Chapter 1

Overview of Electronic Commerce

Learning
1. Define electronic commerce (EC) and describe its
various categories.
2. Describe and discuss the content and framework of
EC.
3. Describe the major types of EC transactions.
4. Discuss e-commerce 2.0.
5. Describe social commerce and social software.

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Learning Objectives
6. Understand the elements of the digital world.
7. Describe the drivers of EC as they relate to business
pressures and organizational responses.
8. Describe some EC business models.
9. Describe the benefits of EC to organizations,
consumers, and society.
10. List and describe the major limitations of EC.

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Electronic Commerce:
Definitions and Concepts
electronic commerce (EC)
The process of buying, selling, or exchanging products,
services, or information via computer
e-business
A broader definition of EC that includes not just the
buying and selling of goods and services, but also
servicing customers, collaborating with business
partners, and conducting electronic transactions within
an organization

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Electronic Commerce:
Definitions and Concepts
MAJOR EC CONCEPTS
 Pure Versus Partial EC
 EC Organizations
 brick-and-mortar (old economy) organizations
Old-economy organizations (corporations) that perform their
primary business offline, selling physical products by means of
physical agents
 virtual (pure-play) organizations
Organizations that conduct their business activities solely online
 click-and-mortar (click-and-brick) organizations
Organizations that conduct some e-commerce activities, usually as an
additional marketing channel
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Electronic Commerce:
Definitions and Concepts
ELECTRONIC MARKETS AND NETWORKS
electronic market (e-marketplace)
An online marketplace where buyers and sellers meet to
exchange goods, services, money, or information
intranet
An internal corporate or government network that uses
Internet tools, such as Web browsers, and Internet
protocols
extranet
A network that uses the Internet to link multiple intranets
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The Electronic Commerce Field:
Classification, Content, and a Brief History
AN EC FRAMEWORK
EC applications are supported by infrastructure and by
the following five support areas:
1. People
2. Public policy
3. Marketing and advertising
4. Support services
5. Business partnerships

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The Electronic Commerce Field:
Classification, Content, and a Brief History
CLASSIFICATION OF EC BY THE NATURE OF THE
TRANSACTIONS AND THE RELATIONSHIPS
AMONG PARTICIPANTS
business-to-business (B2B)
E-commerce model in which all of the participants are
businesses or other organizations
business-to-consumer (B2C)
E-commerce model in which businesses sell to individual
shoppers
e-tailing
Online retailing, usually B2C
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The Electronic Commerce Field:
Classification, Content, and a Brief History
business-to-business-to-consumer (B2B2C)
E-commerce model in which a business provides some
product or service to a client business that maintains its
own customers
consumer-to-business (C2B)
E-commerce model in which individuals use the
Internet to sell products or services to organizations or
individuals who seek sellers to bid on products or
services they need

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The Electronic Commerce Field:
Classification, Content, and a Brief History
intrabusiness EC
E-commerce category that includes all internal
organizational activities that involve the exchange of
goods, services, or information among various units and
individuals in an organization
business-to-employees (B2E)
E-commerce model in which an organization delivers
services, information, or products to its individual
employees

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The Electronic Commerce Field:
Classification, Content, and a Brief History
consumer-to-consumer (C2C)
E-commerce model in which consumers sell directly to
other consumers
collaborative commerce (c-commerce)
E-commerce model in which individuals or groups
communicate or collaborate online
e-government
E-commerce model in which a government entity buys
or provides goods, services, or information from or to
businesses or individual citizens

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The Electronic Commerce Field:
Classification, Content, and a Brief History
A BRIEF HISTORY OF EC
The Interdisciplinary Nature of EC
The Google Revolution
f-commerce
E-commerce activities conducted on Facebook or
influenced by the site
EC Failures
EC Successes
THE FUTURE OF EC

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E-Commerce 2.0:
From Social Commerce to Virtual Worlds
social computing
An approach aimed at making the human–computer
interface more natural
Web 2.0
The second generation of Internet-based services that
lets people collaborate and share information online in
new ways, such as social networking sites, wikis,
communication tools, and folksonomies

