Summary chapter 10

Group 1
Nguyễn Thị Linh - 18071139
Trịnh Thị Hoà An - 19071279
Đỗ Minh Giang - 19071340
Lương Thị Ngọc Ánh - 20070677
Lưu Ngọc Thành - 20070325
Nguyễn Ngọc Minh – 21070833

1 What are the unique features of e-commerce, digital markets, and digital
goods?

- 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.
The characteristics of eCommerce technology

• Global reach.
• Location.
• Interactivity.
• Universal standards.
• Personalization and adaptation.
• Social technology.
• Information density.
• Wealth.
Key words for understanding new e-commerce in 2014 are “social, mobile, local”. THE GROWTH OF E-
COMMERCE

- THE NEW E-COMMERCE: SOCIAL, MOBILE, LOCAL

+ From Eyeballs to Conversations

+ From Desktop to Smartphone

 - WHY E-COMMERCE IS DIFFERENT?
+ Ubiquity: available anywhere, anytime. Marketspace: a marketplace extended beyond traditional
boundaries and removed from a temporal and geographical location.

+ Global Reach; Universal Standards; Richness; Interactivity; Info. Density;

Personalization/Customization; Social Technology
KEY CONCEPTS IN EC: DIGITAL MARKETS AND DIGITAL GOODS IN A GLOBAL MARKETPLACE

+ Information Asymmetry: exists when 1 party in the transaction has more info. that is important for the
transaction than the other party. This info. helps determine their relative bargaining power. In digital
markets, consumers and suppliers can “see” the prices being charged for goods, so it’s more transparent
than traditional markets. Digital markets are very flexible and efficient: reduced search and transaction
costs, lower menu costs (when change prices), greater price discrimination, ability to change prices
dynamically based on market conditions.

+ Disintermediation: removing the middleman, has allowed many companies to improve their profits
while reducing prices.

+ Digital Goods: Music and books have been the forerunner. Now movies and television shows. Digital
goods are much cheaper to produce in the long run with little or no distribution costs compared to
traditional channels. Digital goods marketspaces also provide relatively cheap and efficient channels for
merchants who otherwise could not afford to reach customers on a global scale. Independent musicians
and moviemakers are finding tremendous opportunities for reaching new audiences through the
Internet that they couldn’t reach before. This is especially true on social networking sites and through
viral marketing.
E-commerce firms now have more opportunities to reach customers, suppliers, and partners through
Internet channels. The Internet has also given digital firms the opportunity to create new business
models or reshape their current model by using one or more of the unique features of e-commerce:
ubiquity, global reach, universal standards, richness, interactivity, information density,
personalization/customization, and social technology.

2 What are the principal e-commerce business and revenue models?

- TYPES OF E-COMMERCE
B2B; B2C; C2C m-Commerce E-COMMERCE BUSINESS MODELS

• e-Tailer: Amazon.com
• Transaction Broker: Expedia.com
• Market Creator: Alibaba, eBay
• Content Provider: iTunes.com
• Community Provider: Facebook
• Portal: Google, Yahoo
• Service Provider: Photobucket.com

- E-COMMERCE REVENUE MODELS

• Advertising
• Sales
• Subscription
• Free/Freemium
• Transaction fee
• Affiliate
3 How has e-commerce transformed marketing?
- ONLINE MARKETING AND ADVERTISING FORMATS
• SEM: SEARCH ENGINE MARKETING
• DISPLAY Ads
• VIDEO
• CLASSIFIED
• RICH MEDIA: interactive, targeted, entertaining, for branding orientation
• LEAD GENERATION
• SPONSORSHIP
• EMAIL

- BEHAVIORAL TARGETING It should come as no surprise that online businesses and

merchants collect millions and millions of pieces of data about Internet users outlining
exactly what they do and where they spend their time. E-commerce marketers use the
data in the form of behavioral targeting. Behavioral targeting occurs on individual Web
sites and also on the vast advertising networks that track your every move on the Web.
Just some of the data collected are: The site from which you came; Where you go when
you leave the current site; Each page you viewed on the current site; How long you
viewed each page; Which images you may have clicked on; Whether you purchased
anything; The operating system you use; The browser you use; Personal data you may
have entered such as address, home address, and credit card data; Who said the Internet
was anonymous?
Businesses and e-commerce marketers use the data to:

• Determine how well their Web sites are working.

