptocurrency transactions.

3. Supply Chain Management: The management of the flow of goods and services,
including inventory, warehousing, and logistics.

4. Marketing and Advertising: Strategies used to attract and retain customers, including
SEO (search engine optimization), social media marketing, and email campaigns.

5. Customer Service: Support provided to customers before, during, and after the purchase,
often through chatbots, email, or phone support.

Advantages of E-Commerce

 Convenience: Shopping can be done 24/7 from anywhere with an internet connection.

 Wider Reach: Businesses can reach a global audience, expanding their customer base
beyond local markets.

 Lower Operational Costs: E-commerce often requires less overhead than traditional brick-
and-mortar stores.

 Personalization: Data analytics allows businesses to tailor marketing and recommendations

to individual customer preferences.

Challenges of E-Commerce

 Security Concerns: Risks related to data breaches and fraud can deter customers from
shopping online.
Combiled by : Minale . D, Lecturer at Injibara University,2Department of Marketing Management
E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

 Logistics and Fulfillment: Managing inventory, shipping, and returns can be complex.

 Competition: The low barrier to entry leads to high competition, making it essential for
businesses to differentiate themselves.

 Changing Regulations: E-commerce is subject to various laws and regulations that can
change, affecting operations.

Trends in E-Commerce

 Social Commerce: Selling through social media platforms like Instagram and TikTok.

 Augmented Reality (AR): Enhancing the shopping experience by allowing customers to

visualize products in their environment.

 Subscription Services: Offering products or services on a recurring basis, like streaming

services or monthly product boxes.

 Sustainability: Growing consumer demand for eco-friendly products and practices.

Electronic concept of Commerce

 The Internet has emerged as the major worldwide distribution channel for goods,
services, and managerial and professional jobs.
 This is profoundly changing economics, markets and industry structure, products and
services and their flow, consumer segmentation, consumer values, consumer behaviour, jobs,
and labour markets
 E-commerce is a very diverse and interdisciplinary topic, with issues ranging from e-
technology, addressed by computer experts, to consumer behaviour, addressed by behavioral
scientists and marketing research experts.
 The field of e-commerce is broad. There are many applications of EC, such as home banking,
shopping in electronic malls, buying stocks, finding a job, conducting an auction,
collaborating electronically with business partners around the globe, and providing customer
service.

Combiled by : Minale . D, Lecturer at Injibara University,3Department of Marketing Management

E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

History of E-Commerce

 It is difficult to pinpoint just when e-commerce began. There were several precursors to e-
commerce. In the late 1970s, a pharmaceutical firm named Baxter Healthcare initiated a
primitive form of B2B e-commerce by using a telephone-based modem that permitted
hospitals to reorder supplies from Baxter. This system was later expanded during the 1980s
into a PC- based remote order entry system and was widely copied throughout the United
States long before the Internet became a commercial environment.
 E-commerce applications began in the early 1970s with such innovations as the electronic
transfer of funds. However, the applications were limited to large corporations and a few
daring small businesses. Then came electronic data interchange (EDI), which added other
kinds of transaction processing and extended participation to all industries. Since the
commercialization of the Internet and the introduction of the Web in the early 1990s, E. C
applications have rapidly expanded.
 The implementation of various E C applications depends on four major support categories (i.e.
people, public policy, and marketing/advertising and supply chain logistics.)

1.1. E-Commerce: Doing Commerce on the Internet

1.1.1 Definition of “E-Commerce”?

 Electronic commerce (e-commerce) is often thought simply to refer to buying and selling
using the Internet; people immediately think of consumer retail purchases from companies
such as Amazon.
 But e-commerce involves much more than electronically mediated financial transactions
between organizations and customers. E-commerce should be considered an electronically
mediated transaction between an organization and any third party it deals with. By this
definition, non-financial transactions such as customer requests for further information would
also be considered to be part of e-commerce.
 Some of the definitions of e-commerce often heard and found in publications and the media
are:
 Electronic Commerce (EC) is where business transactions take place via
telecommunications networks, especially the Internet.
 Electronic commerce describes the buying and selling of products, services, and information
Combiled by : Minale . D, Lecturer at Injibara University,4Department of Marketing Management
E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

via computer networks including the Internet.

 Electronic commerce is about doing business
electronically.
 E-commerce, e-commerce, or electronic commerce is defined as the conduct of a financial
transaction by electronic means.
Differences between Electronic Commerce and traditional commerce

 The key differences between electronic commerce (e-commerce) and traditional commerce
stem from how business transactions are conducted, the nature of customer interaction, and the
supporting infrastructure. Here’s a comparison across various dimensions:

1. Mode of Interaction

 E-commerce: Transactions are conducted over the internet, and businesses interact with
customers through websites, apps, or online platforms. All processes, from browsing
products to payments, are digital.

 Traditional Commerce: Transactions occur in physical locations (brick-and-mortar

stores), where customers visit the store to interact with products and sales personnel.

2. Geographical Reach

 E-commerce: Global reach is possible, allowing businesses to sell to customers in different

regions and countries without geographical limitations.

 Traditional Commerce: Typically limited to a specific geographic area where the physical
store is located, although some businesses expand through franchises or multiple outlets.

3. Operating Hours

 E-commerce: Available 24/7, enabling customers to shop at any time, regardless of the
business’s location.

 Traditional Commerce: Limited to specific hours of operation, often constrained by

business hours, local laws, and workforce availability.

Combiled by : Minale . D, Lecturer at Injibara University,5Department of Marketing Management

E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

4. Customer Experience

 E-commerce: Interaction is virtual, with customers relying on product descriptions, images,

and customer reviews. There is no direct physical inspection of products before purchase.

 Traditional Commerce: Customers can physically inspect, touch, or try products before
purchasing. Human interaction with sales personnel can enhance the experience.

5. Cost Structure

 E-commerce: Generally lower overhead costs since businesses do not need to maintain
physical stores. However, there are costs associated with website maintenance, digital
marketing, logistics, and warehousing.

 Traditional Commerce: Higher operational costs due to expenses related to renting

physical spaces, utilities, staffing, and maintaining the storefront.