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E-Commerce 2.0:
From Social Commerce to Virtual Worlds
social network
A category of Internet applications that help connect
friends, business partners, or individuals with specific
interests by providing free services such as photo
presentation, e-mail, blogging, and so on using a
variety of tools

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E-Commerce 2.0:
From Social Commerce to Virtual Worlds
social networking service (SNS)
A service that builds online communities by providing
an online space for people to build free homepages and
that provides basic communication and support tools for
conducting different activities in the social network
social networking
The creation or sponsoring of a social network service and
any activity, such as blogging, done in a social network
(external or internal)

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E-Commerce 2.0:
From Social Commerce to Virtual Worlds
ENTERPRISE SOCIAL NETWORKS
social commerce
The e-commerce activities conducted in social
networks and/or by using social software (i.e., Web 2.0
tools)

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E-Commerce 2.0:
From Social Commerce to Virtual Worlds
VIRTUAL WORLDS AND SECOND LIFE
virtual world
A user-defined world in which people can interact, play,
and do business; the most publicized virtual world is
Second Life
 How Students Make Money in a Virtual World
THE MAJOR TOOLS OF WEB 2.0
 Wikis
 RSS feeds
 Blogs
 Microblogs (e.g.,Twitter)
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The Digital World:
Economy, Enterprises, and Society
digital economy
An economy that is based on digital technologies,
including digital communication networks,
computers, software, and other related information
technologies; also called the Internet economy, the new
economy, or the Web economy

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The Digital World:
Economy, Enterprises, and Society
digital enterprise
A new business model that uses IT in a fundamental way
to accomplish one or more of three basic objectives: reach
and engage customers more effectively, boost employee
productivity, and improve operating efficiency; uses
converged communication and computing technology in a
way that improves business processes
 corporate portal

A major gateway through which employees, business

partners, and the public can enter a corporate website.
THE DIGITAL SOCIETY
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The Changing Business Environment,
Organizations’ Response, and EC Support
THE CHANGING BUSINESS ENVIRONMENT
PERFORMANCE, BUSINESS PRESSURES, AND
ORGANIZATIONAL RESPONSES AND EC
SUPPORT
The Business Environment and Performance
Impact Model
Business Pressures
Organizational Response Strategies
 The support of EC
The Major Capabilities of E-Commerce

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Electronic Commerce Business Models
business model
A method of doing business by which a company can
generate revenue to sustain itself

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Electronic Commerce Business Models
THE STRUCTURE AND PROPERTIES OF
BUSINESS MODELS
Revenue Models
value proposition

The benefits a company can derive from using EC

Functions of a Business Model

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Electronic Commerce Business Models
TYPICAL EC BUSINESS MODELS
1. Online direct marketing
2. tendering (bidding) system
Model in which a buyer requests would-be sellers to
submit bids; the lowest bidder wins.
3. Electronic marketplaces and exchanges
4. Viral marketing
5. Group purchasing

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Benefits, Limitations,
and Impacts of Electronic Commerce
THE BENEFITS AND IMPACTS OF EC
EC as a Provider of Competitive Advantage
THE LIMITATIONS AND BARRIERS OF EC
ethics
The branch of philosophy that deals with what is
considered to be right and wrong
WHY STUDY E-COMMERCE?

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Managerial Issues
1. Is EC real?
2. Why is B2B e-commerce so essential and successful?
3. Which EC business model should I choose?
4. How can we exploit social commerce?
5. What are the top challenges of EC today?

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Summary
1. Definition of EC and description of its various
categories
2. The content and framework of EC
3. The major types of EC transactions
4. E-commerce 2.0
5. Description of social commerce and social software

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Summary
6. The elements of the digital world
7. The drivers of EC
8. The major EC business models
9. Benefits of EC to organizations, consumers, and
society
10. Limitations of e-commerce

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All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

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