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CHAPTER 1. THE REVOLUTION IS JUST
BEGINNING (BOOK 1)
1. What is EC? How does it differ from e – business? Where does it intersect with e – business?
- E-commerce (EC) : the use of the Internet, the Web, and mobile apps and browsers running on mobile devices to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals
- The term e-business to refer primarily to the digital enabling of transactions and processes within a firm, involving information systems under the control of the firm. E-business does not include commercial transactions involving an exchange of value across organizational boundaries. E-commerce (EC) refers to digitally enabled commercial transactions that take place between a company and external parties, such as customers, suppliers, or other businesses. These transactions always involve an exchange of value, for example when products or services are bought and sold online. On the other hand, e-business includes all digitally based internal processes and transactions within a firm. Therefore, the main difference lies in the scope: e- commerce deals with external value exchanges, while e-
business deals with internal digital processes. However, both are closely connected, since a firm’s e-business infrastructure provides the foundation for its e-commerce activities.
- E-commerce intersects with e-business at the boundary of the firm, where a company’s internal digital systems connect with external parties such as suppliers or customers. At this point, e-business applications turn into e-commerce when an actual exchange of value takes place. 2. What are some of the unique features of E – commerce technology? E-commerce technologies provide a number of unique features that have impacted the conduct of business UBIQUITY E-commerce is characterized by its ubiquity : It is available just about everywhere and at all times. It liberates the market from being restricted to a physical space and makes it possible to shop from your desktop, at home, at work, or even from your car. The result is called a marketspace —a marketplace extended beyond traditional boundaries and removed from a temporal and geographic location. GLOBAL REACH
E-commerce technologies permit personalization: Merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases. The technology also permits customization—changing the delivered product or service based on a user’s preferences or prior behavior. Given the interactive nature of e-commerce technology, much information about the consumer can be gathered in the marketplace at the moment of purchase. SOCIAL TECHNOLOGY: USER-GENERATED CONTENT (UGC), CREATORS, AND SOCIAL NETWORKS E-commerce technologies provide a unique, many-to- many model of mass communication, and over the last several years, user-generated content (UGC), in the form of video, podcasts, newsletters, literary content, online classes, digital art, and more, has come to occupy an ever-increasing role in the online content landscape. People who develop and distribute such content are now typically referred to as “creators.” More than 200 million people worldwide characterize themselves as creators, and an entire ecosystem, referred to as the creator economy, has sprung up around them. The creator economy includes social network platforms, content creation tools, monetization tools, fan interaction and community management tools, ad platforms, and administrative tools that support creators and enable them to earn revenue
3. What is a marketspace
Marketspace is a marketplace extended beyond traditional boundaries and removed from a temporal and geographic location. A marketplace is a physical place you visit in order to transact
4. Compare online and traditional transactions in terms of richness? Aspect Traditional Transactions Online (E- commerce) Transactions Richness of information Very rich, with personal, face-to- face service using aural and visual cues. High potential for richness through interactivity and personalization of messages. Customer experience Strong: in-person interactions create a powerful selling environment. Can simulate similar experiences (e.g., chatting online with a customer service representative). Reach vs. Richness Trade-off: reaching a larger audience reduces richness of the message. Reducing the trade-off enables both reach and richness simultaneously. Type of Best suited for Now also able to
Amazon Business – business.amazon.com Ariba Network (SAP Business Network) – sap.com Go2Paper – go2paper.com Supply On – supplyon.com Alibaba International – alibaba.com KOMPASS – kompass.com ThomasNet – thomasnet.com MFG – mfg.com Liquidity Services – liquidation.com EC21 – ec21.com GlobalSpec – globalspec.com Global Sources – globalsources.com
- Consumer-to-consumer (C2C) e-commerce: Craigslist – craigslist.org Facebook – Marketplace Letgo – letgo.com Offerup – offerup.com TheRealReal – therealreal.com Poshmark – poshmark.com ThredUp – thredup.com
