introduction to e-commerce and e-marketplaces sharif university of technology, ali a. nazari...
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Introduction to E-Commerce and
E-MarketplacesSharif University of Technology ,
Ali A. Nazari [email protected]
Fall 1392
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Learning Objectives
1. Define Electronic Commerce (EC) and describe its categories
2. Discuss the content and framework of EC
3. Describe the major types of EC transactions
4. Describe the digital revolution as the major driver of EC
5. Describe some EC business models
6. Describe benefits and limitations of EC
7. Describe the contribution of EC to organizations responding to environmental pressure
8. Describe social & business networks
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Learning Objectives
9. Define Electronic Commerce (EC) and describe its categories
10. Define e-marketplaces and list their components.
11. List the major types of e-marketplaces and describe their features.
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
12. Describe the various types of EC intermediaries and their roles.
13. Describe electronic catalogues, shopping carts, and search engines.
14. Describe the major types of auctions and list their characteristics.
Learning Objectives
15. Discuss the benefits, limitations, and impacts of auctions.
16. Describe bartering and negotiating online.
17. Define m-commerce and explain its role as a market mechanism.
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
18. Discuss competition in the digital economy.
19. Describe the impact of e-marketplaces on organizations and industries.
What is Commerce?
Commerce = com- (together)+ mercis- (merchandise).
1530s, from Middle French commerce (14c.), from Latin commercium "trade, trafficking," from com- "together" + merx (genitive mercis)
"merchandise“
Source: Online Etymology Dictionary, retrieved on 29.09.2013 from http://www.etymonline.com
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Elements of Traditional Commerce
Products or services to sell Location or storefront in which
to sell Marketing plan to promote and
advertise Way(s) to accept orders Way(s) to accept payment
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Electronic Commerce
The process of buying, selling, or exchanging products, services, or information via computer networks
Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
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Different perspectives on EC
Doing business electronically by completing business processes over networks
A tool to cut service costs while improving the quality of customer service and increasing the speed of service delivery
Enabler of online learning and training Framework for inter- and intra-organizational
collaboration A gathering place for community members to
learn, transact, and collaborate such as in social networks
Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
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What is Electronic Business?
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Dimensions of Electronic Commerce
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Source: Choi et al. “The Economics of Electronic Commerce.” In: Macmillan Technical Publishing, Indianapolis, 1997.
Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
EC Classification
Pure vs. Partial– Partial, when at least 1 dim is electronic such
as ordering food online– Pure, when no physical dimensions is involved
Internet vs. Non-Internet EC– Internet– Private networks (e.g., ATM)– LAN (e.g., using services at airports accessed
via intranet)
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Organisations
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Brick-and-mortar (old economy) organizations– Primary business conducted offline – E.g. the super market around the corner
Virtual (pure-play) organizations– business conducted purely online– E.g. online gaming; providing web space
Click-and-mortar (click-and-brick) organizations
– Some EC activities– E.g., the super store around the SUT Metro
station uses an eShop to sell food, drinks, and fruit
Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Information Systems
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Interorganizational information systems (IOSs)
Communications systems that allow routine transaction processing and information flow between two or more organizations
Intraorganizational information systems
Communication systems that enable e-commerce activities to go on within individual organizations
Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
EC Framework
EC applications are supported by infrastructure and by these five support areas:
– People– Public policy– Marketing and advertisement– Support services– Business partnerships
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
Business-to-business (B2B)E-commerce model in which all of the participants are businesses or other organizations
Business-to-consumer (B2C)E-commerce model in which businesses sell to individual shoppers
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
E-tailingOnline retailing, usually B2C
Business-to-business-to-consumer (B2B2C)E-commerce model in which a business provides some product or service to a client business that maintains its own customers
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
Consumer-to-business (C2B)E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they need
Mobile commerce (m-commerce)E-commerce transactions and activities conducted in a wireless environment 2
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
Location-based commerce (l-commerce)M-commerce transactions targeted to individuals in specific locations, at specific times
Intrabusiness ECE-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
