Virtual

Marketing
 Electronic commerce
• Electronic commerce, commonly known as e-comm, e-
commerce or eCommerce, consists of the buying and selling of
products or services over electronic systems such as the
Internet and other computer networks.

• Electronic commerce, in a broad sense, is the use of computer

networks to improve organizational performance. Increasing
profitability, gaining market share, improving customer service,
and delivering products faster are some of the organizational
performance gains possible with electronic commerce.
 Business applications
• Document automation in supply chain and logistics
• Domestic and international payment systems
• Email
• Enterprise content management
• Group Buying
• Instant messaging
• Newsgroups
• Online shopping and order tracking
• Online banking
• Online office suites
• Shopping cart software
• Teleconferencing
• Electronic tickets
 Electronic business
• Electronic business, commonly referred to as "eBusiness"
or "e-business", or an internet business, may be defined
as the application of information and communication
technologies (ICT) in support of all the activities of
business.

• Electronic business methods enable companies to link

their internal and external data processing systems more
efficiently and flexibly, to work more closely with suppliers
and partners, and to better satisfy the needs and
expectations of their customers.
• In practice, e-business is more than just e-commerce. While e-business refers
to more strategic focus with an emphasis on the functions that occur using
electronic capabilities, e-commerce is a subset of an overall e-business
strategy. E-commerce seeks to add revenue streams using the World Wide
Web or the Internet to build and enhance relationships with clients and
partners and to improve efficiency using the Empty Vessel strategy. Often, e-
commerce involves the application of knowledge management systems.
• E-business involves business processes spanning the entire value chain:
electronic purchasing and supply chain management, processing orders
electronically, handling customer service, and cooperating with business
partners. Special technical standards for e-business facilitate the exchange of
data between companies. E-business software solutions allow the integration
of intra and inter firm business processes. E-business can be conducted using
the Web, the Internet, intranets, extranets, or some combination of these.
• Basically, electronic commerce (EC) is the process of buying, transferring, or
exchanging products, services, and/or information via computer networks,
including the internet. EC can also be benefited from many perspective
including business process, service, learning, collaborative, community. EC is
often confused with e-business.
 Subsets
• Internal business systems:
–customer relationship management
–enterprise resource planning
–document management systems
–human resources management
• Enterprise communication and collaboration:
–VoIP
–content management system
–e-mail
–voice mail
–Web conferencing
–Digital work flows (or business process management)
• electronic commerce - business-to-business electronic commerce (B2B) or business-to-
consumer electronic commerce (B2C):
–internet shop
–supply chain management
–online marketing
–offline marketing
 Models

• E-shops
• E-commerce
• E-procurement
• E-malls
• E-auctions
• Virtual Communities
• Collaboration Platforms
• Third-party Marketplaces
• Value-chain Integrators
• Value-chain Service Providers
• Information Brokerage
• Telecommunication
• Customer relationship
 Classification by provider and consumer

• business-to-business (B2B)
• business-to-consumer (B2C)
• business-to-employee (B2E)
• business-to-government (B2G)
• government-to-business (G2B)
• government-to-government (G2G)
• government-to-citizen (G2C)
• consumer-to-consumer (C2C)
• consumer-to-business (C2B)
 Why use the Internet?
• Demand risk
The growth strategy matrix [Ansoff, 1957 the Web can be used as a market
penetration mechanism, where neither the product nor the target market is
changed. The Web merely provides a tool for increasing sales by taking
market share from competitors, or by increasing the size of the market
through occasions for usage.
e.g. The U.K. supermarket group Tesco is using its Web site to market
chocolates, wines, and flowers. Most British shoppers know Tesco, and many
shop there. The group has sold wine, chocolates and flowers for many years.
Tesco now makes it easy for many of its existing customers (mostly office
workers and professionals) to view the products in a full-color electronic
catalogue, fill out a simple order form with credit card details, write a
greeting card, and facilitate delivery. By following these tactics, Tesco is not
only taking business away from other supermarkets and specialty merchants,
it is also increasing its margins on existing products through a premium
pricing strategy and markups on delivery.
• Innovation risk
In most mature industries, there is an oversupply of products
and services, and customers have a choice, which makes them
more sophisticated and finicky consumers. If firms are to
continue to serve these sophisticated customers, they must
give them something new and different; they must innovate.
Innovation inevitably leads to imitation, and this imitation leads
to more oversupply. This cycle is inexorable, so a firm might be
tempted to get off this cycle. However, choosing not to adapt
and not to innovate will lead to stagnation and demise. Failure
to be as innovative as competitors–innovation risk–is a second
strategic challenge.
• Inefficiency risk
Failure to match competitors' unit costs–inefficiency risk–is a third
strategic challenge. A major potential use of the Internet is to lower
costs by distributing as much information as possible electronically.
e.g.
American Airlines now uses its Web site for providing frequent
flyers an update of their current air miles. Eventually, it may be
unnecessary to send expensive paper mail to frequent flyers or to
answer telephone inquiries. The cost of handling orders can also be
reduced by using interactive forms to capture customer data and
order details. Savings result from customers directly entering all
data. Also, because orders can be handled asynchronously, the firm
can balance its work force because it no longer has to staff for peak
ordering periods.

