Module 8 Flashcards
3 Major segments of E-commerce
- Retail goods
- Travel and other services
- Online content
What is e-commerce?
E-commerce is the use of the internet, web, apps to transact business.
What is social marketing about in e-commerce?
Social marketing is based on firms engaging in social conversations. Firms participating in everything social
Keywords in e-commerce channels
- Mobile -From PCs to mobile phones
- Local - Local merchants can gain access to customers
- Social - A collection of technology-based tools for communicating with shoppers
8 Unique features of e-commerce
- Ubiquity
- Global reach
- Universal standards
- Information richness
- Information density
- Personalization
- Social technology
- Interactivity
What is ubiquity
Ubiquity is the fact that the internet is available everywhere, and the marketspace extends everywhere.
Ubiquity reduces transaciton costs
What are univseral standards in e-commerce
The internet is the same everywhere and has one standard. This lowers market entry for merchants and search costs for consumers
What is information density
Information density is the total amount and quality of info available to market particpants.
It makes costs/prices more transparent. Price transparency means consuemrs can find out the variety of prices.
Information density helps firms price-discriminate
What is dynamic pricing
When price of a product varies depending on demand or supply situation
What is disintermediation
Disintermediation is the removal of organizations or intermediaries in the value chain. This makes things cheaper as there is less processes
Answer how digital markets affect the following:
Information asymmetry
Search costs
Menu costs
Dynamic pricing
Price discrimination
Market segmentation
network effects
disintermediation
Asymmetry reduced
search costs reduced
menu costs reduced
dynamic pricing low cost
price discrimiantion low cost
market segmentation low cost
network effects strong
disintermediation more possible
Digital goods:
marginal cost
cost of production
copying cost
distributed delivery cost
inventory cost
pricing
marginal cost zero
cost of production high
copy cost zero
distributed delivery cost low
invneotry cost 0
markeitng cost variable
pricing more variable
Types of e-commerce
- Business-to-Business (B2B) e-commerce
- Business-to-consumer (B2C) e-commerce
- Consumer-to-consumer (C2C) e-commerce. This is where consumers sell to consumers like marketplace
E-commerce business models
- E-tailer or online retailer
Sells physical products - Transaction broker
Saves users money+time by processing online sales transactions. Booking.com - Market creator
Provides a digital environment where buyers and sellers can buy. eBay. - Content provider
Creates revenue by providing digital content - Community provider / social network
Provides an online meeting place - Portal
Provides initial POE. google - Service provider
Provides online services
google drive, uber
E-commerce revenue models
- Advertising revenue models
Revenue is generated by attracting a large audience to its web who can then be exposed to the ad - Sales revenue model
companies get revenue from selling - subscription revenue model
companies offer subscription fees for content - free/fremium revenue model
firms offer basic services for free in hopes consumers buy premium version - transaction fee revenue model
companies receive a fee for transaction - affiliate revenue model
affiliate websites send visitors to websites
Behavioral targeting
Tracking clickstreams of individuals on websites to understand interests and give ads that fit
Native advertising
placing ads in social network feeds
meaning of wisdom of crowds?
means a large number of people can make better decisions about a wide range of topics than a single experts
social listening
understand what people are saying about a brand
Private B2B nertwork
consists of large firms using secure websites to link its suppliers and partners
B2B e-commerce marketplace
provides a single, digital marketplace for many buyers and sellers
what is m-commerce
the commerce of goods via mobile devices
What is the foundation of m-commerce
connecting people to local merchants in the form of geo-advertising.
3 main mobile payment apps
- Near field communication (NFC)
contactless payments like apple pay - quick response (QR) code
barcode where info is encoded - Peer-to-peer payment
bank transfers
4 types of e-commerce presence
- Website/apps
- social media
- offline media
What makse e-commerce disruptive?
- Advancement in technology leads to lower transaction costs and search costs
- Leveraging communities as assets and using the social community of the product
- growing by power of network effects.
what is network effect?
The more users, the more powerful/better the platform becomes.
Same-side network effects?
The network effect happens between the users of the same class.
More people on insta is better
Cross-side network effects?
Happens among two different classes of users
uber drivers and uber consumers
What is metcalf’s law/equation
value of network is proportional to n^2 users
The formula for number of posible connections between network users is:
n(n-1)/2
What are 2 types of network externalities
positive - additional network user increases value to all other users
negative - additional network user decreases value to all other users
What is a one-sided market on e-commerce?
a large share of value is derived from single class of users.
Whatsapp for example has majority as just people who chat
What is a two-sided market on e-commerce?
value is derived from 2 categories of network users.
Uber, airbnb
What is same-side network effects?
increasing value to a class of users resulting from an increase in the number of users from that class
Cross-side network effect?
increasing value to a class of users resulting from an increase in the number of users from another class
positive feedback loops
an increase in A leads to an increase in B, which leads to an increase in A etc
How network effects can affect industries with strong network effects
Industries with strong network effects lead to winner takes all dynamics. once a leader emerges, positive feedback loops strengthen its positionn
Key concepts in e-commerce
information asymmetry
menu costs
dynamic pricing
switching costs
delayed gratification
disintermediation - ability to remove intermediary processes. Consumers can use this to also remove the service fee of platforms.
Digital goods and their costs
Cost of producing first unit is almost entire cost of product and marginal cost is low