6. Marketing and Advertising

 E-commerce: Heavily reliant on digital marketing strategies such as SEO, social media
marketing, email campaigns, and targeted online ads.

 Traditional Commerce: Primarily uses traditional media, including print ads, billboards,
TV, radio, and in-store promotions, although many brick-and-mortar stores are increasingly
adopting online marketing as well.

7. Payment Methods

 E-commerce: Payments are typically processed through online payment gateways like
credit cards, PayPal, digital wallets (e.g., Apple Pay, Google Pay), or even
cryptocurrencies.

 Traditional Commerce: Payments are made in person using cash, credit cards, debit cards,
checks, or mobile payment systems at point-of-sale terminals.

Combiled by : Minale . D, Lecturer at Injibara University,6Department of Marketing Management

E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

8. Product Delivery

 E-commerce: Products are delivered to the customer’s location via courier or shipping
services, and customers may have to wait for the items to arrive. Digital goods (e.g.,
software, music) can be delivered instantly.

 Traditional Commerce: Customers receive the product immediately upon purchase, unless
it’s a custom order or out of stock.

9. Customer Support

 E-commerce: Support is often provided digitally through email, chatbots, online help
centers, or virtual agents. Some websites offer video support or call centers.

 Traditional Commerce: Face-to-face interaction is the primary means of support, with

sales staff or customer service representatives assisting customers in real time.

10. Inventory and Logistics

 E-commerce: Inventory is often managed through warehouses, fulfillment centers, or

dropshipping models. Effective logistics and delivery systems are crucial to ensure timely
fulfillment.

 Traditional Commerce: Inventory is stored within or near the physical store, and
restocking involves in-store logistics.

11. Return and Exchange Policy

 E-commerce: Returns or exchanges typically require shipping products back to the seller,
which can be time-consuming and may involve additional shipping costs.

 Traditional Commerce: Returns or exchanges are often easier as customers can directly
visit the store and resolve issues instantly.

Combiled by : Minale . D, Lecturer at Injibara University,7Department of Marketing Management

E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

12. Data Collection and Personalization

 E-commerce: Data collection is highly automated, allowing businesses to track customer

behavior, preferences, and purchases, often leading to personalized recommendations and
marketing efforts.

 Traditional Commerce: Data collection is less automated and often requires customer
surveys, loyalty programs, or observation, making personalization more challenging and
less precise.

13. Security and Fraud Risks

 E-commerce: Online transactions are subject to risks like hacking, identity theft, and fraud,
though secure payment gateways and encryption can mitigate these risks.

 Traditional Commerce: While physical stores can face theft and robbery risks, traditional
commerce is generally less prone to online fraud or data breaches.

14. Environmental Impact

 E-commerce: Can have lower environmental costs due to less reliance on physical
infrastructure, but shipping and packaging waste can be a concern.

 Traditional Commerce: Higher energy consumption for operating stores, lighting, heating,
and maintaining physical locations, but less packaging waste as customers typically take
goods directly.

Summary of Key Differences

Aspect E-Commerce Traditional Commerce
Interaction Virtual/online Face-to-face/physical
Geographical Reach Global Local or regional
Operating Hours 24/7 Limited business hours
Cost Structure Lower operational costs Higher operational costs
Customer No physical product inspection Physical product interaction
Experience
Payment Methods Digital/online payments Cash, credit card, in-person payments
Delivery Shipping required Immediate product availability
 Both e-commerce and traditional commerce have their strengths and weaknesses, and
businesses often adopt hybrid models to combine the advantages of both worlds.
Combiled by : Minale . D, Lecturer at Injibara University,8Department of Marketing Management
E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

- The major difference is the way information is exchanged and processed:

Traditional commerce:

 face-to-face, telephone lines, or mail systems

 Manual processing of traditional business transactions
 individual involved in all stages of business transactions
 Unavailability of a uniform platform, as traditional commerce, depends heavily on personal
communication.
 It is difficult to establish and maintain standard practices in traditional commerce.
 Heavy dependency on information exchange from person to person.
E-Commerce:
• using Internet or other network communication technology
• automated processing of business transactions
• individual involved in all stages of transactions
• E-commerce websites provide the user a platform where all the information is available at one place.
• A uniform strategy can be easily established and maintained in e-commerce.
• Information sharing is made easy via electronic communication channels making a little
dependency on person to person information exchange.

Activity 1.2:
Elaborate these synonyms terms of EC: e-commerce, e-business, e-marketing and internet
marketing AND identify which one is broad in scope.

Combiled by : Minale . D, Lecturer at Injibara University,9Department of Marketing Management

E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

E-Business Vs E-commerce

E-commerce: is more specific than e-business. E-business involves the use of electronic
platforms- intranets, extranets and the Internet to conduct a company’s business. Internet and
other technologies now help companies carry on their business faster, more accurately and over a
range of time and space. They have created intranets to help employees communicate with each
other and access information found on the company’s computers. They have set up extranets with
major suppliers and distributors to assist with information exchange, orders, transactions and
payments. Companies such as Cisco, Microsoft and Oracle run almost entirely as e-business, in
which memos, invoices, engineering drawings, sales and marketing information –virtually
everything-happens over the Internet instead of on paper.

E-business: includes all electronic–based information exchanges within or between companies

and customers. In contrast, e-commerce involves buying and selling processes supported by
electronic means, primarily the Internet. E-markets are market-spaces rather than physical
marketplaces. Sellers use e-markets to offer their products and services online. Buyers use them
to search for information, identify what they want, and place orders using a credit or other
means of electronic payment. Is the online transaction of business, featuring linked computer
systems of the vendor, host, and buyer. Electronic transactions involve the transfer of ownership
or rights to use a good or service.

