Electronic Commerce

1
Chapter 4 Electronic Commerce
2
E-Commerce Concept

• E-Commerce The process of buying and selling
  goods and services electronically, through the
  Internet and other networks and systems. (see
  Chapter 1)
• Electronic commerce requires a new way of
  thinking about organizational processes (IT
  support crucial), customers and delivery.
• Challenge of finding successful e-commerce
  business models, security and privacy.

3
Business Models and Internet

• Business Model
• Determination of
• business a company is in
• what the market is
• how money is made.
• Example Amazon.ca is (a) in the business of
  selling books and other information products, (b)
  the market consists of individuals and
  organizations that have access to the Internet,
  and (c) money is made by selling products through
  own Web sites and those of Associates.

4
Business Models and Internet

• Internet can be part of business model in
  different degrees forming 2 types of e-commerce
  players
• Pure Play (Amazon.ca)
• Clicks and Mortar or Bricks and Clicks
  (chapters.ca)
• NOTE Internet models should be named after the
  kind of business
• (e.g., online securities broker) and not by
  Pure Play or Clicks and Mortar
• E-commerce development
• product information
  advertising selling

Time
5
Electronic Commerce Segments
Products/Services Originating From
And Selling to
6
Internet Business Models

• Virtual Storefront (B2C)
• Sells goods and /or services online
• www.amazon.ca
• Direct sales over the Web
• Interactive Marketing and Personalization
• Virtual Storefront can be an addition to physical
  stores (click mortar organization)

7
Internet Business Models

• Reverse Auction (B2C)
• Consumers submit a bid to multiple sellers
• www.priceline.com
• Content provider (B2C)
• creates revenue through selling information
  content and advertising space
• http//www.canada.com/

8
Internet Business Models

• Transaction Broker (B2C)
• Buyers view rates and terms complete
  transaction
• www.TDWaterhouse.com
• Portal (B2C) Initial point of entry to Web,
  specialized content, services - www.yahoo.ca

9
Internet Business Models

• Exchange (B2B) Commercial online market many
  buyers sellers
• Vertical Exchange (Set up for specific
  industries Steel, Chemical,
• automotive - covisint.com)
• Horizontal Exchange (Address goods/services used
  by different industries (purchasing office
  equipment, maintenance repair services)
• Product catalogue, purchasing/selling, order
  fulfillment
• More information

10
E-commerce Payment Systems

• Important for closing trading cycle full
  fledged commerce
• Digital wallet stores personal financial
  information on your PC
• E-cash/Digital Cash - you, payee, your bank
  CyberCash
• Smart card you, payee, your bank Mondex card
  reader needed
• Person-to-person payments you, payee, your bank
  PayPal site
• Credit Cards you, payee, your bank (perhaps
  clearing house)
• Issues Security, Trust

11
E-commerce in Canada

• There is a higher percentage of Canadians than
  Americans using the Internet
• Canadian businesses are underrepresented on the
  Internet
• Only 6 percent of Canadian businesses selling
  online in 2000, down from 10 in 1999
• In 2000, e-commerce sales accounted for 0.4 of
  revenues, up from 0.2 in 1999
• Canadians purchase from US online stores

12
Barriers to e-commerce in Canada

• High percentage of SMEs in Canada May not have
  adequate resources to develop e-commerce strategy
• Shortage of skilled IT workers
• Lack of sense of urgency
• Conservative investor culture tax system

13
Who is Making Money on the Web?

• Results
• Winner Transaction (8/11 cos. had positive
  earnings)
• Why solid revenue model
• Losers Content Providers and ISPs, Commerce
• About 20 of all surveyed that met necessary
  requirements to go public had positive earnings
• Most focused on building brands and customer base
  rather than returns
• (Source Scherbakovsky and Siegal)