- B2B2C e-commerce: Alibaba – alibaba.com Uber – ubereats.com Affirm – affirm.com Airbnb – airbnb.com Apple App Store, Google Play Store (digital platforms) 6. Describe three different stages in the evolution of e – commerce Based on the text provided, here are the three different stages in the evolution of e-commerce: 1 , The Invention Stage (1995–2000) This initial period was characterized by explosive growth, innovation, and a "Wild West" atmosphere fueled by over $125 billion in venture capital. Business Focus: The primary goal was to gain market share and "eyeballs" (online visitors) as quickly as possible. Revenue was prioritized over profits, with entrepreneurs pursuing a "first-mover advantage" in a winner-take-all market. The strategy often involved disrupting traditional industries and disintermediation (removing middlemen). Technology & Products: Due to limited bandwidth, e-commerce was restricted to selling relatively
Technology & Products: The widespread adoption of broadband and more powerful PCs enabled the expansion of e-commerce beyond simple goods to include more complex services, such as travel and finance. Marketing: Marketing became more sophisticated and data-driven. Key strategies included search engine advertising, rich media and video ads, and behavioral targeting to deliver personalized messages. Web Presence: Companies expanded their online presence beyond a single website to include integrated campaigns using e-mail, search engines, and multiple specialized websites. 3 , The Reinvention Stage (2007–Present) Beginning with the launch of the iPhone, this current stage is defined by the convergence of social, mobile, and local e-commerce. Business Focus: New business models emerged, such as the on-demand service economy (e.g., Uber, Airbnb) which leverages unused personal assets. The "creator economy" also rose, driven by user- generated content on social platforms. Technology & Products: The primary drivers are mobile devices (smartphones, tablets) and Web 2. technologies, which facilitate user-generated content and social networks. E-commerce expanded to
include local goods and services, and entertainment content became a major revenue source. Marketing: Marketing has been transformed by social networks (Facebook, Instagram, TikTok), which allow for highly targeted and personalized advertising based on vast data repositories. The strategy is to surround the consumer with coordinated marketing messages across multiple platforms. Web Presence: A firm's online presence is no longer just a website but an ecosystem that includes active engagement on various social networks and mobile apps. Future trends like the metaverse and Web3 are also beginning to shape this era.
7. List the major trends of EC BUSINESS : all forms of e-commerce continue to show very strong growth. Social networks such as Facebook, Instagram, TikTok, Twitter, and Pinterest are enabling social e-commerce by providing advertising, searches, and the ability to purchase products without leaving the site. Local e-commerce is being fueled by the explosion of interest in on-demand services. B2B e-commerce, which dwarfs all other forms, also is continuing to strengthen and grow. The Covid-19 pandemic has resulted in an increased—and what is expected to be a lasting—shift to e-commerce
TECHNOLOGY : the mobile platform based on smartphones and tablet computers has finally arrived with a bang, driving astronomical growth in mobile advertising and making true mobile e-commerce a reality. Cloud computing is inextricably linked to the development of the mobile platform because it enables the storage of consumer content and software on cloud (Internet-based) servers and makes the content and software available to mobile devices as well as to desktops. Other major technological trends include the increasing ability of companies to track and analyze the flood of online data (typically referred to as big data) being produced. The Internet of Things (IoT), comprised of billions of Internet-connected devices, continues to grow exponentially and is driving the growth of a plethora of smart devices as well as adding to the torrent of data. Other major technological trends include increasing use of artificial intelligence technologies, increasing interest in blockchain technologies, and increasing focus on the concept of a metaverse that will create an immersive, 3D Internet experience using augmented and virtual reality technologies
- A mobile platform based on smartphones, tablet computers, wearable devices, and mobile apps has become a reality, creating an alternative platform for online transactions, marketing, advertising, and media viewing.
- Cloud computing completes the transformation of the mobile platform by storing consumer content and
software on “cloud” (Internet-based) servers and making it available to any consumer-connected device, from the desktop to a smartphone.
- The Internet of Things (IoT), comprised of billions of Internet-connected devices, continues to grow exponentially and drives the growth of a plethora of “smart/connected” devices such as TVs, watches, speakers, home-control systems, cars, etc.
