ACC 381-Chapter 9

What are the unique features of e-commerce, digital markets, and digital goods?
• Ubiquity: Internet/Web technology available everywhere.
• Global reach: technology reaches around national boundaries, around Earth.
• Universal standards: one set of technology standards: Internet standards.
• Richness: supports video, audio, and text messages.
• Interactivity: the technology work through interact with the user.
• Information density: Large increases in information density-the total amount of information available to all market participants.
• Personalization/Customization: technology permits modification of messages, goods.
• Social technology: the technology promotes user content generation and social networking.
Name and describe 4 business trends and 3 technology trends shaping e-commerce today.
•Technology: powerful handheld mobile devices support music, web surfing, and entertainment as well as voice communication. Social networking software and sites such as Facebook and Twitter become a major new platform for e-commerce, marketing, and advertising. New models of computing such as cloud computing and Web 2.0 software greatly reduce the cost of e-commerce web sites.
•Business: Newspapers and other traditional media are adapting online, interactive models. Online entertainment business models offering television, movies, music, sports, and e-books are surging. Online advertising is growing twice as fast as TV and print advertising.
Define a digital market and digital goods and describe their distinguishing features.
A digital market is a marketplace that is is created by a computer and communications technologies that link many buyers and sellers. Distinguishing features include reduced information asymmetry, search costs, transaction costs, and menu costs, along with the ability to change prices dynamically based on market conditions. Digital goods are goods that can be delivered over a digital network. Distinguishing features include extremely low cost of digital delivery once the digital product has been produced.
What are the principal e-commerce business and revenue models? Name and describe the principal e-commerce business models. Name and describe the e-commerce revenue models.
•Business Models
• E-tailer: sells physical products directly to consumers or to individual businesses.
• Content provider: creates revenue by providing digital content, such as news, music, photos, or video, over the Web. The customer pay pay to access the content, or revenue may be generated by selling advertising space.
• Transaction broker: saves users money and time by processing online sales transactions and generating a fee each time a transaction occurs.
• Market creator: provides a digital environment where buyers and sellers can meet, search for products, display products, and establish prices for those products. Can serve consumers or B2B e-commerce, generating revenue from transaction fees.
• Service provider: provides Web 2.0 applications such as photo sharing, video sharing, and user-generated content as services. Provides other services such as online data storage and backup.
• Community provider: provides an online meeting place where people with similar interests can communicate and find useful information.
• Portal: provides initial point of entry to the Web along with specialized content and other services.
•Revenue Models
• Advertising: Web site generates revenue by attracting a large audience of visitors who can then be exposed to advertisements.
• Sales: companies derive revenue by selling goods, information, or services to customers.
• Subscription: Web site offering content or services charges a subscription fee for access to some or all of its offerings on an ongoing basis.
• Free/Freemium: a firm offers basic services or content for free, while charging a premium for advanced or high value features.
• Transaction fee: the firm receives a fee for enabling or executing transactions.
• Affiliate: Web sites are paid as “affiliates” for sending their visitors to other sites in return for a referral fee.
How has e-commerce transformed marketing?
The Internet provides marketers with new ways of identifying and communicating with millions of potential new customers at costs far lower than traditional media. Crowdsourcing utilizing the “wisdom of crowds” helps companies learn from new customers in order to improve product offerings and increase customer value. Behavioral targeting techniques increase the effectiveness of banner, rich media, and video ads. Social commerce uses social networks and social network sites to improve targeting of products and services.
How has e-commerce affected business-to-business transactions?
B2B e-commerce generates efficiencies by enabling companies to locate suppliers, solicit bids, place orders, and track shipments in transit electronically. Net marketplaces provide a single, digital marketplace for many buyers and sellers. Private industrial networks link a firm with its suppliers and other strategic business partners to develop highly efficient and responsive supply chains.
What is the role of m-commerce in business, and what are the most important m-commerce applications? List and describe important types of m-commerce services and applications. Describe some of the barriers to m-commerce.
M-commerce is especially well-suited for location-based applications, such as finding hotels and restaurants, monitoring local traffic and weather, and providing personalized location-based marketing. Mobile phones and handhelds are being used for mobile bill payment, banking, securities trading, transportation schedule updates, and downloads for digital content, such as music, games, and video clips. M-commerce requires wireless portals and special digital payment systems that can handle micropayments.
How does the Internet change consumer and supplier relationships?
Consumers can now make purchases from anywhere at any time without having to be at a physical store location. It has also given the consumer more control to freely choose suppliers and to get better prices through virtual price comparison. The Internet has made the consumer and supplier relationship more interactive. It has allowed for direct purchasing and selling, removing the middle man and lowering costs.