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Business

What is e-commerce?

“…refers to the sale, purchase, or exchange of goods, services, or other information over the internet or other telecommunications networks.” (Albaum & Duerr, 2008, p. 31)

  • Includes goods or services delivered offline
    -Example: Amazon.com shipping book via DHL
  • Also includes goods and services delivered online
    -Example: e-books, downloaded computer software
  • Internet economy
    – Growing faster than any other business trend in history
  • Companies face issues similar to those faced by traditional multinational companies

Types of e-commerce transactions

  • B2C: business-to-consumer transactions
    -Example: Buying TV online from interpark.com
  • B2B: business-to-business transactions
    -Makes up 70 to 85% of current e-commerce business
  • C2C: consumer-to consumer transactions
    -Private consumer selling online to other consumers, e.g., eBay
  • C2B: consumer-to-business transactions

The Internet: Changing the face of business

  • Successful companies embrace the Internet as a mechanism for transforming their companies and for changing everything about the way they do business
  • Business basics still apply online
  • In the world of e-commerce, company size matters less than speed and flexibility
  • By 2014, online sales and Internet activity will account for or influence 53% of total retail sales in the U.S.
  • 2018: Online retail market in Europe forecast to 233 billion Euro, annual growth rate 12% (Forrester Group, 2015)
  • Online grocery market will grow at the fastest rate and will surpass consumer electronics markets to become second largest online category by 2018 in Europe (Forrester Group, 2015)
  • Nielsen study: 84% of the world’s online population has used the Internet to make a purchase
  • Items purchased most often online include books, clothing/accessories/shoes, airline tickets, electronic equipment, and hotels

Barriers to e-commerce:

  • Not knowing how or where to start
  • Cost and time concerns
  • Fear that customers will not use a website
  • Problems with online security
  • Building trust with customers/partners
  • Open to misuse à Fraud
  • Openness to competition
      Competitors can copy business model

Benefits of selling on the web

  • Opportunity to increase revenues and profits
  • Ability to expand into global markets
  • Ability to remain open 24 hours a day, seven days a week
  • Capacity to use the Web’s interactive nature to enhance customer service
  • Ability to quickly change (e.g., product offering, marketing material)
  • Ability to lower the cost of doing business
    – Faster and cheaper communication flows leading to reduced transaction costs for businesses and consumers
  • Improve efficiency of business operations
  • Ability to grow faster
  • Power to track sales results►Conversion rate –  the percentage of customers  to a website who actually make a purchase à e-commerce as source of competitive advantage
  • Speed of transactions, cutmiddlemen insupply chain
    • e-commerce as source of competitive advantage

E-comerce

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