Learning Objectives
• Features of Electronic Commerce
• Opportunities for Electronic Commerce
• Challenges of Electronic Commerce
© Cengage Learning 2015 1
Features of E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology
© Cengage Learning 2015 2
Features of E-commerce Technology
• Ubiquity is available just about everywhere, at all
times.
– It liberates the market from being restricted to a
physical space and makes it possible to shop from
your desktop, at home, at work, or even from your
car, using mobile e-commerce.
• Global reach permits commercial transactions to cross
cultural, regional, and national boundaries
– potential market size for e-commerce merchants is
roughly equal to the size of the world’s online
population (an estimated 2.56 billion in 2013)
© Cengage Learning 2015 3
Features of E-commerce Technology
• Universal standards is technical standards of the
Internet, and therefore the technical standards for
conducting e-commerce
– This greatly lowers market entry costs—the cost
merchants must pay just to bring their goods to
market. At the same time, for consumers, universal
standards reduce search costs—the effort required to
find suitable products.
– Easily find many of the suppliers, prices, and delivery
terms of a specific product anywhere in the world, and
to view them in a coherent, comparative environment.
© Cengage Learning 2015 4
Features of E-commerce Technology
• Information richness refers to the complexity and
content of a message
– Audio, images, text, video
• Interactivity is two-way communication between
merchant and consumer and among consumers.
– Rating, product review, chatting with an online sales
person
• Information density is the total amount and quality of
information available to all market participants,
consumers, and merchants alike.
– Prices, content
© Cengage Learning 2015 5
Features of E-commerce Technology
• Personalization is merchants can target their marketing
messages to specific individuals by adjusting the
message to a person’s name, interests, and past
purchases
– advertisement based on the consumer’s profile
• Customization is changing the delivered product or
service based on a user’s preferences or prior behavior
– the online version of the Wall Street Journal allows
you to select the type of news stories you want to see
first, and gives you the opportunity to be alerted when
certain events happen.
© Cengage Learning 2015 6
Features of E-commerce Technology
• Social technology allows users to create and share
content with a worldwide community. Using these forms
of communication, users are able to create new social
networks and strengthen existing ones.
© Cengage Learning 2015 7
Electronic Commerce: Opportunities,
Cautions and Concerns
• Businesses need to exercise caution in weighing
risks and benefits of online business
• As technologies advance:
– More businesses may benefit from electronic
commerce
© Cengage Learning 2015 8
Opportunities for Electronic Commerce
• Electronic commerce can help increase profits
– Increases sales
– Decreases business costs
• Virtual community
– Gathering of people online using Web 2.0
technologies
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Using Electronic Commerce to Reduce
Transaction Costs
• Electronic commerce can:
– Improve flow of information
– Increase coordination of actions
– Change attractiveness of vertical integration
• Example: employment transaction
– Telecommuting reduce or eliminate transaction costs
© Cengage Learning 2015 10
Opportunities for Electronic Commerce
(cont’d.)
• E-commerce buyer opportunities
– Increases purchasing opportunities
– Identifying new suppliers and business partners
– Efficiently obtaining competitive bid information
• Easier to negotiate price and delivery terms
– Increases speed, information exchange accuracy
– Wider range of choices available 24 hours a day
• Immediate access to prospective purchase information
© Cengage Learning 2015 11
Opportunities for Electronic Commerce
(cont’d.)
• Benefits extend to general society
– Lower costs to issue and secure:
• Electronic payments of tax refunds
• Public retirement
• Welfare support
– Provides faster transmission
– Provides fraud, theft loss protection
• Electronic payments easier to audit and monitor
– Telecommuting reduces traffic, pollution
– Products and services available in remote areas
© Cengage Learning 2015 12
Electronic Commerce: Current Barriers
• Poor choices for electronic commerce
– Perishable foods and high-cost, unique items
• Four barriers
– Need for critical mass of customers with appropriate
technology
– Unpredictability in costs and revenues
– Insufficient tools for hardware and software
integration
– Cultural and legal barriers
© Cengage Learning 2015 13