Business-to-employees (B2E)E-commerce model in which an organization delivers services, information, or products to its individual employees
Collaborative commerce (c-commerce)E-commerce model in which individuals or groups communicate or collaborate online
Consumer-to-consumer (C2C)E-commerce model in which consumers sell directly to other consumers 2
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
Peer-to-peer (P2P)Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce
E-learningThe online delivery of information for purposes of training or education
E-governmentE-commerce model in which a government entity buys or provides goods, services, or information from or to businesses or individual citizens 2
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Classification by Transaction Nature
Exchange
A public electronic market with many buyers and sellers
Exchange-to-exchange (E2E)
E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Driver, Benefits, and Limitations
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Driver, Benefits, and Limitations
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Business Pressure Drives EC
Driver, Benefits, and Limitations
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Elements of EC
SEARCH ENGINE
SHOPPING BOT
AGGREGATOR
ON-LINE CATALOG
AUTOMATED AGENTS
TRACKING AGENT
ON-LINE HELP
INTERNET TELEPHONY
CUSTOMER PREFERENCES
BARGAINING STRATEGIES
PRICE SENSITIVITIES
CREDIT/PAYMENT INFORMATION
ON-LINE PROBLEM REPORTS
FOLLOW-ON SALES OPPORTUNITIES
TECHNOLOGIES USED INFORMATION GATHERED
BROWSING BEHAVIOR
DELIVERY REQUIREMENTSE-PAYMENT SYSTEMS
CONFIGURATOR
RECOMMENDER AGENT
TRANSACTION PROCESSOR
DATA INTERCHANGE
CRYPTOGRAPHY
BROWSER SHARING
MARKET BASKET
PERSONAL DATA
CUSTOMER SATISFACTION
SEARCH BEHAVIOR
EFFECTIVENESS OF PROMOTIONS
BUYER FINDS BUYER FINDS SELLERSELLER
NEGOTIATIONNEGOTIATION
PAYMENTPAYMENT
SALESALE
DELIVERYDELIVERY
POST-SALEPOST-SALEACTIVITIESACTIVITIES
SELECTION OF SELECTION OF GOODSGOODS
Source: Habib Mir Hosseini, Course content EBC6210, uOttawa, Ottawa, ON, Canada
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
EC Business Model
Business model
A method of doing business by which a company can generate revenue to sustain itself
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Elements of A Business Model
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Customers People to be served and the company’s relationships with these customers including customers’ value proposition
Products & services That the business will offer
Business Processes required to make and deliver the products and services
Resources required and the identification of which ones are available, which will be developed in house, and which will need to be acquired
Supply Chain including suppliers and other business partners
Expected Revenue anticipated costs, sources of financing, and estimated profitability (financial viability)
Functions of a BM
Articulate a customer value proposition Identify a market segment Define the venture’s specific value chain structure Estimate the cost structure and profit potential Describe the venture’s positioning within the
value network linking suppliers and customers Formulate the venture’s competitive strategy
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
EC Business Models
Revenue model
Description of how the company or an EC project will earn revenue
Value proposition
The benefits a company can derive from using EC
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Major Revenue Models
Sales Transaction fees Subscription fees Advertising fees Affiliate fees Other revenue sources
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Typical EC Business Models
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Online direct marketing Electronic tendering systems. Name your own price Find the best price Affiliate marketing Viral marketing Group purchasing Online auctions Product and service
customization Electronic marketplaces and
exchanges
Information brokers (informediaries)
Bartering Deep discounting Membership Value-chain integrators Value-chain service providers Supply chain improvers Social networks,
communities, and blogging Direct sale by manufacturers Negotiation
Typical EC Business Models
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Tendering (bidding) system: Model in which a buyer requests would-be sellers to submit bids; the lowest bidder wins
Name-your-own-price model: Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price
Typical EC Business Models
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Affiliate marketing: An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site
Viral marketing: Word-of-mouth marketing in which customers promote a product or service to friends or other people
Typical EC Business Models
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
SME: Small-to-medium enterprises Group purchasing: Quantity
(aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased
Typical EC Business Models
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Customization: Creation of a product or service according to the buyer’s specifications
Benefits
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
To customers: ‒ Increases Choice of Vendors.‒ Enables customers to shop or do other transaction
anytime‒ Increased amount of information on demand.‒ Allows quick delivery.‒ Facilitates competition which leads to more discounted
prices. ‒ Increased price comparison capabilities.‒ Simple method to check on order status.‒ Customization of products and services. ‒ Creates virtual communities. ‒ Makes it possible to participate in virtual auctions
Benefits
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
To society: ‒ Enables more individuals to work at home. ‒ Allows consumers to do less travelling for shopping,
resulting in less traffic on the roads, and lower air pollution.
