Features of e-commerce

(memorize these)
 7 features of e-commerce
1. Ubiquity
2. Global Reach
3. Universal Standards
4. Richness
5. Interactivity
6. Information Density
7. Personalization/Customization
 Why study these feature?
 To some extend, these features are unique
to e-commerce and explain why this
technology has change the world so much
more than other technologies

 Do these technologies have any of 7

features?
• Phone, electricity, cars, planes

 Yes, but not all 7.

 Ubiquity
 Available everywhere
 Built into other devices

 Hidden, but still there

 Why is ubiquity good?

 Ubiquity
 Ubiquity lowers transaction costs for
the consumer/buyer.
 How so?

 Think about buying gifts last

Christmas
 Think about the fact that gas costs

$2.40/gallon
 Related Concept
 Cognitive Energy – mental effort
needed to complete a task.

 Ubiquity reduces cognitive energy.

• Humans tend to seek options that
require the minimum cognitive energy.
• Consider the mental effort needed to
buy your book online vs. hunting for it
at various book stores.
 Global Reach
 e-commerce technologies enable a
business to easily reach across
geographic boundaries.

 Its really easy to understand how

this feature can benefit business and
consumers.
 Global Reach
 While e-commerce can reach across geographic
boundaries, can it reach across demographic
boundaries.

 Demographics
• age
• income
• race
• gender
• religion

 There is one demographic boundary that

technology can reach. Luckily, business doesn’t
have an interest in reaching this group.
 Universal Standards
 e-commerce is made possible through
hardware (Internet) and
software/content (World Wide Web)

 The Internet – In its infancy, the

architects developed standards that are
now globally recognized (TCP/IP)
 The World Wide Web – Standards are

becoming #1 priority (XML, HTML, etc.)

 Universal Standards
 Universal standards can greatly influence
market entry costs.

 How so?

 Consider the cost of bring goods to a market

 Consider the cost of setting up a virtual,
web-based store, vs. a real brick-mortar
store?
 Universal Standards
 Standards make it much easier to build
business from existing technologies.
 This reduces entry costs

 You can setup an e-commerce website

for about $10/month in technology

overhead costs.
 By reducing entry costs, there is a lot

more competition.
 Related Concept
 Price discovery - can the consumer/buyer
find prices easily, with minimal cognitive
energy.
 Since e-commerce is built on standard
technology (XML, HTML), its really to integrate,
aggregate, and summarize information.

Standardization  Low Entry Cost  More completion.

Standardization  Info. integration More price discovery opportunities.

More competition + price discovery opportunity = lower consumer prices

 Richness
 Advertising and branding are an
important part of commerce.
 e-commerce can deliver video, audio,

animation, etc. much better than

other technologies (billboards, signs,
etc.)
• However, its about as rich as television
technology.
 Comparison: Airplanes enable global
reach, but how about Richness?
 Interactivity
 Consumer/user can interact with the
content.
• Here is where Web technology kick’s
TV’s ass!
 TV is a passive activity
• Engaging consumer/user is a powerful
feature.
 Information Density
 The e-commerce technology
• reduces information costs
• raises the quality of information

 How does the technology reduce costs?

 How does it raise quality.

 Consider the old way to share information,

i.e., paper, mail, voice communication, etc.
 Personalization/Customization
 It seems like a contradiction that e-
commerce has more opportunities for
personalization then, umm, going to a
store and buying an item face-to-face
with a cleck.

 How can e-commerce permit or

enhance personalization and
customization.
 Customization Example
 1992: Dr. B buys Compaq computer
at CompUSA.
 2007: Dr. B buys a Mac Pro

computer at www.apple.com
 Which product is more customized?
 Personalization Example
 Dr. B’s 3-year old son is watching
Sponge Bob and sees an
advertisement for Polly Pocket. BTW,
he hates Polly Pocket or anything pink
for that matter.
 Dr. B’s 3-year old son is play the Bob

the Builder Game on noggin.com and

suddenly a pop-up ad for the Talking
Bob the Builder appears.