Digital Commerce and Web 2.0 (Chapter 8)

Question 1

What 4 types of inner organisational systems exist today?

Answer 1

1. Pre Internet: One way from vendor to customer
   E.g. post, telephone and fax.
2. E - Commerce or digital commerce: selling of goods and services over public and private computer networks.
   E.g. Banking systems
3. Web 2.0: Think client extensions (allows for increased browser capabilities) and then new business models.
   E.g. All you need is a device and the internet.
4. Enterprise 2.0: A backend operations that works system to system to facilitate cooperative work.

Question 2

How do companies participate in digital commerce?

Answer 2

It is the buying and selling of goods and services over private and public networks. Can involve the supply chain a.k.a ‘brokers’ who sell on behalf of companies.

• Restricted to buying and selling
• Information retrieval can involve a fee

They can have a web front and a shopfront

Question 3

What are the three main types of digital commerce companies?

Answer 3

B2C - Business to Customer

• Sales between a supplier and a retail customer
• Involves a web storefront (customer ‘enters’ and manages their order.

B2B - Business to Business
- Sales between companies

B2G - Business to Government
- Sales between government agencies and business

Question 4

What are the two types of digital commerce brokers?

Answer 4

Auctions
- There is a standard auction. In which the price rises as the auction continues.
- There is a an auction where this works in reverse.
E.g. EBAY

Clearinghouses
- Provide goods and services at stated price, and arrange the delivery but do not own the product.
E.g. AMAZON
- Electronic Exchange
- Will match buyers and sellers like a stock exchange.

Question 5

How does digital commerce improve market efficiency ?

Answer 5

1. Disintermediation
   Elimination of middle layers in supply chain
2. Improved information on prices and terms
   Customer can compare prices on a number of websites
3. Price Elasticity
   Suppliers can determine amount of change in demand against changes in price.
   - Price experimentation on customers (increases revenue e.g. Amazon).
   - Manages prices in direct interaction with customers.

Question 6

What economic factors work against E - commerce? (4)

Answer 6

1. Channel conflict
   When the same goods are sold through different channels. You can incur both price conflicts and regulation conflicts.
2. Price conflicts.
   When the same product is offered somewhere else at a more competitive price.
3. Logistics expenses
   How much does it cost to move everything around, store it, change the procedures etc.
4. Customer Service Expense
   This can be an issues with some products. Some require a more intensive customer to vendor relationship. Also issues with returns and repayments etc. E.g. In china payment on credit card, is returned in the form of cash.