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Lesson 2
1.
Learning Objectives •
Features of Electronic Commerce • Opportunities for Electronic Commerce • Challenges of Electronic Commerce © Cengage Learning 2015 1
2.
Features of E-commerce
Technology 1. Ubiquity 2. Global reach 3. Universal standards 4. Information richness 5. Interactivity 6. Information density 7. Personalization/customization 8. Social technology © Cengage Learning 2015 2
3.
Features of E-commerce
Technology • Ubiquity is available just about everywhere, 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, using mobile e-commerce. • Global reach permits commercial transactions to cross cultural, regional, and national boundaries – potential market size for e-commerce merchants is roughly equal to the size of the world’s online population (an estimated 2.56 billion in 2013) © Cengage Learning 2015 3
4.
Features of E-commerce
Technology • Universal standards is technical standards of the Internet, and therefore the technical standards for conducting e-commerce – This greatly lowers market entry costs—the cost merchants must pay just to bring their goods to market. At the same time, for consumers, universal standards reduce search costs—the effort required to find suitable products. – Easily find many of the suppliers, prices, and delivery terms of a specific product anywhere in the world, and to view them in a coherent, comparative environment. © Cengage Learning 2015 4
5.
Features of E-commerce
Technology • Information richness refers to the complexity and content of a message – Audio, images, text, video • Interactivity is two-way communication between merchant and consumer and among consumers. – Rating, product review, chatting with an online sales person • Information density is the total amount and quality of information available to all market participants, consumers, and merchants alike. – Prices, content © Cengage Learning 2015 5
6.
Features of E-commerce
Technology • Personalization is merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases – advertisement based on the consumer’s profile • Customization is changing the delivered product or service based on a user’s preferences or prior behavior – the online version of the Wall Street Journal allows you to select the type of news stories you want to see first, and gives you the opportunity to be alerted when certain events happen. © Cengage Learning 2015 6
7.
Features of E-commerce
Technology • Social technology allows users to create and share content with a worldwide community. Using these forms of communication, users are able to create new social networks and strengthen existing ones. © Cengage Learning 2015 7
8.
Electronic Commerce: Opportunities,
Cautions and Concerns • Businesses need to exercise caution in weighing risks and benefits of online business • As technologies advance: – More businesses may benefit from electronic commerce © Cengage Learning 2015 8
9.
Opportunities for Electronic
Commerce • Electronic commerce can help increase profits – Increases sales – Decreases business costs • Virtual community – Gathering of people online using Web 2.0 technologies © Cengage Learning 2015 9
10.
Using Electronic Commerce
to Reduce Transaction Costs • Electronic commerce can: – Improve flow of information – Increase coordination of actions – Change attractiveness of vertical integration • Example: employment transaction – Telecommuting reduce or eliminate transaction costs © Cengage Learning 2015 10
11.
Opportunities for Electronic
Commerce (cont’d.) • E-commerce buyer opportunities – Increases purchasing opportunities – Identifying new suppliers and business partners – Efficiently obtaining competitive bid information • Easier to negotiate price and delivery terms – Increases speed, information exchange accuracy – Wider range of choices available 24 hours a day • Immediate access to prospective purchase information © Cengage Learning 2015 11
12.
Opportunities for Electronic
Commerce (cont’d.) • Benefits extend to general society – Lower costs to issue and secure: • Electronic payments of tax refunds • Public retirement • Welfare support – Provides faster transmission – Provides fraud, theft loss protection • Electronic payments easier to audit and monitor – Telecommuting reduces traffic, pollution – Products and services available in remote areas © Cengage Learning 2015 12
13.
Electronic Commerce: Current
Barriers • Poor choices for electronic commerce – Perishable foods and high-cost, unique items • Four barriers – Need for critical mass of customers with appropriate technology – Unpredictability in costs and revenues – Insufficient tools for hardware and software integration – Cultural and legal barriers © Cengage Learning 2015 13
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