FAQ’s
• Disintermediation
Electronic commerce offers many opportunities
to reformulate traditional modes of business.
Disintermediation, the elimination of
intermediaries such as brokers and dealers, is one
possible outcome in some industries. Some
speculate that electronic commerce will result in
widespread disintermediation, which makes it a
strategic issue that most firms should carefully
address. A closer analysis enables us to provide
some guidance on identifying those industries
least, and most, threatened by disintermediation.
 Electronic commerce
technology
• Internet technology
Computers can communicate with each other
when they speak a common language or use a
common communication protocol.
Transmission Control Protocol/Internet
Protocol (TCP/IP) is the communication
network protocol used on the Internet. TCP/IP
has two parts. TCP handles the transport of
data, and IP performs routing and addressing.
• Data transport
The two main methods for transporting data across a
network are circuit and packet switching. Circuit switching is
commonly used for voice and package switching for data.
Parts of the telephone system still operate as a circuit
switched network. Each link of a predetermined bandwidth
is dedicated to a predetermined number of users for a
period of time. The Internet is a packet switching network.
The TCP part of TCP/IP is responsible for splitting a message
from the sending computer into packets, uniquely
numbering each packet, transmitting the packets, and
putting them together in the correct sequence at the
receiving computer. The major advantage of packet switching
is that it permits sharing of resources (e.g., a communication
link) and makes better use of available bandwidth.
• Routing
Routing is the process of determining the path
a message will take from the sending to the
receiving computer. It is the responsibility of
the IP part of TCP/IP for dynamically
determining the best route through the
network. Because routing is dynamic, packets
of the same message may take different paths
and not necessarily arrive in the sequence in
which they were sent.
Addressability
Messages can be sent from one computer to another only
when every server on the Internet is uniquely addressable.
The Internet Network Information Center (InterNIC)
manages the assignment of unique IP addresses so that
TCP/IP networks anywhere in the world can communicate
with each other. An IP address is a unique 32-bit number
consisting of four groups of decimal numbers in the range 0
to 255 (e.g., 128.192.73.60). IP numbers are difficult to
recall. Humans can more easily remember addresses like
aussie.mgmt.uga.edu. A Domain Name Server (DNS)
converts aussie.mgmt.uga.edu to the IP address
128.192.73.60. The exponential growth of the Internet will
eventually result in a shortage of IP addresses, and the
development of next-generation IP (IPng) is underway.
 Infrastructure
• Electronic commerce is built on top of a number of different technologies. These
various technologies created a layered, integrated infrastructure that permits the
development and deployment of electronic commerce applications Each layer is
founded on the layer below it and cannot function without it.
• National information infrastructure
• This layer is the bedrock of electronic commerce because all traffic must be
transmitted by one or more of the communication networks comprising the national
information infrastructure (NII). The components of an NII include the TV and radio
broadcast industries, cable TV, telephone networks, cellular communication systems,
computer networks, and the Internet. The trend in many countries is to increase
competition among the various elements of the NII to increase its overall efficiency
because it is believed that an NII is critical to the creation of national wealth.
• Message distribution infrastructure
This layer consists of software for sending and receiving messages. Its purpose is to
deliver a message from a server to a client. For example, it could move an HTML file
from a Web server to a client running Netscape. Messages can be unformatted (e.g.,
e-mail) or formatted (e.g., a purchase order). Electronic data interchange (EDI), e-
mail, and hypertext text transfer protocol (HTTP) are examples of messaging
software.
• Electronic publishing infrastructure
Concerned with content, the Web is a very good example of this layer. It permits
organizations to publish a full range of text and multimedia. There are three key elements of
the Web: • A uniform resource locator (URL), which is used to uniquely identify any server; •
A network protocol; • A structured markup language, HTML Notice that the electronic
publishing layer is still concerned with some of the issues solved by TCP/IP for the Internet
part of the NII layer. There is still a need to consider addressability (i.e., a URL) and have a
common language across the network (i.e., HTTP and HTML). However, these are built upon
the previous layer, in the case of a URL, or at a higher level, in the case of HTML.
• Business services infrastructure
The principal purpose of this layer is to support common business processes. Nearly every
business is concerned with collecting payment for the goods and services it sells. Thus, the
business services layer supports secure transmission of credit card numbers by providing
encryption and electronic funds transfer. Furthermore, the business services layer should
include facilities for encryption and authentication (see See Security).
• Electronic commerce applications
Finally, on top of all the other layers sits an application. Consider the case of a book seller
with an on-line
catalog . The application is a book catalog; encryption is used to protect a customer's credit
card number; the application is written in HTML; HTTP is the messaging protocol; and the
Internet physically transports messages between the book seller and customer.