BUS 237: E-commerce

WHAT IS E-COMMERCE?

- "E-Commerce" is short for "electronic commerce"
- the buying and selling of goods and services over both public and private networks
- an interorganizational system because it links buyers with sellers

E-commerce at its most basic level

2 MAIN CATEGORIES OF E-COMMERCE

1. MERCHANT: companies that buy goods and resell them
- Business-to-Consumer (B2C): between a supplier and a customer via a web storefront
- Business-to-Business (B2B): between companies
--> ex/manufacturer to distributer
- Business-to-Government (B2G): between companies and the government

2. NONMERCHANT: companies that arrange for the sale of goods that they do not own & sell services provided by other companies
- Auctions: competitive bidding process for the sale of goods via an electronic platform (eBay)
- Clearinghouses: provide goods & services at a set price and arrange for delivery (Amazon)
- Exchanges: matches prices of buyers and sellers (Priceline)

FACEBOOK IN E-COMMERCE

Recently, social media seems to have a strong influence on the way companies advertise and run
So exactly how much is a Facebook 'like' worth to a company? By assigning a dollar value to each 'like', PC World determined that for some companies, a 'like' correlated to an average return of 21 cents, while other companies earned as much as $20 per 'like'.
It turns out that simply engaging customers and providing excellent customer service will more likely encourage them to order online

IMPACT ON BUSINESSES

E-commerce leads to disintermediation, which increases market efficiency by eliminating the middle layers in the process of providing products to customers.

With regards to e-commerce auctions, sellers can produce information about price elasticity which tells them how demand fluctuates with respect to the price.

With the Internet, companies are able to reach out to a larger consumer base and it is up to the specific company’s discretion whether they wish to operate locally, nationally or even globally.

However, engaging in e-commerce does have its disadvantages. Customer service expenses would most likely increase for the company since employees must be trained on how to respond to customer inquiries via the Internet. There would also be the costs of creating, running and updating the website for e-commerce.

IMPACT ON CONSUMERS

E-commerce allows consumers to easily compare product prices and other options in the comfort of their own homes, ultimately giving them the power to pick the lowest possible price.

It also lets shoppers sort through results with a click of a button. With today’s technology, goods and services are delivered straight to the doorstep – often for free!

E-commerce has changed consumer attitudes in that now, many people choose to shop exclusively online due to the convenience.

Despite this, there are still security issues regarding credit card payments over the Internet, the lack of face-to-face contact makes it difficult to ask questions and shipping errors.