Combiled by : Minale . D, Lecturer at Injibara University,1Department of Marketing Management

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E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

Unique Features of E-Commerce

Each of the dimensions of e-commerce technology and their business significance are listed in
Table
1.1 deserves a brief exploration, as well as a comparison to both traditional commerce and other
forms of technology-enabled commerce.
Seven Unique Features of E-Commerce Technology
E-commerce Technology Dimension Business Significance
1. Ubiquity: available just about  Available everywhere Ubiquity
everywhere, at all times. lowers transaction costs for the
consumer/buyer.
 It liberates the market from being restricted to a
 Cognitive Energy – mental effort needed to
physical space and makes it possible to shop complete a task. Ubiquity reduces cognitive
energy.
from your desktop, at home, at work, or even  Humans tend to seek options that require the
from your car, using mobile commerce. minimum cognitive energy.
 Consider the mental effort needed to buy your
book online vs. hunting for it at various
bookstores.
2. Global Reach: E-commerce technology  “Marketspace” includes potentially billions of
permits commercial transactions to cross
consumers and millions of businesses
cultural and national boundaries far more
worldwide.
conveniently and cost-effectively than is true in
 Easy to understand how this feature can
traditional commerce. It is accessed by anyone
benefit businesses and consumers
from any demographic group; age, income, race,
gender, religion, etc.
3. Universal standards: standards that are  Universal standards can greatly influence
market entry costs. How so?
shared by all nations around the world.
 Consider the cost of bringing goods to a
 E-commerc is made possible through hardware market
(Internet) and software/content (World Wide  Consider the cost of setting up a virtual, web-
based store, vs. a real brick-mortar store.
Web). - Price discovery – can the consumer/buyer find
 The Internet. In its infancy, the architects prices easily, with minimal cognitive energy?
 Since e-commerce is built on standard
developed standards that are now globally technology (XML, HTML), it’s integrated,
recognized (TCP/IP). aggregate, and summarize information.
- Standardization
 The World Wide Web – Standards are - Low Entry Cost
becoming #1 priority (XML, HTML, etc.) - More completion.
- Info.Integration
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E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

- More price discovery opportunities.

 More competition + price discovery
opportunity = lower consumer prices
4. Richness: Video, audio, and text messages  Video, audio, and text marketing
are possible messages are integrated into a single marketing
message and consuming experience.
Interactivity;- the technology works through  Consumers are engaged in a dialogue that
interaction with the user. dynamically adjusts the experience to the
 TV is a passive activity. individual, and makes the consumer a co-
 Engaging consumer/user is a powerful feature. participant in the process of delivering goods to
the market.
5. Information density :- the technology  The e-commerce technology reduces
reduces information costs and raises quality. information collection, storage, processing and
communication costs.
 Simultaneously, these technologies increase
greatly the currency, accuracy and timeliness
of information- making information more
useful and important than ever
 Due to these technologies prices and costs
become more transparent.
 Price transparency refers to the ease with
which consumers can find out the variety of
prices in the market.
 Cost transparency refersto the ability of
consumers to discover the actual costs
merchants pay for products.
 How does the technology reduce costs?
 How does it raise quality?
 Consider the old way to share information,
i.e., paper, mail, voice communication, etc
6. Personalization/Customization—the  Personalization of marketing messages
technology allows personalized messages to be and customization of products and services
delivered to individuals as well as groups. are based on individual characteristics.

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1.2 Scope of e-Commerce

The UK government also used a broad definition when explaining the scope of e-commerce to
industry:
E-commerce is the exchange of information across electronic networks, at any stage in the
supply chain, whether within an organization, between businesses, between businesses and
consumers, or between the public and private sectors, whether paid or unpaid.(Cabinet Office,
1999
These definitions show that electronic commerce is not solely restricted to the actual buying and
selling of products, but also includes pre-sale and post-sale activities across the supply chain. E-
commerce is facilitated by a range of digital technologies that enable electronic communications.
These technologies include Internet communications through websites and e-mail as well as
other digital media such as wireless or mobile and media for delivering digital television such as
cable and satellite. Electronic commerce systems rely on the resources of the Internet, intranets,
extranets, and other computer networks. Electronic commerce can include:
Interactive marketing, ordering, payment, and customer support processes at e-commerce sites on
the World Wide Web
Extranet access to inventory databases by customers and suppliers
Intranet access to customer relationship management systems by sales and customer service
reps
Customer collaboration in product development via Internet newsgroups and E-mail
exchanges

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E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

1.3 Key Drivers of E-Commerce

It is important to identify the key drivers of e-commerce to allow a comparison between different
countries. It is often claimed that e-commerce is more advanced in the USA than in Europe.
These key drivers can be measured by several criteria that can highlight the stages of
advancement of e-commerce in each of the respective countries. The criteria that can determine
the level of advancement of e-commerce are summarized and categorized as:
Technological factors – The degree of advancement of the telecommunications
infrastructure which provides access to new technology for businesses and consumers.
Political factors – including the role of government in creating government legislation,
initiatives and funding to support the use and development of e-commerce and information
technology.
Social factors – incorporating the level and advancement in IT education and training
which will enable both potential buyers and the workforce to understand and use the new
technology.
Economic factors – including the general wealth and commercial health of the nation and the
elements that contribute to it.

Activity 1.2
List some organizational Societal and consumer benefits of E-commerce (EC)

1.4 Benefits of E-commerce

Some advantages that can be achieved from e-commerce include:

1. Being able to conduct business 24 x 7 x 365: E-commerce systems can operate all day
every day. Your physical storefront does not need to be open for customers and suppliers to be
doing business with you electronically.
2. Access the global marketplace: The Internet spans the world, and it is possible to
do business with any business or person who is connected to the Internet. Simple local
businesses such as specialist record stores can market and sell their offerings internationally using
e-commerce. This global opportunity is assisted by the fact that, unlike

