Summary:
The Internet and the World Wide Web has given birth to a new
form of commerce, E-Commerce. Since 2010, the percentage of all retail sales in
the United States transacted through E-Commerce has grown 12 percent annually. E-Commerce
is the digitally enabled commercial transactions that take place over the WWW
and the Internet. E-commerce is unique from other forms of commerce because it
supports a “marketspace” that is generally available to everyone…all the time.
It is cheaper for the customer, for the sole reason that they do not have to spend
money on gasoline to physically drive or walk to a store location to buy goods.
It eliminates the need for companies to find and pay for shelf space from
retailers, and also equalizes the asymmetry of information in the market. Digital
goods such as music and software, probably the most popular goods that can be
purchased through E-Commerce, can be delivered almost instantaneously over a
digital network, eliminating shipping costs.
There are three main ways to classify E-Commerce
transactions: Business-to-Consumer (B2C),
Business-to-Business (B2B), and Consumer-to-Consumer (C2C). An example of C2C
transactions is the use of EBAY, the online auction site, where people sell
their goods to other end-users. Websites use different models to create revenue.
These include the advertising, sales, subscription, transaction fee, and
affiliate revenue models. All of these are explained in depth in the chapter,
but to utilize the EBay example again, they use the transaction fee model by
charging the seller a small fee for every successful transaction.
The Internet has transformed the way that marketers identify
and communicate with customers. Utilizing the “wisdom of crowds”, where large
numbers of people make better decisions than a small group or single
individual, organizations are able to connect to their customers on a level unheard
of through traditional commerce and ultimately increase customer lifetime
value.
B2B E-Commerce represents a large portion of the
marketplace, projected to be about $5.1 trillion in 2014 in the United States. B2B
transactions are inherently costly and laborious, with some firms estimating
that, on average, they spend at least $100 in overheard per purchase order. In
contrast, B2B E-Commerce transactions enable companies to locate suppliers,
place orders, and track shipments almost cost free and in real-time. This is
all usually accomplished through a Private
Industrial Network, illustrated below.
Even newer than E-Commerce is the ubiquitous M-Commerce.
This is commerce that takes place on mobile digital platforms, such as IPads,
IPhones, and BlackBerrys. The primary focus of these has been based upon
location-finding services, utilizing a platforms built-in GPS and compass. Uses
include finding nearby hotels, receiving real-time information about weather
and traffic, and providing personalized marketing based upon an individuals’
geographical location. Today, M-Commerce platforms can handle almost any type
of transaction that other E-Commerce systems can process.
So, do any of these advantages make you want to start your
own E-Commerce based website? If so, understand that there are two very
important challenges to being successful: 1) developing a clear understanding
of your objectives, and 2) choosing the correct technology to meet those
objectives. Finally, an alternative could be to outsource your needs and wishes
to a professional website builder who is very knowledgeable in constructing
E-Commerce sites.
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