• Create personalized Web pages suited to individual users (think Amazon.com’s “What
others are reading that purchased this book”).
• Improve customer experiences.
• Create additional value for each user.

Often, the data are collected by advertising networks rather than individual Web sites. It’s cheaper,
easier, and less time-consuming that way.

68% of Internet users disapprove of search engines and websites tracking their online behaviors in order
to aim targeted ads at them.

28% (of those surveyed) approve of behavioral targeting because they believe it produces more relevant
ads and information.

+ Do Not Track option in Browser.

- SOCIAL E-COMMERCE AND SOCIAL NETWORK MARKETING

Social EC is based on the idea of the digital social graph which is a mapping of all significant online social
relationships – similar to social network used to describe offline relationships. You map 10 closest
people, then each of them map their 10 closest people… the social graph. The interconnectedness of
people is so important to EC: the P/S you buy will influence the decisions of your friends, and vice versa.
Features of Social Commerce: newsfeed; timelines; social sign-on; collaborative shopping; network
notification; social search (recommendations)

Social shopping sites: Pinterest, you can swap shopping ideas with friends

The wisdom of crowds: large number of people can make better decisions about a wide range of topics
or products than a single person or even a small committee of experts.

Crowdsourcing is another way businesses are using the wisdom of crowds concept on social networking
sites. Present a problem or opportunity on the site and let people provide suggestions, advice, or
feedback free of charge.

Prediction markets also let businesses gain insight into what customers are really thinking. This concept
lets people bet on specific outcomes of, let’s say, new marketing campaign or the next congressional
election.

4 How has e-commerce affected business-to-business transactions?

- EDI: electronic data interchange; 80% of online B2B EC is still based on proprietary
systems for EDI.
Companies use EDI to automate transactions for B2B e-commerce and continuous inventory
replenishment. Suppliers can automatically send data about shipments to purchasing firms. The
purchasing firms can use EDI to provide production and inventory requirements and payment data to
suppliers.

- NEW WAYS OF B2B BUYING AND SELLING

Private Industrial Networks: typically consist of a large firm using a secure website to link to its
suppliers and other key business partners. Owned by the buyer, and it permits the firm and
designated suppliers, distributors, and other biz partners to share product design and development,
marketing, production scheduling, inventory management, and unstructured communication
including graphics and. It’s also called Private Exchange Network.

Net Marketplaces: Alibaba.com

Exchanges: independently owned third-party marketplaces that connect thousands of suppliers and
buyers for spot purchasing. May be vertical.

5 What is the role of mobile commerce in business, and what are the most
important m-commerce applications?

- LOCATION-BASED SERVICES AND APPLICATIONS

Location-based services are perhaps one of the most interesting growth areas in m-commerce.
There are several leaders in this technology, namely Foursquare, Gowalla, and Loopt. Users track
their friends’ locations using geosocial services and earn points and badges for responding to special
deals from businesses they “check-in” with through geo advertising services. Businesses offer
customers special deals in an effort to boost sales from immediate promotions.

Geoinformation services provide mobile users instant, on-the-spot updates on product prices they
wanted.

Wikitude is an example of geoinformation service: it provides a special kind of browser for

smartphones equipped with a built-in GPS (global positioning sys.) and compass that can identify
your precise location and where the phone is pointed. Using info. from over 800,000 points of
interest available on Wikipedia, plus thousands of other local sites, the browser overlay info. about
 points of interest you are viewing, and display that info. on your smartphone screen, superimposed
on a map or photograph that you just snapped.

- OTHER MOBILE COMMERCE SERVICES

Folks in Japan and Europe can already do that. Soon Americans will, too. Studies show that U.S.
consumers, particularly the younger set, have embraced the convenience of online shopping and e-
banking and are now ready to move to the next frontier: person-to-person mobile payments.

Mobile Apps, some not available for web

6 What issues must be addressed when building an e-commerce Web site?

+ Develop an e-commerce presence map.

+ Develop a timeline milestones

Developing a successful e-commerce site requires managers to develop a clear understanding of their
business objects and choose the right technology to achieve those objectives. Decisions need to be
made about the site design and social and information policies. Most of all, the company must
adequately budget for all the necessary components of an e-commerce site.