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traditional communications methods, users are not charged according to the distance over
which they are communicating.
3. Speed: Electronic communications allow messages to traverse the world almost
instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that
communication delay is not a part of the Internet/e-commerce world.
4. Market space: The market in which web-based businesses operate in the global market. It
may not be evident to them, but many businesses are already facing international competition
from web-enabled businesses.
5. Opportunity to reduce costs: The Internet makes it very easy to 'shop around' for products
and services that may be cheaper or more effective than we might otherwise settle for. It is
sometimes possible to, through some online research, identify original manufacturers for
some goods - thereby bypassing wholesalers and achieving a cheaper price.
6. Computer platform-independent: 'Many, if not most, computers have the ability to
communicate via the Internet independent of operating systems and hardware. Customers are not
limited by existing hardware systems' (Gascoyne & Ozcubukcu, 1997:87).
7. Efficient applications development environment: - 'In many respects, applications can be
more efficiently developed and distributed because they can be built without regard to the
customer's or the business partner's technology platform. Application updates do not have to be
manually installed on computers. Rather, Internet-related technologies provide this capability
inherently through the automatic deployment of software updates (Gascoyne & Ozcubukcu,
1997:87).
8. Allowing customer self-service and 'customer outsourcing': People can interact with
businesses at any hour of the day that it is convenient to them, and because these interactions are
initiated by customers, the customers also provide a lot of the data for the transaction that may
otherwise need to be entered by business staff. This means that some of the work and costs are
effectively shifted to customers; this is referred to as 'customer outsourcing'.
9. Stepping beyond borders to a global view: Using aspects of e-commerce technology
can mean your business can source and use products and services provided by other businesses in
other countries. This seems obvious enough to say, but people do not always consider the
implications of e-commerce. For example, in many ways, it can be easier and cheaper to host and
operate some e-commerce activities outside Australia.

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E- Marketing, Lecture Note for 3rd year Marketing Mgt students, 2024

Disadvantages of E-commerce

Some disadvantages and constraints of e-commerce include the following.

1. Time for delivery of physical products: It is possible to visit a local music store and walk
out with a compact disc or a bookstore and leave with a book. E-commerce is often used to buy
goods that are not available locally from businesses all over the world, meaning that physical
goods need to be delivered, which takes time and costs money. In some cases, there are ways
around this, for example, with electronic files of music or books being accessed across the
Internet, but then these are not physical goods.
2. Physical product, supplier & delivery uncertainty: When you walk out of a shop with an
item, it's yours. You have it; you know what it is, where it is and how it looks. In some respects,
e-commerce purchases are made on trust. This is because, firstly, not having had physical access
to the product, a purchase is made on an expectation of what that product is and its condition.
Secondly, because supplying businesses can be conducted across the world, it can be uncertain
whether or not they are legitimate businesses and are not just going to take your money. It's pretty
hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent,
it is easy to start wondering whether or not it will ever arrive.
3. Perishable goods: Forget about ordering a single gelato ice cream from a shop in Rome!
Though specialized or refrigerated transport can be used, goods bought and sold via the Internet
tend to be durable and non-perishable: they need to survive the trip from the supplier to the
purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods
back towards traditional supply chain arrangements, or towards relatively more local e-
commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from
almost anyone to almost anyone else, sparking competition for lower prices. In some cases, this
leads to disintermediation in which intermediary people and businesses are bypassed by
consumers and by other businesses that are seeking to purchase more directly from
manufacturers.
4. Limited and selected sensory information: The Internet is an effective conduit for visual
and auditory information: seeing pictures, hearing sounds and reading text. However it does not
allow full scope for our senses: we can see pictures of the flowers, but not smell their

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fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up
and inspect something, we choose what we look at and how we look at it. This is not the case on the
Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen
for us to see but not the things we might look for if we were able to see it in person. And, taking into
account our other senses, we can't test the car to hear the sound of the engine as it changes gears or sense
the smell and feel of the leather seats. There are many ways in which the Internet does not convey the
richness of experiences of the world. This lack of sensory information means that people are often much
more comfortable buying via the Internet generic goods - things that they have seen or experienced before
and about which there is little ambiguity, rather than unique or complex things.
5. Returning goods: Returning goods online can be an area of difficulty. The uncertainties
surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the
goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left
with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.
6. Privacy, security, payment, identity, and contract: Many issues arise - privacy of information,
security of that information and payment details, whether or not payment details (eg credit card details)
will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction
apply.
7. Defined services & the unexpected: E-commerce is an effective means for managing the transaction
of known and established services, that is, things that are every day. It is not suitable for dealing with the
new or unexpected. For example, a transport company used to dealing with simple packages being asked if
it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white
polka dot paper with a bow. Such requests need human intervention to investigate and resolve.
8. Personal service: Although some human interaction can be facilitated via the web, e-commerce cannot
provide the richness of interaction provided by personal service. For most businesses, e-commerce methods
provide the equivalent of an information-rich counter attendant rather than a salesperson. This also means
that feedback about how people react to product and service offerings also tends to be more granular or
perhaps lost using e-commerce approaches. If your only feedback is that people are (or are not)
buying your

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products or services online, this is inadequate for evaluating how to change or improve your e-
commerce strategies and/or product and service offerings.
9. Size and number of transactions: E-commerce is most often conducted using credit card
facilities for payments, and as a result, very small and very large transactions tend not to be
conducted online. The size of transactions is also impacted by the economics of transporting
physical goods. For example, any benefits or conveniences of buying a box of pens online from a
US-based business tend to be eclipsed by the cost of having to pay for them to be delivered to you
in Australia.

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Chapter Two: Internet Marketing Environment

 The Internet Marketing Environment refers to the external and internal factors that
influence a company's ability to engage, attract, and retain customers using digital channels.
This environment shapes the strategies, tools, and methods used for online marketing.

 Understanding this environment is essential for businesses to thrive in the digital

marketplace. The Internet Marketing Environment can be broken down into several key
components:

 The environment consists of the actors and forces outside and inside marketing that
affect the marketing management’s ability to develop and maintain successful transactions
with its target customers.

 The marketing environment offers strengths, weaknesses, threats and opportunities. All
organizations operate within an environment that influences how they conduct business.
Organizations that monitor, understand and respond appropriately to changes in the
environment have the greatest opportunities to compete effectively in the competitive
marketplace. The marketing environment consists of Microenvironment and a macro
environment.

2.1. Microenvironment

 Consists of forces close to the company that affect its ability to serve its customers. these are
the company, suppliers, marketing channel firms, customer markets and competitors. Let us see
one by one.

2.1.1 The Company: Constitutes the internal environment, Marketing is influenced by top
management, finance, research and development (R & D), purchasing, manufacturing and
accounting and others. these functions must ‘think customer’ and they should work together to

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provide superior customer value and satisfaction. In an online context, the organization must be
adaptable to new technology changes.

