E-Commerce key facts

Question 1

What are the five forces of e-commerce by Porter?

Answer 1

• threat of new entry
• supplier power
• buyer power
• threat of substitution
• competitive rivalry (in the middle)

Question 2

What is the threat of new entry?

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Answer 2

• time and cost of entry
• specialist knowledge
• economies of scale
• cost advantages
• barriers to entry
• technology protection

The ease in which newe competitors can enter the market

Question 3

What is the supplier power?

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Answer 3

• number of suppliers
• size of suppliers
• uniqueness of service
• your ability to substitute
• cost of changing

The ability of suppliers to control the prices and quality of inputs they sell to e-commerce comoanies

Question 4

What is the threat of substitution?

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Answer 4

• substitute performance / availability of substitutes
• cost of change

Question 5

What is the buyer power?

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Answer 5

• number of customers
• size of each rder
• differences between competitors
• price sensitivity
• ability to substitude
• cost of changing

Ability of buyers to negotiate prices and influence the quality of products

Question 6

What is the competitive rivalry?

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Answer 6

• number of competitors
• quality and other differences
• switching costs
• customers loyalty

Intensity of competition among existing e-commerce companies

Question 7

What are potential changes due to e-commerce?

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Answer 7

• Entrants: entry barriers into the market become smaller
• Buyer: customers can easily reaearch and compare prices and can buy anywhere else
• Substitutes: countless substitutes, e.g. e-books, audio streams
• Suppliers: supplier can bypass retailer and sell products directly to customer
• rivalry: existing market gets bigger. more rivalry, competitors can head for new positions