E-Commerce Flashcards
Eight unique features of e-commerce technology
- Ubiquity: Internet / Web technology available everywhere: work, home, etc., and anytime
- Global reach: the technology reaches across national boundaries, around Earth
- Universal standards: one set of technology standards: Internet standards – e.g. TCP / IP make it possible for all devices to exchange content regardless of their type or make
- Richness (of communication): supports video, audio and tech messages
- Interactivity: the technology works through interaction with the user
- Information density: vast increases in information density – the total amount and quality of information available to all market participants
- Personalization / Customization: technology permits medication of messages, goods
- Social technology: the technology promotes user content generation and social networking
Trade-off between richness and reach
Traditional commerce means companies cannot have a rich intimate relationship with their customers, while having a mass base of customers
E-commerce potentially allows for maximizing both richness and reach, because of things like mass customization
Digital Markets (Information asymmetry, search costs, transaction costs, menu costs)
Reduce information asymmetry: you can get a lot of information on the internet, from things like previous user reviews, seller reputation, digital certificates etc.
Reduce search costs: reduce cost of comparing different offers, such as looking at price comparison websites instead of having to walk around to different car dealers or look through newspaper ads (less costly in time and energy)
Reduce transaction cost: costs borne by an organization to participate in a market – cost of sourcing materials etc. Videoconferencing systems means the company can negotiate deals with distant suppliers, outsource customer service
Reduce menu cost: the cost a merchant has to bear associated with changing the price of goods – with digital price labels they won’t need to walk around removing and adding price tags when the price changes
Price discrimination and dynamic pricing
Reduced menu cost means companies can discriminate on price – flight companies can change ticket price depending on how many times you’ve checked the price, what day of the week, what time of the day
Dynamic pricing: the capability to change prices in real time in relation to those variables
Price discrimination: providing different prices to different categories of users – e.g. using a Danish IP address might get more expensive prices than German IP addresses for a flight from Copenhagen to Berlin
Disintermediation
Typical distribution channels have several intermediary layers, which adds to the cost of the final product, but the digital market means they can remove layers which decreases the final cost –> allows for cheaper prices for customers + more profit for manufacturers
E-tailer (Internet Business Models)
Online retailers use web technology to resell consumer goods – e.g. Amazon
Transaction broker (Internet Business Models)
Process transactions for consumers normally handled in person, by phone or by mail
e.g. online travel agency Expedia provides an inventory of travel packages in a single web location
Market creator (Internet Business Models)
platforms where buyers and sellers can meet, display products, search for products and establish prices – e.g. eBay
Content provider (Internet Business Models)
Deliver multimedia content that can be music, text or video – e.g. Netflix
Community provider (Internet Business Models)
Provide a digital online environment where people with similar interests can communicate and share content with each other – e.g. Facebook
Portal (Internet Business Models)
Websites that aim at maximizing traffic by representing the starting point of user journeys on the web, especially when accessed via desktop devices
E.g. Yahoo
Service provider (Internet Business Models)
Similar to e-tailer model, where instead of products, services are provided
E.g. Google with its suite of services like Gmail, Google Maps
E-commerce revenue models (6 revenue models)
Advertising: attracting a large audience of visitors who can then be exposed to advertisements, he most widely used revenue model in e-commerce
Sales: selling goods, in- formation, or services to customers– e.g. Amazon, H&M, Zara
Subscription: a website offering content or services charges a subscription fee for access to some or all of its offerings on an ongoing basis
Free/Freemium: offer basic services or content for free and charge a premium for advanced or special features
Transaction Fee: a company receives a fee for enabling or executing a transaction. For example, eBay provides an online auction marketplace and receives a small transaction fee from a seller if the seller is successful in selling an item
Affiliate: send visitors to other websites in return for a referral fee or percentage of the revenue from any resulting sales e.g. personal blogs
Long-tail marketing
Allows marketers to reach a wide audience inexpensively
Behavioral Targeting
By using personalization technology to modify the web pages presented to each customer, marketers achieve some of the ben- efits of using individual salespeople at dramatically lower costs
