Module 3

Introduction
to E-Commerce
Objective:

After you read and study this module, student should beable to:
Understand the concept of e-commerce
Identify and describe the unique features of e-commerce
technology
Differentiate e-commerce to e-business
Enumerate the pros and cons of e-commerce
Describe the major types of e-commerce
Introduction
Electronic commerce has grown all over the world. E- commerce
has become the platform for media and new, unique services and
capabilities that aren’t found in the physical world.
There is no physical world counterpart to Facebook, Twittter,
Google search, or a host of other recent online innovations from
Pinterest and iTunes to Tumblr. The Internet is about to replace
television as the largest entertainment platform.
E-commerce is projected to continue growing at double- digit
rates over the next five years, remaining the fastest growing form
of commerce. (Rayport and Jaworski, 2003).
Just as automobiles, airplanes, and electronics defined the
twentieth century, so will e-commerce of all kinds define business
and society in the twenty-first century.
The rapid movement toward an e-commerce economy and society
is being led by both established business firms such as Walmart,
Ford, IBM, Macy’s, and General Electric, and online firms such as
Google, Amazon, Apple, Facebook,Yahoo, Twitter, and YouTube.
Students of business and information technology need a
thorough grounding in e-commerce in order to be effective and
successful managers in the next decade
What is E-commerce?

E-commerce is the use of the Internet, the Web, and

mobile apps and browsers running on mobile devices to
transact business.
More formally, digitally enabled commercial transactions
between and among organizations and individuals.
Refers to all forms of business transactions conducted
electronically over computer networks, the internet in
particular.
While e-commerce typically means buying and selling
online, it is not limited to the basic exchange of goods and
services
 Difference of E-commerce & E-
business
There is a debate about the meaning and limitations of both e-commerce ande-business.
Some argue that e-commerce encompasses the entire world of electronically based
organizational activities that support a firm’s market exchanges—including a firm’s
entire information system infrastructure (Rayport and Jaworski, 2003).
Others argue, on the other hand, that e-business encompasses the entire world of
internal and external electronically based activities, including e- commerce (Kalakota
and Robinson, 2003).
E-Business - the digital enabling of transactions and processes within a firm, involving
information systems under the control of the firm

Figure 1. Difference of E-Commerce and E- Business

Figure 1. shows E-commerce primarily involves transactions that cross firm

boundaries. E-business primarily involves the application of digital technologies to
business processes within the firm.
Unique Features of E-Commerce
Technology

Figure 2. Eight unique features of e-commerce

Figure 2. illustrates eight unique features of e-commerce technology that both

challenge traditional business thinking and help explain why we have so much
interest in e-commerce.
These unique dimensions of e-commerce technologies suggest many new
possibilities for marketing and selling a powerful set of interactive, personalized, and
rich messages are available for delivery to segmented,
 In traditional commerce, a marketplace is a physical
UBIQUITY place you visit in order to transact. For example,
television and radio typically motivate the consumer to
go someplace to make a purchase.
E-commerce, in contrast, is characterized by its
ubiquity it is available just about everywhere, at all
times. It liberates the market from being restricted to a
physical space and makes it possible to shop from your
desktop, at home, at work, or even from your car, using
mobile e-commerce.
The result is called a marketspace is a marketplace
extended beyond traditional boundaries and removed
from a temporal and geographic location

GLOBAL REACH
E-commerce technology permits commercial
transactions to cross cultural, regional, and national
boundaries far more conveniently and cost-effectively
than is true in traditional commerce.
As a result, the potential market size for e- commerce
merchants is roughly equal to the size ofthe world’s online
population (an estimated 3.3 billion in 2016) (eMarketer,
Inc., 2016d).
 INTERACTIVITY
One strikingly unusual feature of e-commerce
technologies is that the technical standards of the Internet, and
therefore the technical standards for conducting e-commerce,
are universal standards they are shared by all nations around
the world.
In contrast, most traditional commerce technologies differ
from one nation to the next. For instance, television and radio
standards differ around the world, as does cell phone
technology.

