#8 IT Flashcards
User-created content
Customers create/add value directly to the company or its products
E.g. Through rating and comment mechanisms as on Amazon.
Freemium business model
Free, but ability to purchase further functionality. Heavily applied to online games and smartphone games
Crowdsourcing
The act of outsourcing tasks [...] to an undefined, large group of people or community (a “crowd”) The crowd: - Is dispersed - Has a short attention span - Produces mostly junk - Finds the best stuff E.g. WikiPedia
The long tail
Is the idea, that e-commerce has lower cost of listing a product, compared to offline channels, which in turn allows them to hold more products.
This means that the online allows for the “long tail of products” - the niche products not profitable in offline channels - to be listed.
The incremental cost of having an additional listing so small, that even low-volume are net-profitable. There is no major opportunity cost of occupying shelf space, no manufacturing and distribution cost, only the licensing cost.
An example is Blockbuster, it cost them something to have a title in a shop. But it does not cost Netflix a lot to have a product online. This allows for an active market for e.g. documentaries.
What are some elements of e-commerce strategy?
Trust and data ownership. There are increasing trust issues of data-loss and other scandals related to online business and e-commerce,
Speed of processing an online transaction / funneling
The “direct model”: definition
Direct contact with customers
- Customizing computers to customers
- Easier to “guess” what customer want.
- Intermediaries such as distributors and retailers, where inventory would almost always be in stock, could make products several months old when reaching the customer
Direct contact with suppliers
- No intermediaries –> just in time
Does however require strong infrastructure and customer sophistication.
