Chapter 10: E-commerce: Digital Markets, Digital Goods

Question 1

Define e-commerce

Answer 1

Digitally enabled transactions between and among organizations & individuals

Question 2

Unique tech features of e-commerce

Answer 2

• ubiquity (marketspace)
• global reach
• universal tech standards
• richness, interactivity
• information density
• capabilities for personalization & customization
• social tech
  –> e-commerce is becoming increasingly social, mobile & local

Question 3

What are the main characteristics of digital markets?

Answer 3

• more transparent than traditional markets
• reduced information asymmetry
• lower search, transaction & menu cost
• dynamic price changes based on market conditions
• they foster market segmentation
• stronger network effects
• delivering digital goods (music, video, software etc.) –> high production cost, but low marginal, copying, delivery & inventory cost

Question 4

E-commerce business models

Answer 4

• e-tailers (online retail stores)
• transaction brokers
• market creators
• content providers
• community providers
• service providers
• portals (websites with initial point of entry to web)

Question 5

E-commerce revenue models

Answer 5

advertising, sales, subscription, free/ freemium, transaction fee, affiliates

Question 6

What are the major types of e-commerce?

Answer 6

• B2C (BarnesandNoble.com)
• B2B (ChemConnect)
• C2C (eBay)

Question 7

How does e-commerce influence marketing?

Answer 7

• long-tail marketing: new ways of identifying & communicating with millions of potential customers at lower costs through the Internet
• native advertising: placing ads in organic environment, such as social media feed or editorial content
• wisdom of crowds
• crowdsourcing: leveraging external resources (e.g. for innovation) –> combined with wisdom of clouds most effective, as the firm learns from its customers
• behavioural targeting techniques (consent problem)
• social commerce: using social media to improve targeting of products/ services

Question 8

How does e-commerce influence B2B transactions?

Answer 8

• B2B e-commerce generates efficiencies by enabling companies to locate suppliers, solicit bids, place orders & track shipments in transit electronically by means of electronic data interchange (EDI) (computer-to-computer exchange of standard transactions)
• net marketplaces (e-hubs) provide a single, digital marketplace for many buyers & sellers (spot purchasing or direct goods for single industry)
• private industrial networks link a firm with its suppliers & other strategic business partners (effective supply chains)

Question 9

What is m-commerce?

Answer 9

Mobile commerce is especially well suited for location-based applications & personalized location-based marketing (55% of online retailers have m-commerce websites)

Question 10

What are the main areas of growth in m-commerce?

Answer 10

• mass market retailing (Amazon, eBay, …)
• sales of digital content (music, TV, …)
• in-app sales to mobile devices, which are being used for bill payments, banking etc. that require tech for NFC, QR codes or P2P payment

Question 11

What does m-commerce imply for marketing?

Answer 11

Geoadvertising, geosocial (e.g. where people are), geoinformation (e.g. price of house next door) services through GPS

Question 12

What four things does e-commerce presence require?

Answer 12

websites, email, social media, offline media (timeline is important)

Question 13

Management challenges of developing e-commerce presence

Answer 13

• developing clear understanding of business objectives
• knowing the right tech for those objectives