‒ Allows some merchandise to be sold at lower prices benefiting less affluent people.
‒ Enables people in rural areas to enjoy products and services which otherwise are not available to them.
‒ Facilitate delivery of public services
Benefits
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
To organisations: ‒ Expand the marketplace to global markets‒ Creates virtual communities. ‒ Decreases the cost of creating, processing,
distributing, storing and retrieving paper-based information.
‒ Allows reduced inventories.‒ Provides customization of products and services. ‒ Support business process reengineering efforts‒ Lower telecommunication cost
Limitations
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Technical limitations: ‒ Lack of system security, reliability, standards and
communication protocols.‒ Rapid developing pace of underlying technologies.‒ The need for special Web servers and other
infrastructures, in addition to the network servers.‒ Insufficient telecommunication bandwidth.‒ The cost of developing an Electronic Commerce
business in house can be very high, and mistakes due to lack of experience may result in delays.
‒ Software development tool are still evolving and changing rapidly.
‒ limited choices of Payment systems and universal e-cash
Limitations
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Lack of Trust and User Resistance:‒ Customers do not trust
‒ Unknown faceless sellers‒ Paperless transactions‒ Electronic money
‒ Switching from a physical to a virtual store may be difficult.
Security and Privacy:‒ The Electronic Commerce industry has a very long and
difficult task of convincing customers that online transactions and privacy are secure.
Limitations
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Lack of touch and feel online Many unresolved legal issues Insufficiently large number of sellers and
buyers Breakdown of human relationships Expensive and/or inconvenient accessibility to
the Internet Different Policies Pricing - granularity of price (micro payment),
pricing policy
Discussion: Major problems of Iranian society
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Discussion
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Can EC help us to solve our problems? Traffic congestion / reliable and efficient transportation Unemployment / Job creation Pollution Fair distribution of opportunities Inflation Service provision in remote areas Transparency in processes traceability in public administration reliable statistics
Discussion
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Reliable transportation Job creation Avoiding Pollution Fair distribution of
opportunities Reducing Inflation Services for all Transparency in
processes High quality processes Traceability Reliable statistics
Health
Wealth
Justice
..……..
E-Marketplace
An online market, usually B2B, in which buyers and sellers exchange goods or services;
3 types of e-marketplaces – private – public – consortia
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Elements of E-Marketplaces
Customers Sellers Products and services
– digital productsGoods that can be transformed to digital format and delivered over the Internet
Infrastructure Front end Back end Intermediaries
– Third parties that operates between sellers and buyers
Other business partners Support services 5
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
E-Marketplace
Front endThe portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment gateway
Back endThe activities that support online order fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Storefronts
StorefrontA single company’s Web site where products or services are sold
E-mall (online mall)An online shopping center where many online stores are located
– Visualization and virtual realty in shopping malls
Types of Stores and Malls– General stores/malls– Specialized stores/malls– Regional versus global stores– Pure-play online organizations versus click-and-mortar stores
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Types of E-Marketplaces
Private E-Marketplaces
Online markets owned by a single company; may be either sell-side and/or buy-side e-marketplaces
Sell-side E-Marketplace
A private e-marketplace in which one company sells either standard and/or customized products to qualified companies
Buy-side E-Marketplace
A private e-marketplace in which one company makes purchases from invited suppliers
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Types of E-Marketplaces
Public E-Marketplaces
B2B marketplaces, usually owned and/or managed by an independent third party, that include many sellers and many buyers; also known as exchanges
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Information Portals
Information Portal
A single point of access through a Web browser to business information inside and/or outside an organization
Portal Types– Commercial (public)– Corporate– Personal– Knowledge– Mobile– Publishing– Voice
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Transactions: Online Auction
AuctionA competitive process in which a seller solicits consecutive bids from buyers (forward auctions) or a buyer solicits bids from sellers (backward auctions). Prices are determined dynamically by the bids
Traditional vs. Online Auctions– rapid process gives potential buyers little time to make a decision– electronic auction (e-auction) conducted online
