EssentialsofManagementInformationSystemsFourteenthEditionChapter10E-commerce:DigitalMarkets,DigitalGoodsCopyright?2021,2019,2017PearsonEducation,Inc.

AllRightsReservedLearningObjectives10.1

Whataretheuniquefeaturesofe-commerce,digitalmarkets,anddigitalgoods?10.2

Whataretheprincipale-commercebusinessandrevenuemodels?10.3

Howhase-commercetransformedmarketing?10.4Howhase-commerceaffectedbusiness-to-businesstransactions?10.5Whatistheroleofm-commerceinbusiness,andwhatarethemostimportantm-commerceapplications?10.6

Whatissuesmustbeaddressedwhenbuildingane-commercepresence?10.7

HowwillMIShelpmycareer?VideoCasesCase1:WalmartTakesonAmazon:ABattleofI

TandManagementSystemsCase2:Groupon:DealsGaloreCase3:Etsy:AMarketplaceandCommunityInstructionalVideo1:Walmart’sE-commerceFulfillmentCenterNetworkInstructionalVideo2:BehindtheScenesofanAmazonWarehouseE-commerceComestotheDashboard:TheBattleforthe"FourthScreen"ProblemOpportunitiespresentedbynewtechnologySolutionsDashboarddisplayscreensAndroidAutoandAppleCarPlayAndroidAutomotiveCustomerandautodatabasesIllustratessomemajortrendsine-commerceE-commercemovestotheautomobileplatformSalesofservicesAdvanceddataminingandsearchtechnologyE-CommerceTodayE-commerce:UseoftheInternetandwebtotransactbusinessBeganin1995andgrewexponentially;stillstableeveninarecessionCompaniesthatsurvivedthedot-combubblenowthriveThenewe-commerce:social,mobile,localMovefromdesktoptosmartphoneFigure10.1TheGrowthofE-CommerceWhyE-commerceIsDifferent(1of2)UbiquityMarketspaceisvirtualTransactioncostsreducedGlobalreachTransactionscrossculturalandnationalboundariesUniversalstandardsOnesetoftechnologystandards:InternetstandardsRichnessSupportsvideo,audio,andtextmessagesWhyE-commerceisDifferent(2of2)InteractivityInformationdensityGreaterpriceandcosttransparencyEnablespricediscriminationPersonalization/customizationTechnologypermitsmodificationofmessages,goodsSocialtechnologyPromotesusercontentgenerationandsocialnetworkingKeyConceptsinE-commerce–DigitalMarketsandDigitalGoodsinaGlobalMarketplaceInternetanddigitalmarketshavechangedthewaycompaniesconductbusinessInformationasymmetryreducedMenucosts,searchandtransactioncostsreducedDynamicpricingenabledSwitchingcostsDelayedgratificationDisintermediationFigure10.2TheBenefitsofDisintermediationtotheConsumerDigitalGoodsGoodsthatcanbedeliveredoveradigitalnetworkCostofproducingfirstunitisalmostentirecostofproductCostsofdeliveryovertheInternetverylowMarketingcostsremainthesame;pricinghighlyvariableIndustrieswithdigitalgoodsareundergoingrevolutionarychanges(publishers,recordlabels,etc.)TypesofE-commerceThreemajortypesBusiness-to-consumer(B2C)Example:BarnesandNBusiness-to-business(B2B)Example:ChemConnectConsumer-to-consumer(C2C)Example:eBayE-commercecanalsobecategorizedbyplatformMobilecommerce(m-commerce)E-commerceBusinessModelsPortalE-tailerContentproviderTransactionbrokerMarketcreatorServiceproviderCommunityproviderInteractiveSession–Technology:SmallBusinessLoansFromaFinTechAppClassdiscussionWhatdistinguishestheFinTechservicesdescribedinthiscasefromtraditionalbanks?Explainyouranswer.Howdothefinancialservicesdescribedhereuseinformationtechnologytoinnovate?WhataretheadvantagesanddisadvantagesofsmallbusinessesobtainingloansfromFinTechservices?Ifyouwereasmallbusiness,whatfactorswouldyouconsiderindecidingwhethertouseaFinTechservice?E-commerceRevenueModelsAdvertisingSalesSubscriptionFree/FreemiumTransactionfeeAffiliateHowHasE-commerceTransformedMarketing?InternetprovidesnewwaystoidentifyandcommunicatewithcustomersLongtailmarketingInternetadvertisingformatsBehavioraltargetingTrackingonlinebehaviorofindividualsProgrammaticadbuyingNativeadvertisingFigure10.3WebsiteVisitorTrackingFigure10.4WebsitePersonalizationFigure10.5HowanAdvertisingNetworkWorksSocialE-commerceandSocialNetworkMarketing(1of2)Sociale-commercebasedondigitalsocialgraphFeaturesofsociale-commercedrivingitsgrowthNewsfeedTimelinesSocialsign-onCollaborativeshoppingNetworknotificationSocialsearch(recommendations)SocialmediaFastestgrowingmediaforbrandingandmarketingSocialE-CommerceandSocialNetworkMarketing(2of2)SocialnetworkmarketingSeekstoleverageindividuals’influenceoverothersTargetingasocialnetworkofpeoplesharinginterestsandadviceFacebook’s“Like”buttonSocialnetworkshavehugeaudiencesSocialshoppingsitesWisdomofcrowdsCrowdsourcingInteractiveSession–People:Engaging"Socially"withCustomersClassdiscussionAssessthepeople,organization,andtechnologyissuesforusingsocialmediatechnologytoengagewithcustomers.Whataretheadvantagesanddisadvantagesofusingsocialmediaforadvertising,brandbuilding,marketresearch,andcustomerservice?Giveanexampleofabusinessdecisioninthiscasestudythatwasfacilitatedbyusingsocialmediatointeractwithcustomers.Shouldallcompaniesusesocialmediatechnologyforcustomerserviceandmarketing?Whyorwhynot?Whatkindsofcompaniesarebestsuitedtousetheseplatforms?HowHasE-commerceAffectedBusiness-ToBusinessTransactions?U.S.B2Btradein2019is$13.5trillionU.S.B2Be-commercein2018is$6.3trillionInternetandnetworkinghelpsautomateprocurementVarietyofInternet-enabledtechnologiesusedinB2BElectronicdatainterchange(EDI)Privateindustrialnetworks(privateexchanges)NetmarketplacesExchangesElectronicDataInterchange(EDI)Computer-to-computerexchangeofstandardtransactionssuchasinvoices,purchaseordersMajorindustrieshaveEDIstandardsDefinestructureandinformationfieldsofelectronicdocumentsMorecompaniesaremovingtowardweb-enabledprivatenetworksAllowthemtolinktoawidervarietyoffirmsthanEDIallowsEnablesharingawiderrangeofinformationFigure10.6:ElectronicDataInterchange(EDI)NewWaysofB2BBuyingandSellingPrivateindustrialnetworksPrivateexchangesLargefirmusingasecurewebsitetolinktosuppliersandpartnersNetmarketplaces(e-hubs)SingledigitalmarketplaceformanybuyersandsellersMayfocusondirectorindirectgoodsMaybeverticalorhorizontalmarketplacesExchangesIndependentlyownedthird-partyNetmarketplacesforspotpurchasingFigure10.7APrivateIndustrialNetworkFigure10.8ANetMarketplaceWhatIstheRoleofM-commerceinBusiness,andWhatAretheMostImportantM-commerceApplications?M-commercein2019is45percentofalle-commerceFastestgrowingformofe-commerceGrowingat30percentormoreperyearMainareasofgrowthMassmarketretailing(Amazon,eBay,etc.)Salesofdigitalcontent(music,TV,etc.)In-appsalestomobiledevicesFigure10.9MobileRetailCommerceRevenuesLocation-BasedServicesandApplicationsUsedby74percentofsmartphoneownersBasedonGPSmapservicesGeosocialservicesWherefriendsareGeoadvertisingWhatshopsarenearbyGeoinformationservicesPriceofhouseyouarepassingOtherMobileCommerceServicesFinancialaccountmanagementappsBanks,creditcardcompaniesMobileadvertisingmarketGoogleandFacebookarelargestmarketsAdsembeddedingames,videos,andmobileapps65percentofonlineretailershavem-commercewebsitesWhatIssuesMustBeAddressedWhenBuildinganE-commercePresence?MostimportantmanagementchallengesDevelopingclearunderstandingofbusinessobjectivesKnowinghowtochoosetherighttechnologytoachievethoseobjectivesDevelopane-commercepresencemapFourareas:websites,email,socialmedia,offlinemediaDevelopat