2.1.2. Customers: The company must study its customer markets closely i.e. Customers access
level to the internet, interest to use and buy products or services online and online consumer
behaviour.

2.1.3. Suppliers: These are an important link in the company's overall customer 'value delivery
system. they provide the resources or raw materials needed by the company to produce its goods
and services. Suppliers affect product price, availability and features. In the Internet context
supplier Access level to the Internet, interest to use and sell raw materials or resources online and
integration with the existing system.

2.1.4. Marketing Intermediaries: Marketing intermediaries are firms that help the company
to promote, distribute and sell its goods to final buyers. They include resellers, physical distribution
firms, marketing services agencies and financial intermediaries.

The best-known online intermediaries are the most popular sites such as Google, MSN and
Yahoo! Online intermediary sites provide information about destination sites and provide a means
of connecting Internet users with product information.

Consumer intermediaries such as Kelkoo (www.kelkoo.com ) and Bizrate (www.bizrate.com )

provide price comparisons for products. These are the types of intermediaries online:

Search engines (Google, Yahoo! Search).

Malls (now replaced by comparison sites such as Kelkoo and Price Runner).

Virtual resellers (own inventory and sells direct, e.g. Amazon, CDWOW).

Financial intermediaries: offers digital cash and online payment services such as Pay Pal which
is now part of e-Bay).

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2.1.5. Competitors: A firm’s competitive environment refers to the other companies selling
similar products and operating in the same market space. To be successful, a company must
provide greater customer value and satisfaction than its competitors do. To do so marketers must
do more than simply adapt to the needs of target consumers and gain strategic advantage by
positioning their offerings strongly against competitors' offerings in the minds of consumers.

Unlike the case of traditional marketing, since it is difficult to easily know online competitors,
companies need to always review: Well-known local competitors; well-known international
competitors; and new internet companies local and worldwide (within sector and out of sector).

2.2. Macro environment

 The macro-environment consists of the larger societal forces that affect the whole
microenvironment; these are social, economic, natural, technological, political, legal and
cultural forces.

1. Technological Environment

 Technology plays a critical role in internet marketing, impacting how businesses reach and
interact with customers.

 Key Aspects:

o Digital Infrastructure: High-speed internet, mobile technology, cloud computing,

and data storage solutions.

o Emerging Technologies: Artificial intelligence (AI), machine learning, big data

analytics, chatbots, and automation tools enhance personalized marketing, customer
service, and analytics.

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o Web Tools: Content management systems (CMS), SEO tools, social media
platforms, and advertising networks like Google Ads and Facebook Ads.

 Impact on Marketing: The continuous evolution of technology allows marketers to

innovate in how they communicate with customers, analyze user behavior, and automate
marketing campaigns.

2. Social and Cultural Environment

 The societal norms, values, and cultural dynamics influence how brands communicate with
audiences in different regions or groups.

 Key Aspects:

o Consumer Behavior: Social trends, lifestyle changes, and customer preferences

evolve rapidly in the digital age. Marketers need to understand these shifts to create
relevant campaigns.

o Social Media Influence: Platforms like Instagram, Facebook, TikTok, and

YouTube have become cultural phenomena. Brands use these channels to create
viral content, collaborate with influencers, and drive engagement.

o Online Communities: Forums, discussion boards, and social platforms foster

communities where users share opinions, which can significantly impact a brand’s
reputation.

 Impact on Marketing: Marketers must stay attuned to cultural changes and social trends to
remain relevant. They need to understand different cultures and online behavior to localize
content for diverse markets.

3. Economic Environment

 The state of the economy and consumer purchasing power affect online shopping behavior,
advertising budgets, and digital sales strategies.
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 Key Aspects:

o Globalization: E-commerce has made it easier to market products globally, but currency
fluctuations, tariffs, and trade regulations can impact pricing and sales strategies.

o Consumer Spending: Economic conditions like inflation, unemployment rates, and

disposable income influence consumer buying patterns. During economic downturns,
consumers tend to prioritize value and may shift towards discount-based or value-driven
purchases.

o Online Payment Systems: The availability of secure online payment systems like
PayPal, Stripe, and mobile wallets (Apple Pay, Google Pay) is crucial for seamless digital
transactions.

 Impact on Marketing: Economic conditions dictate consumer buying behavior, which

impacts how marketers price their products, offer discounts, or create campaigns that align
with current spending trends.

4. Political and Legal Environment

 Overview: Government policies, regulations, and laws related to digital marketing,

consumer protection, and privacy affect how businesses operate online.

 Key Aspects:

o Data Privacy Laws: Regulations like GDPR (General Data Protection Regulation)
in Europe and CCPA (California Consumer Privacy Act) in the U.S. impact how
businesses collect, store, and use consumer data.

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o Advertising Laws: Legal frameworks regarding truth-in-advertising, email marketing

(such as CAN-SPAM Act), and digital advertising transparency ensure businesses
follow ethical guidelines.

o Intellectual Property: Trademark and copyright laws govern how businesses use
content online, such as images, music, or logos.

 Impact on Marketing: Marketers must comply with legal requirements when collecting
data, conducting email campaigns, or running advertisements. Non-compliance can result in
fines, lawsuits, or reputational damage.

5. Competitive Environment

 Overview: The online marketplace is highly competitive, with businesses vying for
visibility, traffic, and customer loyalty.

 Key Aspects:

o Global Competition: The internet allows businesses to compete globally, not just
locally. Competitors can come from anywhere in the world.

o Search Engine Rankings: SEO (Search Engine Optimization) plays a critical role in
ensuring a business’s visibility in search results, often making or breaking digital
marketing efforts.

o Innovative Strategies: Competitors may use new strategies like influencer marketing,
viral campaigns, and personalized experiences to stand out.

 Impact on Marketing: Companies must continuously monitor their competition, innovate

their marketing strategies, and adapt to changing market dynamics to maintain a
competitive edge.

6. Natural Environment

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 Environmental factors like climate change, sustainability, and resource availability are
increasingly affecting business strategies, including internet marketing.

