TIM3221

INTERNET MARKETING

LEC 02:
UNDERSTANDING E-COMMERCE
Learning Outcomes
After the end of Lecture 2, you will be able to:

• Understand the e-commerce concepts.

• Define e-commerce from different ways.
• Differentiate the distinctions among the categories of e-
commerce.
• Identify the features, benefits and limitations of e-
commerce

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E-Commerce

E-commerce is the use of the Internet

and the Web to transact business.

OR
E-commerce is the process of buying,
selling, transferring and exchanging
products, services and/or information
via the Internet and the Web.

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Defining E-Commerce

Communications delivery of goods, services, information or

payments via the Internet and Web.
Commercial capability of transact business via the
Internet and Web
Business doing business process via the Internet and
Web.
Service is A tool to cut service cost while improving
quality of customer service.
Learning An enabler of online training and education.

Collaborative A framework for inter- and intra-organisational

collaboration.
Community A gathering place for community members to
learn, transact and collaborate.

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E-Commerce Framework

Buyers, Hardware
sellers, People Technology and software
intermediaries, for support
IS and services.
management
people
E-Commerce Business
Strategy partnership
Public Policy Affiliate
Law and program,
Media joint venture,
regulations
Market research, consortia
promotion and throughout the
advertisement supply chain.

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Categories of E-Commerce

Business Originating From…

Business Consumer

Consumer Business
And Selling to…

B2B C2B

B2C C2C

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B2B

• Who?

• Examples: e-distributors, e-procurement

companies and private industrial networks

• Business-to-Government?

• 85% of e-commerce volume is B2B.

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An Example of B2B

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B2C

• Who?

• Examples: portals, online retailers, content

providers, transaction brokers, market creators,
service providers and community providers.

• Most commonly discussed and has grown

exponentially since 1995 (Laudon, K. C. and
Traver, C. G, 2007).

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An Example of B2C

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C2C

• Who?

• Examples: auction sites, individuals selling

property, car and personal services .

• e-Bay generated more than $44 billion in 2005

and estimated over $50 billion in 2006.

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An Example of C2C

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C2B

• Who?

• Consumers group together to “demand

aggregate” through public sites and then sell to
other organisation.

• Examples: priceline.com and SpeakOut.com.

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An Example of C2B

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Other Types of E-Commerce
Peer-to-Peer (P2P)
•P2P technology can be used in C2C, B2B and B2C.
•Network peer computers share and process file between
other peer computers
•Examples: exchange music, videos, software, games and
other digital product: Gnutella.com.

Mobile-Commerce (M-Commerce)
•Transactions in wireless environment and involve mobile
devices such as PDA and cell phone.
•Examples: e-banking via cell phone and e-transaction on
stock market via PDA.

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Convergence of E-Commerce Categories

Business Originating From…

Business Consumer

Consumer Business
2.Amazon 3.Consumers
And Selling to…

orders books aggregate to bulk

from purchase from
publisher. Amazon.

1.Consumers 4.Consumers resell

buy thousands the books on
of EC books LelongMalaysia.
from Amazon.

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Features E-Commerce

•Ubiquity: Available everywhere and at anytime.

•Global reach: The technology reaches worldwide, around
the earth.
•Universal Standards: There is one set of Internet
standards.
•Richness: Multimedia is possible.
•Interactivity: The technology works through interaction with
the user.
•Cost reduction: The technology reduces information costs
and raises quality.
•Personalisation: Personalisation of marketing messages is
possible.
•Abundant of information: The technology increases
information density and quality.

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E-Commerce Applications

Auctions

B2B Online
Exchanges Publishing

Online Banking Job Seeking M-commerce

Direct Consumer
E-government Travel
Marketing services

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Benefits of E-Commerce

Organisations Consumers

BENEFITS

Society

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Benefits to Organisations
Global reach

Cost reduction

Supply chain improvement

Improved customer relationship

Abundant of Information

Personalisation

Ubiquity

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Benefits to Consumers

More choices

Competitive prices

Speedy delivery

Abundant of Information

Personalisation

Ubiquity

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Benefits to Society

Improved standard of living

Environmental friendly

Improved public services

Economic development

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Limitations of E-Commerce

Limitations

Technological Non-
technological

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Limitations of E-Commerce: Technological

• Lack of telecommunication bandwidth.

• Lack of universal standards.

• Lack of software development tools.

• Lack of integration ability between existing applications

with advanced technologies.

• Lack of Internet accessibility.

• Some applications/transactions required expensive

software/tools.

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Limitations of E-Commerce: Non-technological

• Lack of trust by consumers.

• Lack of buyers and sellers.

• Lack of benefits measurement method.

• Customer preferences on traditional commerce.

• Poor reputation as online fraud is increasing.

• Legal, public policy issues and government regulations

constraints.

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Traditional
Transaction
• Operate in physical store
• Internal inventory
• Paper-based
• Physical marketplace
• Traditional EDI
• Time and place limitation
• Mass production
• Physical-based marketing
• Time-consuming
• Linear supply chain
• Huge investment
• Huge fixed cost
Electronic
VS
Transaction
• Operate online
• Online inventory
• Paperless
• Marketplace
• Use of Inter and Intranets
• Anytime and anyplace
• Mass customisation
• Virtual marketing
• Time-saving
• Hub-based supply chain
• Less investment
• Small fixed cost
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