RICHNESS
Information richness refers to the complexity and
content of a message (Evans and Wurster, 1999).
Traditional markets, national sales forces, and retail
stores have great richness: they are able to provide
personal, face-to-face service using aural and visual cues
when making a sale.
The richness of traditional markets makes them a
powerful selling or commercial environment. Prior to the
development of the Web, there was a trade- off between
richness and reach: the larger the audience reached, the
less rich the message.
UNIVERSAL
Unlike any of the commercial technologies of the
twentieth century, with the possible exception of the
telephone, e-commerce technologies allow for
interactivity, meaning they enable two-way
communication between merchant and consumer and
among consumers.
Traditional television or radio, for instance, cannot ask
viewers questions or enter into conversations with them,
or request that customer information be entered into a
form.

INFORMATION DENSITY
E-commerce technologies vastly increase information
density the total amount and quality of information
available to all market participants, consumers and
merchants alike.
E-commerce technologies reduce information collection,
storage, processing, and communicationcosts. At the same
time, these technologies greatly increase the currency,
accuracy, and timeliness of information making
information more useful and important than ever.
As a result, information becomes more plentiful, less
expensive, and of higher quality.
PERSONALIZATION AND CUSTOMIZATION
E-commerce technologies permit personalization
merchants can target their marketing messages to specific
individuals by adjusting the message to a person’s name,
interests, and past purchases.
Today this is achieved in a few milliseconds and followed by
an advertisement based on the consumer’s profile. The
technology also permits customization changing the
delivered product orservice based on a user’s preferences or
prior behavior.
Given the interactive nature of e-commerce technology,
much information about the consumer can be gathered in
the marketplace at the moment ofpurchase.

SOCIAL TECHNOLOGY
In a way quite different from all previous technologies, e-
commerce technologies have evolved to be much moresocial by
allowing users to create and share content with a worldwide
community.
Using these forms of communication, users are able to create
new social networks and strengthen existing ones.
Types of E-commerce
There are a number of different types of e-commerce and many different
ways to characterize them. For the most part, we distinguish different types
of e-commerce by the nature of the market relationship who is selling to
whom. Mobile, social, and local e-commerce can be looked at as subsets of
these types of e-commerce.

BUSINESS-TO-BUSINESS (B2B)
E-COMMERCE

Business-to-business refers to business that is conducted

between companies, rather than between a company and
individual consumer. It also a form of transaction between
businesses, such as one involving a manufacturer and
wholesaler, or awholesaler and a retailer.
Example: Producers buying components from suppliers and
manufacturers selling finished goods todistributors
BUSINESS-TO-CONSUMER
(B2C) E-COMMERCE
The most commonly discussed type of e-commerce is
business-to-consumer (B2C) e-commerce, in which online
businesses attempt to reach individual consumers. B2C e-
commerce includes purchases of retail goods, travel and
other types of services, and online content.
Example: Amazon and Lazada

CONSUMER-TO-CONSUMER
(C2C) E-COMMERCE
Consumer-to-consumer (C2C) e-commerce provides a way for
consumers to sell to each other, with the help of an online
market maker (also called a platform provider) such as eBay or
Etsy, the classifieds site Craigslist, or on- demand service
companies such as Airbnb and Uber.
In C2C e-commerce, the consumer prepares the product for
market, places the product for auction or sale, and relies on the
market maker to provide catalog, searchengine, and transaction-
clearing capabilities so that products can be easily displayed,
discovered, and paid for.
CONSUMER-TO-BUSINESS
(C2B) E-COMMERCE
Consumer-to-business (C2B) is a business model in which
consumers (individuals) create value and businesses
consume that value.
Consumers are now empowered to demand specific goods
and services from online businesses.
Example: Digital Influencers and Product reviewers are also
example of C2B.
REFERENCES:

Kalakota, Ravi, and Marcia Robinson. e-Business 2.0: Roadmapfor

Success, 2nd edition. Reading, MA: Addison Wesley (2003).

Rayport, Jeffrey F., and Bernard J. Jaworski. Introduction

to E-commerce, 2nd edition. New York: McGraw-Hill (2003)

eMarketer, Inc. “Internet Users and Penetration Worldwide,

2015–2020.” (September 1, 2016d).