 Key Aspects:

o Eco-conscious Consumers: Growing awareness about environmental issues has led

consumers to favor brands that practice sustainability. Marketing messages that
highlight a company's green initiatives or eco-friendly products resonate more with
these consumers.

o Sustainable Practices: Businesses may need to incorporate sustainable practices into

their supply chains, product offerings, and marketing messages.

 Impact on Marketing: Marketers are focusing more on promoting eco-friendly practices,

using sustainable products, and creating "green" campaigns to attract eco-conscious
consumers.

7. Demographic Environment

 The characteristics of the target audience, including age, gender, income, education level,
and lifestyle, significantly influence internet marketing strategies.

 Key Aspects:

o Target Audience Identification: Online marketing allows for precise targeting

based on demographic data (e.g., ads for millennials, baby boomers, or Gen Z).

o Personalized Marketing: Using data analytics, companies can create targeted

campaigns for specific demographics and sub-groups, delivering personalized
experiences.

 Impact on Marketing: Marketers must understand the demographic composition of their

target market to create relevant and engaging content, choose the right platforms, and use
the correct tone and messaging for their audience.

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Conclusion:

 The Internet Marketing Environment is shaped by multiple factors—technological

advancements, social trends, economic conditions, legal frameworks, competitive pressures,
natural influences, and demographic shifts. Successful marketers must stay informed about
these elements, adapt to changes, and tailor their strategies to effectively engage with their
target audiences in a fast-changing digital landscape.

2.3 Types of E-Commerce

 There are a variety of different types of e-commerce and many different ways to
characterize these types.
Figure 2.3.1 Classification of E-commerce by Transaction partners.

 Business-to-Business (B-to-B): In a Business-to-Business E-commerce environment,

companies sell their online goods to other companies without being engaged in sales to
consumers, which is the largest form of e-commerce.

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Business organization
Supplies
Order processing
Order
Wholesalers Website

Seller

Customers

 As an example, a wholesaler places an order from a company's website and after

receiving the consignment, sells the end product to the final customer who comes to buy
the product at one of its retail outlets.
 For example, an automobile manufacturer makes several B2B transactions such as
buying tires, glass for windscreens, and rubber hoses for its vehicles. The final
transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.
 Business-to-consumer (B-to-C): In a Business-to-Consumer E-commerce environment,
companies sell their online goods to consumers who are the end users of their products
or services.
 The website will then send a notification to the business organization via email and the
organization will dispatch the product/goods to the customer. Amazon.com is
general merchandise that sells consumer products to retail consumers.

Business organization
Supplies

Order Order processing

Customers
Orders WeObrsditeer processing

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 Business-to-Government (B-to-G): The exchange of information, services and

products between business organizations and government agencies online.
 This may include,

E-procurement services, in which businesses learn about the purchasing needs of

agencies and provide services.

A virtual workplace in which a business and a government agency could coordinate

the work on a contracted project by collaborating online to coordinate online
meetings, review plans and manage progress.
Rental of online applications and databases designed especially for use by government
agencies.

Organization Website Government

 Business-to-Peer Networks (B-to-P): This would be the provision of hardware,

software or other services to the peer networks. An example here would be Napster who
provided the software and facilities to enable peer networking.
 Consumer-to-Business (C-to-B): This is the exchange of products, information or
services from individuals to businesses. A classic example of this would be individuals
selling their services to businesses.
 Consumer-to-Consumer (C-to-C): In this category, consumers interact directly with
other consumers, Such as e-Bay.com creates a market space where consumers can auction
or sell goods directly to other consumers.
 A common example is the online auction, in which a consumer posts an item for sale and
other consumers bid to purchase it; the third party generally charges a flat fee or
commission. The sites are only intermediaries, just there to match consumers. They do not

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have to check the quality of the products being offered.

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 Place advertisements

Website

Want to sell products

Receive products Want to buy products
Customers 1
Customers 2
Receive Money
 Consumer-to-Peer Networks (C-to-P): This is exactly part of what peer-to-peer
networking is and so is a slightly redundant distinction since consumers offer their
computing facilities once they are on the peer network.

 Government-to-Business (G-to-B): (Also known as e-government the exchange of

information, services and products between government agencies and business
organizations. Government sites now enable the exchange between government and
business.
 Government-to-Consumer (G-to-C): (Also known as e-government). Government sites
offer information, forms and facilities to conduct transactions for individuals, including
paying bills and submitting official forms online such as tax returns.
 Government-to-Government (G-to-G) (Also known as e-government). Government-to-
government transactions within countries link local governments together and also
international governments, especially within the European Union, which is in the early
stages of developing coordinated strategies to link up different national systems.
 Peer–to-Peer Network (P-to-P): Peer-to-peer technology enables Internet users to
share files and computer resources directly without having to go through a central
Web server. E.g. Gnutella is a software application that permits consumers to share
music directly, without the intervention of a market maker as in C2C e-commerce.
.
2.4 Business Model for E-Commerce

 A business model is a set of planned activities (sometimes referred to as business processes)

designed to result in a profit in a marketplace. The business model is at the centre of the
business plan. A business plan is a document that describes a firm’s business model. An e-
commerce business model aims to use and leverage the unique qualities of the Internet and the
World Wide Web.
Key Ingredients of a Business Model

 If you hope to develop a successful business model in any arena, not just e-commerce, you
must make sure that the model effectively addresses the eight elements listed in Table 2.1.
  Many writers focus on a firm’s value proposition and revenue model. While these may be
the most important and most easily identifiable aspects of a company’s business model, the
other elements are equally important when evaluating business models.

1. Value proposition

It answers the question “why should customers buy products and services from a given
firm?”. In other words, how a company's product or service fulfils the needs of customers is
typically addressed by value proposition.
 Typical e-commerce value propositions include personalization, customization,
convenience, and reduction of product search and price delivery costs.
2. Revenue model

Refers to how the company plans to make money from its operations. The revenue model describes how
the firm will earn revenue, generate profits, and produce a superior return on invested capital.

