IB Business and Management: E-Commerce

IB Business and Management: E-Commerce Unit – E-commerce ● ● 1. 2. E-commerce is the trading of G/S via the internet Examples of e-markets include: Financial services – banking, forex, share trading Utility services – house bills for like electricity can be done online to save costs & environment 3. Motor vehicles 4. Retailing ● B2B refers to e-commerce catered for the needs of other businesses – e.g. corporate banking services, suppliers of equipment and spare parts, insurance, general maintenance, and advertising agency services ● Exists online & offline thought he term is now used in the context of e-commerce ● Specialists in the B2B field often argue that consumer marketing strategies *used by B2C businesses) not suitable or sufficient for marketing B2B products/services as B2B involves professional buyers who have a totally different agenda ● B2C refers to e-commerce directly catered for the end-user, i.e. the consumer ● “pay-per-click” Advantages of E-commerce Disadvantages of E-commerce Provides another source of revenue – e.g. google gets from selling ad space (‘sponsored links’). Also, advantages of internet High set up costs – need specialists. EPS costly. Postage & packaging costs of products Another channel of distribution – no geographical boundaries Credit card companies impose finance charges for online payments which may be passed on in form of higher prices or reduced profit margins Greater flexibility for organizations to respond to competitors more quickly. E.g. a company can publicise revisions to its services & products such as price changes much faster via its website than through printing updated hardcopy material. Fraudulent trade — e.g. theres no way a buyer can authenticate items being sold on ebay. Identity fraud Excessive packaging can be reduced. Many businesses now require their customers to use the internet to download or ie manuals rather than the traditional method of printing these guides in several different languages, rather than the Spam & unethical marketing opportunities traditional method of printing these guides in several different languages. This not only reduces waste and excess packaging but also cuts production costs, furthermore, updating technical info for innovative products such as iPod and Kindle. Also more environmentally friendly Retail outlets tend to have higher overheads. These are reduced lower prices. Customers can also save on associates transaction costs (such as travel time and transportation costs_ as there is no need for face to face trading Not suitable for some types of businesses – browsing online may be abburrido y time-consuming. May want a physical test – touch, taste, smell, feel… May want to pick your own fruits and veggies. May be hard to return faulty crap Operating costs reduced – marginal cost is close to zero 0 use of internet means no significant difference to its total costs if it sells 1000 or 1000000 online subscriptions Loading time – internet lag. LEDC’s. Info overload may also mean people prefer to visit physical retail outlets to purchase More choice & convenience and ecommerce reduces barriers to entry and Reliant on advanced technology that may not be available to everyone in all countries. Need to have regularly updated sites and so expensive Enhances competition (benefits of competition go here) Volatile as prone to hacking & breakdowns. Maintenance & upgrades will further add to the costs of ecommerce Job losses & redundancies reduce morale,, motivation and harm industrial relations at work and give the organization o a poor image ● E-commerce and the pricing aspect of the marketing mix: ○ The internet increases price transparency to the advantage of the customer ○ This forces price competition to maintain market share ○ Many businesses have also exploited the ability to adjust and automatically update prices according to the level of demand ○ Internet allows businesses to cut off intermediaries such as wholesale and main street retailers price can be reduced and profit margins retained ● E-commerce and the place aspect of the marketing mix: ○ Distribution is an integral part of any business strategy ○ e-commerce enables businesses to reach a global audience at a fraction of the costs ○ Has helped courier companies like DHL & FedEx ○ Fuelled competition ○ Shortens the channel of distribution so benefits from enormous savings on their operating costs