- The trillions of online interactions that occur each day create a flood of data, typically referred to as big data. To make sense out of big data, firms turn to sophisticated software called business analytics (or web analytics) that can identify purchase patterns as well as consumer interests and intentions in milliseconds.
- Artificial intelligence technologies are being increasingly employed in a variety of e-commercerelated applications, such as for analyzing big data, customization and personalization, customer service, chatbots and voice assistants, and supply chain efficiency.
- Blockchain, the technology that underlies cryptocurrencies, non-fungible tokens (NFTs), and the concept of a more decentralized Internet known as Web3, attracts increasing interest, particularly from traditional financial service firms as well as firms seeking to use the technology for supply chain applications.
- Facebook rebrands as Meta, jumpstarting an increased focus on the “metaverse,” which entails moving the Internet experience beyond 2D screens toward
- Concerns over commercial and governmental invasion of privacy increase.
- Concerns increase about the growing market dominance of Amazon, Google, and Meta (often referred to as Big Tech), leading to litigation and calls for government regulation.
- Conflicts over copyright management and control continue, although there is now substantial agreement among online distributors and copyright owners that they need one another.
- Surveillance of online communications by both repressive regimes and Western democracies grows.
- Online security continues to decline as major companies are hacked and lose control of customer information.
- On-demand services and e-commerce produce a flood of temporary, poorly paid jobs without benefits.
Chapter 2. E – commerce Business Models
and Concepts (Book 1)
1. What is a business model? How does it differ from a business plan?
- A business model is a set of planned activities (sometimes referred to as business processes) designed to result in a profit in a marketplace. A business model is not always the same as a business strategy, although in
some cases they are very close insofar as the business model explicitly takes into account the competitive environment. The business model is at the center of the business plan.
- A business plan is a document that describes a firm’s business model. A business plan always takes into account the competitive environment.
- A business model differs from a business plan in that the business model describes how a company creates value and earns profit, while the business plan is a broader document that explains the business model in detail and always takes into account the competitive environment. 2. What are eight key components of an effective business model? Value Proposition A company’s value proposition is at the very heart of its business model. A value proposition defines how a company’s product or service fulfills the needs of customers. To develop and/or analyze a firm’s value proposition, you need to understand why customers will choose to do business with the firm instead of with another company and what the firm provides that other firms do not and cannot. Revenue Model A revenue model describes how a business will earn revenue, generate profits, and produce a superior return on invested capital. We use the terms revenue model and
Competitive advantage achieved by a business when it can produce a superior product and/or bring the product to market at a lower price than most, or all, of its competitors Market Strategy Market strategy is the plan a business puts together that details exactly how it intends to enter a market and attract customers Organizational Development Businesses that hope to grow and thrive need to have a plan for organizational development that describes how the business will organize the work that needs to be accomplished. Typically, the work is divided into functional departments, such as production, shipping, marketing, customer support, and finance. Management Team The single most important element of a business model is the management team, the employees of the business responsible for making the business model work. A strong management team gives a business model instant credibility to outside investors, immediate market-specific knowledge, and experience in implementing business plans.
3. Describe the five primary revenue models used by e – commerce businesses
Some major revenue models: advertising, subscription, transaction fee, sales, and affiliate. In the advertising revenue model , a business that offers content, services, and/or products also provides a forum for advertisements and receives fees from advertisers. Companies that are able to attract the greatest viewership or that have a highly specialized, differentiated viewership and are able to retain user attention (“stickiness”) are able to charge higher advertising rates. Yahoo, for instance, derives a significant amount of revenue from display and video advertising. In the subscription revenue model , a business that offers content or services charges a subscription fee for access to some or all of its offerings. For instance, the digital version of Consumer Reports provides online and mobile access to its content (such as detailed ratings, reviews, and recommendations) only to subscribers, for a $39 annual fee. Experience with the subscription revenue model indicates that to successfully overcome the disinclination of users to pay for content, the content offered must be perceived as a high-value-added, premium offering that is not readily available elsewhere nor easily replicated. In the transaction fee revenue model , a business receives a fee for enabling or executing a transaction. For example, eBay provides a marketplace platform and receives a small transaction fee from a seller if the seller is successful in selling the item. E*Trade,a financial