 Major types:
 Advertising revenue model
 Subscription revenue model
 Transaction fee revenue model
 Sales revenue model

 Affiliate revenue model

i) Advertising revenue model (ARM)

 A website that offers content, services and/or products also provides a forum for advertisements
and receives fees from advertisers. Example: Yahoo.com
ii) Subscription fee revenue model (SFRM)

 A website that offers users content or services charges a subscription fee for access to some or all of its
offerings. Example: Consumer Reports Online
 iii) Transaction fee revenue model (TFRM)

 The company receives a fee for enabling or executing a transaction. Examples: e-Bay.com and E-
Trade.com.
iii) Sales revenue model (SRM)

 The company derives revenue by selling goods, information, or services to

customers. Examples: Amazon.com
iv) Affiliate referral revenue model (ARRM)

 Sites that steer business to an “affiliate” receive a referral fee or percentage of the revenue from any

resultingsales. Example:MyPoints.com

3. Market Opportunity: Refers to a company’s intended market space and the overall potential
financial opportunities available to the firm in that market space.
Marketspace: the area of actual or potential commercial value in which a company intends
to operate is what a market opportunity means. The realistic market opportunity is defined
by revenue potential in each of the market niches in which the company hopes to compete.

4. Competitive Environment: refers to the other companies selling similar products and
operating in the same market space. The competitive environment is influenced by:

 How many competitors are active?

 How large their operations
are.
 What is the market share for each competitor?
 How profitable these firms are.
 How they price their
products.
 Includes both direct competitors and indirect competitors
 5. Competitive Advantage: Achieved when a firm can produce a superior product and/or bring
the product to market at a lower price than most, or all, of competitors. Types of competitive
advantage include:
 First mover advantage—results from a firm being first into a marketplace. How does this
firm have a competitive advantage over its successors?
 Unfair competitive advantage—occurs when one firm develops an advantage based on a
factor that other firms cannot purchase.
 Second mover advantage –results from a firm being second in a marketplace. What does this
firm have a competitive advantage over its predecessors?
6. Market Strategy: A plan that details how a company intends to enter a new market and attract
customers. Best business concepts will fail if not properly marketed to potential customers. It
also connotes all marketing mix strategies: product, price, place and promotion.

7. Organizational Development: The process of defining all the functions within a business and
the skills necessary to perform each job, as well as the process of recruiting and hiring strong
employees. Describes how the company will organize the work that needs to be accomplished.
Work is typically divided into functional departments and respective employees are assigned
accordingly. Move from generalists to specialists as the company grows.
8. Management Team
 The group of individuals retained to guide the company's growth and expansion. Employees of
the company are responsible for making the business model work. A strong management team
gives instant credibility to outside investors. A strong management team may not be able to
salvage a weak business model but should be able to change the model and redefine the business
as it becomes necessary.

2.4.1 Major Business-To-Business (B2B) Business Models

 We noted that business-to-business (B2B) e-commerce, in which businesses sell to other
businesses, is more than 10 times the size of B2C e-commerce, even though most of the public
attention has focused on B2C. Most of the dollar revenues in e-commerce involve B2B e-
commerce.
 The major business models utilized in the B2B arena include;
A. E-Distributor: Companies that supply products and services directly to individual
businesses are e-distributors.
Grainger, for example, is the largest distributor of maintenance, repair, and operations
(MRO) supplies. MRO supplies are thought of as indirect inputs to the

production process—as opposed to direct inputs. The source of revenue for this model is
Sales of goods.
B. E-Procurement: Just as e-distributors provide products to other companies, e-procurement
firms create and sell access to digital electronic markets. Firms such as Ariba, create
custom-integrated online catalogs (where supplier firms can list their offerings) for
purchasing firms. On the sell side, Ariba helps vendors sell to large purchasers by providing
software to handle catalogue creation, shipping, insurance, and finance. Both the buy and sell
side software is referred to generically as “value chain management” software.B2B service
provider is one type – offer purchasing firms a sophisticated set of sourcing and supply
chain management tools. B2B service providers make money through transaction fees, fees
based on the number of workstations using the service, or annual licensing fees.
C. Marketplace/exchanges or B2B hubs: an exchange is a digital electronic marketplace
where suppliers and commercial purchasers can conduct transactions. Exchanges are owned
by independent, usually entrepreneurial startup firms whose business is making a market, and
they generate revenue by charging a commission or fee based on the size of the transactions
conducted among trading parties. For buyers, B2B exchanges make it possible to gather
information, check out suppliers, collect prices, and keep up to date on the latest happenings
all in one place. Sellers, on the other hand, benefit from expanded access to buyers. The
greater the number of sellers and buyers, the lower the sales cost and the higher the chances
of making a sale. The ease, speed, and volume of transactions are summarily referred to as
market liquidity.
D. Industry consortia are industry-owned vertical marketplaces that serve specific industries,
 such as the automobile, aerospace, chemical, floral, or logging industries.
In contrast, horizontal marketplaces sell specific products and services to a wide range of
companies. Vertical marketplaces supply a smaller number of companies with products and
services of specific interest to their industry, while horizontal marketplaces supply companies in
different industries with a particular type of product and service, such as marketing-related,
financial, or computing services.
For example, Exostar is an online trading exchange for the aerospace and defense industry.
E. Private Industrial Networks: digital networks designed to coordinate the flow of
communications among firms engaged in business together. For instance, Wal-Mart operates one
of the largest private industrial networks in the world for its suppliers, who daily use Wal-
Mart’s network to monitor the sales of their goods, the status of shipments, and the actual
inventory level of their goods. There are two types of private industrial networks: single-firm
networks and industry-wide networks.
Single-firm private industrial networks -company-owned private industrial networks to
coordinate supply chains with a limited set of partners. These single-firm networks are owned by
a single large purchasing firm, such as Wal-Mart or Procter & Gamble. Participation is by
invitation only to trusted long-term suppliers of direct inputs. The most common form of private
industrial network is.
Industry-wide networks - industry-owned private industrial networks to set standards, and
coordinate supply and logistics for industry. These networks are usually owned by a consortium
of large firms in an industry and have the following goals: providing a neutral set of standards
for commercial communication over the Internet.
 2.4.2 Major Business-To-Consumer (B2C) Business Models
Business-to-consumer (B2C) e-commerce, in which online businesses seek to reach individual
consumers, is the most well-known and familiar type of e-commerce. The major business models
utilized in the B2C arena include;
 Portals: offer users powerful Web search tools as well as an integrated package of content and
services, such as news, e-mail, instant messaging, calendars, shopping, music downloads,
video streaming, and more, all in one place. Initially, portals sought to be viewed as “gateways”
to the Internet, such as Yahoo, MSN, and AOL.
 Today, however, the portal business model is to be a destination site. They are marketed as
places where consumers will want to start their Web searching and hopefully stay a long time to
read news, find entertainment, and meet other people (think of destination resorts).
Yahoo, AOL, MSN, and others like them are considered to be horizontal portals because they
define their market space to include all users of the Internet.
 They generate revenues primarily from search engine advertising sales and also from
affiliate referral fees.

