Chapter 10: E-commerce: Digital markets, Digital goods Flashcards
What are the three key concepts in E-commerce?
- Local
- Social
- Mobile
What sets E-commerce apart?
- Ubiquitous access
- Global reach
- Universal (technical) standards
- Richness
- Interactivity
- Information density
- Personalization/ customization
- Social technology
Why is E-commerce ubiquitous?
E-commerce can be accessed from anywhere because:
1. Creation of a marketspace
3. Reduced transaction costs
What is a marketspace?
This is a marketplace not limited by physical boundaries
What is meant by E-commerce having lower universal standards?
- Lower market entry costs: costs to enter the market
- Lower search costs: effort to find suitable products
What is meant with the Richness of E-commerce?
There is no trade-off required anymore between richness and reach. E-commerce has both
What is information density?
This is the amount and quality of available information.
What is price transparency?
Ease of finding out market prices
What is cost transparency?
Ability to find out a merchant’s actual costs
What is price discrimination?
The ability to charge different classes of people different prices for the same product.
What is information asymmetry?
One party has more information than another in a transaction. In the past, retailers had a big advantage with this, but through the internet it has reduced
What are menu costs?
These are the costs for a merchant to change its prices
What is dynamic pricing?
This is a technique where the price depends on a customer’s demand characteristics or a seller’s supply chain situation.
What is disintermediation?
This means that a company removes organizations for intermediary steps from its supply chain
What is m-commerce?
This refers to the use of mobile devices to purchase products online
What are digital goods?
Goods that can be delivered over a digital network
What are transaction brokers?
These are organizations that process online transaction. Their value proposition is to save money
What are content providers?
Organizations or people that create content and spread it online
What are market creators?
These organizations build a digital environment to create markets for goods and services
What does it mean to download something?
This means transferring a file to user’s device
What does streaming mean?
This is a flow of continuous content without being stored on a user’s device
Name the different E-commerce revenue models
- Ads (Google, facebook)
- Sales based (AMZN)
- Subscription (Netflix , PSplus)
- Transaction fee (eBay)
- Affiliate marketing
Name three things online marketing is affected by
- Native advertising
- Long-tail marketing
- Behavioral targeting
What is long-tail marketing?
Internet enables companies to string together sales in distant places as long as the price is high enough
What is behavioral targeting?
Following clicksteams to discover interests and match ads to them. Can be done from websites/apps (first-party) or advertising networks (third-party)
What is native advertising?
placing ads in a social network newsfeed.
What is social e-commerce?
This is a version of e-commerce based on social relationships through social graphs,which map all significant online social relationships
What is social listening?
understanding what peole say about your brand and from those from your competitor
What is the wisdom of crowds?
This refers to the principle that a large number of people can make better decisions than a single person
What are direct goods?
These are goods used in the production process
What are B2B e-commerce marketplaces?
These provide marketplaces on the Internet for many buyers and sellers and are industry-owned or independent intermediaries
What are private B2B networks?
Networks that consist of large firms using secure websites to link to key business partners
What is EDI?
Electronic data exchange (EDI) enables electronic transactions
What are indirect goods?
Goods not directly involved in production
What are exchanges?
These are third-party e-commerce marketplaces connection suppliers and buyers for spot purchasing
What are location-based services?
These are services that are enable through GPS-enabled maps on devices. Includes geosocial, - information and -advertising services
Name three mobile app payment systems
- QR code
- Near Field Communications (NFC)
- Peer-to-peer payment systems (through a payment platform like Venmo)
What makes platforms so disruptive?
- Advancement in information and communications technology improving scalability
- Leveraging communities vs features of a product. Community=primary asset
- Power of network effects
What are network effects?
This is the effect that the more people are using a social netwom, the more valuable it is to its users with this mathematical equation: n^2
What is Metcalf’s Law?
- Network value: n^2
- Number of possible connections: n(n-1)/2
What are the network externalities types?
- Positive: additional user increases value for all other users
- Negative: additional user decreases value for all other users
What is a one-sided market?
Large share of value is from a single class of users
What is a two-sided market?
The value comes from two classes of users. Firms in these markets must consider interaction between sides.
What are same-sided network effects?
Increasing the value for one class of users by increasing the number of users in that class
What are cross-sided network effects?
The value for one class of users can be increased by increasing the number of people in a different class.