Types of Auction– One buyer, one seller– One seller, many potential buyers
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Transactions: Online Auction
Forward auction
An auction in which a seller entertains bids from buyers. Bidders increase price sequentially
Reverse auction (bidding or tendering system)Auction in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B mechanism
“name-your-own-price” modelAuction model in which a would-be buyer specifies the price (and other terms) he or she is willing to pay to any willing and able seller. It is a C2B model that was pioneered by Priceline.com
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Overview Definition Business Models
Summary
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E-Marketplaces
Transactions: Reverse Auction Process
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Transactions: Auction
Double Auction (many-to-many)
Auctions in which multiple buyers and their bidding prices are matched with multiple sellers and their asking prices, considering the quantities on both sides
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Transactions: Bartering
Bartering
The exchange of goods or services E-bartering (electronic bartering)
Bartering conducted online, usually in a bartering exchange
Bartering exchange
A marketplace in which an intermediary arranges barter transactions
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Transactions: Online Negotiation
Negotiated pricing commonly is used for expensive or specialized products
Negotiated prices also are popular when large quantities are purchased
Much like auctions, negotiated prices result from interactions and bargaining among sellers and buyers
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Intermediaries in E-Markets
The Roles and Value of infomediaries– Electronic intermediaries that provide and/or control information flow in
cyberspace, often aggregating information and selling it to others
Broker – is a company that facilitates transactions between
buyers and sellers
Types of brokers– Buy/sell fulfillment
– Virtual mall
– Metamediary
– Bounty
– Search agent
– Shopping facilitator
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Intermediaries in E-Markets
Intermediaries can address the following five important limitations of direct interaction:– Search costs
– Lack of privacy
– Incomplete information
– Contract risk
– Pricing inefficiencies
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Intermediaries in E-Markets
e-distributor
An e-commerce intermediary that connects manufacturers with business buyers (customers) by aggregating the catalogs of many manufacturers in one place—the intermediary’s Web site
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Intermediaries in E-Markets
disintermediation
Elimination of intermediaries between sellers and buyers
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Buying Process in E-Markets
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Electronic Catalogues
Electronic product presentation The backbone of most e-selling sites Three dimensions of electronic
catalogs:– The dynamics of the information presentation
– The degree of customization
– Integration with business processes
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Electronic Shopping Cart
An order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Competitive Factors of Online Transactions
Lower search costs for buyers Speedy comparisons Lower prices Customer service Barriers to entry are reduced Virtual partnerships multiply Market niches abound Differentiation and personalization
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Competitive Forces Model
Model devised by Porter that says that five major forces of competition determine industry structure and how economic value is divided among the industry players in an industry; analysis of these forces helps companies develop their competitive strategy
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
The Analysis-of-Impact Framework
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Impacts of E-Marketplaces on B2C
Product promotion New sales channel Direct savings Reduced cycle time Improved customer service Brand or corporate image Customization Advertising Ordering systems Market operations Accessibility
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Impacts of EC on BP and Organisations
Impacts on manufacturing– Build-to-Order Manufacturing
• build-to-order (pull system)
A manufacturing process that starts with an order (usually customized). Once the order is paid for, the vendor starts to fulfill it
– Real-Time Demand-Driven Manufacturing
– Virtual Manufacturing
– Assembly Lines
Impacts on Finance and Accounting Impact on Human Resources
Management and Training
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
EC and E-Marketplaces
What is EC? EC Framework Types and Classification Business Models Drivers, Benefits and Limitations E-Marketplaces Transactions
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Overview Definition Business Models
Summary
EC Framework
E-Marketplaces
Efraim Turban, H. Michael Chung, Jae Kyu Lee, Michael Chung. Electronic Commerce 2010: A Managerial Perspective. 7th Edition, Pearson , ISBN 0132145383, 2009.
Mehdi Khosrow-Pour. Cases on Electronic Commerce Technologies and Applications. Idea Group Publishing, ISBN 1599044021, 2006..
Related Literature
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