 E-Tailer: Online retail stores, often called e-tailers. E-tailors are similar to the typical
bricks and mortar storefront, except that customers only have to connect to the
Internet to check their inventory and place an order. Some e-tailers, which are referred
to as “bricks-and-clicks,” are subsidiaries or divisions of existing physical stores and
carry the same products.

 This sector is extremely competitive, however. Since barriers to entry (the total cost of
entering a new marketplace) into the Web e-tail market are low, tens of thousands of small e-
tail shops have sprung up on the Web.
 Becoming profitable and surviving is very difficult, however, for e-tailers with no prior brand
name or experience. The e-tailer’s challenge is differentiating its business from existing stores
and Web sites.

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  Content Provider: refers to all forms of human expression that can be put into a
tangible medium such as text, CDs, or the Web. Although there are many different ways
the Internet can be useful, “information content,” which can be defined broadly to
include all forms of intellectual property, is one of the largest types of Internet usage
Content providers distribute information content, such as digital news, music, photos, videos,
and artwork over the Web.
 Retrieving and paying for content is the second largest revenue source for B2C e-commerce.
Content providers make money by charging a subscription fee.
Of course, not all online content providers charge for their information; just look at
Sportsline.com, CIO.com, CNN.com, and the online versions of many newspapers and
magazines.
 Users can access news and information at these sites without paying a cent. These popular sites
make money in other ways, such as through advertising and partner promotions on the site.
Increasingly, however, “free content” is limited to headlines and text, whereas premium content—
in-depth articles or video delivery—is sold for a fee.
 Transaction Broker: Sites that process transactions for consumers normally handled in
person, by phone, or by mail are transaction brokers. The largest industries using this
model are financial services, travel services, and job placement services.
 The online transaction broker’s primary value propositions are savings of money and time. In
addition, most transaction brokers provide timely information and opinion. Transaction brokers
make money each time a transaction occurs. Each stock trade, for example, nets the company a
fee, based either on a flat rate or a sliding scale related to the size of the transaction. Attracting
new customers and encouraging them to trade frequently are the keys to generating more revenue
for these companies.
 Job sites generate listing fees from employers up front, rather than charging a fee when a position
is filled.

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  Market Creator: build a digital environment in which buyers and sellers can meet, display
products, search for products, and establish prices. Prior to the Internet and the Web,
market creators relied on physical places to establish a market.

 A prime example is Priceline.com, which allows consumers to set the price they are willing to
pay for various travel accommodations and other products (sometimes referred to as a reverse
auction) and e-Bay.com, the online auction site utilized by both businesses and consumers. The
revenue source for this is Transaction fees.
 Service Provider: While e-tailers sell products online, service providers offer services online.
Some charge a fee, while others generate revenue from other sources, such as through
advertising and by collecting personal information that is useful in direct marketing. Some
services cannot be provided online; plumbing and car repair, for example, cannot be completed
via the Internet. The most obvious and successful service providers on the Web are the search
engines like Google, Yahoo, Overture, Alta Vista, and Lycos.
 The basic value proposition of service providers is that they offer consumers valuable, convenient,
time-saving, and low-cost alternatives to traditional service providers or—in the case of search
engines—they provide services that are truly unique to the Web.
 Community Provider: Community providers are sites that create a digital online environment
where people with similar interests can transact (buy and sell goods), communicate with like-
minded people, receive interest-related information, and even play out fantasies by adopting
online personalities.
 The basic value proposition of community a provider is to create a fast, convenient, one-stop site
where users can focus on their most important concerns and interests. Community providers
typically rely on a hybrid revenue model that includes subscription fees, sales revenues,
transaction fees, affiliate fees, and advertising fees from other firms that are attracted by a tightly
focused audience.

2.5. Business Models in Emerging E-commerce Areas

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 When we think about a business, we typically think of a business firm that produces a product
or good and then sells it to a customer. But the Web has forced us to recognize new forms of
business, such as consumer-to-consumer e-commerce, peer-to-peer e-commerce, and m-
commerce.

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 2.5.1. Consumer –to- Consumer (C2C) Business Models

 Consumer-to-consumer (C2C) ventures provide a way for consumers to sell to each other,
with the help of an online business. The first and best example of this type of business is
eBay.com, utilizing a market creator business model.
 Consumers who don’t like auctions but still want to find used merchandise can visit Half.com
(also owned by eBay), which enables consumers to sell unwanted books, movies, music, and
games to other consumers at a fixed price. In return for facilitating the transaction,
Half.com takes a commission on the sale, ranging from 5%–15%, depending on the sale price,
plus a fraction of the shipping fee it charges.
2.5.2. Peer-to-Peer (P2P) Business Models

 Like the C2C models, P2P business models link users, enabling them to share files and
computer resources without a common server. The focus in P2P companies is on helping
individuals make information available for anyone’s use by connecting users on the Web.
 Historically, peer-to-peer software technology has been used to allow the sharing of
copyrighted music files in violation of digital copyright law. The challenge for P2P ventures is
to develop viable, legal business models that will enable them to make money.
2.5.3. M-Commerce Business Models

 M-commerce, short for mobile commerce, takes traditional e-commerce models and
leverages emerging new wireless technologies—to permit mobile access to the Web.
 Wireless Web technology is being used to enable the extension of existing Web business
models to service the mobile workforce and consumers of the future.
 The key technologies here are telephone-based 3G (third-generation wireless), Wi-Fi
(wireless local area networks), and Bluetooth (short-range radio frequency Web device

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