Catch Up – Key Concepts Ch. 1

What is E-commerce?
Business activities conducted using electronic data transmissions over the internet and the World Wide Web.

Second Wave E-commerce:
After a major downturn that occurred from the years 2000-2003, electronic commerce began to show signs of new life in which companies were experiencing mass sales growth and even profits through electronic mediums.

E-Business Defined:
The transformation of key business processes through the use of internet technologies. (Another term for Electronic Commerce)

Categories of Electronic Commerce:
B2C – Consumer shopping on the web – Dell Computers
B2B – Transactions conducted between businesses on the web – Wal Mart
C2C – Individuals who buy and sell amongst themselves on the web – Ebay
B2G – Business transactions with government agencies – paying taxes, filing reports

Some Uses for Electronic Commerce:
EFT’s – Electronic Fund Transfers over private communication networks
EDI’s – Electronic Data Interchange transmits computer-readable data in a standard format

Disintermediation – gets rid of the middle man or unnecessary intermediaries. This is very helpful for all categories of E Commerce.

First Wave – Predominantly a US phenomenon with web pages primarily in English on commerce sites.
Second Wave – offers an international scope with sellers doing business in multiple countries and in multiple languages.

Advantages to Electronic Commerce:
- Can increase profits due to lower operating margins
- Advertising reaches a global market
- Can reach customers in geographically scattered regions
- Increases selling and buying opportunities
- Offers wider range of choice for buyers
- Available all the time
- Instant access to detailed information regarding sales or purchases
- Internet can be used as a medium to deliver digital products
- LOWERS COST

Disadvantages to Electronic Commerce:
- Some business process may not be compatible with electronic commerce processes (perishable food, custom jewelery, etc.)
- Compatibility between traditional processes and internet processes creates major difficulty
- Calculation of ROI very difficult for businesses looking to commit to new technologies
- Issues with technology and software that produce cultural and legal obstacles for business conducting electronic business.

Economic Forces Facing Electronic Commerce:
- Transaction Costs: total of all costs that a buyer and seller incur as they gather information and negotiate a purchase-sale transaction
- Markets and Hierarchies: market negotiated transactions
- Reducing Transaction Costs: improving flow of information and increasing coordination of actions
- Network Economic Structures: companies coordinate their strategies, resources, and skill sets by forming long-term, stable relationships with others based on shared purposes.
- Network Effects: as more people begin to use such networks, the value of the network increases to the individual.

International Nature of Electronic Commerce:
- Trust Issues on the Web: businesses on the web must establish trust relationships with customers in order for customers to feel secure when purchasing.
- Language Issues: to do business on a global level, businesses must incorporate multiple languages in their web pages.
- Culture Issues: an important element of business trust as the business must know how a potential customer will act in different cultural situations.
- Culture and Government: some countries’ governments put strict controls on what may or may not be communicated over the web
- Infrastructure Issues: dealing with inadequacies of infrastructures throughout the world.