Chapter 10
E-commerce: Digital Markets, Digital Goods
10.1What are the unique features of E-commerce, digital markets,
and digital goods?
- E-commerce is about digitally enabled commercial transactions between and
among organizations and individuals over the Internet and the Web.
- Marketing in this social-mobile-local e-commerce period is based on firms
engaging in multiple online conversations with their customers, potential
customers, and even critics. The emphasis in online marketing has shifted from
a focus on eyeballs to a focus on participating in customer-oriented
conversations.
- As mobile devices become more powerful, they are more useful for accessing
Facebook and other social sites. As mobile devices become more widely
adopted, they can be used by customers to find local merchants, and by
merchants to alert customers in their neighborhood of special offers.
Unique features of E-commerce
a. Ubiquity: extended beyond traditional boundaries and removed from a
temporal and geographic location.
b. Global reach: reaches across national boundaries, around the earth.
c. Universal standards: there is one set of technology standards, namely Internet
standards.
d. Richness: complexity and content of a message (text, audio, video).
e. Interactivity: allow for two-way communication between merchant and
consumer.
f. Information density: reduces information costs and raises quality.
g. Personalization/customization: allows personalized messages to be delivered to
individuals as well as groups.
h. Social technology: empower users to create and distribute content on a large
scale, and permit users to program their own content consumption
- The Internet reduces information asymmetry. An information asymmetry
exists when one party in a transaction has more information that is important
for the transaction than the other party.
- Digital markets are very flexible and efficient because they operate with
reduced search and transaction costs, lower menu costs (merchants’ costs of
changing prices), greater price discrimination, and the ability to change prices
dynamically based on market conditions.
- Digital markets provide many opportunities to sell directly to the consumer,
bypassing intermediaries, such as distributors or retail outlets. Eliminating
, intermediaries in the distribution channel (disintermediation) can significantly
lower purchase transaction costs.
- Digital goods are goods that can be delivered over a digital network. For the
most part, digital goods are “intellectual property” which is defined as “works
of the mind.”
10.2What are the principal e-commerce business and revenue
models?
Types of E-Commerce
o Business-to-consumer: involves retailing products and services to individual
shoppers.
o Business-to-business: involves sales of goods and services among businesses.
o Consumer-to-consumer: involves consumers selling directly to consumers.
o M-commerce: the use of handheld wireless devices for purchasing goods and
services from any location.
E-commerce: Digital Markets, Digital Goods
10.1What are the unique features of E-commerce, digital markets,
and digital goods?
- E-commerce is about digitally enabled commercial transactions between and
among organizations and individuals over the Internet and the Web.
- Marketing in this social-mobile-local e-commerce period is based on firms
engaging in multiple online conversations with their customers, potential
customers, and even critics. The emphasis in online marketing has shifted from
a focus on eyeballs to a focus on participating in customer-oriented
conversations.
- As mobile devices become more powerful, they are more useful for accessing
Facebook and other social sites. As mobile devices become more widely
adopted, they can be used by customers to find local merchants, and by
merchants to alert customers in their neighborhood of special offers.
Unique features of E-commerce
a. Ubiquity: extended beyond traditional boundaries and removed from a
temporal and geographic location.
b. Global reach: reaches across national boundaries, around the earth.
c. Universal standards: there is one set of technology standards, namely Internet
standards.
d. Richness: complexity and content of a message (text, audio, video).
e. Interactivity: allow for two-way communication between merchant and
consumer.
f. Information density: reduces information costs and raises quality.
g. Personalization/customization: allows personalized messages to be delivered to
individuals as well as groups.
h. Social technology: empower users to create and distribute content on a large
scale, and permit users to program their own content consumption
- The Internet reduces information asymmetry. An information asymmetry
exists when one party in a transaction has more information that is important
for the transaction than the other party.
- Digital markets are very flexible and efficient because they operate with
reduced search and transaction costs, lower menu costs (merchants’ costs of
changing prices), greater price discrimination, and the ability to change prices
dynamically based on market conditions.
- Digital markets provide many opportunities to sell directly to the consumer,
bypassing intermediaries, such as distributors or retail outlets. Eliminating
, intermediaries in the distribution channel (disintermediation) can significantly
lower purchase transaction costs.
- Digital goods are goods that can be delivered over a digital network. For the
most part, digital goods are “intellectual property” which is defined as “works
of the mind.”
10.2What are the principal e-commerce business and revenue
models?
Types of E-Commerce
o Business-to-consumer: involves retailing products and services to individual
shoppers.
o Business-to-business: involves sales of goods and services among businesses.
o Consumer-to-consumer: involves consumers selling directly to consumers.
o M-commerce: the use of handheld wireless devices for purchasing goods and
services from any location.
