Essentials of Management
Information Systems
Fourteenth Edition, Global Edition
Chapter 10
E-commerce: Digital Markets,
Digital Goods
Copyright © 2020 Pearson Education Ltd.
Learning Objectives
10.1 What are the unique features of e-commerce, digital markets,
and digital goods?
10.2 What are the principal e-commerce business and revenue
models?
10.3 How has e-commerce transformed marketing?
10.4 How has e-commerce affected business-to-business
transactions?
10.5 What is the role of m-commerce in business, and what are
the most important m-commerce applications?
10.6 What issues must be addressed when building an
e-commerce presence?
10.7 How will MIS help my career?
Copyright © 2020 Pearson Education Ltd.
E-commerce Comes to the Dashboard: The
Battle for the "Fourth Screen"
– The evolution of e-commerce from that of simply buying goods or
services online to creating new marketing channels in areas that didn’t
exist just a few years ago.
– After television, computers, and mobile phones, car dashboards are
emerging as the “Fourth Screen” for future marketing opportunities.
– In fact, by 2030, dashboard-based products could generate $750 billion
revenue.
– Future opportunities for car dashboards include advertisements based on
a traveler’s location, ordering products like coffee or gasoline, and
potentially saving money on car insurance by allowing companies to
track driving habits.
– Who will own this market? Currently auto makers and major technology
companies like Google and Apple are battling for control of this market.
Additional challenges such as driver distraction and privacy will need to
be addressed before the revenue estimates possibly become a reality.
Copyright © 2020 Pearson Education Ltd.
E-commerce Comes to the Dashboard:
The Battle for the "Fourth Screen"
• Problem
– Opportunities presented by new technology
• Solutions
– Dashboard display screens
– Android Auto and Apple CarPlay
– Android Automotive
– Customer and auto databases
• Illustrates some major trends in e-commerce
– E-commerce moves to the auto mobile platform
– Sales of services
– Advanced data mining and search technology
Copyright © 2020 Pearson Education Ltd.
E-Commerce Today
• E-commerce: Use of the Internet and web to transact
business
• Began in 1995 and grew exponentially; still stable even in
a recession
• The new e-commerce: social, mobile, local
• Move from desktop to smartphone
• What other new trends in ecommerce?
Copyright © 2020 Pearson Education Ltd.
Figure 10.1 The Growth of E-Commerce
Copyright © 2020 Pearson Education Ltd.
Why E-commerce Is Different (1 of 2)
These features explain why e-commerce has grown so quickly because of
the unique nature of the Internet and e-commerce, which are richer and more
powerful than previous technology revolutions such as radio and TV.
• Ubiquity
– Marketspace is virtual
– Transaction costs reduced
• Global reach
– Transactions cross cultural and national boundaries
• Universal standards
– One set of technology standards: Internet standards
• Richness
– Supports video, audio, and text messages
Copyright © 2020 Pearson Education Ltd.
Why E-commerce is Different (2 of 2)
• Interactivity – ex: using a chat window to interact with technical
support at a merchant’s website.
• Information density ex?
– Greater price and cost transparency
– being able to find hundreds of prices for the same product
online
• Personalization/customization ex?
– Technology permits modification of messages, goods
• Social technology
– Promotes user content generation and social networking
Copyright © 2020 Pearson Education Ltd.
Key Concepts in E-commerce – Digital
Markets and Digital Goods in a Global
Marketplace
• Internet and digital markets have changed the way
companies conduct business
• Information asymmetry reduced
• Menu costs, search and transaction costs reduced
• Dynamic pricing enabled
• Switching costs
• Disintermediation - reduction in the use
of intermediaries between producers and consumers
Copyright © 2020 Pearson Education Ltd.
Figure 10.2 The Benefits of
Disintermediation to the Consumer
Copyright © 2020 Pearson Education Ltd.
Digital Goods
• Goods that can be delivered over a digital network
• Cost of producing first unit is almost entire cost of product
• Costs of delivery over the Internet is very low
• Marketing costs remain the same; pricing highly variable
• Industries with digital goods are undergoing revolutionary
changes (publishers, record labels, music etc.)
Copyright © 2020 Pearson Education Ltd.
Types of E-commerce
• Three major types
– Business-to-consumer (B2C)
▪ Example: Barnes and Noble.com
– Business-to-business (B2B)
▪ Example: ChemConnect, grainger.com (one of the largest B2B
marketplaces in the United States), mcmaster.com, and
elemica.com (chemical industry)
– Consumer-to-consumer (C2C)
▪ Example: eBay
• E-commerce can also be categorized by platform
– Mobile commerce (m-commerce) is a category based on the
nature of the connection to the Internet
Copyright © 2020 Pearson Education Ltd.
E-commerce Revenue Models
• Advertising
• Sales
• Subscription
• Free/Freemium
• Transaction fee
• Affiliate (partners)
Copyright © 2020 Pearson Education Ltd.
How Has E-commerce Transformed
Marketing?
• Internet provides new ways to identify and communicate
with customers
• Why marketers are interested in analyzing blog content,
Twitter and social media posts
• Internet advertising formats
• Behavioral targeting
– Tracking online behavior of individuals
Copyright © 2020 Pearson Education Ltd.
Figure 10.3 Website Visitor Tracking
Copyright © 2020 Pearson Education Ltd.
Figure 10.4 Website Personalization
Firms can create unique
personalized web pages that
display content or ads for
products or services of special
interest to individual users,
improving the customer
experience and creating
additional value.
Copyright © 2020 Pearson Education Ltd.
Figure 10.5 How an Advertising Network
Works
Copyright © 2020 Pearson Education Ltd.
Social E-commerce and Social Network
Marketing (1 of 2)
• Social e-commerce based on digital social graph
• Features of social e-commerce driving its growth
– Newsfeed
– Timelines
– Social sign-on
– Collaborative shopping
– Network notification
– Social search (recommendations)
• Social media
– Fastest growing media for branding and marketing
Copyright © 2020 Pearson Education Ltd.
What Is the Role of M-commerce in Business,
and What Are the Most Important M-commerce
Applications?
• M-commerce in 2019 is 45 percent of all e-commerce
• Fastest growing form of e-commerce
– Growing at 30 percent or more per year
• Main areas of growth
– Mass market retailing (Amazon, eBay, etc.)
– Sales of digital content (music, TV, etc.)
– In-app sales to mobile devices
The use of wireless mobile devices for purchasing goods and services
Copyright © 2020 Pearson Education Ltd.
Figure 10.9 Mobile Retail Commerce
Revenues
Copyright © 2020 Pearson Education Ltd.
What Issues Must Be Addressed When
Building an E-commerce Presence?
• Most important management challenges
– Developing clear understanding of business objectives
– Knowing how to choose the right technology to achieve
those objectives
• Develop an e-commerce presence map
– Four areas: websites, email, social media, offline media
• Develop a timeline: milestones
– Breaking a project into discrete phases
Copyright © 2020 Pearson Education Ltd.
Figure 10.10 E-commerce Presence Map
Copyright © 2020 Pearson Education Ltd.
